Pages: 7 profit.com.pk

The jingle bells ofcreativity Page 3The new form of corruption in Pakistan Page 7

Intel – the IT industry juggernaut Page 2

KARACHI

STAFF REPORT

DeSPITe energy crisis andsecurity issues, Pakistan’sexport figures in the lastfive months were 10 per

cent higher than the correspondingperiod last year. Pakistan hasattended more than 12 exhibitionsand four business forums in Chinaduring the outgoing year 2011. Thisparticipation will be increased to 20exhibitions in 2012, said Tariq IqbalPuri, Chief executive of TradeDevelopment Authority of Pakistan(TDAP) during a meeting with MianAbrar Ahmad, President, KarachiChamber of Commerce & Industry(KCCI) here at KCCI head office.he also agreed to allocate PakistanPavilions to KCCI for severalinternational exhibitions includingTDAP’s WeXNeT for womenentrepreneurs scheduled to beorganised in Dubai soon. he alsoexpressed his gratitude towardsKarachi Chamber’s support and activeparticipation. he was also upbeatabout the president’s meetings with

foreign delegation on the juncture ofexpo Pakistan 2011 and also soughtsame support in expo Pakistan 2012. head of TDAP also recognised theKarachi chamber as the mostproductive forum of Pakistan andcommended its efforts for playing animperative role to uplift the economy.

he expressed his desire that TDAPand KCCI should work closely aspartners in progress to enhanceexports. he said KCCI is a proactiveand leading chamber and its role intrade and industry is pivotal. hetermed business community as the“locomotive” for trade.

he appreciated the fact that so farexports were satisfactory despiteexport targets being marred by securityissues and energy crises. Financialcrises of eU had also affected theexport, he added. While expressingcontentment he said that currentexport figures were 10 per cent ahead ifwe compare the last five months’exports with the volume of exports lastyear. he stated that the authority hadchanged its approach whilediversifying destination like Russia,China, Japan, Iran, Afghanistan,Central Asian States, GCC countries.he highlighted the participation ofPakistan in more than 12 exhibitionsand four business forums in China.This participation will be increased to20 exhibitions in 2012, he added.In 2012 trade through Karakoramhighway will resume with WesternChina. he requested President KCCIto organise workshops and seminarswith collaboration of KCCI to createawareness in the business communityabout unexplored markets. “Pakistanneeds trade not aid; the only solutionto uplift and strengthen the economyis industrialisation and enhancing

exports,” Mian Abrar said. Whileexchanging his views Mian Abrarasserted upon the dire need ofexploring regional markets andenhancing regional trade with SAARC,ASeAN, Central Asian Republics,China, Iran, India, Middle east andAfrican countries. he was of the viewthat by design Pakistani exportsremain stagnant. he focused onstrengthening the economy whileincreasing exports rather thanremittances. he suggested a policy-shift from Western markets to regionaltrade blocs like SAARC, ASeAN,Shanghai Cooperative Council. heurged to bring diversity in export whileencouraging unexploited engineeringsector, value-added agro based andhalal food sector etc. he alsodemanded to allocate KCCI to organisePakistan Pavilions in the internationalexhibitions around the globe. Former President KCCI Majyd Aziz,Senior Vice President YounusMuhammad Bashir, Vice PresidentZia Ahmed Khan and the managingcommittee members also participatedin the meeting and exchanged theirviews and proposal to enhance trade.

Pakistan’s exports rise by 10pc in last five months

Monday, 02 January, 2012

Govt fails in enhancing tax revenueISLAMABAD

AMER SIAL

The year started with desperateattempts by the government tosave $11.3 billion standbyarrangement facility of the In-

ternational Monetary Fund (IMF) whichwas finally abandoned in September withthe announcement that macroeconomicstability was on the right track and thecountry could withstand shocks for thecurrent fiscal year.

IMF was stressing upon taxing therich, curtailing losses of the public sectorenterprises and reducing the power dif-ferential subsidy to zero to stop the na-tional economy’s hemorrhaging. A weakcoalition government tried to apprise IMFof many contentious political issues thatwere hindering the implementation of itsadvice. It even arranged meeting of theFund with the political parties but IMFmaintained its “do more” stance on therevenue and power sector reforms.

Losses in the power sector alone im-pacted a loss of two per cent in the annualfiscal deficit that had remained over six percent of the GDP for the last three fiscalyears. Due to the suspension of IMF pro-grammes in May 2010, foreign inflows werereduced to a minimum, as international fi-nancial institutions and other bilateraldonors kept stressing additional revenuegeneration to meet up the shortfall.

Pakistan wanted continuation of IMFprogramme as it would have made possi-ble budgetary support from IFIs and otherdonors. Currently, financial support fromdonors is only possible if the IMF issues aletter of support to the intending donorson the macroeconomic stability of thecountry. Pakistan managed to face obsta-cles due to the rise in international com-modity prices, mainly cotton, whichenhanced the annual exports to over $25billion and remittances of over $11 billionduring the last fiscal year. even thoughPakistan has not opted for a new bailoutpackage from IMF for current fiscal yearbut has maintained a steady relationshipwith IMF to seek another programme ifthe need arises, as experts estimates ex-ports and remittances would remain underpressure due to the global financial crisis.

During the last fiscal year, various taxreform measures were approved but notfully implemented. RGST was not ap-proved by parliament, but additional taxmeasures were introduced in the currentfiscal year’s budget. In mid-March 2011government approved a flood surchargelevy, increased special excise duty on im-ports and imposed a 17 per cent sales taxon sales of tractors. It also increased theex-factory rate on sugar, removed sales-taxexemptions on fertilisers, pesticides andplant machinery, and eliminated zero-ratesales taxes on garments, carpets, leather,surgical and sports goods. however, soonafterwards, a few measures were diluted:the tax rate on the textile sector and someother items was reduced from 17 to 5 percent. The combined fiscal impact of thesetax measures were aimed at preserving thetax ratio at a similar level as last year, but

this target was not met.A recently released World Bank

progress report on Country PartnershipStrategy on Pakistan for the next threeyears points out that Pakistan’s medium-term outlook critically hinges on a signifi-cant revenue mobilisation effort thatshould produce two to three per cent ofGDP in the next four to five years.

It notes that the toughest questiongovernment faces is how to create fiscalspace. This occurs in a context of fiscal re-trenchment and gets aggravated by its lowand declining total and tax revenue ratiosthat reached single digit by end of last fis-cal year. Revenue mobilisation in Pakistanhas been historically weak. In the last fiscalyear, various tax policy reform measureswere approved, but not fully implemented.

A comprehensive revenue mobilisa-tion strategy centered on structural reform

of the taxation system is needed to con-front these challenges. The overall tax pol-icy strategy points to six major measuresincluding adoption of broad based Re-formed General Sales Tax on goods andservices, provincial tax reforms, a two-tierstructure for individual income tax andadopting a withholding tax, reform of thefederal excise tax, adopting a businessfriendly corporate income tax, and a sim-plified structure of customs duties.

Federal and provincial governmentsfor the last one year have failed to evolve aconsensus on the imposition of RGST onservices and agriculture income tax. Thebank report recommends that the tax ad-ministration strategy should centre onbroadening the tax base, establishing aneffective audit and enforcement mecha-nism, establishing an effective internal andexternal mechanism, and limiting Federal

Board of Revenue’s administrative powersto legislate by administrative orders.

however, a look at the last decadeshows the tax revenues were decliningsince the global crisis, budgeted revenuetargets were persistently missed, incomeand sales taxes were rising. But trade andexcise taxes were declining and low tax col-lection is also apparent for the provincialgovernments and privatisation proceedshave been marginal in the last four years.

Government’s slow pace on imple-menting the tax administration reformshave resulted in unfulfilling of the ex-pected results. Giving momentum to thenumber of new tax filers, centralisedaudit, including audit of large taxpayers,and fully computerised tax system andcontinuous monitoring of FBR staffcould yield desired results in next fewfiscal years.

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debate02Monday, 02 January, 2012

ALI RIzvI

WheN I was born, theworld of technologieswas evolving. I wouldsee my rich uncle carry-

ing a briefcase and he’d open it to re-veal a mobile phone that seemedsomething out of outer space. I alwayswondered if eT carried one too to com-municate with kids on earth and astechnologies were evolving, my gener-ation was thrust into a world whereleft, right and centre technologies wereevolving at a speed faster than light.Metaphorically speaking, of course.And then, there were cartoons too andalmost all of us remember the nameMickey Mouse. It’s a household name.everybody’s heard about it, invariably.In technology, what is the first namethat comes to my mind? Well, it has tobe Intel. I knew that if there was any-thing evolving on the computer tech-nology front, it had to be Intel.

WoRld WIThouT MICRoPRoCessoR

Intel, the world leader in silicon inno-vation, develops technologies, prod-ucts and initiatives that continuallyadvance how people work and live.Intel was the company that intro-duced the world’s first microprocessorin 1971. Intel is the world’s largestsemiconductor chip maker, based onrevenue. It is the company that madea series of microprocessors, proces-sors that are found in most personalcomputers worldwide. Since the in-vention of the wheel, for this genera-tion the single most importantinvention has to be the microproces-sor that enables us to use computertechnologies to facilitate us in a vastvariety of fields. A world without themicroprocessor would be akin to aworld without a light bulb.

In order to gain greater under-standing of Intel’s role in Pakistan, wemet Naveed Siraj, Intel Country Man-ager Pakistan. Unfortunately, due tobad traffic I reached 20 minutes latebut he was pleasant enough to wait pa-tiently. So we got straight to the point.What is Intel’s role in Pakistan I askedhim? Intel is the tech leader in the in-dustry catering to three distinct seg-ments. It has demonstrated leadershipthrough focusing on enterprise devel-opment. Intel during the course of itsoperations has facilitated businessesthrough the implementation of com-puter technology that has benefitedthem largely, Naveed Siraj said.

While explaining the problemsfaced in the implementation process, he

said SMes by design focus on revenuegeneration. Small businesses will there-fore not want to invest in IT. Instead,they would like to rely on customisedsoftware programmes. Therefore, theiraim is to operate software and hardwareboth, with minimum resources. Intelhas targeted the SMe sector and aftertaking on projects of mutual interest,has come far in facilitating these smalland medium enterprises.

InTel’s PlACe In The MARkeT

Dwelling on how the advent of newcompanies in the IT industry has af-fected Intel’s stake in the market, hesaid that in the last three years smartphone sales have almost doubled.Therefore, there has been phenomenalmarket growth. Both the formal andinformal channels have contributedtowards this growth. Therefore thegrowth has been more organic in na-ture. IT products, Siraj said have alsoexperienced high growth, mainly dueto the affordability of IT products. Wehave witnessed an increase in the useof PC’s as well. Therefore, growth inthe sector presents us with an oppor-tunity. Intel continues to be the mar-

ket leader and while there have beenchallenges, these challenges have notbeen insurmountable. To facilitateprogressive growth, the governmentwill have limit the informal sector andinstead focus on evolving policies thatare conducive to bringing down thecosts of IT products in the local mar-ket. We recognise governments needto generate revenue, however stepsmust be taken to reduce the generalsales tax from the present 17 per cent.

Mr Naveed Siraj was very straight-forward about the company’s vision for2012. “We will continue the executionof our programmes, while simultane-ously focusing on joint programmeswith different entities as well.”

he said that Intel’s collaborationwith Meezan bank is also an initiativethat promises to yield great results.“Through Meezan bank we have of-fered to provide laptops to students oninstallments. They now also have theopportunity of owning a notebook for$100. Public private partnership isalso another dimension that holdsgreat promise.” With regards to thePunjab 100,000 laptops distributionprogramme, he said it is a good ven-ture that will offer students increasedmobility and access to information.

They will be able to augment theirstudies and increase their learningthrough the use of laptops.

ReCessIon hAngoveR

When asked about how badly the globaleconomic recession has affected the ITindustry and how he views the prospectsin the Asian markets, he said that firstlywith regards to Pakistan schemes likethose recently launched in Punjab andothers initiated by Intel such as Intelteach are helping project a differentimage of the country that needs to allo-cate more resources towards imagebuilding. As far as Asia is concerned hesaid that there has been a shift in per-centage of revenue being generated indifferent regions and with the increaseof the middle class, Asia is attractingbusinesses despite the recession.

The IT sector he said stagnated inPakistan mainly because there was nodedicated IT minister. While speakingabout Intel teach he said that till lastmonth, the figure of teachers who havebeen trained under the programme hasreached 300,000. It was initiated in2001 and under this programme intelhas trained 10 million teachers. 70 per

cent of these teachers hail from Punjabhe said. As far as competition is con-cerned, he said that he did not view it asa threat but rather as an opportunity.“Increased competition is good becausethe consumers benefit from it,” Sirajsaid. As far as Intel was concerned theywere focusing on promoting the bene-fits of their own technologies. “We arebuilding hardware specific solutions,with the ability to penetrate a large cus-tomer base.”

APPeAlIng TeChnologIes

“People want products that appeal tothem, therefore we have also worked to-wards creating such technologies. Ultrabook is another category of notebookswhere the focus has been towards cre-ating a rapid response technology. Ultrabook has the ability to update emails onstandby. Increased battery life is an-other area that we are working on. TheUltra Book was launched last year andis also available in Lahore, with fourbrands releasing the product world-wide,” Naveed Siraj said.

When asked about whether the year2012 will see an increase in the demandfor data centers, he said that for every600 smartphones, one server is re-quired. With the growth of smart-phones being witnessed world wide, itwill be accompanied by an increase inthe demand for data centers.

Talking specifically about Pakistanhe said that in order to promote infor-mation technology, device usage andpervasiveness needs to increase thatcan only be brought about by evolvingstrategies to provide consumers with af-fordable products. The ownership ofcomputers needs to be emphasisedupon and there should be a greaterfocus on promoting women entrepre-neurship that will encourage fastergrowth in the IT sector. Seminars alsoneed to be conducted to increase aware-ness about IT Siraj said.

And on this note, we wrapped upour meeting with Intel Country Man-ager Pakistan Naveed Siraj. It is an ac-cepted fact that in order for Pakistan toprogress it will have to develop the ITsector on an urgent basis that will createnew avenues of opportunity for the peo-ple of this country. Intel has done com-mendable work on their part and othercompanies need to follow suit to ensurethat the development of the country is acollaborative effort that involves allstakeholders in the process.

The writer is News Editor, Profit.Comments and queries:

ali.rizvi7957@gmail.com

Intel – the IT industry juggernautIn an exclusive interview with Profit’s Ali Rizvi, Country Manager Intel Pakistan talks about the IT sector, Intel’s contributions and the emerging trends that can be expected in the year 2012

JAgDISH BHAgwAtI

AS if undermining the WorldTrade Organization’s DohaRound of global free-tradetalks was not bad enough

(the last ministerial meeting in Genevaproduced barely a squeak), the UnitedStates has compounded its folly byactively promoting the Trans-PacificPartnership (TPP). President BarackObama announced this with nineAsian countries during his recent tripto the region.The TPP is being sold in the US to acompliant media and unsuspecting publicas evidence of American leadership ontrade. But the opposite is true, and it isimportant that those who care about theglobal trading system know what ishappening. One hopes that thisknowledge will trigger what I call the“Dracula effect”: expose that which wouldprefer to remain hidden to sunlight and itwill shrivel up and die.

The TPP is a testament to the ability of USindustrial lobbies, Congress, andpresidents to obfuscate public policy. It iswidely understood today that free-tradeagreements (FTAs), whether bilateral orplurilateral (among more than twocountries but fewer than all) are built ondiscrimination. That is why economiststypically call them preferential-tradeagreements (PTAs). And that is why theUS government’s public-relationsmachine calls what is in fact adiscriminatory plurilateral FTA, a“partnership” invoking a false aura ofcooperation and cosmopolitanism.Countries are, in principle, free to join theTPP. Japan and Canada have said theyplan to do so. But a closer look revealsthat China is not a part of this agenda.The TPP is also a political response toChina’s new aggressiveness, builttherefore in a spirit of confrontation andcontainment, not of cooperation.The US has been establishing a templatefor its PTAs that includes several items

unrelated to trade. So it is no surprisethat the TPP template includes numerousagendas unrelated to trade, such as laborstandards and restraints on the use ofcapital-account controls, many of whichpreclude China’s accession.From the outset, the TPP’s supposedopenness has been wholly misleading.Towards this end, the TPP was negotiatedwith the weaker countries like Vietnam,Singapore, and New Zealand, which wereeasily bamboozled into accepting suchconditions. Only then were biggercountries like Japan offered membershipon a “take it or leave it” basis.The PR machine then went into overdriveby calling the inclusion of theseextraneous conditions as making the TPPa “high-quality” trade agreement for thetwenty-first century, when in fact it was arip-off by several domestic lobbies.American regionalism closer to homeshows the US now trying to promote theFree Trade Agreement of the Americas(FTAA). But its preferred template was to

expand the North America Free TradeAgreement (Canada, Mexico, and the US)to the Andean countries and include hugedoses of non-trade-related issues, whichthey swallowed. This was not acceptableto Brazil, the leading force behind theFTAA, which focuses exclusively on tradeissues. Brazil’s former President Luiz LulaInácio da Silva, one of the world’s greattrade-union leaders, rejected theinclusion of labor standards in tradetreaties and institutions.The result of US efforts in SouthAmerica, therefore, has been tofragment the region into two blocs, andthe same is likely to happen in Asia.ever since the US realized that it hadchosen the wrong region to be regionalwith, it has been trying to win a seat atthe Asian table. The US finally got itwith the TPP, simply because Chinahad become aggressive in asserting itsterritorial claims in the South ChinaSea, the South China Sea, and vis-à-visIndia and Japan.

Many Asian countries joined the TPP to“keep the US in the region” in the face ofChinese heavy-handedness. Theyembraced the US in the same way thateast europeans rushed to join NATO andthe european Union in the face of thethreat, real or imagined, posed by post-Soviet Russia.America’s design for Asian trade isinspired by the goal of containing China,and the TPP template effectively excludesit, owing to the non-trade-relatedconditions imposed by US lobbies. Theonly way that a Chinese merger with theTPP could gain credibility would be tomake all non-trade-related provisionsoptional. Of course, the US lobbies wouldhave none of it.Jagdish Bhagwati, University Professorat Columbia University and SeniorFellow in International economics atthe Council on Foreign Relations, is theauthor of Termites in the TradingSystem: how Preferential Agreementsundermine Free Trade.

America’s threat to Trans-Pacific trade

PRO 02-01-2012_Layout 1 1/1/2012 10:09 PM Page 2

SINCe it has been well established thatthe mode de gouvernance relevant forthe Pakistani political landscape is toavoid a horizontal alignment at allcosts, the government today and in fu-

ture would duck a million times if it has to, but notestablish its writ in front of mob of any size. Thingsthat one has to do to stay in power! The govern-ment would rather incur losses of more than Rs600billion annually than stand tall to protests, whichcould spill over and cause subversion. This is the

price the state has to payfor not being entrustedwith national trust whilebeing, very proudly so,democratically elected.

In the state’s de-fense, it is like walkingon a very thin rope to ex-tract water out of a deepwell. Once the privatisa-tion process is initiated,

the discourse surrounds burnt cars, corruption,lost jobs, the much higher than ten per cent cut,and concerns regarding the possibility of beingable to mend the black sheep. On the critical end,successive governments have been unable to provetheir worth on this front (among all others) andprivatised entities are still surrounded by deepcontroversies. Now only if we had only onefavourite; the non-transparent privatisation ofPTCL has resulted in losses of more than a billiondollars (Rs89 billion)with ambiguity on whetherthe entire payment has been received, and, KeSC’sliabilities (contingent upon GoP) have grown toRs160 billion from reportedly zero at the time of

privatisation.Moreover, processes that were initiated, such as

the case of PIA, met with severe criticism althoughthe organisation has negative net worth of aboutRs63 billion and accumulated losses of more thanRs90 billion. Similarly, Pakistan Railways incurs anannul loss amounting to Rs15 billion, has been in-jected with Rs10 billion in the last two months. Com-mentators lament loss of about 400 engines, whichwere, by the way, as old as the country itself, whileabout a hundred or so original and very antiquemasterpieces are by the grace of god still function-ing. Recently, sighs of relief were heard when someengines convalesced, as there is much talk of pri-vatising the white elephant.

So clearly, things are out of control and thegovernment cannot afford more dissent and dis-approval than what it already faces. But if onewere to compare the Rs600 billion loss with theRs300 billion that the government intends tospend on the country’s education, hospitals,roads, in sum all of us, the writer cannot help butfeel wistful at the prospects of having about a tril-lion rupees being available to spend purely on de-velopment. And if one were to compare, the Rs743billion paid in direct taxes with the said amount,it would be unnatural for the salaried/middle classto not feel infuriated and push demands for expe-dient privatisation.

As of Oct-11, the credit extended to Public Sec-tor enterprises amounted to Rs407 billion, aboutRs19 billion higher than the beginning of the year.If one were to keep the losses in perspective withthis amount, one would only wish a lot of luck tobanks that have lent out this money. On the sameend, credit to the private sector has gone down byRs37 billion during the Jul-Oct’11, thus it is notjust the prospect of recovery but the opportunitycosts that have to be brought in perspective.

In the heart of hearts, nobody wants anyone todie. But in the current scenario, a larger group ofpeople is being choked to support a few. And sadly,it’s not just for now and today. There is no solace.

The writer is an economic analyst and freelancefinancial journalist. She can be contacted at

sakina.husain@gmail.com

NO denying the bearing ofoutside influences on eco-nomic policymaking, butwhen an entire year’s growthtrajectory follows exogenous

flows, there is something inherently flawedin power centres. All was well in the financeministry till the international commoditymarket jacked up cotton prices and Arabspring and recession worries engineered in-creasing remittances. Of course, smilesdropped when the cotton boom was pricedout of the commodity market and oil re-mained elevated despite pronouncedgrowth slowdown in the financial north.

Yet all that is bad has not been unfairlythrust upon the government, and Islamabadcannot claim being taken by surprise by in-ternational developments. The cotton wind-fall was circumstantial at best, and thosethinking otherwise have been exposed as in-appropriate, to say the least, to occupy seatsthat affect financial decision-making. Infact, the domestic situation has been causefor much more alarm. Despite Dr Sheikh’stough talk, the government has not been

able to free itself from its largely self-im-posed financial straight jacket. The PSeburden has not been shed, indicating con-tinued preference for traditional politicalmaneuvering despite the obvious negativeeconomic spill-over. Tax collection remainscompromised, with no hint of the posturingneeded to brush up the FBR and buildprovincial tax collection capacity to benefitfrom the 18th amendment. Then there isblatant, inexcusable, unprecedented gov-ernment borrowing, crippling private sectorexpansion and ridiculing monetary policycalculus. The tight fiscal space has also min-imised public spending when most neededto upgrade social overhead capital and easelabour market pressure. The rupee’s losingstreak, too, has not been offset by exportbase expansion.

Still, in debris lies opportunity. So long asit is in the dark as to what to do, the govern-ment can at least figure out what not to do.And a good starting point would be not repeat-ing ’11 mistakes. There was little encouragingin the year that has been. But at least whatmust be avoided is a lot clearer.

The year that was

Politico-economiccompulsions�ofchoking�many�tobenefit�a�few

Why won’t

you privatise?

Sakina�Husain

E D I T O R I A L

The jingle bells of creativity

LIVING in a corporateworld, one happens tohold up to the cliché thatmoney can buy every-thing. As part of the

deal, the rich get everything and thepoor become losers of the game. Look-ing at the quality of advertisementstoday, it often strikes me, if creativityis also synonymous to the amount ofmoney spent. A general rule of thumbsuggests that all the big companiesusually come up with more creative

ideas than the smaller companies justbecause they choose to affiliate them-selves with renowned advertisingagencies that mostly have good stuff instore to advertise the product in aunique way. It is thus, very strange anda matter of concern for many of us. Butrealistically speaking, just like moneycan’t buy happiness; money can’t buycreativity either. We as a nation are in-stilled with some serious creativity inthe real sense. No one can doubt thelevel of creativity that we are bestowedwith; some smart Asians we are. Cre-ativity is not a science, it is an art. Anadvertising campaign that sends themessage across its audience can bedeemed creative even though it can geton your nerves. If we look at a verypoorly designed commercial and for-get about quality issues for some time;I recall some mind boggling jinglesthat literally made one beg for mercy,but were actually very effective even

though we detested them to the ex-treme. Admit it, we still rememberthose catchy slogans and I pay tributeto all of them with hats off and a thou-sand bows. Telefun has to win the cre-ativity gift hamper for drilling‘0900-78601’ into our heads. ‘Gayesoap sabunon mein toap’ was also cre-atively designed to remain etched inour memory, even after so many years.‘Kis nay kaha tha kay Pepsi pay paanchrupay kum kerdo?’ and ‘Kis nay kahatha kay Pepsi 65 ki ker do?’ I swear,none that I know, made this grave mis-take. But Pepsi managed to worm itsway into our minds by a genuinelylame yet creative concept. Similarly,we also acknowledge that ‘Maza awamikha badami…’ and The Jazz Jazba’s fa-mous songs made sure, we cry more onthe consistency of the over exposure ofthese jingles, so that we can forget thetrauma of watching Pakistan lose inthe Cricket World Cup.

On the flip side,the theory of ‘Naqaland Aqal’ also comesrightly into play whenwe cheat creatively.Just recently, I was re-minded of this when apopular magazinetook up one of my ar-ticles as their ‘letter tothe editor’ and the paradox of the cre-ativity was that it was published rightunder the letter whose title read, ‘plagia-rism’; eliminating the slightest of possi-bility to even think of the above contentas being fabricated. *Round of ap-plause*. Coca-Cola, along the samelines, started targeting the cricket loversand their spirits of hope, after Pepsi hadalready targeted the cricketers and thecricket team. Pantene wanted us to tryand test their product to make sure thatit is the number one shampoo and Sun-silk, the very next day, tells us that it is

already tried andtested that Sunsilk isthe number one sham-poo. The debate of cre-ativity is strongly tiedwith intellectual prop-erty under which, a setof exclusive rights arerecognised for a num-ber of distinct types of

creations of the mind. however, creativ-ity may not always mean originality,which is why, often marketers arguethat creativity breeds creativity and ifthe ideas are copyrighted, it would leaveno room for their improvement. hadGraham Bell copyrighted the telephone,mobile phone would not have existedtoday. I’d have to agree to this too, tosome extent, as long as the originatorgets his due credit.

The writer is Sub-Editor, Profit. She canbe reached at syedmaheen@hotmail.com

Maheen�Syed

For�comments,�queries�and�contributions,�write�to:

email: profit@pakistantoday.com.pk�����Ph: 042-36298305-10�fax: 042-36298302���� �Website: www.pakistantoday.com.pk

BABuR sAghIRCreative�Head

hAMMAd RAZALayout�Designer

shAhAB JAfRyBusiness�Editor

AlI RIZvINews�Editor

MuneeB eJAZLayout�Designer

Monday, � 02 � J anua r y, � 2012

Realisticallyspeaking,�just�likemoney�can’t�buyhappiness;�money�can’tbuy�creativity�either

kunWAR khuldune shAhIdSub-Editor

MAheen syedSub-Editor

All-weather friends

This is with regards to the news report,“China Three Gorges plans $15b invest-ment in Pakistan” published on Satur-day. It is indeed a promisingundertaking that China looks to be onthe verge of sponsoring. Our Chinesefriends’ investment plan of $15 billion inthe Pakistan energy sector is really com-mendable. It might border on being aherculean task and even if this much in-vestment plan could be materialised itwould make Pakistan self sufficient inpower sector. This would also catermany other hydro, thermal projects thatare either in the pipeline or are underimplementation. Regretfully, Pakistangovernment did not take such preposi-tion seriously four years back.

M ASLAM CHAuDHRy

LAHORE

Afghan question

This is with regards to the article,“The Chinese flavour in US brewedAfghan soup” published onThursday. I’m completely lost forwords at the sheer irony that theChina’s oil deal with Afghanistan isengulfed by. I mean it wasAmerica’s war, they paid heftybucks for it and welcomed scornsfrom all over the globe; and at theend of the day someone else getsthe cake. This serves the US right,because they have causeddestruction all over the world intheir lust for control over resources.And now China is looking likeemerging as the true global power,without any violence whatsoever.

SALeeM AJMAL

MuLTAn

PRO 02-01-2012_Layout 1 1/1/2012 10:09 PM Page 3

Monday,02 January,2012

04news

hina Rabbani khar, foreign Minister

The future relations with theUS would be clear, not confusing.The war against terrorism cannotbe won alone

he piece does not divulgeanything about a happy planetbut expresses efforts neededto make the planet, i.e. earth,happy. ‘happiness’ is the mostperplexed word in the diction-ary of mankind. It is oftenconfused with ‘comfort’.

HAPPY PLANET INDEX

UNDP has made significant criteriato evaluate how happy the masses are indifferent corners of the world. Thehappy Planet Index is another signifi-cant yardstick of assessing the livingstandard of human beings in the world.It was introduced by New economicsFoundation (NeF) in July 2006. It looksto be designed to evaluate the style of liv-ing, thinking and reacting towards thecorporeal forces applying over humanmental capacity and other capabilities. Itstudies the well recognised indices ofcountries’ development such as GDP(Gross Domestic Product), the hDI(human Development Index) and workswhile taking sustainability into accountand considering uncertainty as the dom-inant factor against happiness and ful-fillment of life. It is evaluated on thebasic thesis that ultimate aim of most ofthe people is not to become rich but gen-erally to live long and lead a happy andhealthy life. Similar work is being doneunder different names as ‘living planetindex’, ‘gross national happiness’, ‘phys-ical quality of life index ’, ‘global peaceindex ‘, and ‘freedom house’ etc.

GINI COEFFICIENT

Gini-coefficient is another gauge ofnational income distribution around theglobe and is used as stimulant towardsgenuine happiness. The Gini-coefficientis an evaluation of the disparity in distri-bution of wealth and resources. A valueof 0 expressing perfect equality whereeveryone has equal share of income anda value of 1 expresses maximum inequal-ity where only one person grasps all theincome. It has found application in thestudy of inequalities and indiscipline asdiverse as sociology, politics, economics,health science, ecology, chemistry, engi-neering, industry and agriculture.

FREEDOM HOUSE

‘Freedom house’ or ‘Freedom in theWorld’ was launched in 1973 representsthe level of political rights in variousstates, territory, on a scale from 1 (mostfree) to 7 (least free). Depending on theratings, the nations are then classified as"Free", "Partly Free", or "Not Free". It isagain a thought provoking point that

even a nation is a member of the UnitedNations according to UN criterion; it canbe declared ‘ not free ’ according to someother civilized standard acknowledgedby the same organisation i.e. the UN.Freedom house rankings are widely re-ported in the media and used as sourcesby political researchers. Their construc-tion and use has been evaluated by crit-ics and supporters.

GENUINE PROGRESS INDICATOR

The genuine progress indicator(GPI) is an alternative metric systemwhich is an addition to the national sys-tem of accounts that has been suggestedto replace, or supplement, gross domes-tic product (GDP) as a metric of eco-nomic growth. The GPI is used in greeneconomics, sustainability and more in-clusive types of economics commonlyknown as "True Cost" economics.

LEGATUM PROSPERITY INDEX

The Legatum Prosperity Index is anannual ranking developed by the Lega-tum Institute of 118 countries. The rank-ing is based according to a variety offactors including wealth, economicgrowth, personal well-being, and qualityof life. Norway topped the lists of the lasttwo reports i.e. 2010 and 2011. The 2010Legatum Prosperity Index is based on 89different variables analyzed across 118nations around the world. Source dataincludes World Development Indicators,Gallup World Poll, World IntellectualProperty Organisation, WTO, GDP, UNhuman Development Report, WorldBank, OeCD, World Values Survey. The89 variables are grouped into 8 sub -groups which are averaged using equalweights. These 8 sub-indexes are:n healthn Safety & Securityn Personal Freedomn economyn entrepreneurship & Opportunityn Governancen Social Capitaln education

For example, Personal Freedom in-cludes freedom of speech and religion,national tolerance for immigrants andethnic and racial minorities. In many de-veloping countries like Pakistan peopleare not allowed to talk openly againstgenerally accepted norms and religiousbeliefs. This type of attitude makes theminds of people clogged and increase amob of followers and not of thinkers. Anobsessed mind cannot be an independ-ent researcher. All kind social and reli-gious researches demand an attitude ofa judge and not a pleader. In all Muslimcountries we are producing pleaders andnot unbiased scholars.

SOCIAL CAPITAL SUB-INDEX

The Social Capital sub-index includesthe percentage of citizens who volunteer,give to charity, help strangers, and whofeel they can rely on family and friends. Itis strange enough that a distorted form ofreligion plays an important role in phil-anthropic contributions and the reasonbehind it to reduce the severity of crimein the people on self help basis. Go for abig offense and get clemency of mightyLord by distributing Zardah (Sweet rice)at Data Darbar. It is the elasticity of con-science which can give some soothing ef-fect to an ignorant soul.

LIVING PLANET INDEX

The Living Planet Index (LPI) is anindicator of the state of global biologicaldiversity, based on trends in vertebrate

populations of species from around theworld. The Living Planet Index was orig-inally developed by WWF in collabora-tion with UNeP-WCMC, the biodiversityassessment and policy implementationarm of the United Nations environmentProgramme. UNeP-WCMC collectedmuch of the data for the index in the firstfew years of the project.

GROSS NATIONAL HAPINESS

Many think tanks suggest that bene-ficial development of human society cantake place only when material and spiri-tual development take place side by sideto complement and strengthen eachother. The four pillars of GNh (GrossNational happiness ) are the promotionof sustainable development, preserva-tion and promotion of cultural values,conservation of the natural environ-ment, and establishment of good gover-nance The Physical Quality of Life Index(PQLI) is an attempt to measure thequality of life or well-being of a country.The value is the average of three statis-tics: basic literacy rate, infant mortality,and life expectancy at age one, all equallyweighted on a 0 to 100 scale. human de-velopment (humanity) in the scope ofhumanity, specifically international de-velopment, is an international and eco-nomic development model that is aboutmuch more than the rise or fall of na-tional incomes.

CHILD DEVELOPMENT INDEX

People are the real wealth of nations.Development is thus about expandingthe choices people have, to lead lives thatthey value and improving the humancondition so that people will get thechance to lead prosperous lives. And it isthus about much more than economicgrowth, which is only a means - albeit avery important one – of enhancing peo-ple’s choices. The Child DevelopmentIndex (CDI) is an index combining per-formance measures specific to children -education, health and nutrition - to pro-duce a score on a scale of 0 to 100. A zeroscore would be the best. The higher thescore, the worse children are faring.

GENUINE PROGESS INDICATOR

The genuine progress indicator(GPI) is an alternative metric systemwhich is an addition to the national sys-tem of accounts that has been suggestedto replace, or supplement, gross domes-tic product (GDP) as a metric of eco-

nomic growth. The GPI is used in greeneconomics, sustainability and more in-clusive types of economics commonlyknown as "True Cost" economics.

GLOBAL PEACE INDEX

The Global Peace Index (GPI) is anattempt to measure the relative positionof nations' and regions' peacefulness. Itis the product of Institute for economicsand Peace (IeP) and developed in con-sultation with an international panel ofpeace experts from peace institutes andthink tanks with data collected and col-lated by the economist Intelligence Unit( eIU ). The list was launched first inMay 2007 then continued on May 2008,2 June 2009, 10 June 2010 and most re-cently on 25 May 2011. It is claimed tobe the first study to rank countriesaround the world according to theirpeacefulness. It ranks 153 countries (upfrom 121 in 2007).

SUSTAINABLE DEVELOPMENT

Moreover, it is believed that the con-cept of sustainable development requiresdetermination of the environmental costof pursuing those targets. The happyPlanet Index ( hPI ) pioneers derivedtheir base line from the philosophy of Je-remy Benthem (1748 – 1832) english, andStuart Mill ( 1806 – 1873 ) eldest son ofJames Mill, i.e. utilitarianism, that a com-mon man’s course of action is not morethan overall happiness which he extractsfrom comforts of life. his moto of living is‘eat drink and be joyous, for tomorrowyou die’. It is just a kind of consequential-ism that morality of an action can be de-termined by its cosequences. If you getpleasure than all is correct. With achanged and more charged version youcan say, “God is in his heaven and all isright with the world”. It is the principle ofultimate happiness and the countrieswhich are doing their best in this direc-tion, allowing their citizens to lead suchlives and avoiding infringing on the op-portunity shall stand at better place on thescale. This will help making this planet ahappier one for coming generations. hPIcannot measure happiest countries in theworld but can assess life satisfaction onphysical grounds. We must not forget thefact that the more you have the capacity toenjoy physically; the less your mental ca-pabilities are. hPI is best conceived as ameasure of the environmental efficiencyof supporting well-being in a mediocrewell-being. each country’s hPI value is afunction of its average subjective life sat-isfaction, life expectancy at birth, and eco-

logical footprint per capita.

THE RANKINGS

According to the latest updated sta-tistics of happy Planet Index (hPI), first11 satisfied countries in the world arefrom Central and South America exceptVietnam at No 5, Coata Rica at No 1, fol-lowed by Dominican Republic, Jamica,Guatemala – all are tiny Central Ameri-can countries. Colombia at 6, and Brazilat 9 are South American countries whichare not small but their people are leadingrelatively tranquil lives. Most of thesecountries remain detached from haz-ardous political upheavals of the world.Pakistan, despite its abnormal milieu, isat No 24. It means that we are primafacie a satisfied nation which is enhanc-ing the level of world peace and makingthis planet a happy one. And of courseone of the reasons behind this positionis our fight against terrorism. Anotherreason is our extraordinarily suspiciousand contented approach towards corrup-tion. Many of us are not fed up with cor-ruption, suprisingly. They only talk ofthis colossal quandary but, indeed, theyare waiting for their own turn to makehay in the expected sunshine. 25 out ofthe first 50 are Asian countries withSaudi Arabia, Philippines, Indonesia,Bhutan are at 13, 14, 16, and 17. China atNo.20, Sri Lanka at 22, Pakistan at 24,Bangladesh at 31,Malaysia at 33, India at35, Nepal at 37. First european country,in this list of 143, is Netherlands, whichis at No 43 followed by Germany at 51,Italy at 69, France at 71, UK at 74, thewinner of hDI (human DevelopmentIndex) Norway is ranked 88th. Thebusiest nations are in the middle from 51to 100 except Israel at 67, South Koreaat 68, Japan at 75, Turkey at 83 Australiaat 102, New Zealand at 103, Denmark105, Russia at 108, Lebanon at 110, USat No 114, South Africa at 118. The emptyheaded nations of the world are gener-ally closer to the bottom which is a proofthat empty headed person or countriesare doing nothing in the cause of makingthis planet happy. In the last 43 coun-tries, from 101 to 143, 29 states areAfrican including Zimbabwe, Tanzania,Botswana, Namibia, Brundi, BarkinaFaso, Central African Republic, SierraLeone, Togo, Benin, Mozambique andMali are woven into a long tail of happyPlanet Index in reverse order from Zim-babwe 143 to Mali at 132.

The writer is a Grade-20officer and a freelance contributor.

He can be contacted atshahidkhursheed2009@gmail.com

ASSESSINg�LIvINg�STANDARDSANALYSISSHAHID KHuRSHEED

g Evaluatinghappiness via NewEconomicsFoundation’s ‘HappyPlanet Index’ andother coefficients

T

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news

CORPORATE CORNERMr khurram sayeed hailsissuance of sRo 1119(1)/2011

KARAChI: Mr Khurram Sayeed,executive Committee Member,India-Pakistan Chamber ofCommerce and Chief executivePlanet Petrochemical, has hailed theinclusion of polymers in the road listof items importable from India. hesaid that polymers of PP and Pe areused in the manufacturing of bags

for fertiliser, sugar and cement and this measure willgive some relief to the consumers as they can now beeasily imported from India at competitive prices. hefurther said that through the SRO 1119(1)/2011, otheritems included in the road list are cement, clinker,vegetables, cotton, yarn, cane and beet sugar, amongothers. PRESS RELEASE

Inauguration of CT scanmachine at Begum Akhtar Welfare Trust

ISLAMABAD: Inauguration ceremony of CT scanmachine was held at Begum Akhtar Rukhsana MemorialWelfare Trust hospital in Bahria Town, Phase 8. Chief guestMrs Malik Riaz hussain did the ribbon cutting. BahriaTown’s Chairman Malik Riaz hussain, executive DirectorGeneral (Rtd) ehtesham Zameer, executive DirectorGeneral (Rtd) Shoukat Sultan, hospital AdministratorBrigadier (Rtd) Khurram Raza, VCe Commodore (Rtd) MIlyas and a large number of other notable guests were alsopresent on this occasion. PRESS RELEASE

farzana Raja distributes life insurance cheques

LAHORE: Federal Minister and Chairperson BenazirIncome Support Programme (BISP), Madam FarzanaRaja, distributed life insurance cheques at a distributionceremony under Waseela-e-haq scheme of BISP held atgovernor house. During the ceremony, 152 cheques, eachcomprising of Rs1.5 million, were distributed among thebeneficiary families, while 20 cheques, under lifeinsurance scheme of BISP were also distributed. Besidesother leaders, Governor Punjab Sardar Latif Khosa,President PPP Punjab Imtiaz Safdar Warraich, PPPParliamentary Leader in Punjab Assembly Raja Riaz andGeneral Secretary PPP Punjab Samiullah Khan were alsopresent on the occasion. PRESS RELEASE

Inauguration of double Phattak flyoverMULTAN: The inauguration of Double Phattak Flyoverwas performed by Prime Minister Syed Yusuf Raza Gillaniin Multan. Federal Minister for Communications DrArbab Alamgir Khan said that the construction of DoublePhattak flyover was a long standing demand of peoplewhich was included in package III of Multan Inner CityRing Road Project. This package has a total cost of Rs1596million. In order to ensure safe, smooth and fast trafficflow in the city of Multan, 6x interchanges have beencompleted at cost of Rs3.58 billion. PRESS RELEASE

Not a drop of oil will pass throughthe Strait of Hormuz, if moreWestern sanctions are imposedover Tehran's nuclear programme

Iranian vice President, Reza Rahimi

KARACHI: Mr Arif Suleman, Honorary Advisor of RoyalThai Government in Pakistan, met with Shaikh AbdulQadir Al - Shaibi, (key holder of the Khana-e-Kaba),during his recent visit to attend Ghosle Kaba Ceremonyin Makkah Al Mukarmah Saudi Arabia. PRESS RELEASE

Economics�review�of�theyEAR�2011

JANUARY

The year begins with a predic-tion. "We have to save the euroover the next six months," sayshungary's prime minister, ViktorOrbán, as the country starts itssix-month turn heading the euro-pean Union. In the UK, the eco-nomic data shows inflationshooting up to 3.7% in December,prompting growing speculationthat the Bank of england will raiseinterest rates by the spring.

It is revealed that the UK econ-omy shrank by a shock 0.5% in thelast quarter of 2010 as Britain's re-covery faltered in the pre-Christmassnow. At the annual get-together forworld leaders in Davos, GeorgeSoros – the speculator who fa-mously "broke the Bank of england"– warns that the UK faces recessionunless its austerity package is re-laxed. Cynics muse that Soros mightbe talking up his own strategy,rather than expressing concern.

FEBRUARY

News that inflation rose to 4% inJanuary, the highest annual rate inmore than two years, prompts a pre-dictable response. Deputy governorof the Bank of england, CharlesBean, warns that interest rates mayhave to rise, and is joined by AndrewSentance - a soon-to-depart memberof the Bank's monetary policy com-mittee (MPC). City wags, concernedthat his medicine might finish off theUK, dub him "Death" Sentance. Nosuch concerns in China, which be-comes the world's second-largesteconomy after taking the title Japanhad held for more than 40 years.

MARCH

The last thing the world's econ-omy needed in March was a shock,but that's what it got. An earth-quake and tsunami in Japan rock fi-nancial markets.

Meanwhile, having spent therunup to the financial crisis insist-ing there was nothing risky aboutstuffing sub-prime mortgages intocollateralised debt obligations, thecredit ratings agencies awake.Moody's slashes Greece's rating bythree notches to B1, while alsodowngrading Spain's to Aa2. Bor-rowing costs for weaker members ofthe eurozone continue to rise, rais-ing fears that further rescue pack-ages will be needed.

The agency also has words for

George Osborne following the chan-cellor's "budget for growth". It saysBritain could lose its prized AAAcredit rating if growth forecastsprove too optimistic.

APRIL

The ratings agencies are devel-oping a taste for this downgradinglark.Standard & Poor's snips USdebt outlook from stable to negativefor the first time since the Pearlharbor attack in 1941.

Meanwhile, China raises its in-terest rates for the second time in2011, adding to concerns that itseconomy is overheating.

A shutdown of the US federalgovernment is averted with a latedeal on spending cuts, but the goldprice hits a new record of $1,500 anounceas investors seek safe havens.

MAY

With the world looking forfirm financial leadership, Do-minique Strauss-Kahn is arrestedin New York on sexual assault al-legations, forcing his resignationas the head of the InternationalMonetary Fund (the charges aresubsequently dropped). Portugalnegotiates a €78bn (£70bn)bailout deal, while the economicthinktank, the Paris-basedOeCD, says the UK will have tostart raising interest rates to pre-vent inflation.

JUNE

The Orbán timescale still looksvalid. Five months after hungary'sprime minister warned europehad six months to save the euro, aBerlin meeting between Ger-many's chancellor, Angela Merkel,and the French president, NicolasSarkozy, prompts headlines: "45minutes to save the euro". Mean-while, the rudderless IMF sup-ports the UK's austerity measures,butstock markets fall sharply onthe imminent prospect of a Greekdefault. Greek bonds hit recordlevels after riots add to the pres-

sure on the government.

JULY

What a relief. "At the 11th hour,a new solution to save the euro hasemerged," reports the Wall StreetJournal, after european leadershammer out a new deal including a"Marshall plan" to stimulate theGreek economy. In the UK, a secondroyal wedding, an earthquake, hotweather, heavy snowfall and theOlympics are all lined up to excusepoor second-quarter GDP figures.

French finance minister Chris-tine Lagarde is appointed the newhead of the IMF. With the postagain going to a european, emerg-ing nations argue it should be filledon the basis of competence, not na-tionality. Whatever next?

AUGUST

Congress passes a new US debt ceil-ing deal, but it's still not a great monthfor Barack Obama. The president isrocked as ratings agencyStandard &Poor's carries out its threat to down-grade the US's gold-plated triple A rat-ing to AA+, as it judges that a deficitreduction plan is too tame. Switzerlandmoves to counteract the "massive over-valuation" of the Swiss franc. In the UK,the MPC members suddenly agree. Dis-senters Martin Weale and Spencer Dalefall back into line in a unanimous votefor interest rates to remain at theirrecord low of 0.5%.

SEPTEMBER

having solved the problem inJuly, the world's leaders startdoubting whether they really havesaved the euro. Leading centralbanks are to flood the financial sys-tem with US dollars, in a co-ordi-nated action designed to boostmarket confidence.

In the UK, public sector job cutssend unemployment back throughthe 2.5m barrier, and having backedthe coalition government's austeritydrive in June, the IMF hedges itsbets. It cuts UK economic growthforecasts and warns that David

Cameron may have to slow hisdeficit reduction programme.

OCTOBER

Merkel and Sarkozy hold emer-gency talks in Frankfurt to cement adeal to save the eurozone (again).Sarkozy flies to Germany rather thanstay with his wife, Carla, for the birthof their first child – underlining eitherthe scale of the panic or his fear of ma-ternity wards. Inevitably, europe'sleaders claim another victory after in-creasing the firepower of the mainbailout fund - the european financialstability facility (eFSF) – to around€1tn. The Bank of england takes ac-tion to kick-start Britain's flatliningeconomy by pumping £75bn moreinto the banking system – more, andearlier, than economists had expected.

NOVEMBER

The much-heralded October euro-zone victory suffers a setback. TheMerkozy eyebrow arches as Greekprime minister George Papandreouproposes a referendum on the deal.The plebiscite is subsequentlycrushed, as is Papandreou, who quits.he's not alone. Italy's prime minis-ter, Silvio Berlusconi, also says he'soff as interest rates on Italian bondsrise above 7%. In the UK there issome good news, as figures showGDP was stronger than expected inthe third quarter, growing by 0.5%,while inflation is also starting to fall.But there's bad news too: in his au-tumn statement, Osborne concedesthe UK will barely grow next year.

DECEMBER

UK unemployment hits a fresh 17-year high of 2.64m. The tension betweenthe US and China over internationaltrade escalates when Beijing imposes ad-ditional duties on cars imported from theUnited States. eU leaders agree a "fiscalcompact" after David Cameron vetoed arevision of the Lisbon treaty. And theyear ends with a happy new year mes-sage from the IMF: the world, warns La-garde, is at serious risk of sliding into a1930s-style slump. GuARDIAn

g The eurozone's futurehung in the balance,the US saw its creditrating downgraded,Japan's earthquakerocked markets andfiscal failings forced outtwo prime ministers

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Monday, 02 January,2012

Markets

Today, we have reached a greatmilestone. The reactors arestable, which should resolveone big cause of concern for us allJapanese Prime Minister,yoshihiko noda

weekly review

KSE gains 47 pointsWoW, gas crisistakes toll on industry

g Index ends flat on investorpessimism

g 86 advance, 104 decline,110 remain unchanged oftotal 300 scrips traded

g kse-30 index closes at10275.60

g kse ends flat as volumes sink tonew low

g 92 advance, 102 decline, 110remain unchanged of total 304scrips traded

g kse-30 index closes at 10292.58

g kse gains 41 points despitelackluster trading

g 104 advance, 106 decline and105 remain unchanged of total315 scrips traded

g kse-30 closes at 10288.20

g Margin Trade system spursbulls at kse

g 133 advance, 87 decline, 98remain unchanged of total 318scrips traded.

g kse-30 index closes at10318.16

g kse-100 ends on sour note,with 88 pts drop

g 98 scrips advance, 113 decline,88 remain unchanged of total299 scrips traded

g kse-30 loses 139.13 points toclose at 10179.03

KARACHI

STAFF REPORT

The week started off withextremely low volumes amidthe issues pertaining toCapital Gains Tax (CGT),

memo-gate controversy and gas supplyto the manufacturing sectorparticularly the fertilizer industry.Adding to the misery of the fertilizer

sector, poor off-take numbers inNovember further dampened investorsentiments.As a result, average volumes weredown by 15%WoW to 38m shares.however, the KSe 100 Index witnesseda gain of 47 points, up 0.4%WoW.Foreign fund managers remainedmostly inactive due to Christmas andNew Year holidays, thereby remainingnet seller of meager US$0.4m.

TAckLINg gAS cRISIS: The gascrisis in the country is worsening withthe winter setting in. In order torationalise the gas usage, thegovernment is considering proposalsregarding month-long closure of CNGstations and raising CNG prices.Moreover, the government hasfinalized the increase in gas tariff fordifferent consumers from 14% to 207%from Jan 2012 which is likely to

negatively impact the margins of themanufacturing sectors.FERTILIzER OFFTAkE DOwN11%MOM: All fertilizer sales inNovember were down 11%MoM,whereas both urea and DAP offtakedropped MoM by 12% and 22%respectively. Consequently, thefertilizer stocks like FFC, eNGRO,FFBL & FATIMA underperformed themarket by 3%, 6%, 10% and 1%

respectively.LSM cONTRAcTS IN OcT, FDIFALL DURINg 5MFY12: Large scalemanufacturing (LSM) has grown by2.1%YoY in 4MFY12 mainly due to thelow base effect as floods last year hadaffected the industrial production. InOctober alone, however, the LSMcontracted by 1.5%. Furthermore,Foreign Direct Investment (FDI) fell by27%YoY in 5MFY12 to US$419.8m.

LAHORe

AAHYAn MuMTAZ

The year-end witnessed low trading volumes and all round dull activityas the KSe-100 index gained a meager 47 points (+0.4% WoW). Ac-tivity remained slow, with average daily volumes coming in at 38mlnshares (-15% WoW). Political tensions, infrastructural issues, regula-

tory concerns, and dampened industrial activity compounded negative investorsentiments. Foreigners again were net sellers, disposing USD 0.4mln worth ofequities during the week. The week started off where the last ended; in the midstof political turmoil engulfing the country in the wake of the memogate scandal.The political atmosphere has taken its toll as investors treated the uncertaintywith a cautious approach. Further, the issues pertaining to Capital Gains Tax(CGT) which has resulted in a deadlock between capital market participants and

regulator hammered activity. however,some respite from the regulatory

front was seen with the SeCP’srecently announced relax-

ation in Margin Financingrules. It is expected that

the amendments willhave a positive effecton the market as therules come into playonce implemented.This bodes well foractivity and shouldsee the market in thepositive in the com-

ing weeks, assumingthe political situation

settles down a bit andmacroeconomic funda-

mentals see a marked im-provement from the declining

trend they have assumed.

Fertilizer stocks were in thelimelightunsurprisingly giventhe issues revolvingaround gas supply forthe industry. The gascrisis in the country isworsening with thewinter setting in. Inorder to rationalizethe gas usage, the GoPis consideringproposals regardingmonth-long closure ofCNG stations andraising CNG prices.Moreover, the GoPhas finalized theincrease in gas tarifffor differentconsumers from 14%to 207% from Jan2012 which is likely tonegatively impact themargins of themanufacturingsectors. Furthermore,NIB was in thelimelight with newsflows regarding a possible sale of the bankto IBIC. According to sources, talks are underway for a suitableprice which would entice the Chinese bank to view a possibleacquisition favourably given the heavy losses that have beensustained by NIB over the course of its operations in Pakistan.

sToCk sPeCIfIC ACTIvITyFertilizer stocks areexpected to be in thelimelight for thecoming week as ahardline stanceon gas supply isexpected tofinalize shortly. Inthe event that theproposed 207%hike in feed stockprices to thefertilizer sector isimplemented, aurea price hike inthe range of Rs300/ bag wouldbe highly likey. Insuch a case,FATIMA is thepreferred stockwhich benefitsfrom windfallgains as prices arehiked.Further, bankingstocks, withyearly results tobe announcedwould be popularplays onattractivedividend yields.

foRWARd lookIng exPeCTATIons

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analysis

07

The lifeline of the country continues to be theindustries as well, and as a result of an increase indemand of gas; the curtailments to the industry,have adversely affected it. Our focus remains, tofind a solution that benefits all the stakeholders

sngPl Managing director, Arif hameed

SHAN SAeeD

Istill remember during AsianFinancial crisis, PresidentSuharto’s government faced anignominious exit from the

parliament in May1998. People were fedup with corrupt rulers in Indonesia. hisfamous son Toni was caught forcorruption, crony capitalism andwrongdoing in the government. InPakistan, we are in the same boat witheven higher level of corruption at allspheres of the government department.Prime Minister, his son, cronies likeAyyaz Niazi-Corrupt Chairman of NICLex-Russian Night Club Manager and ex-Standard Chartered corrupt banker inDubai, Khawaja in Oil and gas company.

President and his entourage of corruptpeople like Raja Pervaz Ashraf in RentalPower deals, ex-MD Capt Ajjaz haroonof PIA, Babar Awan and Dr. Asimhussain—doctor becoming an energyexpert. he has no idea what’s going on inthe energy market globally. Does heknow about shale gas or natural gas thatwould entirely change the global energymarket in the next 5-years? For hisinformation, till 2006, the United Stateswas the ninth largest global producer ofnatural gas. Now, it’s No 1 in the world.It’s really remarkable the recovery USAhas made in the natural gas market dueto its consistent effort in breakthroughtechnology. energy experts are sharingtheir strategic thoughts about solarenergy, natural gas and shale gas that

would be the new game changer in theglobal energy market. Few regions arenot even considering analysing theenergy market or having skin in thegame. In the coming decade, countriesthat would be thriving with theireconomies would be those who areinvesting heavily in the energy andnatural resources.ENTREpRENEUR’S pERSpEcTIvE:how crony capitalism kicked goodinvestment out of Pakistan? Localentrepreneurs and businessmen know thatthey have to bribe or kickback orcommission the government officials to getwork done. Moreover, these governmentofficials want stakes in the new venturesand profit sharing. This makes themuncomfortable as they don’t want to shareprofits with government officials becausethey fear black mailing in future. Fear is adepreciating asset with no upside orrecoverable value. They want to makeinvestment in Pakistan but areapprehensive about corrupt governmentinvest amounting to $10 to $15 billion ifpresent government gets it act straight byallowing level playing field to the allinvestors in Pakistan instead of favouringtheir own men to get kick backs. Sincegovernment wants to favour its own peopleto have smooth cash flow of corrupt fundsin bank accounts, makes good investment

difficult to get in the financial system in thecountry. The image of the country is badlytarnished in the local and internationalmedia as our corrupt rulers are onlythinking short term to fill their ownpockets. International or foreign investorstake a cue from local investors beforemaking investment in Pakistan. Just asmall example Yamaha wanted to invest$15 million in Pakistan in 2010, butwithdrew their investment as corruptgovernment officials wanted kickbacks inthe deal. Chinese company pull out of TharPower Coal project as NePRA officialswanted kick back on $17 billioninvestment. GDP size remained stagnantfor the last two years as GOP did notsupport in increasing income of the people. INSIDE INFORMATION: Dogovernment officials know that wherethe illegal funds are heading for? Theyare landing with FBR very soon. Youbet. By the way, All Suiss banks haveannounced that they are closingaccount of Pakistani clients and arerevealing data of all Pakistani accountholders with FBR who are maintaininghuge funds with them. So governmentofficials have to think hard where toplace those illegal funds in the comingthree months. The sleepless nightswould be pressing for some people. REMEDY FOR cRONY cApITALISM:

Government should provide confidence tolocal investors in order to restore itscredibility and financial standing in theinternational community. Once localinvestors will get their skin in the game andinvest in Pakistan, foreigners wouldautomatically come in the market to placefunds. The rule is very simple, be open, betransparent and don’t favour your ownpeople. Let the market function withoutgovernment interference. Government ofPakistan should follow successfuleconomies like Singapore, Malaysia,Indonesia and South Korea to welcomelocal and international investors to makegood investment, sharing technology andbest management practices for the economyto grow and to provide jobs to the localpeople. The suffering of people in Pakistanis too much now and they want to havefinancial emancipation and want to improvetheir living standards going forward. happyinvestment the good way!

Shan Saeed is a financial marketeconomist with 12 years of solid globalexperience based inSingapore/Malaysia. He has graduatedfrom Uni of Chicago, Booth School ofBusiness, USA and IBA Karachi. He canbe reached at saeedshan@gmail.com.Blogs atwww.economistshan.blogspot.com

The new form of corruption in Pakistan

NAwAzISH MIRzA

The recent trend in Pakistan’s academicscene is a transition from core teaching in-stitutions to so called research concen-trated universities. This has been pushed

at the top level as the higher education Commis-sion (heC) has linked various appointments, pro-motions and tenures of academia with theirresearch output. The countless business schools ofthe country are following suite with their rankingsheavily relying on the research published by the fac-ulty. The research and its dissemination is benefi-cial if the purpose is improving on knowledge andpossibly that was the prime factor for heC’s focuson promoting research. however, the recent growthof open access journals has provided Pakistan’s ac-ademia in management sciences with the possibilityto beat the system and sadly some of them did notmiss the train. Consequently, we are facing a catas-trophe of research in management sciences.

The numerous open access journals that formthe basis of this publication hoax, offer some in-teresting services that are worth discussing. Pri-marily, some of these two managed to end up inindexing services provided by Thomson Reutersand Ulrich’s Journal Database that are consideredKosher by heC making them favourite for busi-ness schools professors. Secondly, these journalsmostly have at least twelve issues a year (somemight have up to 24) and you can end up publish-ing same number of articles if you can afford topay some hundred dollars for each “acceptance”.Interestingly, fee is charged on acceptance andnot on submission making it a risk free venturefor the researchers. Thirdly, if you do not have aforeign currency account or a visa card, you canstill pay for publication through a local bank ac-count in Pakistan – yes in PKR.

even if these reasons are not good enough, youfurther have the possibility to act as “reviewer” ofyour own paper by creating fake emails as a profes-sor and proposing the nonexistent expert as a pos-sible referee. Surprisingly, the journal will notinvestigate the pseudo referee and voila you have apublication – assuming that being rational, the au-thor is not likely to reject his own paper. Further,even you let the editors do the tough task of findinga referee; still the rejection rate of these journals iszero, making them attractive for a publication seek-ing public. This reminds me of Nobel laureateMyron Scholes, who in one of his guest lectures atParis Dauphine stated that every academic manu-script has an ex ante 99% probability of rejection.Thanks to these journals, we are excellent at beat-ing the odds. Lastly, the editorial board of thesejournals have significant participation from the subcontinent. Further, readers should not be surprisedif they end up on the website of an internationalopen access journal whose entire editorial boardcomprises of academics from some university inKyber Pakhtunkhwa. Oh yes! Still it is an interna-tional journal.

In a recent article published by Dr Q Isa Daud-

pota – who has been tracking the issue of fake pub-lications for sometime – some interesting facts arepresented about the heC recognised PhD supervi-sors in management sciences. his findings revealthat half of these holy supervisors have publicationsin such dubious journals with an average of 4.6 ar-ticles per person. The same article further revealsthat one of the professors in management sciencesproduced 18 international publications – all in suchjournals - in eighteen months. I had a similar expe-rience sometime back when a seasoned academi-cian tried to show his superiority on me by claimingthat he has been publishing four articles a monthtaking his publication count to 40. Impressed by hisquote, I investigated the publication bouquet andimagine what I got. From 1980 to 2007, his totalpublications including his doctoral dissertationwere 4 that increased by ten times from 2007 to2011. All thanks to these open access journals. Thisinformation is shocking for anyone who is familiarwith the research and publication process in busi-ness studies. In technologically advanced countries(a terminology used by heC for developed coun-tries) a business related academic article would re-quire, on average, six months of extensive work.Interestingly, this average time is spent on researchdespite the convenient on and off campus access tosystematic databases, literature, surveys etc. Fur-ther, the review, comments, revision and publica-tion process can take up to a year for a second tierjournal whose editorial process ensures that the re-search is genuine and findings are not cooked.

Given the progression of our business professorswho have demonstrated the ability to publish atsuch an unbelievable rate, there could be two pos-sible actions. If we believe in the story, heC shouldpropose their names to Nobel committee to be con-sidered as next laureates for an achievement thatsurely is unmatched worldwide. else, heC shouldcrack down on all such publications and all such au-thors for the insult these imbeciles are bringing tobusiness academics. The dire consequences of thesepractices do not emanate from incapable individu-als publishing filth in name of research but actualloss will surface if genuine faculty members aretempted to ride this bandwagon to match the pub-lication rate of open access clientele. For those whoare curious about title of some of these journalsshould refer to Dr Daudpota’s article that exposesking of the ring of open access.

The sad part of the story is yet to come. Whilebrowsing the website of god fathers of these jour-nals, I came across some academic conferences inPakistan where these sham journals are acting ascollaborator. In one of those conferences that tookplace in the last week of December, heC is appear-ing as a co sponsor. having heC on board, whomshould we recourse as lender of the last resort? Theother conference that is likely to take place inspring 2012 in Lahore has all collaborating journalsfrom the same category. Again, with heC’s generos-ity towards research, this conference might claimsome research grant or at least some recognition forthe university, while, simultaneously, these Jour-

nals benefit as these questionable conferences pro-vide marketing opportunities to exploit more acad-emicians.

This discussion brings another challengingissue for heC. The quality assurance procedure de-mands that at least one article from dissertationshould be published in a recognised journal beforethe formal award of PhD degree by a local degreegranting institution. If these journals continue toremain as recognised, only because they appear insome indexing service, the quality of locally pro-duced PhDs will be of serious concern. In contextof academic articles in general and PhD in specificI would like to share a unique source of plagiarismthat heC should counter and which is unlikely tobe captured by these dubious journals. This inci-dent recently happened in a foreign country whena Pakistani doctoral student translated a thesis toenglish that was originally written in some euro-pean language, and submitted in his own name. Thefraud was detected by the reviewer by chance asthere is no way a software, regardless of its artificialintelligence, can disclose this kind of intellectualdeception. If this can happen abroad, I will not besurprised if this is already happening in Pakistan.

The result of these malign practices, leadingfrom plagiarism, false research, publishing in fakejournals, is fairly obvious albeit seriously dauntingfor business education. The unethical publishingyields institutional applaud, research rewards, pro-motions and tenures. The websites of business uni-versities are flashing the news of their faculty’spublications in this bogus category. This raises avery serious question. What should we expect aboutthe future business managers who are being trainedby people violating basic research etiquettes?

This is high time that heC should take seriousnote of research practices being followed at busi-ness schools in Pakistan. The authority must en-force its vision of promoting a research culture inthe country. The indexing lists are not sacredcows and heC must strictly scrutinise the jour-nals to remove such plagued publication avenuesthat promote cheating among business academia.They must abstain from recognising so calledbusiness conferences that act as nothing morethan marketing campaigns for such journals. Theymust retrospectively evaluate the promotions, ap-pointments and other benefits of faculty in man-agement sciences on basis of prank research andcorrective measures must be taken to convey aclear signal. For once, grandfather clause shouldbe trashed in the wider interest of business edu-cation. Similarly management schools should dis-courage these kinds of publications by theirfaculty members otherwise such high rate of pub-lications can be a source of humour but is not areflection of class in serious academics.

The author holds PhD in quantitative financefrom Paris Dauphine. The views expressed are of

author and does not represent any institution.Author can be contacted at

nawazish@nmirza.com

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