ACHIEVEMENTS
:» Founded and serves as Chairman of PABE, Pakistani-American Business Executives, and an information portal.
:» Founding Director of PAL-C, Pakistan American Liaison Center that brought about the Pakistan Congressional Caucus in USA.
:» Founding Director and Trustee of President Musharraf's Pakistan Human Development Fund.
:» Active member of the U.S. Trade Advisory Committee for Congresswoman Jane Harman, and is a past member of the World Affairs Council International Circle.
:» Founding member of MCAC, Multi-Cultural Advisory Committee, a community outreach program initiated by US Department of Justice on the West Coast.
:» Past Chairman and now serves on the Industry Advisory Board for the College of Engineering, Computer Science and Technology at California State University, Los Angeles.
:» Recipient of the United States Small Business Administration's Award for Excellence.
Business Monitor has had the honour to know Mr. Lodhie's multi - activities either in USA or in Pakistan.

Born in Delhi - India, Pervaiz Lodhie still remembers the hardships that his family went through to migrate to Karachi Pakistan after 14th August 1947. Settling into a new city and starting a living from ground up was not easy for his family in 1947. But the Lodhie family had a background in engineering and his father was an automotive engineer who joined the Kandawalas and managed their Eastern Automobiles Division in Karachi.
Coming from a family that had an engineering background, Pervaiz's parents wanted him to be the 3rd generation engineer and started to look for a prominent school for their son.
After partition there was a huge shortage of good schools in Karachi and Mohammed Ali Jinnah requested the school management to open its doors for non Parsi students to fill this void, the request was granted and thousands of children from all faiths came to the B.V.S. for quality education. During the early 1950's B.V.S. Parsi High School was the only school in Karachi that had a Technical Training program. The technical education program was based on theory and practical use of the latest equipment donated by the US Ford Foundation. Soon young Pervaiz was under the wings of great teachers like Irani Master, Sir Aziz, Sir Hussain, Mr. Divecha, Mrs. Mistri, Mr. Minwalla and the great Principal at that time - Behli Rustomjee.
Pervaiz graduated from the B.V.S. with distinction and was the third highest ranked student from all over Karachi. He went to D.J. Science College and then joined what is now called Axminister Carpets. Young Pervaiz put his technical training in use and was responsible for assembly and operations of the Carpet Woolen Yarn Division.
In 1967 like many young Pakistanis Pervaiz left his homeland for further education, first to Pasadena City College and then to Cal State University at Los Angeles. He completed his Bachelors in Mechanical Engineering and worked in partnership with his brother designing electronic indicators. He established LEDtronics in 1983 as a small two-person manufacturing organization. The business has grown with sales approaching $20 million with manufacturing facilities in Torrance California and Karachi Pakistan.
But this is when most individuals would slow down their quest for hard work - having a very successful business and a beautiful family with a loving wife and three children. But love for his country and for the betterment of humanity - has driven Pervaiz to do lot more. His real story now begins:

Pervaiz Lodhie is President and CEO of LEDtronics, Inc. He established LEDtronics in 1983 in Torrance, California. Pervaiz was one of the twenty-four Founding Directors and Trustees of President Musharraf's Pakistan Human Development Fund. Pervaiz with his own initiative has also started the Humanitarian Poverty Alleviation programs in the poorest Pakistani villages, providing them sustainable solar powered LED light bulbs and solar powered drinking water pumps.
He has designed what he calls his third world kit for application in underdeveloped areas. His kit holds three LED lights for households without electricity. The solar panel generates enough power during the day to light a home for six to eight hours in the evening. The solar-powered lighting kits are being placed in two beta sites in Pakistan. The UN is looking at this program and this will have far reaching positive effects all over the world, especially in developing countries.
Pervaiz transferred his US based company's labor intensive assembly work by starting a 'contract manufacturing' company in the Export Processing Zone Karachi, 9 years ago. It was a success beyond expectations. This partnership with Pakistan not only helped save his company in USA but also enabled him to be profitable and globally competitive. He has now employed 200 workers, out of which 60% are women.
By creating 200 jobs, basic minimal needs of 2000 immediate family members are met. In addition, these 2000 people create a further economic ripple effect in their area and impact the lives of 20,000 people. This is how very little investment gives the highest return.
Back home, Pervaiz has affected billions of dollars of economic health of America. For the last 19 years his company has supplied Solid-State LED light bulbs to the US industry to reduce electric energy usage by average 2-3 megawatts per year. This energy reduction has reduced pollution and has helped reduce hazardous waste.  >>>>>

Bata ready to capture women's footwear market
Managing Director of Bata, Imran Malik
In the Pakistani shoe manufacturing industry, Bata is a name that needs no introduction. Having initially gained popularity through the manufacture of school shoes, the company has evolved into Pakistan's largest footwear brand. Bata was one of the first multinational organisations to set up operations in Pakistan. The company currently operates in 60 countries across the world and has recently started production of women's shoes, besides bringing innovations to the core category of children's shoes. Today, it has over 370 outlets in Pakistan. Last year, three new machines were added to its manufacturing facilities in order to meet growing demand. Prices of the firm's shares have also skyrocketed.
All the way up
The current managing director of Bata, Imran Malik, has worked his way to the top of the company after starting off as a salesman. Malik climbed the ladder to eventually bag the top most spot at the firm. Talking to The Express Tribune, he commented that the nation was brimming with talent. He said that the employees at Bata felt pride in being part of the organisation and took ownership of their work. Due to their unfaltering commitment, Bata products have never failed to generate demand among customers. He pointed out that at present many Pakistanis are working as country heads for Bata in different parts of the world, including Indonesia and Kenya. Malik was the first Pakistani to be appointed country  >>>>>

Singapore looks set to become the world's fastest-growing economy in 2010 after the government upgraded its forecast to a blistering 13 to 15 percent annual expansion. The new estimate, up sharply from an earlier prediction of 7.0 to 9.0 percent, outstrips forecasts of around 10 percent growth in regional powerhouse China and comes despite lingering worries over the US and European economies. "Singapore will be the strongest-growing economy in Asia for the year and probably in the world," said Song Seng Wun, a Singapore-based regional economist with CIMB Research. He said the new growth forecast was "realistic" despite a projected slowdown in the second half because gross domestic product (GDP) expansion in the first six months of the year was likely to be 18 percent. Asia's other export-oriented economies are also expected to post healthy increases this year, but Singapore has other growth drivers including its tourism and financial services industry. Singapore opened two huge casino resorts this year that have proved a popular draw. David Cohen, a regional economist with research house Action Economics, said Singapore will "probably come on top of the charts worldwide".  >>>>>

Avari sees growth in economy, hotel business despite terrorism
One of the top Pakistani hotelier and businessman, Byram D. Avari, 69, is not scared of terrorism, political uncertainty and a government that is piling up debt with each passing day. He has already seen many upheavals and insists that Pakistan's economy will only grow, grow and grow! So as the chairman of Avari Hotels Limited, he has increased investment in new hotels despite huge losses to the industry in recent years. At a time when many hotels are struggling to remain afloat and many new projects have been put on hold, he launched AvariXpress in Islamabad on July 7. And by the end of 2011, he intends to open doors of the country's first all-suites hotel in the federal capital. "There is a lot of demand for quality-accommodation in the country," he told The News in an interview. "AvariXpress is a boutique hotel. This is exactly like a five-star hotel, but provides limited services." Avari, who plans to open several other boutique hotels across the country, said there were ways to save costs, while offering luxuries. "We don't have big receptions, banqueting halls or a number of restaurants, much spending on advertisements or a doorman." Despite the additional security expenses, hotel industry in the country has prospered, he said. "If you look at the growth graph, it falls down at times, but overall it continues to go up."  >>>>>

'US to try for greater market access to Pakistani textiles'
Senior US trade officials have pledged to work towards greater market access for Pakistani textile products in the United States and to advance bilateral trade and economic ties, a statement said. They also hope for early finalisation of reconstruction opportunity zones (ROZs) legislation aimed to facilitate job creation and economic development in the tribal areas bordering Afghanistan. "Pakistan is open for business," Gail Strickler, Assistant United States Trade Representative (USTR) of Textiles, told a large delegation of Pakistani textile exporters at a reception held for them and a number of leading US textile apparel buyers. The Pakistani delegation was led Adviser to the Prime Minister on Textiles Mirza Ikhtiar Baig. The reception was part of the Texworld, a trade fair for apparels, held in the United States for the first time. Top Pakistani textile products manufacturing companies set up their stalls in the weeklong exhibition, along with those of other nations. Strickler said the USTR would make every effort to help Pakistani manufacturers in facilitating their exports and even to improve the quality of their products. Paul Jones, Deputy USTR, said that improving market access for Pakistani products was part of the strategic dialogue between the United States and Pakistan. Better economic cooperation and development would melt away the trust deficit between the two countries. Michael Delaney, Assistant USTR for South Central Asia, said that creation of jobs through economic development is the best weapon to fight militancy.  >>>>>

Bangladeshi economist ready to help Pakistan on micro-financing
The Nobel Prize winner Bangladeshi economist Dr Muhammad Younis said that he would like to help Pakistan reduce poverty with his Grameen Bank experience of micro-finance banking. "Micro-credit banking can help reduce poverty," he told The News in an interview. Younis said that in Bangladesh around nine million borrowers of Grameen Bank were poorest people of the country, but the correct utilisation of funds helped improve their financial position. Due to micro-credit banking the economy of Bangladesh is getting better at the grass root level, he said, adding, production capacity is increasing and job opportunities are on the rise in the country. Younis said he was in Japan to make an agreement with one of the major Japanese readymade garments chain called UNIQLO. The company will work with Grameen Bank to establish economic clothing industry and set up outlets in different cities of Bangladesh, Younis said. "The initiative will enhance industrialisation, create jobs, and help stabilise economy," he said. Younis said his mother inspired him. "She never turned back a poor person empty- handed." "I never work for any award or reward, but I try to help the poor with my full capacity," he said adding, "God provided results due to my fair intentions." "I have good memories of Pakistan and would like to see it on path of a strong economic recovery," Younis said.

ECC forms body to estimate sugar needs
The Economic Co-ordination Committee (ECC) of the Cabinet on Tuesday constituted a powerful ministerial level committee to decide in three days how much sugar to be imported for Ramazan and rest of the season. Briefing the media about the decisions taken in the ECC meeting, Secretary Finance Salman Siddique said the provinces have agreed in the meeting on taking administrative measures, in case of hoarding, to ensure availability of the commodity in the market. He said the meeting also identified the people responsible for the delay in import of sugar and a report in this regard would be submitted to the Prime Minister. He, however, did not disclose their names. Giving details, he said the ECC also approved limited payment model tariff, already approved by National Electric Power Regulatory Authority (Nepra), for purchase of power from power projects yet to start commercial operation. The tariff approved will include fuel cost, variable and fixed O&M cost, Return on Equity (RoE) component to be determined by the Nepra  >>>>>

Textile sector NPLs reach Rs100 billion
The textile sector emerged as the biggest defaulter of banks when its non-performing loans (NPLs) reached about Rs100 billion as reported by the State Bank in its recent report. The textile sector, which was bitterly criticised by the State Bank for its growing NPLs, appeared as the biggest defaulter despite higher consumption of cotton and increasing exports. The combined NPLs of manufacturers of textile and manufacturers of apparel, readymade garments and dressing reached Rs99.561 billion till December 2009. The NPLs figures were compiled from all banks and Development Finance Institutions (DFIs).  >>>>>

Limiting cotton purchase for two months: PCF rejects 'vague' proposal
Chairman Pakistan Cotton Forum (PCF), Seth Muhammad Akbar said categorically that no intervention to free market mechanism will be acceptable to growers, ginners, spinners and organised value added textile manufacturers. Vested interest element, represented by a few, should, therefore, stop maligning other sectors of textile industry simply to serve their personal interests. Chairman PCF said the major stakeholders of the cotton economy are fully vigilant to the situation and they would not let the policymakers to play in the hands of a bunch of ancillary industry carrying vested interest.  >>>>>

Legislation under way in US to abolish tariff on textiles
The US delegation, during its recent visit, has conveyed to the government of Pakistan that legislation to abolish tariff on textiles is underway, which would enable Pakistan's textile sector to export its products to the US market without paying duties. The officials of the US AID and US's Special Representative to Pakistan and Afghanistan Richard Holbrooke shared this information after the conclusion of an address delivered by the US Secretary of State Hillary Clinton. They said the legislation on abolishing the 16 percent tariff on Pakistani textiles was discussed in the Senate's standing committee on foreign affairs.  >>>>>

Rupee trims losses
IN the local currency market this week, the rupee avoided sharp rise against the dollar, though it continued its downslide versus US currency amid rising demand to cover yearend payments. The rupee commenced the week on bearish tone moving both ways as it continued to drift lower versus dollar, off set to a greater extent by increased inflows of overseas remittances. In the inter-bank market, the rupee lost 14 paisa on the buying counter and another 13 paisa in the selling counter to trade at Rs85.44 and Rs85.48 in the first trading session after closing last week at Rs85.30 and Rs85.35.  >>>>>

'Women empowerment imperative for development'
Karachi Women parliamentarians and leaders stressed upon the need for women's empowerment to lead the country on the path to development. These views were expressed at the Sixth Women's Leadership Conference titled 'Women's Empowerment' organised by Triple-E and the Sindh Ministry of Women's Development at a local hotel. Speaking on the occasion, the keynote speaker, MNA Sherry Rehman, strongly condemned a superior judge for questioning the placement and basis on which women parliamentarians are selected. "I strongly express my condemnation over the judge's questioning. Women from not only our party but from all other parties became legislators on merit."  >>>>>

PTA organises Telecom Consumer Forum
Pakistan Telecommunication Authority (PTA) organised Telecom Consumer Forum with a theme "Together for Consumer Rights", said a press release issued here on Thursday. State Minister for Industries and Production, Dr Ayatullah Durrani was the chief guest on this occasion while Chairman PTA, Dr Mohammed Yaseen presided over the Forum.
Consumer Representative, Suraiya Allahdin, representatives from IT & telecom industry, telecom consumer groups, renowned social workers and academia also attended the event. Dr Ayatullah Durrani said that this forum provides us an excellent opportunity to review the telecom scenario in Balochistan for achieving desired targets in terms of service expansion. He said that the telecom sector has witnessed a spectacular growth in the recent past.
He said that Balochistan is gaining a lot of ground through implementation of last mile solution and increased network coverage. Major share in this increase of network coverage has been that of the mobile sector while Wireless Local Loop (WLL) services have also fared well recently in the province, he added. The Minister said that it would also have a positive spill over effect on the overall economy of the province creating increased economic activity in Balochistan.
Dr Ayatullah further said that number of consumer-oriented steps have been taken by the operators under the guidance of PTA which not only facilitate the telecom consumers but also ensure their protection from poor quality of services. He said that the verification of user antecedents and blocking of unverified SIMs, successful introduction of new SIM Activation System and smooth implementation of "SIM information System-668" are some of the significant steps taken by PTA on SIM issue which would go a long way towards safe and legal use of mobile services.
Chairman PTA, Dr Mohammed Yaseen said that the statistics of recent telecom growth in Balochistan are evident of the satisfaction level of telecom consumers of this area with the quality of telecom services provided to them. He said that in year 2002 cellular teledensity in Balochistan was just 0.17 percent which has grew manifold after the completion of numerous development projects making this figure much healthier in March-2010 which is 34.3 percent.
CEO Universal Service Fund (USF), Parvez Iftikhar said that the fund has started projects worth Rs 5.87 billion in Balochistan, which would help in provisioning of telecom services to far flung areas of Balochistan. This would bring economic betterment in the area, he added. The consumer representative, Suraiya Allahdin appreciated the role of PTA in focusing on consumer issues. Presentations were also made by PTCL, mobile and WLL operators on this occasion.

Pakistan may launch new satellite next year
Pakistan is planning to replace PAKSAT-1 with a new communication satellite PAKSAT-1R and hopefully it will be launched on August 14, 2011. The satellite will support all conventional and modern Fixed Satellite Service (FSS) applications, will use the geostationary orbit, and acquire a constant height of 36,000km above the surface of earth crust.
Talking to APP Manager PAKSAT (SUPARCO) Waseem-ul Hassan said that the satellite will have a total of up to 30 transponders and life time of the satellite would be 15 years. Giving some more details about the satellite, he said it would carry the communication pay-load that consists of internet broadband, TV channels distributions, tele-medicine and tele-education. He mentioned that work on the project is started with full bloom, and the measurements are taken to make it perfect and a long-term loans are also made for this project. Manager PAKSAT said, as per the technology achievements in the region, Pakistan has to make fast and competitive progress in the technology of space sciences. Some more satellites would also be launched in the next years by Pakistan, he added.
"It is a right time for Pakistan to make such progresses while the eyes of world are on us". In future such contributions, that make the Pakistan in every field a proud one, will be made and always be made for not only to assist Pakistani nation but to give a big helping hand to whole humanity, he maintained.

Toyota to recall 270,000 cars
Toyota Motor said on Friday it plans to recall 270,000 vehicles worldwide because of an engine fault affecting cars including its luxury Lexus range and Crown sedans.
Toyota said a range of engines were defective due to faulty valve springs, which may lead to a worst case scenario of the engine stopping while the vehicle is in operation.
The company said that the defective 4.6-litre V8 and 3.5-litre V6 engines had been installed in eight top line models including some hybrids - the Lexus GS350, GS450h, GS460, IS350, LS460, LS600h and LS600hL as well as Crown sedans. The world's largest automaker has been hit by a series of safety recalls and has pulled around 10 million vehicles worldwide since late last year.
Toyota's announcement comes as the company looks to improve its recall process following heavy criticism of the way it handled safety issues in the US that have been blamed for more than 80 deaths.
Toyota paid a record $16.4m fine to settle claims it had hidden gas pedal defects in the US, and US officials have refused to rule out the possibility of more fines.

Workforce being reduced OMCs close 200 petrol pumps in 18 months
Foreign oil marketing companies (OMCs) have closed down at least 200 petrol pumps across the country in the last one and a half years. OMCs are also reportedly reducing their workforce under a global programme for reduction in marketing and distribution operations. Chevron Pakistan Limited, an OMC, had also embarked on its downstream reduction plan, which had translated in significant reduction of staff and closure of its retail outlets.
General Manager External Affairs Shell Pakistan Limited (SPL) Abid Saeed Ibrahim told Dawn that around 50 pumps of the company had been closed in the last one and a half years due to dealers' malpractices and lease issues mainly. Its current retail outlets are now over 900 in the country. Regulatory authorities have already been informed about the closure of pumps and their explosive licences have been surrendered.
On the job situation he said that the company had outsourced its various jobs and many officials after being relieved from the SPL had joined the outsourced companies. He said Shell is in the process of divesting its interest in LPG business in Pakistan under a global strategy of focusing on smaller number of large scale businesses. Sources in oil industry said that in Chevron alone at least 150 petrol pumps since late 2008 have been closed. Currently, its total outlets stand at 550 in the country. Khyber Pakhtunkhaw and Balochistan are the main areas, which have felt the major impact of pumps' closure.
Smaller towns and cities have similarly been targeted. There were issues of security situation coupled with smuggling of diesel and petrol from Iran in KP and Balochistan. Sources added the impact is not restricted to the petrol pumps only but highly skilled and qualified workforce has also been affected. For Chevron alone in Pakistan 35-45 per cent of the management and lower staff are likely to leave the company. The greater concern for the economy is that the funds recovered from the assets sales by these two multinationals are either being repatriated to their principals abroad and are not being reinvested within Pakistan.
Meanwhile, an official spokesman of Chevron Pakistan, when contacted, seemed to deny this altogether saying that all is not true. He did not give any clear answer on pumps closure, divestments and workers' lay off in the company. However, he said that Chevron is still a profitable company where optimisation and rationalisation of business are taking place in line with global business strategy. Regarding downsizing of business departments and closure of pumps, he said that Chevron like other multinational companies take on rationalisation process from time to time in order to stay competitive. For closing of pumps, he added that Chevron reviews the outlets and they continue their operation "if they are profitable".
Two days back, a Chevron spokesman had said, "We do not comment on market rumors and speculation. Chevron constantly reviews its operations around the world to improve shareholders value. The company has no plans to shut down its operations in Pakistan," the spokesman said. Industry sources and latest actions by the company indicate that Chevron is pulling out its stake and investment from marketing and distribution business and moving it into upstream business out of Pakistan. The other actions that are indicative of this are the fact that senior leadership of the company has already been transferred to Dubai and other senior business managers may be leaving the company.

Income tax revenue at customs stage up 94pc
Collectorate of Customs Appraisement, Karachi, enhanced duty collection by 23 per cent at Rs38.6 billion during 2009-10 over Rs31.2 billion of the last year. According to official figures the highest growth was recorded in income tax collection at customs stage, which increased by 94 per cent at Rs10.6 billion from Rs5.4 billion recorded last fiscal. The collectorate generated higher revenue on account of sales tax up by 36 per cent at Rs37.2 billion to June 30, 2010, compared to Rs27.3 billion recorded earlier.
However, collection of federal excise duty at customs stage declined by 13 per cent at Rs1.7 billion from Rs1.9 billion last fiscal. The overall revenue collection at the collectorate was higher at Rs88.25 billion from Rs66 billion of last fiscal.
However, customs sources told Dawn that though the ap praisement collectorate had been computerised for processing of documents required for clearing of Goods Declarations (GDs), but still most of the processing is being done manually.
This leaves a lot of room for corruption because hardcopies could be altered and changed as per requirement without leaving any evidence. Sources said that the collectorate was computerised way back in 1992 but the automation system is still not operative.
They disclosed that initially the electronic calculators of the computers were knocked off and with the passage of time entire GD processing became manual. Revenue collection during June 2009-10 witnessed a comfortable growth at the collectorate. However, customs sources thought that had there been no issue of ISAFNato containers and disturbance at the PaCCS owing to indecisive approach of the FBR's high-ups the revenue collection would have been much higher.
Official figures disclosed that duty collection during June 2010 stood at Rs6.8 billion compared to Rs6.2 billion recorded in June 2009. There would have been higher collection provided issues pertaining to ISAF containers and PaCCS, which cropped up in the last quarter, were handled carefully, sources added.
Similarly, sales tax collection at customs stage improved to Rs5.04 billion from Rs3.35 billion recorded last fiscal. Collection of income tax at customs stage almost doubled at Rs1.53 billion from Rs542 million of 2008-09. The federal excise duty collection declined to Rs214 million during June 2010, compared to Rs229 million collected in the same month last fiscal.

OGDC remains foreigners' delight
Net foreign purchase of Pakistani equity on Friday touched the incredible figure of $8.40 million. That was on a day when most local participants, including individuals; companies; funds and even banks together dumped $5 million in shares. With five trading sessions remaining next week, foreign funds have already bought $29.65 million worth of equity in July. But it was really this past week that overseas investors went wild on local stocks, with net purchases of $14 million.
To the amazement and agony of locals, foreign Funds have concentrated their buying in just a couple of shares. Oil and gas giant, OGDC, remains their delight. With a volume of 8.6 million shares, accounting for 13 per cent of all shares (67 million) traded on Friday, OGDC stood out as the volume leader. But that is half the story, the other half is more bizarre. The heavyweight oil & gas stock has the power to influence the KSE-100 index by 21 points for each rupee change in its price, either way. On Friday, the stock posted a gain of Rs2.70, shooting up from Rs148.19 to close at Rs150.89. All of that went to show that the aggregate 67 points rise in the KSE-100 index on Friday owed itself almost entirely to that one giant stock.
OGDC touched highest at Rs151.89 on Friday. Many analysts cheered that as a feat accomplished by any of the stock. Most local equity strategists have put a fair price of OGDC share at around Rs129. So what makes the foreign funds pay Rs20 or 17 per cent premium over that price?
Mark Mobius, the brain behind the Templeton Fund, which is assumed to hold almost 80 per cent of all of the OGDC shares that are in the hands of overseas investors, has already expressed his love for energy sector in the region. Some local brokers, however, wonder how high the stock will fly. Many caution their clients to beware of a sudden turnaround. "When the tables are turned, it is better not to be under them," said one such timid broker. Overseas investors' interest in local bourses is growing by the day. Already a quarter of all the free-float is held by offshore funds. And the $2 billion worth of aggregate foreign portfolio investment (FIPI) has helped to gradually push the stock values higher, albeit on painfully modest turnover.

 No change likely in interest rates in new policy
Financial markets are anticipating the interest rates to remain unchanged at the existing level when the central bank announces on Friday the first monetary policy of 2010-11. "The SBP has already indicated that it has no plans to raise the key discount rate from the current level of 12.5 per cent by rejecting all the Pakistan Investment Bonds (PIB) bids in the last auction only a few days back," a banker told Dawn on Wednesday.
The market was expecting high yields on its investments in the bonds, but the central bank rejected all the bids to indicate that it did not intend to hike the key policy rate for the moment. A financial analyst said the June headline inflation was down to 12.7 per cent on reduction in domestic fuel prices from 13.1 per cent in May and global commodity prices remained subdued. "These factors have provided the SBP some room to keep the rate unchanged for the next couple of months," he contended.
Many bankers and analysts, however, agree that the SBP could spike discount rate by up to one per cent by the close of first half of the current fiscal year in December because of the expected rise in the inflationary pressures on the back of hike in the domestic power prices. Further, the central bank could tend to follow the regional trend. India has raised interest rates for the fourth time in the last few months to curb soaring inflation.
"The analysis of last few years clearly shows that the SBP's tight monetary policy has failed to bring down inflation caused by increased fuel, food and power prices and exchange rate depreciation," the analyst said. "The economic managers need to take fiscal and administrative measures to deal with inflationary pressures caused by these factors. Monetary tightening cannot be effective in tackling these factors," he argued.
The government's fiscal deficit expanded to 6.2 per cent of gross domestic product (GDP) during the last fiscal year against its budgetary target of 4.9 per cent and revised target of 5.1 per cent. The bankers said any further rise in the domestic interest rates would be disastrous for the economy and would slowdown economic recovery apart from contributing to the rising stock of the banking industry's non-performing loans (NPL).
The GDP growth decelerated to 1.2 per cent during 2008-09 to recover to 4.1 per cent last year. The government hopes GDP to grow at 4.5 per cent this year. But the analysts say the target would be difficult to achieve unless interest rates were revised down. Some economic analysts believe that the central bank has no other option but to hike the interest rates because of the growing fiscal deficit at a time when external assistance was not coming and foreign investment was falling.
Our Staff Reporter adds from Karachi: Benchmark 6month Treasury Bills cut-off yield was increased slightly on Wednesday indicating possible future trend in the interest rate. However, the cut-off yield on other two papers of 3-month and 12-month tenure was kept unchanged but the massive amount of over Rs65 billion were raised for six months. The treasury bills rates reflect the policy interest rate maintained by the State Bank. The 6-month t-bills cutoff yield was 12.37 per cent (up from 12.34 per cent) which is close to policy interest rate of 12.5 per cent.
The market experts said cut-off yields on all tenure of t-bills were above 12 per cent and no change was visible to indicate a possible downward change in the interest rate. The government raised Rs42.833 billion for three months and Rs13.988 billion for 12 months without changing the cut-off yields. Total Rs117.420 billion was realised in the auction.

Palm oil rises on output worry
Malaysian crude palm oil closed up 0.4 per cent on Wednesday on concern that rains will slow output, which countered expectations of slowing demand from India. Concern remained that a brewing La Nina weather event, which brings more rains to palm oil producing Southeast Asia and hotter weather to soybean growing US and South America, will affect output. The benchmark October contract on Bursa Malaysia's Derivatives Exchange settled up 10 ringgit to 2,495 ringgit ($782) a ton. Overall volume stood at 10,785 lots at 25 tons each.
"Uncertainties about palm oil supply remain the driver for CPO prices," said a trader with a local commodities brokerage. However, expectation that India, the world's largest vegetable oil buyer, may slow buying because of a possible increase in its domestic oilseed crops weighed the market, the trader said. A Reuters technical analysis showed that the contract was expected to fall towards 2,403 ringgit per ton.
The Jakarta-based PT KBN Nusantara, formerly known as the state marketing centre, sold 9,000 tons of crude palm oil in an auction on Wednesday with the top price at 7,559 rupiah ($0.839) per kg, against 7,456 rupiah per kg on previous day. Producers in Medan, home to Indonesia's main palm oil export port of Belawan in Sumatra island, did not hold any palm oil auction. Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm olein used as cooking oil unchanged at 7,900 rupiah per kg from previous day.

Stress tests provide fresh data to investors
More important than how many European banks passed their stress tests is that investors now have new data to decide for themselves if a bank is worth putting money into, analysts said on Monday. "The biggest contribution from this is probably the open visibility, the transparency that we get about the banks," said Holger Schmieding, head of developed Europe economics at Bank of America Merrill Lynch. "Having that probably helps a lot of investors now to make their own calculations as to how comfortable they feel about the European financial system," he said during a briefing broadcast from London.
Only seven banks six in Spain and one each in Germany and Greece failed tests designed to show if they could withstand an economic recession coupled with steep losses on loans, stocks and government bonds. Many analysts slammed the tests as too easy, but after digesting the data over the weekend the verdict was more mixed, with residual scepticism joined by acknowledgement that a lot more information was now available.
The tests covered 91 top banks, accounting for 65 per cent of the European banking system, with the results released late Friday. "The stress tests were very helpful in delivering a huge amount of new and consistent data on the banks," Goldman Sachs economist Erik Nielsen said. "The state of the system turned out better than most had thought," he added. European officials meanwhile tried to calm concerns that some banks still have potentially fatal weaknesses after reports that not all were forthcoming.
The issue was highlighted in Germany, Europe's powerhouse economy, where reports said six lenders, including giant Deutsche Bank, had not made full disclosure of their sovereign debt holdings, a key item in the test process. The Financial Times quoted Arnoud Vossen, secretary general of the Committee of European Banking Supervisors (CEBS), which compiled the results, as saying six banks did not give details that German law says cannot be pried from them.

Foreign firms take part in Build Asia fair
Diplomats from the Asean countries took part in the inauguration of three-day Build Asia real estate and construction industry show incorporating stone fair on Tuesday reflecting confidence in Pakistan's economy. Pakistan Industrial Development Corporation CEO Gul Mohammed Rind, ambassadors and High Commissioners of Asean diplomatic missions and chairman Pasdec Ihsanullah Khan also attended the inauguration ceremony in which participants from more than 11 countries, including China, Cyprus, Germany, Iran, Italy, Turkey, and UAE, and more than 100 foreign delegates are taking part.
The largest event of its kind in Pakistan, Build Asia provides an unrivalled platform for architects, consultants, interior designers, builders, landscapers, contractors, machinery and equipment manufacturers and suppliers from the public and private sectors. The 6th Build Asia-2010 is being organised with the support of federal ministry of housing and works, Board of Investment (BoI), Confindustria Marmomacchine Assomarmomacchine - Italy, Lasbela Industrial Estates Development Authority - LIEDA, Trade Development Authority of Pakistan (TDAP), Sindh government and City District Government Karachi (CDGK).
The event is jointly organised by Pakistan Stone Development Company (Pasdec), Association of Builders and Developers (Abad), All Pakistan Marble Industry Association (APMIA) and All Pakistan Furniture Exporters Association.

Silk Bank allots right shares to CEO to fulfill capital requirements
Silk Bank's board of directors has allotted right shares to the bank's president and CEO to meet its minimum capital requirement (MCR) following the refusal of Bank Muscat, the majority shareholder in the bank, to exercise its option.
The bank will meet its MCR following the allotment of right shares. The bank has a shortfall of Rs2.296 billion as on March 31 in meeting its capital requirement for 2009.
The central bank on April 15, 2009 revised downward the minimum paid-up capital requirement for banks in view of the global slowdown in growth and capital accumulation by financial institutions and representation from shareholders. Under the revised requirements, banks were advised to raise their paid-up capital (free of losses) to Rs6 billion by December 31, 2009 and Rs7 billion by December 31, 2010 and finally raise it to Rs10 billion by December 31, 2013 in a phased manner.
In a notice sent to Karachi Stock Exchange (KSE) on Wednesday, Silk Bank said that Bank Muscat being a majority shareholder in the bank holds approximately 315 million shares in the bank prior to the announcement of the rights issue. It was thus offered 982 million shares in right issues in proportion with its existing shareholding.
"However, Bank Muscat informed the bank that it would not be exercising its option to subscribe and pay for its right shares and requested Silk Bank's board to offer and allot such Bank Muscat right shares to other investors as it may deem fit," the notice said. To meet SBP's stated MCR, the bank announced a rights issue of 311 percent at a discount of Rs7.5 per share on December 02, 2009 to generate net additional capital of Rs7 billion.
The issue had been supported by all members of the consortium's investors except Bank Muscat, because of regulatory constraints by the Central Bank of Oman. "However, their share will be subscribed by new investors and the process is expected to be completed by end-June 2010," stated the annual report 2009 of the bank.
The notice sent to KSE said that in addition to Bank Muscat Rights Shares, 52.53 million shares in the rights issue were not subscribed to and paid for by existing shareholders. Accordingly, such shares were returned to the bank for allotment. "The board resolved to allot and issue Bank Muscat's and unsubscribed rights shares to Azmat Tarin, CEO of Silk Bank," it said. However, the allotment is subjected to conditions that the subscription of the shares by Tarin would be completed on or before September 30. The approval of SBP and Securities and Exchange Commission of Pakistan has to be obtained in respect to the allotment.
The board also authorised Azmat Tarin in his capacity as the CEO to allot rights shares to any third party including senior management, the board, or any new investors prior to September 30. Subsequent to the allotment, shareholding of Azmat Tarin in total and issued paid-up capital of the bank will be 28.50 percent.

WTO rules against EU on hi-tech products
The World Trade Organisation has ruled in favour of the United States, Japan and Taiwan in their complaint against EU duties on high-technology products, a source close to the dispute told AFP on Monday. "I can confirm that the panel ruled in favour of the US, Japan and Taiwan," the source said. The ruling was issued confidentially to the parties involved on Friday, according to trade sources.
It is expected to be circulated publicly at the "end of August or early September," said the source close to the dispute. The plaintiffs had accused the European Union of violating the WTO's Information Technology Agreement by imposing duties on imports of products including television set-top boxes, flat-screen panels and printers with multiple functions.
Brussels countered that the agreement did not apply since the products in question had taken on multiple functions. For example, the EU maintains that the flat-panel computer monitors cited by the United States should properly be classified as video monitors because they can also be used with DVD players and thus fall out of the scope of the WTO agreement. Likewise, set-top boxes with Internet access should be seen as video recorders because they can record live television, the EU said. However, the United States said the EU was "manipulating tariffs to discourage technological innovation." The United States estimates that global exports of the affected products were worth more than $70 billion in 2007.



Training centres ownership Textile ministry, exporters lock horns
The row between the ministry of textile industry and exporters’ bodies over the ownership of training institutes imparting vocational and technical education took a serious turn on Thursday following ministry’s insistence over an agreement for the same.The ministry about a year ago floated an idea about change in title and ownership of these vocational institutes. However, on facing tough resistance from textile associations, the ministry formed a sub-committee headed by Khalid Amin to resolve the issue.
The sub-committee of Textile Training Institute Management Board (TTIMB) was given the task to solicit suggestions from all textile trade bodies with regard to change in ownership of these training institutes. The TTIMB held its first meeting on May 5, 2009 wherein a resolution was adopted by the heads of ten textile trade bodies demanding no change in title and ownership of the vocational and technical institutes.
A spokesman for textile bodies told Dawn that the resolution was passed on to the textile ministry but it remained silent for a year and did not offer reply or comment against the decision taken at the TTIMB meeting. The resolution of the TTIMB sub-committee refused to change the status of the ownership of the institutes established through funding from the Export Development Fund (EDF) and demanded the status quo because there had been no problem in running them so far.
The heads of textile trade bodies also suggested to the government to put its energy towards betterment of conditions of export-oriented industry, exports, and remittances so that such vocational institutes run by the EDF fund could work smoothly to impart training and skills to the textile workforce. The ministry on July 13, 2010 circulated a format of an agreement seeking change in ownership of these vocational training institutes.
Since all textile related matters in the past were handled by the ministry of commerce and the ministry of textile industry was created in 2004, all the textile subjects were handed over to the new setup. Referring to the changed situation the letter from the ministry stated that after the creation of the ministry in 2004, the administrative control of all textile related EPB/EDF funded institutes has been vested in it under the rules of business, 1973.
One of the clauses of the agreement stipulates that the government has owned all physical and capital assets and property of these institutes acquired with the funding from EDF/PSDP.This once again sent jitters amongst textile trade bodies and a meeting of TTIMB sub-committee was convened on Thursday. The meeting attended by heads of eight textile trade bodies again adopted a resolution seeking a status quo with regard to ownership of these vocational training institutes.

Call to slash sugar, electricity prices in Ramazan package
Pakistan Industrial and Traders Associations Front (PIAF) has urged the Prime Minister to give top priority to cut sugar and electricity prices in the upcoming Ramazan Package. PIAF office bearers Chairman Irfan Qaiser Sheikh, Vice Chairmen Khawaja Shahzeb Akram and Iqbal Baig Chugtai in a statement Thursday said that only because of high electricity tariff, people would not be able to avail the facility fully in the holy month of Ramazan, therefore, it is imperative that the prices of electricity are revised downward.
They said that cut in electricity prices in Ramazan package would not only restore the masses' confidence in government, but would also provide relief to the business community. They further said prices of sugar could be controlled by strengthening its supply system while cut in its prices could also play bring down prices of other commodities. A little attention towards enhancement of storage capacity for the commodity could also be helpful in achieving desired results as far as prices of sugar are concerned, they noted.
The PIAF also said repeated increase in electricity tariff has raised the cost of doing business to alarming levels; a large number of manufacturing units are facing great difficulties in fulfilling orders to foreign buyers while Pakistani merchandise is fast losing its due place in the global market, they said.

Revenue targets for fiscal year 2011: utterly unrealistic optimism
People nowadays have a serious lack of optimism but an even more serious overdose of unrealistic optimism. What is this type of optimism? The most conclusive definition or one of the most profound definitions can be the following: It has been revealed in an exclusive Business Recorder report that the Federal Board of Revenue (FBR) has submitted an annual collection plan based on the revenue collections as envisaged in the budget for 2010-11.
While it is not even one month since the start of the new fiscal year, a passage of time that may justify optimism with respect to revenue collections, yet it has to be acknowledged that our budgetary estimates with regard to tax collections have invariably been unrealistically optimistic. This year, one would assume, would be no exception though.
However while previous finance ministers have not dwelt on the unrealism behind budgetary estimates, both in terms of expenditure as well as revenue, yet the incumbent Finance Minister Dr Hafeez Sheikh was at pains to note in his budget speech that "we have kept Public Sector Development Programme (PSDP) at a realistic level. This will facilitate predictable, timely and automatic releases for project implementation agencies." While in his defence it is clear that he was focused on PSDP budgetary and actual allocations, which witnessed a gap of over 200 billion rupees in 2009-10, yet one would have hoped that if he had the acumen to understand the need for accurate figures in expenditure he surely must also have the insight to appreciate the need for accurate revenue figures.
Hafeez Sheikh, in his budget speech delivered on the floor of the House, claimed "the tax measures being proposed by the government are fair, just and equitable guided by the principle of ability to pay set in context of a war economy." His critics challenge this claim on two grounds. First and foremost he did not change the existing tax structure which is regarded as inequitable and anomalous. He announced no customs duty on any product would be increased, enhanced exemption limit on income of the salaried and non-salaried class, while continuing to exempt the income of the rich landlords sitting in the country's national assemblies. Claiming that farm income tax is a provincial and not a federal subject is merely shirking the role that must be played by the federal government to render the tax system more equitable.
And secondly, Sheikh failed to note in the budget speech that tax reforms would continue to follow the path as dictated by the International Monetary Fund (IMF) under its Stand-By Arrangement (SBA) and agreed in November 2008. This applies to the reforms already undertaken by the FBR, namely: integrating tax administration which envisaged integrating income and sales tax administration. However this integration has not been on a 'functional basis' as stipulated in the first Letter of Intent (LoI) signed by the government and submitted to the IMF board for approval of the SBA facility. Confusion continues to prevail with the FBR appointing untrained personnel to deal with the corporate sector which is causing major inconvenience to this productive sector.
The second IMF proposal with respect to the tax system is the controversial value added tax (VAT) that Dr Sheikh insists would commence from October 1 this year, though in deference to local sensibilities he has referred to it as the reformed GST. However Sindh has announced its decision to exercise its constitutional right to levy, collect and spend GST tax as it deems appropriate and with stakeholders, ie retailers and wholesalers, up in arms against its imposition, it is still to be seen whether Sheikh will be able to impose this tax by October.
And finally a third IMF stipulation as contained in the first LoI, the reintroduction of audit as part of a risk based audit strategy, was not implementable. One is at a loss to understand that if the government could convince the IMF of its inability to reintroduce audits why cannot the government convince the IMF that a fully integrated VAT at present is also unimplementable.

Trucks, goods associations reject APTTA
Trucks, trailers and goods associations of Balochistan and Khyber-Pakhtunkhwa (KP) have expressed their dismay over the approval of minutes of Afghan-Pakistan Transit Trade Agreement (APTTA), saying allowing Afghan trucks via Chaman to Wahgah border and Karachi port would be disastrous for local transporters besides leaving hundreds of local people jobless. Office-bearers of the associations, while talking to Business Recorder over the phone flayed the government on the accord, arguing that it would create serious economic problems for the people linked with the transport industry. President Balochistan goods and trucks association, Noor Mohammad Shahwani said about 500 trucks and tankers operate between Torkham-Chamman-Afghan borders but after the agreement, local truckers will have no role in the activity.
He said that the agreement had endangered future of thousands of Pakistani truck and trailer drivers, as it would allow Afghan transporters carry Indian goods to Afghanistan from Pakistani seaports. He said it would have been better had the government consulted transporters before signing of the 'one-sided' agreement. Noor Mohammad lamented that transporters were already facing numerous problems due to poor law and order situation in the area and that APTTA would further worsen these.
President of another goods' association, Abdul Hakeem Qalandar also, expressed grave concern over the government's decision to allow Afghan trucks to carry Afghan goods through Wahgah to India, saying the accord would also badly affect transport system in the country as Kabul has only right-hand drive vehicles.

Canada can be a big market for Pakistani products: FPCCI
Canada with a population of 33.3 million, which included over 0.3 million Pakistanis, could be a big market for the country's products if the marketing through exhibition and visits of trade delegations was done appropriately, said the President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Sultan Ahmed Chawla on Thursday while addressing a press conference on 'Pakistan's 2nd Single Country Exhibition in Toronto'.
He also said that Toronto could be a hub for Pakistani exports to the North American countries. He was flanked by S.M Muneer, Chairman Pakistan-Canada Business Council of FPCCI, Sahibzada Ahmed, Pakistani Counsel General in Toronto, Dr Usman Director General Trade Development Authority of Pakistan (TDAP), Dr Shafeeq Qadri a Pakistani born Canadian parliamentarian and other members of the FPCCI.
SM Muneer, who is also supervising the forth coming exhibition in Canada, starting from October 28, said the federation, which in collaboration with the TDAP had organised a successful exhibition containing around 65 stalls of different products in July 2009, was going to hold the next fair to promote the country's products in the foreign country.
Soon after the announcement of the fair, almost 34 applicants have so far applied for installation of stalls in the foreign country where previously the country's products like Shaals, ladies cloths, salt, tea, etc were welcomed by the Canadian buyers, he added.
Though the country had only 0.06 percent share in the total global imports of Canada currently, the share was likely to be increased in the near future after holding fairs and exhibitions. The trade volume between the two countries had also increased from $205.72 million to $569.69 in the last few years. Being the main export product - the Pakistani textile has 28 percent share in the Canadian market.
Dr Usman said the Toronto exhibition was the first one in Pakistan's history to search markets in North America. He also said the authority was focusing on the Asian market. Dr Shafeeq Qadri said that having a large number of Pakistani people in Canada, the country's production would enjoy a huge market there. He also praised PIA for having direct flights between the two countries, which would also help in boosting the bilateral trade relation.