monthly economic affairs june, 2013
DESCRIPTION
Download Monthly Economic Affairs June, 2013 for CSS Subject Current AffairsThe CSS Pointwww.thecsspoint.comTRANSCRIPT
Th er e ar e cer tain s oci o- e con o mi c, ge o- po lit i cal an d
ge o - s tra te gic i s su e s w hi ch wi l l hav e to b e ad dr es s e d
o n pr io r ity bas is ; ot he r wi se th e n e w p o pul ar
go ve rn me n t ma y fac e th e s ame fa te as o f PPPP.
June 2013
Issue-VI
MONTHLY
Volume-II,
Page 8-9
Firming up
Page 6-7 Page 12-13
Economic Affairs | www.economicaffairs. info
EDITORIAL BOARD– Dr Ashfaq Hassan Khan
– Dr Abid Sulehri
– Pervez Amir
– Shah A Hassan
– Zubair Malik
– Haroon Akhtar Khan
– Shahid Khaqan Abbasi
– Hamidullah Jan Afridi
– Tausif ur Rehman
– F. M. Paracha
– Wahab Chughtai
– Muhammad Iqbal Qazi
– Avan Soft (Pvt) Limited
CONTACT
ADVISORY BOARD
EDITOR– Yassir Rasheed
OPERATIONS
MARKETING
PHOTOGRAPHY
GRAPHICS
WEBMASTER
ECONOMICAffairs
Monthly
Publisher: M S ajid Printers: R A P ri nters
audi Arabia is an old and trusted friend of Pakistan and has rescued the country
during the toughest of times in its history. There is a general expectation amongst
the people that with our "amiable" (PML-N) government in pla ce, the same
story may be repeated again. According to a newspaper report, Saudi Arabia is expected
to extend a bailout package of about $15 bi llion to Pakistan's highly-indebted energy
sector by supplyi ng crude and furnace oil on the deferred payments to enable it to
resolve the chronic circular debt issue.
Although PML (N) sources, in private conversations have denied the veracity of
this report and some cynics have termed it a tool used by vested interests to manipulate
the stock market. However, this expectation, of some sort of assistance from the kingdom
refuses to die . In specific terms, the news report had stated that Pakistan would seek
about 100,000 barrels of crude oil and 15,000 tons of furnace oil per day from Saudi
Arabia on deferred payments for three years, the cost of which works out to be between
12 to 15 billion dollars. The facility can be utilised to reduce acute electricity loadshedding
in the country, besides restructuring the power sector by minimising subsidies, eliminating
circular debt, ensuring recoveries a nd reducing system losses to a sustainable level.
Needless to say that Pakistan finds itself in dire straits on the energy front and the
fact that a formal denial of the news report has not been made by the PML (N) lends a
measure of credence that such an arrangement or a variation thereof is li kely to be
discussed at the highest level during Nawaz Sharif's expected visit to Saudi Arabia soon
after assuming the office of Prime Minister early next month. And that help from Saudi
Arabia is probable to the Nawaz government due to the strong fraternal relations
between Saudi Arabia and Pakistan in general and Sharif's close personal ties with King
Abdullah in particular. Thus Sharif's assumption of reins of government may prove to
be fortuitous for the Pakistan economy is becoming a matter of satisfaction for trade
and industry in the country.
According to the report, as soon as PML-N emerged as the majority party after the
May 11 elections, the Saudi Ambassador to Pakistan sought a briefing on the country's
oi l requirements from the foreign ministry before he called on Sharif. Prior to this, the
Saudi government had not taken any interest in the matter because of a visible chil l in
its relationship with the PPP government. It may be recalled that Saudi Arabia extended
a similar special package to Pakistan soon after this South Asian country went nuclear
in 1998 and faced international economic sanctions. Pakistan at that time had received
$3.5 billion worth of oil from Saudi Arabia on deferred payments, a part of which was
later converted into a grant.
Needless to say, that granting of such facility to Pakistan by Saudi Arabia at this
critical juncture would be of immense help to the country. From whatever way the
government looks at the problem, the measures contemplated to increase total energy
supply in the country, at least in the short run, would involve a huge amount of foreign
exchange, which the country cannot afford at the moment. Pakistan imports about
400,000 barrels of crude oil per day and 30,000 tons of furnace oil at a cost of about
$15 billion per annum. If Pakistan could get a good part of these products on a deferred
payment basis, the PML-N government could at least reduce the electricity crisis in the
short run and, in the meantime, could initiate a number of measures to augment energy
supplies in the country. This would provide a measure of relief to the people and the
industry and contribute to PML-N government's popularity. Those who believe that such
a facili ty could be used to stay away from the Iranian gas import may be mistaken
because the Iranian gas project has reached a stage that backtracking on it is not an easy
option. However, such a package could be used to r enegotiate gas price with Iran for
the Iran-Pakistan gas pipeline to bring it down to a more reasonable level . It needs to
be stressed, nonetheless, that such a stop-gap arrangement should not be used to avoid
hard and bold decisions in the energy sect or to make it v iable in the long-run.
From the Editor’s desk
S
– Maria Khalid
Deputy Editor
EDITORIAL4
Keeping IMF at bay
Flat # 5, Block # 23, PHA AppartmentsG-7/1, Islamabad, PakistanOffice: + 92-51-2890168 + 92-333-5439495 + 92-333-5536239Email: [email protected]: http://www.economicaffairs. info
– Manager Web / IT: Sohail Iqbal
June 2013
June 2013 EXCLUSIVEMONTHLY
6-7
Utmost care is taken to ensure that articles and other information published are up-to-date and accurate. Furthermore,
responsibility for any losses, damages or distress resulting from adherence to any information made available through the
contents is not the responsibility of the Magazine. The opinions expressed are those of the authors and do not necessarily
reflect the views of the editor, publisher and the management. Comments and suggestions are welcomed.
D I S C L A I M E R
13-14
CONTENTSTHE COVER
NBP Performing Despite
Challenges.......................................28-29
12-13
16-17
19
18
15-16
30-31 32-33
The Leviathan Glides.... .......................8-9
Power Shortfall , the Spoiled Chi ld...12-13
Not the same old Mode of
Security.... .......................................14-15
Human Capital Investment,
The Only Way Forward.......................19
NAB Feels like a Million Dollars......16-17
News in Brief... ... .............................24-26
Taliban! F irmingup.... ...........................6-7
Pak Army Watching Sharif’s Cosying upto India............................................34-35
Pakistan needs to draw lessons from
Nepal’s Crop Insurance...................36-38
Economic Affairs | www.economicaffairs.info
The Leviathan
GLIDES
T he re a re ce rt ai n s oc i o-e co n o mic , ge o - p ol i t ic al a n d
g e o-s t ra t eg ic i ss u es w h ic h w i ll h a v e t o b e ad d r ess ed
o n p rio ri t y b a si s; o t h e rwi s e t he n ew p o p u la r
g o ve rn me n t m a y f a ce t h e sa me f a t e as o f P P P P .
June 2013Issue-VI
MONTHLYVolume-II,
P age 8-9
Firm ing up
P age 6-7 Page 12-13
Firming up
Performance portfolio in Pakistan’s
accountability
FE ELS LIKE A M ILL IO N DO LL ARSWhen Investing
Becomes Gambling
balancing the unbalanced
Security&
Armed to the teeth
theCapturingdemographic dividen d
th rough education
More Than A Pret ty Footnote
Fashion Week
June 2013TERRORISM6
Sajid Gondal
Peace and prosperity is thetop pri ority, says Nawaz
Sharif after taking oath as
Member of Parliament. Heis pinning hope on bringing
peace to this country by
pursuing the Taliban for apeace deal through negotiations. However,
the groun d real it ies suggest ot herwise.
Intell igence report s availabl e withMonthly Economic Affairs revealed that getting
advantage of politica l transition in Pakistan,
the Tehreek-e-Taliban Pakistan (TIP) gatheredits strength. It also hinted that the taliban will
only use negot iations as a time bargaining
practice and will never disarm themselves fora long lasting peace agreement.
The Commandant Frontier Corps recently
repo rted Ministr y o f Inter ior about anemergent threat erupting from the western
borders. The commandant in a report available
with Monthly Economic Affairs alarmed thatmiscreants who had fl ed from Swat and
Malakand and other areas are gathering across
the Chamman (Baluchistan) border and arecontemplating to send their agents in Pakistan.
Citing the report during a recent meeting
of interim federal cabinet, the ex- interimminister for interior Mr. Habib was of the view
that the misc reant groups were gettin g
instructions from their handlers across theborders. He informed the members that the
intellig ence services submi tted inevitable
evidences in this regard.The FC Commandant sta ted that the
provincial home departments were already
abreast of incoming threats to law and orderand internal security and advised to strengthen
the secur ity of important personalities and
installations.It was also suggested in the report that
as the army and security forces are tightening
their controls of t ribal area s along withnorthern borders, the miscreants have been
shifting their focus and men power to western
borders in Baluchistan.However, in con sideration of new
developments, the Frontier Crops as well asmilitary is also shifting their resources to
Baluchistan to defeat their nefarious designs.
The intelligence report also pointed outthat the security situation in Karachi is getting
complicated due to the presence of TTP and
Baloch mili tants. Thou gh the enhancedsecurity measures reduced the incidents of
target killings, yet t he polit ical parties ANP,
PPP and MQM are apprehensive of curtailingTTP and B aloch miscreant s in Karachi .
Peace Talks With the Taliban
The PML (N) chief Nawaz Sharif, Tehreek-
i-Insaf chairman Imran Khan, JUI -F leaderMaulana Fazlur Rehman and Jamaat-i-Islami
Chief Syed Munawar Hasan called for dialogue
with the Taliban. But while there seems to bea consensus on negotiations, the Taliban are
internally divi ded and unwil ling to meet
government’s demands to sever all ties withforeign miscreants, disarming themselves and
abide to the law of the land.
To understand the complexity of thesituation, it will be prerequisite to know about
the various factions of the militant groups —
Firming up
Economic Affairs | www.economicaffairs.info
foreign, nationa l and loca l — operating in
Pakistan.
Tehreek-i-Taliban Pakistan: Led by
its ameer, Ha keemul lah Mehsud, it is the
largest network. Having been displaced fromits native South Waziristan, the TTP, now
headquartered in North Waziristan, serves asa platform for several other groups with cells
and operationa l capabilities across Pakistan.
It has a national agenda but collaborateswith other groups, too, both across the border
as well as inside Pakistan.
Then there are several affiliated groups,which though independent in operationa l
matters, have ideological and operationa l
l inkages with the TTP. These incl ude theTehreek-i-Taliban Mohmand, Tehreek-i-Taliban
Bajaur, Tehreek-i-Taliban Swat , Tehreek-i-
Taliban Darra Adam Khel, Orakzai and Khyber.The TT (B) and TT(S) in the past have had
separate peace ta lks with the government.
Hafiz Muhammad Gul Bahadar
Group: Th e Mi ran shah -b ased Ha fi zMohammad Gul Bahadar has also had a peace
agreement with the government since 2008
(revived), the terms of which have never beenimplemented amid attacks on security forces
and counter-art illery shelling. Authorities in
North Waziristan’s regional headquarters haveno control over the area whatsoever. The Gul
Bahadar group operate on the principle of live
and let-live.
Smaller & Independent Groups:These are all based in Khyber tribal region and
include Mangal Bagh’s Lashkar-i-Islam, Nahi-
wa-anil -Munkar, pro-government AnsarulIslam and another relatively smaller groups.
There a re a few independent groups also
operating in Darra Adam Khel and other places.
Pro-government group: The Wana-
based late Maulvi Nazir Group is the only so-called pro-government militant group, whose
interests lie across the border in Afghanistan
and has so far refused to be drawn into conflict
with the Pakistani security forces following an
agreement in 2007. That agreement still holds.Authorities in Sout h Wazir istan’s regi onal
headqu arters, therefore, enj oy so me
administrative control .
The Punjabi Taliban: There a re atleast nine known groups called the Punjabi
Taliban, many of them disillusioned by what
they saw as retired Gen Pervez Musharraf’sbetrayal of the Kashmiri freedom struggle.
Others have stri dently violent sectarian
agendas — all based in North Waziri stan.
Foreign Groups: In terms of strength,
chief among the foreign groups operating fromNor th Waziristan, are the Haqqani network
(the biggest group), followed by militants
affi l iated with Isl amic M ov eme nt ofUzbekistan, Al Qaeda Central, the Islamic Jihad
Union, Eastern Turkistan Islamic Movement,
Libyan Islamic Fighting Group, Turkish Gamaat,Dutch Tali ban, DT Mujah ideen, Isla mic
Movement of Turkestan, Azeri Jumaat, Taifatul
Mansurah and one other group.
What to negotiate?
Based on fai led peace agreements, aborted
talks and statements at di fferent t imes, theTTP’s m ain talking points could be summed
up as:
1) Establishment of caliphate and enforcementof Sharia to replace the exist ing “infidel”
democratic system and the Const ituti on.
2) Pakistan pulls out of the US-led war onTerror, end drone st rikes, sever ties with
Washington and for eign pol icy should be
within the dictates of Islam.3) Pak istan Army’s withdra wal from tribal
areas, relocation of security checks posts and
handing over securi ty to the Frontier Corps.4) Release of all TTP prisoners.
5) Th e TTP wi l l n ot lay do wn arms.
6) Support the Afghan Jihad.7) Compensation and war reparations.
What does the government say?1) Renounce militancy and
lay d ow n arms .
2) No parallel
administration.
3) Expel foreign militants.
4) Accept the state’s writ, constitution and lawof the land.
5) No prisoner exchange.
Given Taliban’s history, it ’s hard to be
optimistic. But with American troops leaving
Afghanistan, there should be an interest inadvancing a politi cal system t hat insurgents
might see as an alternative to armed conflict.
4TERRORISMJune 2013 7
Intelligence reports
available with
Monthly Economic
Affairs revealed that
getting advantage of
political transition
in Pakistan, the
Tehreek-e-Taliban
Pakistan (TIP)
gathered its
strength. It also
hinted that the
taliban will only use
negotiations as a
time bargaining
practice and will
never disarm
themselves for a
long lasting peace
agreement
Economic Affairs | www.economicaffairs.info
June 20138 WAR ON TERROR
Tammy Swofford
I first became aware of the
movement of th e C. I.A.with the ir barrels-of-cash
program into Afghanistan
several years ago. Withyears o f n etwo rkin g
jour nal ism and research
under my belt I am aware of a distinct reality. Information is the Nasdaq of the Arab street.
Problematic, is how individuals adeptly play
both sides of the street. So it can be difficultto sort out the t ruth. So when receiving
information di scussi ng the movement of
money into Afghanistan, I merely filed it awayas an uncorroborated account. Today,
the information is both verified and
vi lified. The C.I.A. has been on quitethe spending spree.
The Leviathan glides into
Afghanistan, Pakistan and acrossth e globe. The bl under of
America in the Middle East and
beyond i s a basic one. Wehave taken an or gani zation
whose pr imary task is that of
information-gathering and reduced it to thetasteless task of i nfluence pandering. Two
consecutive administrations have attempted
to accomplish nation-building in Afghanistanby allowing our primary security apparatus to
Economic Affairs | www.economicaffairs.info
The Leviathan
GLIDES
4June 2013 9WAR ON TERROR
function a s an ATM machine as opposed to
doing the gritty and dangerous work of HumInt. We have failed in Afghanistan because of a
paradigm shift. This new order of business has
allowed C.I.A. operatives to function as the firstlink in the cha in for international money
laundering schemes. American tax dollars are
laundered right into the hands of a lphabetorganizations run by Karzai kleptocrats. The
baron robbers then launder the money past
the noses of the citizens and into vaults ofpersonal wealth. The C.I.A. is involved in an
ugly business not befitting their oath of office.
It would be cheaper to train a circus troupe ofchimps to deliver the money. We might obtain
equivalent results.
The role of the C.I.A. is meant to be oneof information gathering, critical analysis, and
ongoing Threat Con evaluation to safeguard
our national sovereignty. This mission can onlybe accomplished by dedicated professionals
who have a high level of socioli nguistic,
ethnographic, and perceptual/conceptual skills.But into Afghanistan, the Leviathan glides. It
glides into every strata of society. It moves with
pay-offs to tribal warlords all the way up toeconomic inducements for the powerful morally
corrupt. And for the dowry, America has
received a tubercular cow. The various milkmaids within the Karzai administration continue
to squeeze the teats to this day.
The outcom e of our folly is less thanspectacular. Future historians will assess the
worth of our barrels-of-cash program and find
both administration and stewardship lacking.Our failures and lost opportunities will plague
us for decades to come.
The hemisphere has regional corruptionwhich seems insurmountable. Nepotism,
cronyism and tribal customs which dicta te
tribute for an audience are not confined to the
poverty belts within the tribal regions. These
societal ills extend into the corridors of powerand boardrooms of multinationals. We have
imagined that the best m anner in which to
enter the matrix is to respond in kind. But dirtyhands cannot wash dirty hands. And more than
anything, the emerging democracies which are
hybrids of Shari'ah pr inciples and Westernthought, require the extension of clean hands
of governance.
The ravages of British Colonialism nolonger suffice to cover the flanks of
th e p o we r f u l
corrupt and theirconsistently
n e f a r io u s
business dealings. This script no longer seduces
the underserved masses. My private corridorwriting predicted a vast social tumult two years
in advance of the Tunisian warning shot. The
thoughts which I no longer divulge trouble mysleep to this day. Perhaps our involvement in
the region is absolutely necessary because of
the nature of an asymmetrical battle space.But what remains to be rectified, is the use of
our spy agency to facilitate the ongoing and
rampant cor ru pt busi ness pr actices of
Afghanistan and beyond.
The digital age provides for a flood of
information which presents a different currentreality and truth than many care to assess. So
whilst facts may be hidden for a season, once
overtaken by discovery and digital nimbleness,there is hell to pay. Such is the case with the
unfoldi ng story o f the C. I.A. and their
involvement in money laundering of Americantax dollars into a matr ix of corruption. The
breadth of this financial occultus remains
indeterminate.Recognition of corruption is one thing.
Bu t because we have had a policy o f
encouraging corruption, we have decimatedany and all opportunities to establish interfacing
healthy governance models for the good of
Afghanistan. Instead of holding leadershipaccountable, we have satiated the desire for
enormous wealth . Inst ead of teaching
governance as stewardship, we have reinforcedgovernance without an ethical component.
The losers are those at the bottom of the foodchain. These are the ones who may not have
the strength to rise up against injustice. But
they will give their remaining strength to theirprogeny.
The United States must pull back and take
a good hard look at the mission of the C.I.A. Itis an increasingly dangerous world in which our
operatives must work. But perhaps we need to
pull in the leash and make ittaut again regarding the
responsibilities of the men
and women who serve.Their work should be confined
to that of information gathering with
the best available tools of the trade.Let the Leviathan glide. But let it glide
for the sake of intelligence. Let the
Leviathan glide. But let the movementbe to ward greater inte r- agen cy
collaboration amongst our various services
for the good of all.of a new century. It is the critical need within
an environment where asymmetrical terror
presents as the greatest risk to stability withinvolatile societal rims.
Wh en abuse of offic ial capacit y i s
accompli shed through a gift of monetaryrecompense, your l eadership must give full
account. When that gift is extended through
unofficial and untraceable channels, Americamust give account. Your nations are too fragile,
you are seated upon powder kegs of human
fl esh, and th e f uses must not b e l i t.Those who govern have been given a
trust. Turn the corner. With, or without us.
The role of the C.I.A. is meant to be one of
information gathering, critical analysis, and
ongoing Threat Con evaluation to safeguard our
national sovereignty. This mission can only be
accomplished by dedicated professionals who
have a high level of sociolinguistic, ethnographic,
and perceptual/conceptual skills. But into
Afghanistan, the Leviathan glides. It glides into
every strata of society. It moves with pay-offs
to tribal warlords all the way up to economic
inducements for the powerful morally corrupt.
Economic Affairs | www.economicaffairs. info
The writer is a Freelance Journalist and author o fthe novel Arsenal. She can be reached at
Mehmood Ul Hassan Khan
Elections 2013 are over and
post elections political heat is
also going to simmer down.Different parts of the country
are confronti ng the dust of
defeat. PML-N Chi ef Mi anNawaz Sharif’s sher (lion) is
roaring. Tehrik-e-Insaaf Chairman Imran Khan’s
tsunami has already hit the mountainous areas ofKhyber Pakhtunkhwa. The new change has many
prospects and constrains. PML-N Chief Mian
Nawaz Sharif will have to live up to expectationsof the people to steer the sinking economy from
the choppy waters.
There are certain socio-econom ic, geo-political and geo-strategic issues which will have
to be addressed on prior ity basis; otherwise the
new popular government may face the same fateas of PPPP. Genie of acute energy shortage which
has been hovering over the country for the last
so many years badly needs a genuine effort. Thereis a skyrocketing budgetary deficit which needs
space-shuttle drive to manage. There is menace
of terror ism and extremism which needsappropriate short and long terms policies of the
heavy mandate.
Socio-Economic Challenges
Neither macro-economic indicators are ingood shape nor are its prospects bright and
healthy. The new
New
Chessboard
June 2013COVER STORY10
Economic Affairs | www.economicaffairs.info
22COVER STORYJune 2013
Economic Affairs | www.economicaffairs.info
government at center would face difficulties to
address the prevailing gigantic economic issueslike low tax-to-GDP ratio (lowest even in the
region) currently soaring around 10 percent;
high debts level (domestic & external) currentlyat 68 percent of GDP or Rs15.2 trillion, showing
that each Pakistani carries a loan burden of Rs.
80,000, rampant corr uption in the whiteelephants of public sector enterprises (PIA, PIA,
Railways, Pak Steel and Wapda) alone eat up
over Rs. 300 billion annually through budgetarysubsidies; widening fiscal deficit i.e. 8.5 percent
of GDP, which causes inflation and the abnormal
increase in government borrowing from theSBP/banks. The new government would also
confront weak private sector, low gross national
savings ratios, (lowest in the region 15 percent)and circular debt that needs hundreds of billions
of cash inj ections by the governm ent.
According to estimation the governmentneeds US$ 4 billion to get rid of circular debts.
Act ive comm erci al diplomacy may provide
breathing space to newly formed government.Opti on of supply of oil and other energy
resources on deferred payments ought to be
activated but not on the compromise of socio-econ omic o r geo-st rategic sovereign ty.
Reduction in line losses (40 percent), theft (20
percent), and capacity building measures forthe existing infrastructure and a paradigm shift
in the means of production would be ideal
com bina tion to cur b the waves of heatthroughout the country. Importing 1,000MW
electricity from India as part of short to medium
term strategy to end load-shedding would beanother option. Publi c-pr ivate str ategic
partnership in al l ind ustr ial area s l ike
(Faisalabad, Gujrat, Gujranwala, Karachi etc.)fo r the en ergy p ro duc tion f ro m th e
unconventional means should be encouraged.
Even coal (imported or local) should be usedfor energy production. Alternative energy drive
must be started. Strong relations with Turkish
and German entrepreneurs in the fields ofgreen energies mix should be further
strengthened.Moreover, the PML-N lead government
must take appropriate steps to negotiate with
the IMF for obtaining bailout package of $5-7billion to avert balance of payment crisis and
preparing ground for present ing a feasible
budget for 2013-14. Federal Budget 2013-14would be one of the toughest tasks of the
center. Dwindling foreign currency reserves,
vanishing FDI ratios a nd the last but not theleast, imbalanced parity between imports-
exports would cause serious challenges in the
days to come. The only good sign is high ratiosof worker remittances i.e. may surpass to US$
11 bi ll io n in the cur re nt fis cal yea r.
The complexity of the situation requirescomposite short and long term strategies. The
government will not depend on conventional
or traditional means to fix it by either tighteningthe belt by compressing imports to the tune of
$3 billion on immediate basis or approaching
the IMF to avoid default. Role of commercialdiplomacy would be crucial. The government
should approach its strategic partners like,
China, UAE, Saudi Arabia and Qatar to showerassistance in shape of joint venture projects
and financial support for the time being for
meeting the budgetary deficits.Unemployment is spreading like a cancer
in the society. According to Pakistan Survey
(2012) the country has more than four millionun emplo yed and eight to 10 mil l ion
underemployed people. New government must
be ready to face the music. Unemploymentcrisis has toppled the dynasties of most of the
Middle East region in the ongoing waves of
Arab spring. It may have bad consequences inthe near future.
Geo-Political Challenges
To achieve national consensus on the
imp ort ant national i ssues would be aparamount challenge in t he days t o come.
Working relations with MQM (law & order
situation, expected change of governorship),Baloc histan nationalists (marginaliza tion
process in shape of socio-economic isolation,
political discrimination) and to some extentwith Khyber Pa kht unkhwa on c ertain
conflicting real ities (war against terror ism,
drones and construction of water reservoirs)would be needed to tackle with coll ective
political wisdom and spirits of accommodation.
Geo-Strategic Challenges
Pakistan’s geographical positi on hasmultidimensional strategic nature. Pakistan is
gateway to Central Asian Countries and shortest
connected sea corridor which needs to beoptimally uti lized without indulging with
ongoing greater game around our soil. We have
abundant opportunities and numerous hurdles.Expected US withdrawal from Afghanistan
would bring paradigm shift in our notions of
security and stabi lity.Chinese premier Li Keqiang has recently
visited Pakistan for finalizing the handing over
formalities of Gawadar Port. It would be game
changer in the national economy and furtherenhance our strategic importance in the region.
Bilateral cooperation in the fields of peaceful
nuclear energy between Pakistan and Chinawould speed-up. Pak-Russia strong bilateral
relations would be beneficial for both countries,
for our stra tegic presence in the CIS andmaintaining strategic equilibrium in the region.
The government may face tough reaction
fr om the US esta bl ish ment and SaudiArabia/GCC cl ub on the burni ng i ssue of
Pakistan-Iran gas pipel ine. It has been kept
back burner for so many years but all of suddennational polit ical maneuver ing in the last
regime carried us at the wolf door. The PMN-
N lead government will face the two imminentscenarios, either: endorsing Pakistan-Iran gas
pipeline and facing the dragon’s fury i.e. US,
Saudi Arabia/GCC along with tough time atIMF & World Bank forums, no supply of energy
resources at deferred payments a nd BIG NO
to any substantial socio-economic assistanceof project. Or, discarding the Pakistan-Iran gas
pipeline and becoming a strong contender of
socio-economic bounties, geo-political stabilityand geo-st rategic cushion. The government
must negot iate w ith the US on the much
n eeded Pa k- US fr ee market ac ces s,establishment of economic free zones along
with sup pl y o f ci v i l nu cl ear p lant s.
Spirits of romance and honeymoon withIndia must not be dreamed at once. Elections
in India are going to be held in 2014. So,
making inroads on I ndian front woul d notproduce any substantial results before 2014.
Bilateral must be pursued with BRICS (Brazil,
Ru ssi a, India, C hina and South Afri ca).On the issue of death and l ife, i.e.
terror ism and drones, the government must
initiate composite national dialogue with allthe major stake holders in the political arena
and military junta to rea ch at one point
agenda. Meaningful talks with Taliban withinand out of the territory must be chalked-out.
US led drone policy has been proved counter-pro ducti ve in the war theater. The new
go vern ment may c o nv in ce th e U S
esta bl ishment for the sup ply of dro netechnologies for indigenous response to any
violation of sovereignty in the days to come.
Concluding Remarks
Issues are too big to resolve which need
bold steps and strong political commitment.People are hoping that Sher (lion) will eat the
high ratios of unemployment, discrimination,
denial of social justice and poverty. Let us hopefor the best because Mian Nawaz Sharif, the
new Prime Minister has a strong character.
June 2013ENERGY12
Yasmeen Ali
In Pakistan, depending on
yo ur pl ace of residing ,th ere i s no elect r ici ty
from six t o twenty hours
a day. Whereas it has hi thard th e l ives o f the
comm on man, mak ing i t
impossible to funct ion on day to day basis,i t h as also br ought down pr oduc tion in
ind ustr ial sec to rs d rast ica l ly, c ost ing
contracts and jobs of mill ions across thecount ry.
If we look at the issue- t wo r easons
emerge. F irst , the demand is far greaterthan the s upp ly. Pa kist an i s ju st no t
p rod uc ing en ough o f it to go arou nd.
Second, the government i s fa iling in paying
dues to pow er generation com panies thusgiving r ise to the phenomenon of “ci rcular
d eb t.” Th is i s bas ic al ly p i l in g up o f
government dues outstanding to the powersu pplying uni ts thereby di sab ling th em
f ro m co verin g the ir ov erh ead s an dp rod uci ng /impo rt in g power. Onc e th is
debt is paid off, the IPP’s can pay off their
p etro leu m impo rt ex pens es and st artp roduci ng at optimum level. The IPP’ s a t
c u rren t are res po n si b le to pr o v ide
electr ici ty to ha lf of our countr y. As thegovernm ent did not pay i ts debt so now
they are charging or demanding higher per
un it prices from the consumers. This hikein elect rici ty p rices i s af fecting no t only
our local industr ies and homes but is a lso
af fecti ng o ur exports of manuf actur ing
go ods. The go ver nment must interven eand pay out the circula r debt. Or pr ovi de
subsidy o n electr ici ty.
Most of th e systems h ere run oneither gas o r co al, i.e. they are t hermal
systems. B oth Gas and Coal are consideredscarce and expens ive c om mo di ties f or
electr icity production. We lack high quality
lo wer en d gr id s that are u sed to c arryelect r ic ity fr om p ower ho uses to th e
ulti mate consumers vi a grid stations . The
infrast ructure i s old a nd deter iorated. Thesy stem is u nabl e to s ustain ex t re me
weather conditions hence most of the grids
shut d own at ext rem e temperatur e oreither com pletely stops working. WAPDA
is facing huge li ne losses due to electr ici ty
Long-term solution requires focused attention. Pakistan cannot sustain flawed
judgment in taking of a final decision in this regard. It is exorbitantly expense nigh
impossible to convert present energy giving units into one with different source
of energy production. It will require virtual revamping of the entire existing set up.
However, government should look into the possibility of setting up energy units
with LNG (Liquefied Natural Gas).
Economic Affairs | www.economicaffairs.info
th eft or i l le gal u sa ge o f elec t r ic i ty.
Th en also, we fac e th e very rea lpr oblem of for eign investors being shy to
invest b ig buck s i n Pakista n ow ing to the
soc io-p oli tica l-corrupt system.
There will be no honeymoon period for
the Nawaz Sharif Government. The test of his
government will be to provide immediate reliefto the people. Nawaz Sharif needs to put
together some sharp plans to address this
pressing issue. short-term plans should becombined with long-term ones.
Some short term steps to address t he
situation are: Line Losses & reasons must belooked into & steps must be taken to correct
the same, incoming government MUST look
into discrimination of electricity distribution.Why is Punjab (more particula rly) and in
particular Lahore, Faisalabad & some other
cities facing power outrage for 16 hours a day,whereas this is reportedly not happening to
this degree in other provinces. Upgrade Grid
Stations; government must convert inefficientgas plants to efficient ones in order to conserve
electric energy. In areas where over 80% of
bi lls are being pa id must not suffer poweroutrage as sharply as in areas where they are
no t. This wi ll not only encourage t imelypayment of bills but will also be seen as being
in the spirit of fairness.
Long-term sol ut ion requires focusedattention. Pakistan cannot susta in flawed
judgment in taking of a final decision in this
regar d. It i s exor bit ant ly exp ense nighimposs ible to convert present energy giving
units into one with different source of energy
production. It will require virtual revampingo f the enti re exist ing set up. However,
government should look into the possibil ity
of setting up energy units with LNG (liquefiednatural gas). I am told this is cheaper in terms
of setting up and operational costs . LNG is
cheap (comparatively).Very cheap. Qatar isthe biggest producer/exporter for LNG and
can export gas in liquefied form anywhere in
the world and focus on the places where thestate earns the most income for the gas. The
idea at first was to ship LNG by boat to t he
US , which was supposed to he lp meet thed emand o f hun gry Americans, but the
continuously low natural gas prices in the US
means that it is more profi table for Qatar to
suppl y i ts gas elsewhere, e.g. the Uni ted
Kingdom, India , Japan and other countries in
south-eastern Asia and Europe. Demand forQatar’s l iquid gas increased immediately in
Japan after the ear thquake on March 18 –
supplying gas over such a distance through asystem of pipe l ines would be practi cal ly
impossible, especially when there is more than
just dry land between the two locations. Inadd it ion to these distant places, some
neighbors of Qatar have also shown an interest
in buying gas from the country, especial lyBahrain, Dubai and Abu Dhabi. Four of the six
GCC countries – Saudi Arabia, Bahrain, Kuwait
and the United Arab Emirates – are importersof natural gas a nd only two are exporters –
Qatar and Oman. As the gas exports of Oman
are ca 10% of the gas exports of Qatar, thereis no doubt that Qatar is the most influential
supplier of natural gas in the region. There is
no reason to fear that Qatar will run out ofgas any time soon. The country has the third-
largest natural gas deposits after Iran andRussia – Qatar owns 14% of the total gas
reserves of the world. Qatar has enough gas
for more than 200 years at current productionquantity.
The incursion of foreign investment will
depend on a conducive atmosphere directlylinked to political and socia l stabili ty of the
countr y. Corr uption must be checked to
encourage it - with incentives.Nawaz Sharif will be well advised to
review and down size the massive increase of
Rs. 5.82 per unit price of electricity by thecaretaker government. This step i s being
te rmed as fac i li tatio n fo r in co min g
dispensation. In a sit uation where due tounavailability of gas & electricity the business
comm unity is st ruggling to do business ,
com mo n man i s st ru ggl ing to manageexpenses, the step is seen in direction of
lowering Nawaz Sharif government popularity
even befo re b eing s wor n to o ff ic e!
The writer is a lawyer and author of“A Comparative Analysis of Media & Media Laws inPakistan.” Her twitter handle is @yasmeen_9
13ENERGYJune 2013
ECONOMY TERMS OF THE DAY
1. Remembrance of what has been heard, seen, or otherwise experienced,
such as that of an advertisement, commercial, or demonstration. See also
recall test.
2. Removal or withdrawal of a contaminated or defective good from sale
by its manufacturer or producer, either voluntarily or when forced by a
watchdog agency. Sometimes a good (such as a motor vehicle) is recalled
af ter it has been sold, for rectification, exch ange , or refund.
3. Revocation of a judgment on a question of fact or a question of law.
Pool of investments, collection ofsamples of an artist or other creative
person, or group of complementary
or supplementary products marketed
together.
Portfolio
M Saeed Khalid
A basi c raison d ’et re ofstate is to provide security
to its citizens, internally as
well as on its frontier. Moststa tes d evo te a large
proportion of their budget
to d ef en c e a nd f ormaintaining law and order. The United States,
which accounts for nearly a fifth of the world’s
GDP, spends enormous sums on internal andexterna l security. Half of its federal budget
is spent on d efence . The nex t b iggest
economies, China and I n d i aare s tead i ly
incr easing
t h e i rdefence
bu dgets. Pa kistan being a much smallercountry, its economy cannot match I ndia . It
has followed the aim of maintaining a credible
d eterrent in convent io na l forces and amatching deterrent in nuclear weapons.
Critics of Pakistan’s defence expenditure
argue that its weak economy cannot sustaincurrent share of defence spending. They want
to increase budgetary provisions for economic
and soc ial sect or develo pm ent. Thesedemands are to be viewed in the context of
our regional security needs. India , Iran and
Afghanistan are devoti ng more, not lessresources to enhance their defence capability.
Pa kistan’s nuclear assets are the cause of
anxi ety to some countries and they are saidto have contingency pl ans to defang our
nuclear arsenal on the pretext of i ts g oing
under the contr ol of jihadist elements. Thish as add ed another di men si on to the
c onven tional needs of deterren ce and
vigilance and in case of need to defend ourinstallations.
In the prevailing threat scenario,
it is not feas ibl e to ignore ourprimary security needs to make
fun ds avai lab le f or o th er
nationa l needs even if theyare of high priority. But that
does not stop us from scrutinizing whetherwe are getting value for money allocated to
defence. Secondly, are efforts being made to
prune wasteful expenditure? War has takena new connotation after 9/11. But the armed
forces, as an institution had diffi culty in
acknowledging that the good and the badTaliban stand for the same goal.
Pakistan has often been called a security
state implying that defence takes precedenceov er ever ythi ng else and th e defen ce
establi shment has an overridi ng voice in
shaping the country’s foreign policy. This maybe changing as the army’s doctrines on India
and Afghanistan show signs of modification.
The army ch ief ’s recen t st ate ment shighl ighting the threat from Pakistani Taliban
and all ied outfit s are sig nifi cant. General
Kayani wants to make it clear that army’soutlook on militant groups has undergone
an important change.
If the war on militancy is our own war,the entire methodology must be reviewed.
Ther e shoul d be a two-pr onged effort to
improve intelligence, and to better react toterrorist attacks. Unfortunately, the militants
are roaming around freely carrying weapons
and explos ives all over the countr y. Thisrequi res deploy ment of peop le in pla in
June 2013SECURITY14
model of securityNot the same old
Economic Affairs | www.economicaffairs.info
15SECURITYJune 2013
cl othes to spot suspici ous cha racters onpubl ic transport and in public places. An
armed guard or two outsi de a mosque orshrine cannot pr event a terrorist attack.
Even more disturbing is the way security
personnel react to attacks. In most cases, theterrorists a re abl e to inflict damage before
escaping. They are able to hit their targets
with impunity. This stat e of affairs ca n becontrolled by better training security staff in
response techniques. The public officials and
legislators should be given training in raisingtheir level of threat awareness and methods
to sav e their l ives when under attack .
It is worth recall ing that Pr esidentRonald Reagan had a narrow escape due to
his presence of mi nd, i n an attempt to ki ll
him in Washington DC. He was hurt but actedintelligently to avoid more bullets. Lying in
hospital bed, he was able to tell hi s wife
Nancy rather pr oudly : ho ney, I duc ked .The secur ity forces and intell igence
services have to figure out better ways to
detect , int ercept and respond to terrorattacks. In short, a new kind o f capacit y
building i s needed to succeed against people
who send their foot soldiers to kill and getki lled, while the ringleaders are di recting
operations from the relative security of theircaves, and sometimes from hideouts in the
urban areas.
It is not clear what impact greater publicawar eness c an have on detec ting the
whereabouts of terrorists and their handlers.
Strict methods may l ead to accusations ofrunning a police state but individual freedoms
may have to face some erosion to ensure the
col lective safety of a ll.Time has com e to cr ack do wn on
madrassahs known for training mili tants.
Many countries resort to counter intelligenceand covert operations. They train agents to
carry out covert operations without letting
non-state a ctors to create training camps.Pakistan must act on lessons learnt the hard
way as there is no room for complacency
after losing forty thousand l ives in terrorattacks on its soil .
Th e wr iter is a former ambassador of
Pakistan to Argentina, Belgium and the EuropeanUnion.
Time has come to crackdown on madrassahs
known for training militants. Many countries
resort to counter inte lligence and covert
operations. They train agents to carry out covert
operations without letting non-state actors to
create training camps. Pakistan must act on
lessons learnt the hard way as there is no room
for complacency after losing 40,000 lives in
terror attacks on its soil
Pakistan can get a massive blow to its
remittances as Kingdom of Saudi Arabia (KSA)
has declared 30,000 Pakistani expatriates
illegal immigrants following new employmentlaw Ni taqat , accordi ng to Saud i media
reports.
It has been learnt that KSA announced
that 30,000 Pakistani immigrants have been
found il legal and they would be depor tedsoon. According to the new l aw, the KSA’s
government declared that any work or job,
different from the one declared on visa would
be considered illegal. Saudi Arabia has termed
the latest move a measure to prov ideemployment to locals.
It is t o be noted t hat approximately
500,000 Pakistanis working in Saudi Arabia
have been faci ng problems due to stri ct
empl oy men t ru les in the co untry.Analyst s suggested to up com in g
government that the Embassy of Pakistan in
Riyadh should contact the Saudi government
immediately to resolve this issue as it could
cause substantial losses to the nationa lexch equer in terms of rem ittances.
It is worth adding that KSA government
earlier announced deferment of imposition
of this law for three months and asked illegal
expatriates to set tle thei r i ssues, b utsu rpr ising ly before the expi ry o f this
deferment they have stated 30,000 Pakistanis
illegal, which is a clear violation of deferment
which was announced by Saudi Arabia’s King
Abdullah last month.
It is yet to be known that whether Saudiauthorities would deport these i llegal
Pakistani expatr iates or imprison them.
Meanwhi le, remittances in 10 months
of the current fiscal year 2012-13 have shown
a growth of 6.37 percent or $692.83 millionwhen compared with $10, 876.99 million
received during the same period of last FY,
accor din g to State Bank of Pa kista n.
S ignificantly, the inflow of remittances
in July-April 2012-13 alone from Saudi Arabiawas $3,371.59 million while i n April 2013,
the inflow of remittances from Saudi Arabia
was $392.28 million. It shows that probable
deportation of 30,000 Pakistani expatriates
from Saudi Arabia could bring the above-mentioned figures down.
Dent in remittancesfeared: Saudi declares
30,000 Pakistani
workers illegal
Economic Affairs | www.economicaffairs.info
June 201316 REPORT
Muhammad Bilal Khan
The economic situation ofthe country is extremely
bad down owing to the mal
governance and bad or nopolicies in the PPPP’s five
years term. The stories of
Bhutto’s glory and BenazirBhutto’s sacri fice couldn’t feed and sat isfy
people. That wasn’t enoug h to answer
unbridled inflation, deteriorating law and ordersi tuat io n, ever- risi ng c rimes , rampant
corruption, increasing unemployment, growing
injustice, l oom ing energy crises and l ots ofother problems emanating from administrative
lapses involving mal governance. The irony of
the matter is, in spite of all this unpleasantness,NAB managed to perfor m well in 2012.
NAB received 7, 565 com p laint s,
completed 392 inquiries, filed 95 references,and r ecovered Rs. 25 Bil lion: Says Bureau’s
Annual Report.
The Nationa l Acco untabi li ty Bureau(NAB) released its annual report 2012 - a
watershed year in the history of the bureau.The report says, on the enforcement s ide of
NAB activities recoveries throug h VoluntaryReturn (VR) and Plea Bargain (PB) amounted
to Rs. 25 Billion. Despite constraints and deficits
in Human Resource quality and quantity, megacorruption cases are being prosecuted as best
as possible.
The NAB worked with Bureaucracy fortheir re-st ruct ur ing , str eng th eni ng of
regulatory mechanism, and for removal of rule
violations to prevent corruption in plannedpr ocu rem ents and pr oj ects. N umerous
committees of bureaucrats were formed in all
major area s of gov ernance to improveperformance on sustainable basis. Rs1.5 trillion
worth of projects and procurements worth
Rs1.5 tri llion were processed to save overRs200 Bi llion, invol ving pl anning and pre-
tendering irregularities.
The bureau processed 7889 complaints,completed 392 inquiries and filed 95 references
in the accountabi lity courts. The influx of
complaints increased during the year as theor ganizat ion received 7,565 com pl aints
reaching a total of 9353 complaints, includingthe backlog of 1788.
The report further reveals that theBureau authorized 232 fresh inquiries in 2012,
raising pendency to 978 including the backlog
of 746 inquiries.“A total of 392 inquiries were finalized
(including closures and conversion into formal
investigation), whereas, 586 inquiries remainedunder com pletion,” sai d the report, adding
th at th e B ur eau aut ho rized 86 ne w
investigations, thus reaching to a total of 379.Out of total investigation cases, 147 have
been finali zed whi le the remaining 232 are
under process, said the annual report that isa statutory requirement.
During 2012, the NAB also recommended
placement of 192 accused on the Exit ControlList (ECL) through the Ministry of Interior. The
burea u also fi led 95 references in th e
Accountability Courts, making a total of 719cases, including 624 cases already pending in
the trial courts.
The year 2012 also saw the start of aninduction and training programme of over 250
Performance portfolio in Pakistan’s
accountability
FEELS LIKE A MILLION DOLLARS
Economic Affairs | www.economicaffairs.info
4REPORTJune 2013 17
new investigators for NAB to be trained by a
mix of local and foreign faculty.
The annual report says that in this yearthe traditional emphasis on Enforcement as
a primary tool gave way to prevention as a
primary tool for accountability; as is the casein most developed countries of t he world.
former Cha irman NAB Admiral Retired
Fasih Bokhari in his comments says that for 65years and t hroug h 59 different legislations
‘Enforcement ’ as the pr imary anti-corruption
tool has not worked. Pak istan’s absolutecorruption index has remained unchanged at
2. 5/10 si nce the st art of Transparenc y
International Cor rupt ion Perception Index.Pakistan’s corruption is therefore, not party,
event, or form of government specific. The
constant corruption index is a clear indicationof major system flaws in Consti tuti onal,
Legislative, Regulatory, and Gover nance
structureThe Prevention framework started in
March 2012 is in compliance with the United
Nations Conventi on against C orruption(UNCAC). It is based on the international ly
recognized nexus between the Bureaucratic,
Political, and Private Sector interests that leadto Grand Corr uption when and i f they join
hands to work in an exploitative framework.
It is the job of agencies like NAB to not allowthis collusion to happen. The separation of
these three interest groups is essential to curb
corrupt practices that can reach the levels of‘mega corruption’. Restructuring of the state’s
governance system and regulatory mechanisms
is the key to redu cti on of corr upt ion.The report says that focus on the Private
Sector is not the best starting point because
this is the sector that is the engine of growth.
It i s the funct ion of businessmen to make
maximum profit. It is the function of the state’s
Regulatory mechanism to control the level ofprofit. In Pakistan we see that the Regulatory
mechanisms are either nonexistent or have
collapsed under pressure from political andbusiness interests.
Focus on the politicians by an agency such
as NAB is unrealistic in the current heavilypol i t ic ized env iron ment o f Pa kist an.
Focus on the Bureaucracy was the best
starting point in the given environment. Theseare the regulators of the state and need to be
given support and independence from political
and financial pressures. T he legislative andRegulatory structures of the State need to be
reviewed to remove discretionary and service
anomalies.The report says that in order to allow
greater autonomy to Regional Bureaus and
ensure speedy process of decision making, theChai rman, NAB, has delegated suffi cient
operational as well as administrative powersto the Director Generals of Regional Bureaus.
The NAB report highlighted the role of
Chairman Admiral (Retired) Fasih Bokhari whoset priorities of prevention as a mechanism to
precede enforcement, emergent and quick
recovery of looted money, mega cases to beaccorded priorit y and interaction through
meetings with stakeholders.
The report further indicates that a seriesof presentations by US Embassy to Senior
Management of NAB and Prosecutors was
organized during February and March 2012.These presentations provided an opportunity to
benefit from the investigation techniques of FBI
and Department of Justice used in the field ofInvestigation and Prosecution in intricate cases.
Dur ing the preceding year, the NAB
International Cooperation W ing (ICW) heldnumber of meetings with foreign delegates to
strengthen international cooperation for anti
corruption as per United Nations ConventionAgainst Corruption (UNCAC) charter and to
arrange foreign trainings for NAB officials to
st rengthen their invest igation ski lls andcapacities. Twenty five meetings were held with
the embassies of USA, UK, UAE, Switzerland,
Canada, Germany, Malaysia, China, Japan,Australia and European Union.
According to the annual report, the year
2013 has been titled ‘Consol idation Year’ soas to consolidate the initiatives and strategy
formulated by Mr. Fasih Bokhari during the
last year, with specific reference to awareness,prevention, training, development and welfare
measures for employees.
The 2012 annual report 2012 covers theachievements, shortfalls, statistics and way
forward to eliminate corruption and corrupt
practices.
NAB worked with Bureaucracy
for their re-structuring,
strengthening of regulatory
mechanism, and for removal of
rule violations to prevent
corruption in planned
procurements and projects.
Numerous committees of
bureaucrats were formed in all
major areas of governance to
improve performance on
sustainable basis. Rs 1.5 trillion
worth of projects and
procurements were processed
to save over Rs200 Billion,
involving planning and pre-
tendering irregularities
The Supreme Court’s decision was nearly
three years in the waiting, but its order was
short and decisive.
A five-judge bench on May 28 declared
National Accountabi lity Bureau Cha irmanAdmiral (retd) FasihBokhari ’s appointment
null and void and directed the government
to swiftly appoint a new chief for the anti-
corruption watchdog.The ben ch – headed by Ju sti ce
Tassaduq Hussain Jilani and com prising
Justice Anwar Zaheer Jamali, Justice Asi f
Saeed Khan Khosa, Justice Amir Hani Muslim
and Justice Muhammad Ather Saeed –announced its decision i n a short order.
The order stated that the criterion for
appointing the NAB chief was not followed
in accordance with Rule 6 (i) of the NationalAccountabi lity Ordinance 1999.
“For the reasons to be recorded later
in the detailed judg ment, we hold and
declare that consultation in the appointmentof c ha irman NAB was no t made in
accordance with Section 6 of the National
Accountability Ordinance 1999 and the law
declared by this court. Consequently, this
consti tuti onal petit ion is allowed, theimpugned appoi ntm ent of B okha ri i s
declared to be without lawful authority and
is set aside with immediate effect. The
federal government is directed to make freshappointment without further loss of time,”
the apex court bench ruled in its short order.
Bokhari is the third chairman of NAB
sent packing through a judicial verdict.
Earlier NawidAhsan was removed as NA Bchief in December 2009 and Justice (retd)
Deedar Hussai n Shah was disqua lified i n
March 2011.
Former leader of the opposition in theNational Assembly Chaudhry Nisar Ali Khan
had petitioned t he apex court on October
22, 2011 seeking a declaration against the
appointment of Bokhari as void ab initi o
(illegal from the beginning), saying i t wasnot made by President Asif Ali Zardari in
consultation with the leader of the house
(prime minister), leader of the opposition
or the chief justice.In his petition, Chaudhry Nisar had not
raised any objection to the eligibi lity of
Bokhari as NAB chairman and only disagreed
with the proposed nomination of PresidentZardari.
DismissedNAB chief sent packing
Economic Affairs | www.economicaffairs. info
June 2013ECONOMY18
Naukhaiz Saleem
Though Pakistan proffers
a hu ge po tent ial for
internationa l investors,many com panies have
lately been pulling their
o perations out of thecountry primarily due to
security and economic concerns. I would like
to look at some of the important economicindicators which foreign (both direct, indirect
and portfoli o) investors pore over before
investing in a country. Ironically, most ofthese indicators give a red signal to those
keen on investing in Pakistan
The most important ratio investor sstudy is the fiscal deficit to GDP ratio. Most
of the emerging economies suffer from huge
fiscal defi cits due to huge governmentspen di ng an d sub sid ies alon g with
weaknesses in tax collection. Though fiscal
defic it is not bad for an econom y, apersistently high fiscal deficit over several
years i s a bad signal for foreign investors.Generally speaking, a persistent fiscal deficit
of less than 2% is considered healthy where
has a fiscal deficit of higher than 4% of GDPover a long period is a sign of caution for
investors. Pakistan has had a persistent fiscal
deficit of around 6.8% of GDP for last fiveyears. This deficit increased to 8.5% of GDP
in 2012 primarily due to circular debt crisis,
public sector enterprises’ mounting losses,hi gher int erest paymen ts and fl ood.
Countries with growth in real GDP are
heavens for foreig n investor s. Economicgrowth in Pakistan had been averaging around
3% during the last 5 years which is deemed
to be slow. Primary reasons behind the slowgrowth have been the energy crisis along with
floods in two consecutive years and security
co ncerns. Moreover, with incr easingpopulation putting stress on the per capi ta
income, Pakistan is having a general social
and political unrest. Though the governmentis targeting GDP growth of 4.3% during FY13,
it looks quite optimistic scenario considering
structural problems like energy cris is l oss,making public sector and fiscal side policies.
Thou gh some ana lyst s con sid erupcoming government of Pakistan to revive
economic acti vity, persistent growth in
economy needs a number of str ucturalreforms. Pakistan has been unable to bring
structural reforms for long and has consistently
shown resistance towards reforms, which isalso indicated by the decline in rank of our
country to 112th position in the most recent
Economic Freedom Index (the index has hada positive correlation with economic growth).
Depreciation of Pakistani rupee, about
45% during last 5 years, has been a big reasonbehind decline in business confidence and
investment in Pak ista n. A t il t towards
consumption and lack of investment has lead
to a stress on external account of Pakistan,which in turn has impacted the domestic
currency. Despite continuous increase in
remittances over years, negative trade balancehas kept its pressure on the current account.
Though the current account deficit of around
2% in 2012 can arguably be consideredmanageable, it can cause problems going
forwa rd if there is no t foreign di rect
investment and government keeps funding itwith debt.
Any country has to borrow domestically
or from foreign sources to fund its persistentfi scal deficit. A country with debt levels of
more than 65% of GDP is considered a matter
of concern. Pakistan’s debt to GDP averagedaround 65% during last 5 years which is a
matter of concern for the economy. Though
debt to GDP of advanced economies averaged106% during 2012, a high debt level of
emerging economies is considered more fatal
than it is for advanced econom ies. It i simportant to mention that external debt to
GDP is only 28% while the remaining is being
financed domestically.Foreign reserves of the government
indicate liquidi ty in the system when they
are compared to the trade flows and shortterm debt. Traditionally, reserves of worth
more than 3 mont hs of imports were
considered adequate. By this rule, Pakistan’sreserves of $US61 million in 2012 adequately
covered 3 months of imports worth US62mn
of im por ts. However, owing to i ncr easingimportant of debt levels, another ratio of
reserves to short term debt provides a good
insight to liquidity position of the country.Short term debt is 3.5% of official reserves
of Pakistan which indicates some liquidity
problems for the country. Naukhaiz Saleem, CFA is a fund manager,
investment analyst and entrepreneur who tweets
at @na ukhaiz a nd b logs at naukhaiz .com/blog
When
Investing
Becomes
Gambling
Economic Affairs | www.economicaffairs.info
19EDUCATIONJune 2013
Khaula Khalid
Great civilization flourished
when its philosophies were
based on acqui siti on ofk n o w l e d g e . T h e
Me so p ot am ian s, th e
Greeks, the Romans, theMuslims and the modern
West attained their heights
through seeking knowledg e and advancingeducation. Qarawiyyin University founded in
859AD was the first institution of higher
learning which eventually led to the foundingof great universities like Al-Azhar (972AD),
O xford ( 1167A D), Cambr idge (1209AD),
Harvard (1636AD) and others. The Muslimcivilization ruled the world for over 1000 years
based on its contributi on to the growth of
kno wled ge and ed uca t io n. Th e basi cinspiration was through the first verse of the
Qur'an "Read in the name of your Lord who
cr eated" and the Prophet Muhammad'scommand that "Acquisition of knowledge is
obligatory for every Muslim male and female".
The colonial period had its toll on thenations of the East in terms of education.
Pa kistan is one of the countri es that has
suffered in this regard and continues to haveits share of problems due to lack of education.
This has led to intolerance, extremism and a
narrow worldview and is becoming the chiefcause for underdevelopment.
After 9/11, the global scenario took a
360 degree turn. The war on terrorism affectedthe global political scene and Pakistan was not
an exception. Being a frontline state, we were
in a tight spot. I believe that it is the lack ofeducation and wakefulness that such acts of
terrorism crop up recurrently here. The HDI
(Human Development Index) value for Pakistan
in 2012 sta nds at 0.515 (i n the low HDI
categor y), which ranked the country at 146out of 187 countries and territories. In Pakistan,
the l iteracy rate is on ly 58% w hi ch
d emon strates that roug hl y ha lf of ou rpopulation is untaught.
Education augments a person’s thinking
and perspectives. A person when educated isau fai t with his rights in addi tion to his
obl igations. Peopl e fal l prey to malicious
groups who brainwash them owing to the lack
of tr ue rel igious erudition. Ki lling innocent
people and shedding their blood is utterly inopposition to the teachings of I slam. Islam is
a religion of peace, love and harmony like all
the other religions of the world. No religiongives its blessings to the followers to commit
such inhumane acts. The last sermon of
pro phet Muhammad (PB UH) in 622ADespecially focused on human rights a nd the
UN charter of human rights, 1945 is derived
from the same principles.The madrassah system hasn’t been held
accountable in the past that led to a certain
way of upbringing and a certain l imited viewof Islam. Their syllabus was never checked;
such is the slackness of our governing elite.Moral development is impor tant and the
previous gover nment hasn’t taken their
educational development into account. Peopleshouldn’t be so deprived of their basic r ights
that they have no other alternative but to
stand up against the state.It is down to the lack of education that
some people blindly follow fanatics who make
them commit such inhumane crime as suicidebom bings. We ought to educate our people
and make them famil iar with the actua l
teachings of I slam. We need to develop ourhuman capital and for developing hum an
capital, first we need moral development and
values. We need to address the core issues inorder to end militancy. Only capturing or killing
militants may not help because militancy is
the name of thinking and you can’t simply killthinking. Through our personal conduct a nd
subsequent actions, we shoul d send this
message to the whole world that Muslims andPakistanis are not terrorists. We, like all other
nations want to see the world as a peaceful
and a better place for our generations to come.
Human z
Education augments a person’sthinking and perspectives. A
person when educated is au faitwith his rights in addition to hisobligations. People fall prey to
malicious groups whobrainwash them owing to the
lack of true religious erudition.Killing innocent people and
shedding their blood is utterlyin opposition to the teachingsof Islam. Islam is a religion ofpeace, love and harmony likeall the other religions of the
world
the only way forward
Economic Affairs | www.economicaffairs.info
June 2013FASHION20
Afrah Jamal
There was a conferenceon counter-terrori sm
underway in Hyderabad
as fashion week waswinding down in Lahore.
One of the presenters, aDutch with a PhD and a
thesis on the effects of fear on social
behavior had indicated resil ience as part ofthe counter-terrorism strategy. ‘We had a
fashion show, does that count?’ I later asked
Dr. Mark Dechesne who was in townrecently. If he was startled, he did not show
it.
Two thing s have been t rending ontwitter since April 2013. Fashion week finds
itself i n the same time slot as politics a nd
as pol iticians perfect their str ut on the
political ramp, the fashionistas have taken
to the red carpet and designer-wear floods
the catwalk. Though fear overshadows botheven ts , p eop le ref us e to let th e
claustrophobic environment dictate their
social calendar.The famed fashion week which started
from Karachi and c oncluded in Lahor e
represents the beautiful bubble that existsin the midst of madness and mayhem and
mirrors the resilient core of a nation. The
existence of this oasis when every sectorhas suffered set-backs from tourism and film
to sp or ts is an enc ou ra gin g s ign .
As designers gathered to put their bestfoot forward, their elegant statements and
edgy vision define their region’s stylish new
trajectory. The industry is young and to gofrom being a mere blip on the local map to
a substantial presence in the international
arena, it needs a well designed roadmap
and a proper platfor m. Pantene’s Br idal
Couture Week (BCW) runs for three days,has six shows and comes twice a year. For a
city like Karachi, a hairs tri gger away from
violence, prolonged outages and shutterdown st rikes, putting together a show of
this magnitude is a major achievement. For
the fashion industry that gets a chance tohonor Pakistan’s contribution to couture
while keeping the dazzling spotlight on the
best and the brightest from its ranks, it is aniconic victory.
This year the B ridal Couture Week
featur ed 18 desi gners and 14 H auteCouturiers. The parade of models floating
by included cricketing legends, film/stage
performers, TV actors and a news a nchor;their presence was hailed by cheers and
gave the show some add ed p izzazz .
More Than A Pretty Footnote
Fashion Week
‘Artists are the gatekeeper of truth. We are civilizations radical voice’. – Paul Robeson
1 http:/ /www.rcci.org.pk/wp-content/ uploads/2012/12/gtopti.pdf
2 http:/ /www.ebuzztoday.com/pantene-bridal-couture-week-2013-pbcw-maliha-sheikh-13015/
3 http:/ /www.brecorder.com/pakistan/business-a-economy/114948-pakistan-10th-largest-market-of-gold-fpcci-chief.html
21FASHIONJune 2013
Sumptuous designs by seasoned players like
Deepak Perwani, HSY, Lajwanti or Nadya Mistrygraced the walkway. For some, like Zaheer
Abbas, this would be a first. For others like
Tabassum Mughal whose majestic creationgot to take not one but two turns down the
runway – the second time because her model
Ayaan Ali snagged ‘best dressed on red carpetaward’, it is a chance to be part of an ensemble
cast of trailblazers out to ta ke on the design
worl d by storm. They included Nadda S.Aadamjee, Imraan Rajput, Mussarat Bushra
and 10 others chosen to feature one piece in
a special segment. The resident social mediateam was required to be on their toes ready
to spin the few designer faux pas into 140characters or less . But there weren’t many
misses. Earlier, a models predicament on the
ramp had been sk illfull y covered up by animpromptu dance routine by her partner Tipu,
giving chiva lry a memorable litt le cameo.
But for a society, dealing with a spiralingeconomy and escalating extremism – where
does such pageantry fit in especially given the
deeply conservative r oots? There are manyreasons for enlisting vanity-fair in the counter-
narrative. Bridals, according to Shanaz Ramzi
– GM Publications & PR at HUM Network Ltd,falls into neither prêt nor couture. The ramps
were not willing to give it a place. More than
three years have passed since BCW introduced
bridal couture to the mainstream. Since thenthere has been a waiting line for designers
a nd o pen ing s fo r make- u p art i st s ,
choreographers and entertainers. The eventis beamed to thirty or so countries. This time
it was available online via the magic of live
streaming. An international clientele awaitsbeyond the gates who can now avail the cyber
services (style360labelestore) to view and/or
order.Pakistan ranks among the top 10 textile
exporters of the world and as sales skyrocket,
the increased visibility ensure that its vibrantfashion scene gets global recognition. These
are promising indicators of growth and a steptowards prosperity – if only in select sectors. A
portion of the show was dedicated to Nadia
Chottani’s jewelry collection out to showcasethe ‘lost splendours of Empress Noor Jehan’s
Haveli’ alongside the debut of Maliha Sheikh’s
designs known for incorporating trace elementsof ‘Sindhi heritage’ with a contemporary twist.
Pakistan reportedly lacks gem cutting/polishing
facilities and is forced to export gems in rawform, losing revenue. On the bright side, the
gem/jewelry export business has spiked to
“16.99 percent and 138.73 percent respectivelyduring first eight months of current financial
year... .” (Asad Naeem – Business Recorder)
Tending to the cultura l roots helps in
building up the Pakistani brand. The infusion ofpatriotic fervor came in the form of the national
anthem that made a sudden appearance from
the second day onwards. It continued whenFuzon – a popular band took the stage driving
the shrieking volunteers wild. That many were
later overheard wondering who they were justcheering for underscores the importance of
promoting local talent above all else lest their
voices get lost in the din of cultural invasion.Also, choreography heavily reliant on Indian
music interferes with the process of crafting a
distinct identity devised under that ‘Made InPakistan’ banner. Bollywood does not need our
patronage. Pakistan does. Ironically Indiandesigners Anjalee and Arjum Kapoor marched
to the beat of X-Men First Class and Pirates of
The Caribbean, though their bright lookingcollection stayed on the fringes of bridal wear.
The month long festivities dedicated to
fashion makes it much more than a charminglittle foot-note in the style directory. The brief
conversation with Dr. Dechesne assigns it as part
of the resilience narrative.
The writer is Columnist for “Daily Times”. She can
be reached at [email protected]
Economic Affairs | www.economicaffairs.info
June 2013OPINION22
Ambassador Javid Husain
Mian Nawaz Sharif, after theconvincing victory of his party
in the general elections, was
right in assigning top priorityto the economy of the country
in his public comments. This
wa s h ard ly su rp r is ingconsidering the mess in which the outgoing PPP-
led government has left the economy. Long hours
of load-shedding and gas shortages a re a dailyreminder of the severe energy crisis from which
the countr y is suffering. The econom y has
virtually stalled with hardly any improvement inthe standard of living of the people. Instead, the
problems of widespread poverty, and high rates
of unemployment and inflation have broken theback of the common man. The social and physical
infrastructure of the country is in a deplorable
state. We are nowhere near the attainment ofth e m i l len ni u m d evel op men t go als.
On top of that, the federal government’s
ability to overcome these serious problems isseverely circumscribed by the high levels of
budgetary and external account deficits. Because
of the high level of nationa l debt, we havereached a stage w here debt servicing claims
almost two-thirds of the net federal revenues.
According to the budgetary estimates for thecurrent financial year (2012-13), the net federal
revenues were expected to be Rs1775
billion whereasthe tot al
d e b t
Economic growth is a function of investment.
Other things remaining the same, the higher the
national investment rate, the higher would be the
growth rate of the economy. For raising our current
low level of national investment rate (13% of GDP)
to 25% of GDP or above, which is necessary for a
respectable GDP growth rate, we should raise our
national saving rate as much as possible so as to
reduce our dependence on loans from international
financial institutions and donor countries for
financing our development programmes. A high
degree of dependence on external loans for
financing our developmental activities can be
extremely risky for the country as it gives foreign
governments and IFIs a handle to control our
national decision making in the fields of national
security, foreign policy and economy
balancing the unbalanced
Security&
Economic Affairs | www.economicaffairs.info
23OPINIONJune 2013
servicing liability was estimated to be Rs. 1140
billi on, that is, about 64% of t he net federal
revenues!In add ition, the tota l al loca tion of
resources to the defence sector worked out
to be Rs793 bi llion including Rs. 545 bi llionallocated explicitl y to defence, Rs . 98 bi llion
provided for military pensions and reportedly
another amount of Rs150 billion provided fordefence elsewhere. Thus, the total budgetary
allocation for debt servicing and defence alone
amounted to Rs1993 billion exceeding by farthe net federal revenues and leaving nothing
for runni ng th e ci vi l admin istr ation or
economic development. The fact that we havebeen using loans at high rates of interest for
financing our current expenditure year after
year is a sure recipe for getting into a debttrap.
It is true that economic progress can take
place only in an environment of peace andsecuri ty, both internal and external, where
the investors and entrepreneurs are preparedto take the risk of investing their resources
with the certainty of getting back an attractive
return. But this condition alone is not sufficientto generate high growth rates that our country
needs for enhancing the welfare of the people
and acquiring a respectable pos ition i n thecomity of nations.
Econo mic gro wth i s a fu ncti on of
investment. Other things remaining the same,the higher the national investment rate, the
hi gher would be the growth rate of the
economy. For raising our current low level ofnational investment rate (13% of GDP) to 25%
of GDP or above, which is necessary for a
respectable GDP growth rate, we should raiseour national saving rate as much as possible
so as to reduce our dependence on loans from
international financial institutions and donor
cou ntries for fi nanci ng our development
programmes. A high degree of dependenceo n ext erna l lo ans fo r fi nan ci ng ou r
developmental act ivities can be extremely
r isk y for th e count ry as it gives foreig ngovernments and IFI’s a handle to control our
national decision making in the fi elds of
national security, foreign policy and economy.Obviously both the government and the
people have a role to pl ay in raising our
national saving rate which was as low as 10.7%of GDP duri ng the last financial year. Just to
put the matter in proper perspective, China’s
national saving rate is estimated to be about50% of GDP which enables it to achieve a high
national investment rate and consequently a
hi gh economic growth rate. Even Indi a’snational saving rate is above 30% of GDP. Thus,
a national programme of austerity is a must
if we wish to achieve a high economic growthrate like a dignified nation and not as a nation
with a begging bowl in its hand. This is wherethe PML (N) leaders in the government at the
centre and in the provinces would have to set
an example of simple life style in their personall ives and avoid wasteful expenditure in their
st yle of governance. O f course, besid es
practicing austerity, the government wouldhave to introduce specific policy measures to
encourage people to save and invest as much
as possible.The fi rst test o f the new federal
government of the country would be in t he
bu dget to be pr esented to the Nationa lAssembly. Obviously the government must
put an end to the present practice in which
the budgetary allocations for debt servicingand defence exceed the net revenues of the
federal government. Some drastic measures
would be required to restore fiscal stabi lity to
the federal government’s finances. For this
purpose, the new government would have totake urgent steps to raise the tax-to-GDP ratio
to over 15% from the current level of about
9% by widening the tax base, el iminating taxexempt ions and improv ing tax col lection
through reform of the FBR.
Simultaneously, the government mustundertake steps to eliminate t he drain of
res ou rc es du e to c or r up t io n a nd
mism anagement of stat e enterpr ises likeWAP DA/PEPCO, railway s, PIA, etc . The
increased resources which become available
through higher collection of tax revenues,elimination of waste and corruption in state
enterp rises, and avoi dance of wasteful
expenditure should be di verted mostly todevelopmental activities rather than increase
in the d efen ce ex penditu re. We must
remember that the more resources we allocatefor defence, the less would be available for
economic development. Over-empha sis on defence at the
expense of economic development would
weaken a country economically and expose itto internal and external dangers in the long
run as happened to the Soviet Union. On the
ot her hand , neglec t of the esse nti alrequirements of nat iona l secur ity would
expose a countr y to serious threats in the
short run. The test of a leadership is to str ikethe right balance between the requirements
of security and development by practicing the
concept of comprehensive security in whichdevelopment and securit y are treated as
integral components of the national security
policy.
ECONOMYTERM OF THE DAYBroadly, social heritage of a group (organized community or society). It is a pattern of responses discovered, developed,
or invented during the group's history of handling problems which arise from interactions among its members, and
between them and their environment. These responses are considered the correct way to perceive, feel, think, andact, and are passed on to the new members through immersion and teaching. Culture determines what is acceptable
or unacceptable, important or unimportant, right or wrong, workable or unworkable. It encompasses all learned
and shared, explicit or tacit, assumptions, beliefs, knowledge, norms, and values, as well as attitudes, behavior, dress,
and language. See also organizational culture.
“Culture”
The writer is a former ambassador to
the Nethe r lands, South Korea and Iran
BriefJune 2013NEWS IN BRIEF24
Kuwait O il Company, a subsidiary of the government
owned Kuwait Petroleum Company, has set a target
o f 4 million barrels per d ay (m bpd) by 2020.The country’s current capacity is approximately
3 bpd with an additional 200,000 bpd produced
from the divided zone with Saudi Arabia currently.The target i s expected to be reached mostly by
development pl ans in Nort h Kuwait with some
d evel opments in th e di vided zone as well . “To achieve the 4 million target , we aim to
produce 3.65 mbpd from Kuwait and 350,000bpd
f rom the di vided zone,” sa id Sami al-Rushaid,c ha irman and managin g di re ct or of KOC .
“Som e of t he increase will come from the
developm ent of heavy oil, we are planning toproduce 60,000 bpd of heavy oil by 2017 and 2018,
but some will also come from the Jurassic light oil
which is coming out with gas, we expect to producearound 400,000 bpd of light oil from the Jurassic by
2020,” he added.
Going beyond i ts 2020 deadli ne, al-Rushaidstated that the company plans to have production
capacit y plateau at 4 mbpd from 2020 to 2030.
“Generally speaking, what we will be seeing from2020 to 2030 wil l be more of what we call the
unconventi ona l, heavy oil and Jurass ic l ight oil.”
Developing the new fields in Kuwait will notbe an easy task. “It is a very complex reservoir, it is
deep, has high pressure, high temperature fractured
and has H2S, it has everything and dealing with thatis one of the main cha llenges. However we are
making very good progress on this so far,” he said.
Kuwait to hit 4
million bpd by 2020
Pakistan to give wheat
to Iran for powerPakistan will export
of 100,000 tonnes ofwheat to Iran to
sett le the dues for
electricity supplied tothe country’s energy-
starved border areas.
The shipmentof 100,000 tonnes was to have been delivered to Iran in mid-February but was delayed
by preparations for Pakistan’s May 11 election. “The wheat is being given to Iran againstthe outstanding payment of $53 m illion for electricity supplied to Pakistani border
areas from the Iranian grid,” ministry spokesman Mohammad Ashraf said. “The interim
cabinet has approved the decision and exports wil l be initiated as early as possible.”The European Union and the United States have imposed toughened sanctions
meant to discourage Tehran’s nuclear programme, which they say has a military purpose.
Iran rejects that claim, saying its programme a ims at the peaceful product ion ofelectrici ty.
Western sanctions do not target food shipments, but financial measures ha ve
frozen Iranian companies out of much of the global banking system, hindering paymentsfor imports, on which Iran relies for much of its food.Electricity from Iran costs Pakistan
around $3 million a month and is supplied to towns near the Iranian border, including
the port city of Gwadar.
The Securities a nd Exchange Commission of Pakistan (SECP) has issued a license toSahara Insurance Compa ny Limited (SICL), a wholly-owned subsidiary of Employees
Old-age Benefi ts Institution (EOBI), al lowing it to conduct non-life insurance business
in the country.It has been after a gap of four years that the SECP has given license to an insurance
company. Last time, it issued license to an insurance firm was in 2009 and that was to
a life insurer.Following the registration of the SICL, the total number of active non-life insurers
has reached 40, while the total number of active insurance companies (life and non-
li fe), incl uding Pak ista n R einsuranc e Com pany Li mited, now sta nds at 50.With continuing emphasis on social insurance, EOBI decided to incorporate SICL
with the primary objective of providing health insurance coverage to EOBI pensioners
aged between 60 and 70. In addition, accidental death and disability coverage wi ll beprovided to Pakistanis working abroad.
SECPIssues a Sahara
Insurance Company Ltd
in
Economic Affairs | www.economicaffairs.info
25NEWS IN BRIEFJune 2013
Borrowing by Govt crosses Rs1 trillionThe borrowing for budgetary support finally crossed the Rs1 trillion-mark, while the government suddenly increased its borrowing from State Bankspeeding fast towards half a trillion rupees.
The State Bank reported that the borrowing for budgetary support rose to Rs1.042tr during ten months and 10 days of the current fiscal. However,this is still less than the borrowing of Rs1.076tr made last year during the same period.
The expected fiscal gap of about 4 per cent of GDP in the budget could not be controlled to its limit which might be around 8pc at the end of the
cur rent fi sc al. This large fiscal gap demands large size of borrowings l ike prev ious year when the fiscal gap was ov er 8pc.The size of the budgetary borrowing is almost same with fractional difference. The borrowing from State Bank rose to Rs454bn; it was Rs424bn
during the same period last year.The growth rate of monetary expansion for this period was 9.86pc while the growth rate was 9.06pc last year.The government has so far borrowed Rs631bn from commercial banks; the amount was Rs624bn last year. The biggest difference was noted in
the credit off take by the private sector which shrunk to record low this year in the 10 months. The private sector credit off take during this period wasjust Rs92bn compared to Rs235bn last year. Even the last year was not significant for economic growth and participation of private sector. The poor
amount o f credi t of f take by the pr ivate sec tor reflects th at the econ omic growth could be even lower th an last yea r.The current fiscal could prove the worst year for the economic growth in the last five years. While the high hopes are attached with the new incoming
government, it would not reflect in the current fiscal that is to be ended on June 30.
Iran has offered insurance for
Indi an refiners to boost its
crude sales. US and European
Unio n sanc tions aimed at
choking the flow of oil money
into Iran and forcing Tehran to
n eg ot iate c u rb in g i t s
c o n tro ve rs ia l n uc lea r
programme slashed i ts crude
exports in half in 2012, costing
it as much as $5 billion a month.
The sanctions have forced refiners in India, Iran’s second-largest
oil buyer, to reduce imports because Indian insurers have sai d they
can no longer cover refineries that process Iranian crude. “They (Iran)
said they can provide insurance for our refineries,” said one of the
sources, after a meeting between Indian O il Minister Veerappa Moily
with his Iranian counterpart Rostam Qasemi.
“We had a fruitful meeting...Our meetings are about the energy
sector,” Qasemi told reporters, without elaborating. Qasemi is on a
three-day visit to India from Sunday to woo New Delhi for stepping
up oil imports and invest in the Opec-member’s oil and gas sector.
Two refiners — Hindustan Petroleum Corp, and Mangalore Refinery
and Petrochemicals Ltd — halted Iranian oil purchases in April due to
insurance problems.
India cut imports of Iranian oil by 26.5 per cent in the fiscal year
which ended March 31, and had reduced shipments by 56.5pc in April,
according to data from trade sources.
Iran also offered to ship gas to India in liquefied form via Oman,
they said. Iran does not have the technology to l iquefy gas so they
have asked India to use Oman for liquefying the gas for further supplies
to New Delhi, said a second source.
“Both of us expressed our desire to continue with business with
each other. We need to nurture business with them...there are problems
which will be sorted out,” said Moily after the meeting. India has asked
Iran to participate in tenders seeking oil supplies for its strategic storage
being buil t at two places with a combined capacity of 18.55 million
barrels by 2014.—Reuters
Iran offers insurance to
Indian refiners
PIA to induct 12 narrow body
aircraft in its fleetPakistan Inter-national Airline (PIA) is in an urgent need to inductnew aircraft in its fleet to meet demand and capacity; this was
di sclosed at the 56th Ann ual General Meet in g of PI A.Managing Director PIA Junaid Yunus said the Airline was in
the process to acquire 12 narrow body fuel efficient aircraft in itsfleet which would enable the Airline to offer better services to its
customers and would have savings with regard to fuel costs andmaintenance costs, as presently the Airline fuel cost was around
60 percent as compared to the industry average of 35 percent.Hussain Lawai senior m ember PIA Board of Di rectors sai d
good news was very soon in first phase PIA would be getting fournewer narrow body aircraft on lease from its own resources and
no further loans would be obtained. He said a complaint cell wouldbe esta bl ished with act ive participa tion of sharehol ders.
PIA shareholders appreciated present management's role inmaintaining the airline operations with a fleet constraint and other
factors affecting the airline especially inconsistency and frequentchange of management.
France has drawn up a blacklist of 17 countries in cluding Switzerland
that do not help investigate foreign aid fraud, banning the use of theirbanks to help distribute development funds .
Aides to development minister Pascal Canfin were unable to say
how much French foreign aid currently transits via banks in the countriesfeatured on the n ew b lacklist.The blacklist expands on an already-established register of eight “non-cooperative states and territories” that
already includes Botswana, Brunei, Nauru, Guatemala and the Philippines.It adds Switzerland, Lebanon, Panama, Costa Rica, the United Arab
Emirates, Dominica, Liberia, Trinidad and Tobago, and Vanuatu.The officials
justified the move by s aying there was a lack of transp are ncy in thenations on the list, adding that poor and developing countries were often
the main victims of fraud. “The aim is primarily preventative, to putpressure o n these countries by public ising this list to progress towardsmore transparency,” they said.
France blacklists 17 co untries for handling foreign aid
Economic Affairs | www.economicaffairs.info
June 2013NEWS IN BRIEF26
Amb ass ado r of Rep ub l ic o f
Indo nesia to Pa kista n, Bur hanM uhammad has sa id that hi s
priorities were to enhance economic
cooperation between Indonesia andPakistan and to connect the business
c ommunit ies of two count ries,which woul d further st rengthen
mut ual link ages b etween two
Muslim countr ies.He highlighted that during his
v isi t to Isl ama bad Cha mber of
Comm erce and Industry (ICCI). Hesa id that the Indonesia-Paki stan
Preferential Trade Agreement (PTA)
was a landmark development in thebi lateral hi story of two countries
which will not only raise bilateral
trade volume but also open doorsf or Pa kista ni busi nessmen to
penetrate i n the emerging Asean
market.The Ambassador apprised that
there was some delay in the
enforcement of PTA as notificationhas not been issued yet. He sa id
that in this connection he wil l also
v isit J akarta to meet IndonesianTrade Minister. He st ated that
besides economic and commercial
c oo pe rat ion , Ind on esi a alsointended to invest in power projects
as wel l as Pakistan can get benefi t
of Indonesia n expertise in coa lsector for producing electricity. He
said that Pakistan and Indonesia are
also negotiating to start a project ofC oal Power Pl an in Karachi for
generating electr ic ity by using
domestic coal while the rest willcome from Indonesia.
He sai d that Indonesia and
Pa kistan have had a remarkablehistory of brotherly relationship and
two countries have enjoyed sound
and steady commercial interactionsince last several decades. He said
that President of Indonesia, Susilo
Bambang sent him to Pakistan forimproving the trade and economic
l inks between the two countries.
Indonesia ready to investin power projects
'Pakistan can attract
$5b in foreign
investment'
KARACHI: The Overseas Investors Chamber of
Com merce and Industry (OICCI) expects that thenew government can prov ide right environm ent
and support to Pakistan's economy and the country
can attract as much as $5 to $6 bi llion in foreigndirect investment annually.
The chamber is optimistic that the incoming
government will set a clear and focused directionto address key issues of governance, security, energy
and inconsistent policy implementation, which in
the recent past has severely affected inflow offoreign d irect in vestmen t in the co untry.
In a statement the OICCI President Kimihide
Ando sai d that as the country moves towards asmooth t ransi tion of power at the Centre and in
provi nces, Ando sai d the ongoing democrat ic
proc ess is creating a posi tive internationalpercept ion, which i s partially reflected in the
increasi ng forei gn portfolio investment in the
country's stock market.This window of opportunity can be used to
ch annel lo ng er term FD I to bolst er the
manufactur in g and infrastr ucture sec tor forsustained business a ctivities, which will cause an
increase in employment and economic growth, he
suggested.Seeing the country's potential, he expressed
confidence th at a few bold economic policy
initiatives by the new government can dramaticallychange the economic situation.
The Competition Commission of Pakistan (CCP) fined two dominant urea manufacturers around
Rs 8.6 bi llion on unreasonable price increase and the matter was currently subjudice. The CCP said
this case was instructive in the industry offered huge subsidy of around Rs 23.75 billion in only oneyear.
The companies maintain they transferred this subsidy by keeping their prices lower than the
international price. Import, thus cannot give domestic manufacturers any competition and in anycase urea is imported only to meet the shortfall and since government has to absorb its cost to make
urea available at an affordable price to farmers, there is a little incentive left to import, Ms Rahat
chairperson of CCP said. Whatever the peculiar reasons may be, it is clear the subsidy offered hasonly skewed the market and has not reached the intended beneficiary.
It has impacted not only the price but even made the availability of the product scarce, she
said. The domestic industry has the installed capacity to meet the local demand, which is constrainedby supply of gas. Parties hiked the pr ice upto 86 percent in a year, whereas gas curtailment, which
was the major ground taken behind such price increase impacted only 27 percent of production ofthe entire industry, there was also not much change in input costs. The 2 dominant companies
together availed Rs 15 billion of subsidy in one year (still higher than the penalty imposed). One of
the companies doubled its net profit from Rs 11 billion to Rs 22.5 billion. The Commission imposedthe maximum penalty i.e 10 percent of the turnover taking into account significance of urea for an
agri-based economy.
CCP fines dominant urea manufacturers around Rs 8.6bn
Foreign exchange
reserves rise to $11.62bnPakistan’s foreign exchange reserves rose
to $11.62 billion in the week ending May
24 from $11.43 billion the previous week,the central bank announced on May 30.
The r eserves held by the State Bank of
Pak ista n stood at $6. 56bil lion, afterincreasing 2.83 percent from $6.38 billion
in the pr evious week, wherea s th e
reserves held by commercial banks surgedby 0.17 percent to $5.059 bi ll ion as
com pared with $5.05 bil lion in th e
pr ev io us week. Remittances f ro mPakistanis abroad rose 6.37 percent to
$11.57 bill ion in the first 10 months of
the FY-2012-13, from $10.87 bi llion in thesame period last year. The fiscal year runs
from July to June.
SCB unveils digital banking
vision in PakistanStandard Chartered Bank announced its
digital banking vision aimed at enhancing
the cu stomer bank ing experience in
Pakistan. This is part of the Bank’s global
focus on ‘Digitisation’-socialising personal
banking and extending customers’ digital
li festy le into bank ing. Bank launc hed
‘Breeze’, its award-winning Mobile Banking
application, making Pakistan the second
market in the MEPA region where thisappli cation i s available. Breeze Mobil e
banking is designed to address the needs
of globally connected customers who are
on-the-go, tech-savv y and who value
transaction freedom and conveni ence.
Economic Affairs | www.economicaffairs.info
27June 2013
Economic Affairs | www.economicaffairs.info
InterviewMaria Khalid
The energy sector projects
are o ur top pr ior i tybecause the entire country
is facing a serious cr isis
of energy followedby m o u nt i n g
circular debt that
has brought theindustrial development into a stand
still. The bank is a lso planning to
extend its financing to the energysector. The financing of energy-
related project is on the top priority
of NBP. So far, some 10 wind energyprojects have been initiated in the
country, of which seven have been
financed by the NBP. Of theseseven, five have a lready
c o m m e n c e d
operat io ns an dtwo mo re are
ex p ec ted to
becom e
operational shortly. On the whole, as much asfinancing facility worth Rs 125 billion had been
extended to the energy sector.
What is your strategy to strengthen the
core banking application of NBP?
The National Bank had successful ly
implemented core banking application in its
main branch to provi de 'superb' customerservices, besides ensuring efficiency across
the bank ing functions. This core banki ng
application aimed to strengthen NBP’s internalbanki ng system. After the successful launch
of the main branch, the bank i s planning to
introduce core banking application in al l itsbranches. According to the plan, core banking
appl ication will be implemented in 250
branches over the next four months. We havealready com pleted a pilot project of online
system and at present, with 1, 300 online
branches, the bank has become the country'slargest bank with 100 percent online branch
network.
How do you see the demand of business
community for a cut in SBP policy rate?
2012 was a difficult year for commercialbanks because of persistent reducti on in
discount rates that significant ly impacted
the net interest income of all banks. Anyfurther reduction in policy rate will bind
to have negative impact on inflation andas wel l as n et inc om e of b ank s.
Under a decli ning int erest rate
scenar io, the bank was redefining its
June 2013INTERVIEW28
Dr. Brohi has rich experience in all
disciplines of contemporary banking. His
dynamism and professional deep insightis a great source to promote the bank’s
business a nd to maintain and improveits present position among the domestic
industry.
He joined the bank in 1984 a ndheld numerous Senior Management
positions at the Regional and Head Office
leve l. Dr. Broh i, pr io r to becom ingPresident of the NBP, was serving as
Chief Operating Officer and Head of
Commercial & Retail Banking Group ofNBP, and ca rries rich experience in all
spheres of banking spanning over almost
three decades. In the past, he has beenthe head of Bank’s Operations Group,
Strategic Planning Group, Information
Techn olog y Gro up, Cu ltur e Chan geP ro gramme Gr ou p an d Traini ng .
Pr io r to joi ni ng NB P, he was
Assistant Professor of Management,taught in various Universiti es in the
United S tates of America. He holds a
Bachelor ’s Degree in Law, a Master’sDegree in Literature from the
Univ ers ity of Sind h, a
Master’s Degree inB u s i n e s s
Adm ini st rat io n
from USA and aD oc to rate in
P u b l i c
Administrationfr om Karach i
Universi ty.
Portfolio
President and CEO of National Bank of
Pakistan Dr. Asif A Brohi
performing
despite challenges
NBP
Economic Affairs | www.economicaffairs.info
29INTERVIEWJune 2013
business model and at present, while most
comm ercial banks are investing heavil y ingovernment securities, the NBP has effectively
kept its fresh investment in government
securities at a minimum level and is trying tofulfill the demand of the private sector.The
bank is planning to offset the impact of low
interest rate by expanding (its investment) inhigh-yield and low-risk product s, low-cost
deposit mobilization branch expansion and a
reduction in non-performing loans (NPL) andyou wil l witness posi tive resul ts from this
quarter onwards.
Has NBP introduced any products to
facilitate the masses in general?
Advance sal ary, consumer gold andagriculture loan are three main products of
the NBP to facilitate masses, particularly people
in rural areas, who have previously beendeprived of banki ng facilit ies. A sig ni ficant
growth has been witnessed in agriculture and
consumer loans over the past few years andat present, the NBP has the largest market
share in terms of agr iculture and consumer
loans among domestic commercial banks.Consumer loans, let me share, especially
against gold, have grown by 51 percent
whereas the growth in agricultural loans was
30 percent during 2012. Total agriculture andconsumer loans stood at Rs 131 billion at the
end of December last year.
What are the NBP’s preferred areas for
investment?
Whil e m any local banks preferred to
invest in government securi ties , the NBP
witnessed a significant growth in advancesloca lly as well as internationally. With an
increase of 25 percent, total advances grew
to Rs 657 billion by the end of December lastyear from Rs 525 billion in December 2011.
NBP achieved a massive growth in lending to
farmers: the bank achieved its target for thisfiscal year by di sbursing Rs 52 bil lion on
account of a gricultural credit disbursement
during July-Apri l of FY13. "The (bank's) overallinvestment had surged to Rs 343.5 billion at
the end of December last year, up from Rs
319.5 billion at the end of December 2011.”
Do you have any plan to further expand
the NBP’s branch network?
Yes, we are planning to set up 55 new
branches across the country, i ncluding 40
convent iona l and 15 of I slamic banking. Weare focusing on rural areas--we have decided
to open more branches in less developed areas,
instead of urban areas, out of 40 branches, asmany as 30-32 branches would be established
in r ural areas.We will also gradually expand
the bank' s foreign operatio ns. The NBPcurrently has 29 overseas branches and the
Bank is planning to set up a branch in Sri Lanka
to facilitate trade and industry. Talks with thecentral bank of Sri Lanka are in final stages.
The NBP will a lso set up a branch in Russia
very soon. You may know that the NBP is alsosuccessful ly operatin g fou r br anc hes in
Afghanistan and six in Central Asian Republics.
Every other bank is introducing Islamicbanking products. Is NBP making any strategy
to make achi evements in this fl ourishing
sector?Like all other commercial banks, the NBP
is also revital izi ng its Isl amic bank ingoperations. With the opening up of 15 new
designated Islamic banking branches this year,
the total number of such branches would riseto twenty three. Recently, Mr. Zubair Haider
has joined NBP as the head of Islamic banking
and I hope that he would provide new impetusto NBP's Islamic banking services.
What role is the NBP playing to facilitate
home remittances?
NBP is the leader in home remittances
business and this is also an area of top priority.
The NBP has agg ressiv ely exten ded itsremittance correspondence base across the
globe with the aim of facilitating overseas
Pakistanis. Cumulatively, the NBP has struckagreements with 30 leading overseas remitting
partners. Striking a major strategic move, the
NBP created a separate independent groupna med G lo ba l H om e R em it tan ce s
Management Group in 2009 to focus on inward
home remittances business.
The NBP currently has 29
overseas branches and the Bank
is planning to set up a branch in
Sri Lanka to facilitate trade and
industry. Talks with the central
ba nk of Sr i Lanka are in final
stages. The NBP will also set up
a branch in Russia very soon. You
may know that the NBP is also
su ccessfu ll y o per ating fou r
branches in Afghanistan and six
in Cen tral Asian Rep ubl ics.
E ver y ot her b ank is
introduci ng Islami c ba nking
products. Is NBP making any
strategy to make achievements in
this flourishing sector?
Like all other commercial
banks, the NBP is also revitalizing
its Islamic banking operations.
With the opening up of 15 new
d esignated Islamic b anking
b ranches thi s ye ar, the total
number of such branches would
rise to twenty three.
Economic Affairs | www.economicaffairs.info
June 2013WORLD30
Armed to the teeth“A well regulated militia, being necessary to the
security of a free state, the right of the people
to keep and bear arms, shall not be infringed.”–The Second Amendment to the US Constitution
Economic Affairs | www.economicaffairs.info
4WORLDJune 2013 31
Sabria Balland Chowdhury
The Second Amendment
to the US Constitution isthe backbone of the entire
gun control or rather, the
lack of gun control debatewhich has part icu larly
been an i ssue in the
spotlight in recent times even more so thanbefore. The December 2012 mass shootings
of 20 children and 6 adults in an elementary
school in Connecticut by a crazed shooterwas supposed to be the “tipping point ” in
the gun control debate but very sadly, even
this most horri fic and tragic of incidents hasnot been the cause of any successful gun
control legislations in the US as ha s been
seen in the past in Great Britain and Australia.One of the main reasons for this is
si mpl y the in terp ret at io n o r rath er
misinterpretation of the famous SecondAmendment to the US Constitution. Although
written in 1791, when it was believed that
arming the ci tizenry against a tyrannica lgovernment was necessary, it is st ill used
today in rhetoric and unfortunately in practice
as the right to carry arms for the protectionof individuals and their families. There is also
some romanticism and nostalgia in this love
of bearing arms which dates back to the daysof the pioneers and the opening of the West
in order to defend themselves against Native
Amer ican s, bandits and wild ani mal s.Ho weve r, th is rom ant ic i sm and
nosta lgia which is well-eng rained in the
American mindset and cult ure is kept wellalive and notoriously politically strong by the
National Rifle association (NRA), which has
strong interest groups among Congressmenand protects the arm’s industry’s interests
comm erci ally. It is the lethal mixture of acult ure w hich feels the constant need to
protect itself against enemies and the highly
potent lobbying of the NRA which has made
the US the most armed country in the world.
Today, i t i s es timated th at the lawenforcement agencies and th e mil itary
possess four million weapons while American
ci vi lians possess 310 mil lion assor tedweapons, including assault weapons which
are found in the batt lefields of Iraq and
Afghanistan. To add to these shocking facts,approximately 50% of all gun sales involve
pri vate se ller s and do no t requi re any
background check.This leads to the nightmares that have
resul ted in the high school shoot ings in
Col om bin e in C olor ado, V i rgin ia TechUniv ers ity in Virginia , the Sikh Temple
shootings in Wisconsin and the elementary
school shootings in Sandy Hook, Connecticut,just to name a few incidents. More young
people each year are killed and m aimed by
gunfi re in the United States than all UScasualties in Iraq and Afghanistan pu t
together and gun homicides is one of the
biggest causes of death among t he youth.There are 30,000 g un r elated deaths in the
United States every year.
The statistics and life stories are chilling.Recently, a two year old girl was accidentally
shot and killed by her five year old brother…
by his own personal gun. In April in Tennessee,a four year old boy shot and killed a 48 year
old woman. A few days later, a six year old
boy was accidentally shot by another fouryear old. Parental responsibility is no doubt
an issue in cases such as these but a great
deal has to do with the gun culture in Americaand the interests of the NRA which seeks to
arm its members with guns in order to protect
cit izens from what it cal ls go vernmenttyranny. There are no doubts th at this
intense ly strong lobbying by the NRA has
imbedded itself into the American culturewell enough to actually have people believe
that they must arm themselves to the teeth
i n o rde r to p rot e c t th e ms elve s
from….themselves.The horr ifi c resul ts are that the
continual spiral of deaths caused by homicides
and accidents due to guns increases, with nohopes of any legislations being passed by the
C ongress which controls the sell ing and
purchasing of guns in any way. The startlingresponse of the Conservatives and the NRA
after the Sandy Hook shootings was far from
one which advocates gun controls. Rather,the argument suppor ted more guns in
schools, even arming teachers in order to
defend t heir students against any attacks.Under such circum stances, how can any
intelligent and sound decisions be made in
constructing a safe society?President Roosevelt had said, “The only
thing we have to fear i s fear itsel f”. This
statement could not be more appropriate forthe gun cult ure which has fri ghtening ly
materialized in the United States. Between
misinterpreting the Second Amendment andlosing complete perspective of its place in a
set period in history, the aggressive lobbying
of the NRA and citizens’ fear of not beingable to protect themselves against violence
(yet in the process causing it also), the vicious
cy cle of the lack of gun control continuesfiercely and more and more innocent lives
are lost.
Economic Affairs | www.economicaffairs.info
June 2013EDUCATION32
Mehnaz Aziz
Cur rent de mo grap hi cs
changes in Pak istan posean interesting scenario of
tough challenges coupled
w i th e n c o u r a g i n gopportuniti es. Pakistan is
experiencing rapid growth
in population with slow decline in fertility andmortality rates. A lot is written on the effect
of demographic changes on economic growth.
Declining fertility and mortality rates due toimproved health care and awareness, a
process known as ‘demographic transition’,
leads to a bulg ing population of youth readyto work and save. This demographic transition
i f channelled to product ive avenues through
relevant policy interventions will lead to rapideconomic growth - an outcome known as
“demographic dividend”. Sathar, Royan and
Bongaarts in their latest book “Capturing theDemographic Dividend in Pakistan” published
by Population Council, 2013 has addressed
key areas to focus, in order to capture thisvaluable demographic divi dend. Key areas
identif ied were educat ion coverage and
reproducti ve healt h awareness. Call it acha llenge or opportunity ; policy makers can
harness the power of Pakistan’s increasing
cohort of population in their prime years tof uel ec ono mic gro wth . Ot herwise , i f
uncontrolled, this rising population tide will
c ause agitation, unrest, v io len ce and
political/civil conflict.
Important policy questions here a re;How to control the unsustainable growth of
population through voluntary measures? How
to secure the demo graphi c div idend bybuilding capacity and increase productivity of
this new young populat ion? Are the present
infrastructure, industry and economy capableof absorbing this increasing tide of working
population? The a nswer to all these policy
questions is linked directly or indirectly to theprovision of quality education. Internationally
the strong connection between education and
population wellbeing is recognized and welldocumented at all stages of development. The
next few decades are crucial for Pakistan as
the majority of population will be of working
Economic Affairs | www.economicaffairs.info
theCapturing
The positive effects of education
are not limited to lowering fertility
rates. Universal access to education
is the key ingredient for Pakistan
to transform demographic
transition into demographic
dividend. The population of
Pakistan is growing at a soaring
rate of 1.8 and is projected to
reach close to an astounding
300 million by 2050
demographic dividend
through education
33EDUCATIONJune 2013
age and hence we need to start planning
for i ts wellbeing no w. Investm ent in
education is the need of the time and ourfocus area should be pri mary educat ion
with particular attention to gir ls’ education.
The most direct impact of education(particularly girls’ education) is on lowering
fertility rates. Educated women are found
to have low fertil ity rates. In the case ofPa kistan increased investm ent in girls’
education and wider outr each of family
pl anning awareness will direct ly lowerfert ili ty rates. As per the most recent
Demographic and Health survey of Pakistan
the fertility rate of educated women is 2.3but for uneducated women it is a striking
4.8. Also the median age of marriage for
educated women is 6 years older than foruneducated women.
The positive effects of education are
not l imited to lowering fertil ity rates.Universal access to educa tion is the key
ing redient fo r Pakista n to transfo rmdemographic transit ion into demographic
div idend. The population of Pa kistan is
growing at a soaring rate of 1.8 and isprojected to reach close to an astounding
300 million by 2050. A major proportion
(49%) of this 300 mill ion will consist ofyoung people (24 - 64). This working age
population cohort wil l be a catalyst for
future growth, if educated and providedthe employment opportunities to serve the
country.
In 2050, close to 59% of this bulgingworking age population will be women.
Considering the present female literacy rate
of only 38%, in working age population (20-64), a large portion of the working age
pop ulation (62%) is a burden on the
economy. This trend will continue to 2050,
where the pro port ion o f uneducated
females in work ing age population are
nearly double than males. Realizing thecurrent sad state of education provision for
females and to ensure the productive and
active involvement of this large portion offuture population, there is an urgent need
to invest heavily and on pr iority basis in
girls’ education.The futur e of Pak ista n is heavily
dependent on the provision of equitable
education to all and i s in line with themandate of article 25 A. The need of time
is investment in primary education and to
achieve provision of education for everyoneas a basi c human r ight. The c hang ing
demographic of Pakistan is a double edged
sword. If not used in a productive and rightway to spur future economic growth, it will
hu rt Pak ista n soc ially, p oli tical ly and
economically in the future. To harvest thef ru i ts of lo ng term human capi tal
develo pment, we should act now anddevelop a nationwide education strategy.
Post eight een amend ments we see a
disparity in quality and provision in all fourprovinces - A National Counci l to ensure
st andard s an d in co ord in atio n with
implementation in Provinces. Also a districtbased accountability mechanism is the need
of the day. The ball is in the court of the
new government post May 2013 electionsto ensure that the prom ises made in
manifestoes see the light of the day. Any
e du cat io n po l icy to c ap tur e th edemographic dividend has to be inclusive
of all four provinces.
Th e author is the found ing direc tor ofChildren’s Global Network and is the member ofth e G lob a l Age nda Counci l for Paki sta n-
Economic Affairs | www.economicaffairs.info
TERM
OF THE DAY
“Resolution”
1. Formal authorization or
expression of an action,decision, intention, opinion,
transaction, etc.
2. Proposition put before ame eting of stockholders
( shareholders ) or thedirectors of a firm for
discussion, approval or
adoption. Resolutions are offour common types: (1 )
Elective ( see electiver e s o l u t i o n ) , ( 2 )
E x t r a o r d i n a r y ( se eextraordinary resolution),
(3) Ordinary (see ordinary
resolution), and (4) Special
(s ee special resolution).
3. Appropriate disposition
of a complaint or protestthrou gh prescribed or
stan dard pro ced ures .
4. Sharpness or clarity of amonitor, printer, or scanner
image , expressed in anappropriate unit: pixels per
inch (PPI) for monitors, dots
per inch (DPI) for printers,and samples per inch (SPI)
f o r sc an n e r s . F o rphotographic.
ECONOMY
June 2013REPORT34
Reuters
Pa kist an 's all -powerful mi li taryoverthrew Nawaz Sharif 14 years ago and
hustled him off into exile in handcuffs. Now
he's back as prime minister-elect, with thearmy watching his every move, especially
steps planned to ease tension with arch-
rival India.Sharif's Pak istan Musli m League-
Nawaz (PML-N) won 124 of 272 contested
seats in this month's parliamentary election.Its nearest rival, the Pakistan People's Party
(PPP), won just 31 in the first democratic
handover of power since independence in1947.
But Sharif is inheriting an almost-
broke nat ion that has been ruled by themilitary for more than half the 66 years
sin ce then. It i s wracked by a Tali ban
insurgency, sectarian violence, daily powercuts and spi raling unemployment among
its 180 million people.
“Pakistan has so many problems thath e n eeds th e h elp an d supp or t of
everybody, including the army,” said Shazad
Cha udhr y, a former air vice marsha l.The question is: will the army give
Sharif the freedom to do w hat he wants?
The top source of potential friction is hisaim to boost trade and t ies with India.
Sharif's policies towards India will be
heavily scrutinised, but there are signs themilitary may be slightly more amenable to
overtures than in the past.
In 1999, the army torpedoed Sharif'sattempts to improve relations by secretly
sending soldiers disguised as mi litants to
capture Indian outposts in the heights ofKargil, in the north of Indian-administered
Kashmi r. When Sharif tried to fire Pervez
Musharraf, his then-chi ef of army staff,Mu sharraf took p ower in a co up.
Sharif has promised an inquiry into
the Kargil invasion. Most officers be lievethat is a poli tical move aimed mostly at
containing Musharraf, who is now under
house arrest i n the capital, rather than aplan to punish senior officers.
Sharif was at pains to absolve the
military of blame for his overthrow at arecent news conference. “I never had any
trouble with the army. The coup was staged
PAK ARMYwatching
The army wanted to
know if Sharif could
unite Pakistan's four
provinces, each most
likely headed by a
different party, to rein inmilitancy, said Major
General Mahmud
Durrani, national
security adviser under
the previous government
Sharif’s cosying up to India
Economic Affairs | www.economicaffairs.info
35REPORTJune 2013
by one single person,” he said. “The rest ofthe army was not taken into confidence.
We have to work together.”
Officers say they are watching threethi ng s c lo se ly: th e fo rmat io n o f a
commission to investigate the 1999 invasion;
who replaces the army chief in Novemberwhen his term expires; and how Sharif plans
to tackle mil itants, especially the Pakistan
Taliban. The a rmy distinguishes between“good” Taliban - who do not attack Pakistani
security forces and fig ht i n Afghanistan -and “bad” Taliban, who have killed tens of
tho usands of soldiers and civ il ians in
Pakistan.Sharif favours talks with the Pakistani
Taliban. Many in the military believe this
co uld h elp address some ind iv id ua lgriev anc es but they do not want any
compromise on things l ike changing the
Pakistani constitution.The army wanted to know if Sharif
could unite Pakistan's four provinces, each
most likely headed by a di fferent party, torei n in mi li tancy, said Major General
Mahmud Durrani, national security adviser
u nd er th e pr ev io u s go vern men t .No sl ink ing b ack to barrac ks
Pakistani mili tants have, alleged ly,
previously enjoyed the backing of the army.That has changed, officers insist, although
elem ents with in the mili tary are st il l
sometimes accused of supporting militantgroups.
India blamed elements of the Pakistani
security forces for supporting gunmen whoattacked the Indian city of Mumbai in 2008,
somethi ng Pa kist an str ongly denied .
Durrani sa id attitudes to India were
slowly changing, meaning that top officers
are unlikely to stand in the way of Sharif'soutreach this time. “For Pakistan to move
ahead, it needs peace with India,” he said.
“But the military will not just s link back to(the) barracks. It still has a lot of input on
foreign policy and needs to be weaned off
that gradually.”The current army chief, Ashfaq Kayani,
obliquely refers to India as an “external
threat” in speeches but also now mentionsthe “ internal thr eat ” of mili tancy - a
significant change in rhetoric. “The army is
now enlightened enough to understand thesignificance of peace with India,” one high-
ranking officer said. “Everybody wants the
Kashmir issue to be resolved.”But any changes would need to be
slow and be matched with concessions from
India, cautioned Durrani and Chaudhry, thefor mer air vice marsha l. “It's a fallacy to
imagine that foreign policy can be changed
overnight,” Chaudhry said. “Can you wishaway the problems with India? Can you wish
away the problem of Kashmir?”
Sharif may also benefit from divisionsbetween generals over the contr oversial
extension of the term of the chief of army
staff, said analyst Ayesha Siddiqua, who haswritten extensively about the Pa kistani
military. Kayani has served two three-year
terms, sowing dissent among some of thosewho had been in line to move up the ranks,
she said.
Kayani's term is up in November, andSharif will at least nominally have to approve
his replacement. He had signalled he would
accept the mil itary's recommendation, shesaid.
"I t seems like he's learned from his
past mistakes," she said. "He might use theKargil commission (of inquiry) as a political
tool to get some space to negotiate with
India ."Sharif had three hours of tal ks with
Kayani on Saturday. "The army chief and
Nawaz Sharif expressed their determinationto fight terrorism," an English-language daily
quoted a PML-N official as saying. "Mr Sharif
also praised the army's role in strengtheningdemocracy and providing securit y during
the election."
The past five years had shown thatwhi le the military rem ained the mo st
powerful force behind the scenes, i t no
longer wanted to take direct power, sai dretired Lieutenant General Talat Masood.
Musharraf, the last military dictator,
was in detention. Generals had been hauledu p before Pak ista n's feisty courts and
accused of vote-rigging, cor ruption and
extrajudicial killings." The army d oes n ot have the
monopoly on power it once did," Masood
s aid. "The p erf ormanc e of the lastgovernment was pathetic, but the army
d id n' t st ep in - the jud ic iary di d. "
The past five years had shown that while the military
remained the most powerful force behind the scenes, it
no longer wanted to take direct power, said retired
Lieutenant General Talat Masood
Economic Affairs | www.economicaffairs. info
June 2013AGRICULTURE36
Saleem Shaikh
Farmer Sa rsw at i
Bhetwal in Nepal’s remote
scenic mountain valley hadall blessings in the first year
of her cr op insu rance .
She survived the freakfrost in January this year
that ruined her standing potato crop, just two-
three weeks before harvest.“Had my crop been not insured, I would
have suffered recoverable financia l losses,
plunging me i nto apo ss ibl e deb t
t r a p a n d
leaving me
unable to prepare for the next crop,” said
Bhetwal, the 47-year-farmer in Lamdihe scenic
mountain village of Duli khel town, about 30km (18.64 miles) southeast of Kathmandu,
Nepal’s capital.
C ro p in suranc e i s p ur ch as ed b yagricult ural producers, including farmers,
ranchers and others t o protect themselves
against either the crop losses due to naturaldi sasters, such as frost, hail , drought, and
floods, or the loss of revenue due to declines
in the prices of agricul tural comm odi ties.The two general categories of crop
insurance are called crop-yield insurance and
crop-revenue insurance.Sarswati Bhetwal says in November last
year she had culti vated potato on ha lf a
hectare that cost her NRs. 15,000 ($176.5)and insured it with a private insurance
company.
1,125 ($13.25) ofm y
investment in the crop and equal amount was
paid by the government as a premium. And,
after crop damage assessments, the insurancecompany pa id to me 80 percent of th e
damages or NRs. 12,000 ($141) within a month
of th e d ama ge,” she tol d th is scr ibe.This payment from the insurance cover
means a lot for Ms. Bhetwal.
In Nepal, potato crop is sown in Octoberand harvested by end of January.
“This amount [paid by an insurance firm
against the crop losses] enabled me to sowgarlic and cauliflower crop in February. I hope
profit from these vegetables after their harvest
in May will be financially helpful,” she saidwith delight obvious on her face.
Around 35 to 40 farmers have suffered
economic losses due to potato crop damagescaused by the fr ost in mid-January when
temperature dived below -2 all of sudden that
lasted for over 10 days.Sarswati Bhetwal says she
Pakistan needs to drawlessons from
Pakistan can tackle climate change vagaries with insurance cover
Nepal’s crop insurance
Economic Affairs | www.economicaffairs.info
37AGRICULTUREJune 2013
never witnessed frost in her life as devastating
as this year’s. The frost obliterated pota tocrops on hundr eds of hectares in her and
several other adjoining villages.
Local government agriculture officialsDhuli khel town say while they are yet to
estimate the damages, initial situation pains
a horrible situation of damages to potato andother winter vegetable crops.
Arjun Bahadur, another potato far mer
in the vil lage, suffered estimated NRs. 14,35,000 ($1,588) worth financial losses as he
lost his entire potato crop on 4.5 hectares to
the freak frost. Left high and dry, the tenantfarmer now plans to obtain money from a
private moneylender against his two-room
house as col lateral. Yet , he will have to payhigher rate of interest, possibly over 20 percent
per annum.
“I really need to borrow to pay rent tofarmland owner, buy essential farm inputs for
next vegetable crops to recover the financial
losses if, God forbid, there is no unfavourableweather condit ions ,” Bahadur sa id whi le
uprooting damaged potato plants with sickle.
Local farmers say Sarswati Bhetwal’s cropinsurance experience has brought good lessons
for them.
“Now, we have learnt enough that bydint of crop insurance we farmers can survive
crop failures caused due to bad, unpredictable
weather conditions,” 40-year-old Bahadur said.He confessing that downplaying importance
of crop insurance has cost them a lot.
Meanwhile, Sarswati Bhetwalsays arefarmers come to her to get know about more
details, procedures a nd benefits as well as
help in getting their crops insured to avoid
financial losses. “I’ve noticed interest among
farmers about crop insurance is r ising ,” shesays.
Bed Mani Dahal, environmental scientist
at the Kathmandu University said during lastfew years the weather has become increasingly
erratic, unpredictable and unpromising for
mountain farmers, whose crops have becomehighly vulnerable to rainfall variability and
rap id ly ch an ging cl imate pa ttern s.
“The crop insurance, however, can helpfarmers avoid financial losses due to erratic
weather patterns and keep the farming activity
continue unaffected, which can otherwise
disrupt food supply in the local market and
spiral up the grain and vegetable prices,” the
environmental scientist said.Nand Kishor Agrawal, coordinator of the
Nor way-funded Himalayan Climate Change
Adaptation Programme (HICAP) launched bythe Intern ationa l Centr e for Integrated
Mountain Devel opment (ICIMO D) sai d
weather scientists in Nepal’s meteorologicaldepartment may have predicted the cold snap,
but that information was not conveyed to
farmers.“Understandingly, there is an apparent
lack of communication or an interaction gap
between the government’s weather scientists,extension department off ici als and the
farmers, which must be br idged to help
farmers mitigate damage from extreme eventswith improved, timely weather forecasts,”
Agrawal said.
In Pakistan, farmers are also gr ipped bysimilar conditions due to changing weather
patters, scarce, erratic rainfalls and need suchprotective measures to help them stave off
impacts fr eak weather events in shape of
natur al di sasters on their livel ih oods.Insurance, Pakistani government officials
say, may be one way of coping with the
enormous social, economic consequences ofsuch extreme weather events.
Zafar I qba l Qadir, for mer cha irman of
the National Disaster Management Authority(NDMA), in Islamabad, sa id the NDMA has
already hammered out a plan to introduce
national disaster r isk insurance. It aims toeventual ly make it mandatory for Pakistan’s
entire population to be insured against disaster
risks, he added.
Arjun Bahadur, a pota to far mer in L amdi he sceni c mo unta in village a t Dhulikhel tow n -
about 30 km ( 18.64 miles) southeast of Kathmandu, Nepal’s capital city - checks damaged
po tato plant standing in his potato field devastated by the recent frost
A woman farmer pulls a plastic w ater pipe to supply wa ter to vegeta ble farmland in
Pa nityanki picturesque mountain vi llage of Kavrepalanchowk district, some 35 kms from
Ka thmandu, N epal’s capi ta l city
Economic Affairs | www.economicaffairs.info
A pilot phase of the programme, to be
implemented starting any time this year withfunding support from the World Bank, will
extend free or subsidized insurance to those
judg ed the count ry’s poo rest and mo stvulnerable. Eventually, officials hope farmers,
livestock producers and others will be included
as well, said Ahmad Raza Sarwar, director-general of the National Insti tute of Disaster
Management in Islamabad.
Sarwar told this scribe over phone thatthe size of the insurance premiums each
person or family might pay i s sti ll being
negot iated with insurance fi rms, as is theamount of coverage.
Some details of the insurance have been
worked out and more are sti ll being workedout among the disaster management authority,
the Ministry of Climate Change, the Finance
Ministry, and the Federal Economic Affa irsDivision, but authorities are confident it will
soo n be com pleted, sa id offici als in the
Pakist ani cl imate cha ng e min ist ry sa y.
The insurance, developed after extensive
consul tations with insurance com panies,fina ncial regula tors, banks, businesses and
international fina nci al institutions, aims to
cover the risks posed by the climate-inducednatural disasters that are becomi ng more
frequent in the country.
Meanwhile, Zafar Iqbal Qadir said theWorld Bank will set aside around five percent
of th e developm ent funds the Bank has
comm itted for Pakistan for the nationwideinsurance project.
According to the World Bank’s Country
Partnership Strategy (CPS) document, the Bankhas committed $5 billion to Pakistan for 30
uplift projects over several years.
The pro gramme, which the disastermanagement author ity say s would be the
biggest insurance venture of its k ind in the
world, aims to eventually cover Pakistan’s 180million people for the loss of human lives,
livelihoods, shelter and livestock.
But one early question raised about the
insurance effort is how the poor wi ll be able
to afford premiums for insur ance cover.
"This matter has also com e underdiscussion and it has been now decided that
premiums for those who can't afford will be
subsidized and full premium for t hose livingbelow the poverty line will be pa id by the
government," Qadir said.
Independent climate change and disasterexperts said that although this is a welcome
move, it remains to be seen whether the
NDMA would be able to effectively implementits plan.
“In the past, we have seen the launching
of good initiatives with much fanfare. But thesethen remain on paper only. What is seriously
needed is a mechanism that allows for disaster
mitigat ion and adapt ation proj ects to beimplemented in a true spir it,” sa id Sattar
Zangejo, a disaster management expert who
has worked with Oxfam International, the U.N.Development Programme, Australian AID and
Plan International.Across Pakistan, the devastating 2010
deluge caused agriculture and infrastructure
damage worth over $84 million, while floodsin 2011 cost the natio nal exch equ er an
estimated $63 million, according to the federal
finance ministry.Economic damages from 2012 year’s
torrential monsoon rain during the first three
weeks of September were estimated at $35million, according to the NDMA.
-
Crop insurance is purchased by agricultural
producers, including farmers, ranchers and
others to protect themselves against either
the crop losses due to natural disasters, such
as frost, hail, drought, and floods, or the loss
of revenue due to declines in the prices of
agricultural commodities
A farmer covers his v egetable crop to avo id fr ost attack in Lam dihe scenic mo untain villa ge
at Dhul ikhel town - abo ut 30 km (18.64 m iles) southeast of Kathmandu, Nepa l’s ca pital
Sarswati Bhetwal, a 47-year- farmer shows a potato- fill ed bucket
in Lamdihe scenic mountain v ill age Dhulikhel town - about 30 km
(18.64 miles) southeast of Kathmandu, Nepal’s capital city - standing
in her potato field destroyed by the recent frost
June 2013AGRICULTURE38
Economic Affairs | www.economicaffairs.info