Blowing the whistle on corruption
in the offing
Fraught with danger
The tension generated by the Kerry-Lugar Bill might convince the American military establishment that alienating its Pakistani counterpart is simply not an option at the present time
By Aasim Sajjad Akhtar
Eighteen months after winning the general election the Pakistan People's Party (PPP) government stands eyeball to eyeball with General Headquarters (GHQ) and the latter's carefully crafted assortment of establishment politicians. There are, of course, a number of establishment politicians who are conveniently operating within the PPP, which makes the recent increase in political temperatures typically treacherous. In any case, the events of the next few weeks and months will be crucial for our recently born-again democracy.
The Kerry-Lugar Bill, which has apparently precipitated the confrontation, is actually a sideshow. There is no question that GHQ has been trying to rehabilitate its image in the aftermath of the Musharraf public relations disaster and the hullabaloo about sovereignty in the wake of the Kerry-Lugar Bill becoming public is a classic ISPR strategy to project the military as the heroic defender of the nation (counterposed to the PPP which has 'sold out'). The generals obviously think that most of us have not been paying attention to the various military operations that they have ordered in recent times at the behest of the Obama administration. Nor do they see any irony in periodically taking up the cause of state sovereignty while consistently trampling all over the principle of popular sovereignty.
All this aside, tensions have been simmering between the elected government and the generals for some time now, notwithstanding public proclamations from both sides to the contrary. It seems to me the fundamental issue is that the military leadership wants exclusive negotiating rights with Washington and is thoroughly annoyed and threatened by the elected government because it is complicating what has been a traditionally cozy relationship between the Pentagon and GHQ.
Under the Bush administration war-mongering neocons were able to marginalise the State Department and other arms of American government, just as Pakistani generals did not have to concern themselves with the meddling of elected politicians. The cowboy-commando relationship symbolised by Bush and Musharraf produced unambiguously disastrous results for Pakistan, Afghanistan and the wider region.
Of course it was an outgoing Bush that negotiated for a transition to civilian rule; the PPP promised to improve performance in the War on Terror', and GHQ accepted that it was time for a strategic retreat in the wake of severe public disaffection after eight years of Musharraf. While none of the participants in this carefully staged transition thought that everything would go smoothly, things were further complicated by transition from eight years of radical Republican rule to the incoming Obama administration.
The 'great new hope' of America had to live up to his commitment to refocusing on Afghanistan, whilst at the same time pointing to his policy towards Pakistan as evidence that the US would be changing its long-standing practice of supporting undemocratic regimes in the Muslim world. Thus began the contradictory strategy of intensifying military operations in 'Af-Pak' – which necessarily reinforced the bargaining power of the Pakistani military -- whilst at the same time trying to put pressure on Pakistan to move away from its historic policy of patronising militancy.
Intriguingly, the mainstream consensus appears to be that the strategy is failing in Afghanistan, and working in Pakistan. So while the insurgency within Afghanistan is growing stronger by the day, observers suggest that the Pakistani military is (willingly or otherwise) making inroads into established 'terror' networks. The situation in Afghanistan is relatively unambiguous. But here in Pakistan things are considerably more complex. Ordinary Pakistanis, and particularly Swatis and others who have been living in war zones, remain convinced that there are dubious links still between the military establishment and certain militant groups (or elements within groups). If this is not evidence enough, then one need look no further than the various public pronouncements of decision-makers in the military that there is a need to distinguish between 'good Taliban' and 'bad Taliban'.
Surely anyone who knows anything about Pakistani politics recognised that it would take more than an operation in Swat to force the military to review its strategic vision. The PPP has ostensibly adopted a 'pragmatic' approach to democratisation and appears to be attempting to use what it conceives of as a small window of opportunity based on the stated priorities of the Obama administration to force the military further onto the back foot.
But the policy is fraught with dangers. First and foremost, the Pakistani people are deeply suspicious of the United States, and like most people around the world, understand American foreign policy to be based on naked imperialist principles. The PPP is hoping that US pressure on the Pakistani military will create space for the fledgling democratic experiment to flourish. What if the long consensual relationship between the Pentagon and GHQ as well as the fact that the American strategy in the region primarily remains a military one (as even the Kerry-Lugar Bill illustrates)?
The Americans are not committed to any particular democratic vision. As Obama's desperation grows, particularly in the lead-up to elections in 2012, expediency will replace whatever semblance of idealism there is in determining policy in 'Af-Pak'. Frankly, it is possible that the equation changes much sooner: the tension generated by the Kerry-Lugar Bill might convince the American military establishment that alienating its Pakistani counterpart is simply not an option at the present time.
The PPP has always struggled to reconcile the imperatives of power politics with its founding principles, encapsulated in the epic adage: Taaqat ka surchashma awam hai (The people are the wellspring of power). All democratic forces, even if they are opposed to virtually everything else the PPP stands for, will support any meaningful attempts to change the civil-military equation and thereby open up more democratic space in this country. For example, in recent times, Pakistan Television (PTV) has been running shows that openly question the legitimacy of the national security state. This does not quite equate to a change in official media policy but is a welcome start. More such initiatives in the sphere of education as well as implementation of earlier promises such as the restoration of student and trade unions would receive widespread support.
However, the primary focus of the government appears to be power politics. This is not a surprise per se, but nevertheless the PPP should recognise that it is virtually impossible for democratic forces outside the realm of power politics to gamble on the outcome of the Great Game currently unfolding in the region. This is not the only way to promote the democratisation agenda in this country. Perhaps more significantly, it is a strategy that may completely backfire. And this we cannot afford.
Our strategic predicament
A statistical analysis of the War on Terror and how it has shaped Pak-US relations
By Beenish Kulsoom
Long before his demise scholar Eqbal Ahmad wrote "a mirage mis-named strategic depth [sic]" has resulted in "failed policies, fixed postures and sectarian violence", and feared for "political and strategic predicament" faced by the Pakistani state in the wake of the Taliban victory in Afghanistan.
That was in 1998 and now in 2009, 11 years from then, and eight years after 9/11, Ayesha Jalal in her recent book Partisans of Allah: Jihad in South Asia; 2008 reveals that from 1979 to 1990 there was a 100 percent increase in militant parties, whilst the sectarian parties rose to some 90 percent. Sectarian clashes also surged during the period; it is estimated that between 1989 and 2003, in some 1,813 sectarian incidents 1,468 persons were killed and 3,370 injured.
In his address on March 27, this year President Obama had referred to issues in Pakistan, evident now in the form of Kerry-Lugar Bill (formerly known as Biden-Lugar, not many know that most prominent senators including Hillary. Clinton and Barak Obama co-sponsored the Bill in July 2008). The main thrust behind the co-sponsorship of the Bill was to engage civilian leadership, de-link the military interference, making substantial social-development investment, and ensuring the aid to be performance based. The political forces within Pakistan also insisted upon these measures. Hussain Haqqani, our ambassador to US, who was then a professor in Boston University, reiterated similar demands in his testimony to the House Armed Services Committee of the House of Representatives in October 2007 -- also because Pakistan with Musharraf as president was under effective military rule at the time.
President Obama is only doing what he had earlier said about Pakistan. Can we forget Senator Obama's famous speech at Woodrow Wilson International Centre for Scholars in August, 2007 stating:
"As President, I would make the hundreds of millions of dollars in U.S. military aid to Pakistan conditional, and I would make our conditions clear: Pakistan must make substantial progress in closing down the training camps, evicting foreign fighters, and preventing the Taliban from using Pakistan as a staging area for attacks in Afghanistan."
A year later, as a Democrat Presidential Candidate Remarks on Iraq and National Security in July 2008 to Council on Foreign Relations while elaborating US actions on Pakistan he had said, "The greatest threat to [that] security lies in the tribal regions of Pakistan, where terrorists train and insurgents strike into Afghanistan. We cannot tolerate a terrorist sanctuary, and as President, I won't…. And we must make it clear that if Pakistan cannot or will not act, we will take out high-level terrorist targets like bin Laden if we have them in our sights."
There were three drone attacks reported in year 2007; 17 in year 2008; 33 in year 2009 (until September 29). Unlike our leaders, American leaders stay true to the promises made on the hustings.
Let us see how Pakistan has fared in the declassified US security reports:
Pakistan as it has figured in the Anti-Terrorism Reports by the United States
In December 2008 former US Secretary of State Madeleine K. Albright, in a meeting arranged by Council on Foreign Relations, commented Pakistan contains everything 'that gives you an international migraine'.
Reports published by US think-tanks in mid-2008 have all outlined suggestive corrective measures for US administration in dealing with Pakistan. These reports highlight that the two countries relations are in fact not bilateral; our neighbour Afghanistan has a bearing on so-called bilateral relations. In December 2008 President-elect Obama in an interview to NBC had said 'We can't solve Afghanistan without solving Pakistan.' And, it is no surprise that the US Strategy for the region is called Af-Pak.
Reports on security issues inform US Policy towards Pakistan
Two reports by the State Department, made public in the middle of last year, inform the present day actions. Reports such as Country Reports on Terrorism 2007 by the Department of State, USA and 2007 Report on Terrorism by the National Centre for Counter Terrorism (NCTC) raised grave concerns about the rising militancy and extremism in the country.
Issues raised in these reports questioned the role of Pakistan, its credibility and motivation in supporting the war on terror.
Before going any further I want to highlight few of the achievements made until the year 2005 by Pakistan in War on Terror.
Arrests made by
Pakistani law enforcement agencies and military have enabled important al-Qaeda-related arrests in Pakistan, including Abu Zubaydah (March 2002), Ramzi bin al-Shibh (September 2002), Khalid Sheikh Mohammed (March 2003), and Abu Faraj al-Libbi (May 2005).
Military and civilian lives lost
The Pakistani forces have lost more than 1,400 officers and men, with over 3,500 seriously wounded. Pakistan military suffered more than the combined casualties of 37 nations operating in Afghanistan. The US suffered almost 869 deaths in Afghanistan, whilst the other coalition forces combined faced 573 causalities.
Civilian death count is even more abysmal. General public lost lives not just in military operation, but at the hands of terrorists. It is estimated that some 2,000 civilians lost their lives in 2008, and around 59 suicide bombings were recorded in 2008, an increase from the previous year. The suicide bombings in the country have risen sharply from 2002 onwards, as there were only two such bombings recorded in 2002.
Country Report on
Country Report on Terrorism notes that the tribal regions of Pakistan are providing 'safe havens' and 'sanctuary' to terrorists. The report also noted that al-Qaeda has regrouped and reconstituted itself to pre-9/11 period in the Federally Administrated Tribal Areas (FATA) of Pakistan, the group "seek to exploit local grievances for their own local and global purposes."
The other terrorist group, finding refuge in FATA, is that of Taliban. The affiliates of the al-Qaeda have found associates, sympathisers and cooperatives in the Taliban, hiding in this region.
The most important component of this report is the list of those organisations, which are labelled as the Foreign Terrorist Organisation (FTO). The list includes four organisations from Pakistan having members from the Afghan Jihad, which were later engaged in the Kashmir Jihad.
Any organisation which perpetrates terrorist activities, is involved in terrorist activities against the strategic interests of US, and is foreign, is designated as FTO by the Secretary of State.
FTO list is revised every two years; initially the list included 30 organisations and in its 2007 revision, some additional 12 organisations have been added.
The first FTO list was issued in 1997, in which 30 organisations were designated as FTOs. The list included more than 13 Muslim organisations involved in terrorist activities, including Hamas and Hizbullah from Middle East and Harkut-ul-Ansar (HA) from Pakistan.
Notable Muslim organisations are al-Qaeda (included from 1999 onwards), Hizbullah, Hamas, and Al-Jihad among others from Arab world. At least four organisations Harkut-ul-Mujahedeen, Jaish-e-Mohammad, Lashkar-i-Jhangvi and Lashkar-e-Taiba
Having identified four Pakistan based religious/militant organisations as FTOs, and traced their genealogical roots to the Afghan Jihad, it was only logical that are suspected of regrouping on the Pak-Afghan border. It is claimed that Pakistan-based FTOs have sympathisers, associates and workers involved in terrorist activities against the strategic interests of US, their presence in the central region of Pakistan is alarmingly dangerous and having violent repercussions. Linking rising militancy and extremism with ethno-regional conflicts within Pakistan, the reports claim that Pakistan is unable to deliver in the War on Terror. The four Pakistan based organisations noted in the report are: Harkat-ul-Mujahadin, Jaish-e-Muhammad, Lashkar-e-Taiba, Lashkar-e-Jhangvi.
2007 Report on Terrorism by the National Centre for Counter Terrorism (NCTC)
According to this report, approximately 14,000 terrorist attacks occurred in various countries during 2007 world over, resulting in over 22,000 deaths. Approximately 67,000 individuals worldwide were either killed or injured by terrorist attacks in 2007. Based on reporting and demographic analysis of the countries involved, well over 50 percent of the victims were Muslims and most were victims of attacks in Iraq; whereas only 2 US citizen deaths were recorded in Afghanistan and 17 for Iraq.
In Pakistan, terror attacks in 2007 increased by 137 percent over 2006 attacks. North-West Frontier Province (NWFP) and Federally Administered Tribal Areas (FATA) regions accounted for 54 percent of the total attacks, up from 23 percent the previous year. Following the 'operation silence' the infamous Lal Masjid clean-up operation in July, 2007, the number of attacks escalated and averaged nearly 100 per month for the remainder of 2007.
NCTC also manages an online Worldwide Incidents Tracking System, and according to the records, from January 2004 to June 2009, 4,832 terrorist attacks occurred in Pakistan killing some 5,000 people and wounding around 12,000.
The message from Washington is loud and clear -- recalcitrance will be penalised and compromise will be rewarded. The security imbroglio never seems to be resolved for Pakistan.
Promoting competition enables economy to maximise productivity and efficiency
By Alauddin Masood
The growth of cartels or cartelisation in Pakistan, as per studies, is directly related to the policies pursued by the successive governments for the industrial growth of the country. After independence in 1947, Pakistan had hardly any industrial infrastructure. For rapid industrialisation, the authorities embarked upon a bi-pronged programme, involving both the public and private sector.
The main component of the public sector programme aimed at harnessing the state organisation --(East/West) Pakistan Industrial Development Corporation (PIDC) -- for setting up new industrial ventures and privatising the concerns thus established when they became profitable. Established in 1952, but not operational now, PIDC spawned many large-scale industries in the country, notably in cement and fertilizer sectors. A basis for State monopoly was thus laid and the industrial nationalisation process that started in 1972 reinforced it. However, the nationalisation process limited the scope of the Monopolies and Restrictive Trade Practices Ordinance, 1970 (MRTO), as the law (then prevalent) had no provision to deal with public sector organisations.
The main features of the industrialisation programme in the private sector included grant of liberal concessions and bank loans to the private investors for establishing new industrial ventures and allowing the investors to reap maximum profits on the premise that if they accumulated sufficient profits they would reinvest their earnings for establishing new concerns or factories. No wonder most of them still consider it their right to reap a profit of 65–70 percent against a world norm of 15–20 percent!
Given a strong history of national monopolies, state control over prices and a guided economy, quite understandably, Pakistan's experience of market economy remains limited to the last 25 years.
The cement industry in Pakistan furnishes a classic example of a long-standing oligopoly consensus, apparently against public interest. The industry is homogenous, notorious globally for absence of strong price competition. In Pakistan, however, it has been uncompetitive from the start. As most of the cement units were initially set-up by PIDC and later even the private factories were nationalised in 1972, for long periods government owned State Cement Corporation of Pakistan (SCCP) fixed prices and directly controlled the industry in the public interest. The government, though, lost its interventionist power with the advent of unregulated privatisation.
The first cartel of private cement manufacturers in Pakistan surfaced in 1992, when demand exceeded supply. Taking advantage of this situation, cement manufacturers raised prices overnight and also restricted supply. Upon government's intervention, cement manufacturers curtailed the prices.
After emergence of Central Asian Republics (CARs) in 1992, anticipating demand for cement from CARs, Pakistani cement industry started investing heavily in plant/machinery. By 1998, Pakistan's cement manufacturing capacity had increased substantially in anticipation of import orders from CARs and 8 percent rise in domestic demand. But, both expectations turned out to be too optimistic and consequently there was excess idle capacity. Normally, this would imply a reduction in price. However, instead the manufacturers raised prices from Rs135 to Rs235 per bag, notifying uniform increase of Rs. 100 through advertisements.
Enquiries revealed that the price increase was not due to increase in input costs, which were, in fact, reduced in 1997. On April 15, 1999, the government reduced the excise duty in order to facilitate cement manufacturers, and agreed to a price of Rs. 200 per bag. In May 2003, all the 21 member companies of All-Pakistan Cement Manufacturers Association (APCMA) reached an agreement to raise cement price by Rs35 per bag effective June 2003. After public outcry, the government subsidized cement imports. Resultantly, prices decreased, over the next six months, from Rs353 to Rs195 per bag in January 2007, but rose to Rs255 per bag next month and to Rs275 per bag in April 2008.
Though the illegal practice of forming a cartel to increase product price had existed in the cement sector since 1992, it was only recently that the Competition Commission of Pakistan (CCP) has slapped soft fines of Rs4.5 to Rs5.0 per bag on cement companies for forming a cartel. Based on the production figures for the year 2008, the fine was 50 percent of the maximum fine that CCP could impose on the cartel. However, cement barons started raising a hue and cry, giving the impression that the cumulative fine of Rs6.5 billion imposed on the cement mills and their representative body APCMA was very high because, according to them, manipulation of prices and production was a minor offence.
The law permitted CCP to impose a maximum fine of Rs12.70 billion on these entities for indulging in this illegal practice in the last year (2008) alone. If the fine was imposed with retrospective effect, i.e. since 1992 when the cartel was first detected, the amount of the fine would have exceeded Rs150 billion. If the cumulative effect of a fine of Rs5.0 per bag comes to Rs6.5 billion, then by the same yardstick the profits of cement manufacturers would have increased by Rs45.5 billion when they increased the price of cement by Rs35 per bag. When Rs100 raised the price per bag, the profits would have increased by Rs130 billion. The cement manufacturers have been increasing the price of cement too frequently, as narrated in the preceding paragraphs, and reaping windfall profits at the cost of the helpless consumers.
The logic of competition law is to prevent firms from engaging in activities that allow competition only in name. Enforcement of competition laws means keeping a close check on the propensity of dominance and exploitation of consumers or excluding competitor firms. It also includes the prohibition of anti-competitive agreements such as those that fix prices or quantity, supervising mergers and acquisitions, assessing their influence on limiting competition and restricting deceptive marketing practices such as dissemination of false or misleading information. The new competition law, enforced under the 'Companies Ordinance, 2007' since 2007, does not curb or reduce a dominant position. Instead, it addresses the abuse of dominance.
In addition to the cement sector, CCP has also took notice of illegal practices in several banks, cellular companies, stock exchanges, two fertilizer companies, Pakistan's largest oil refinery, a business school, a government-sponsored trust, a professional association and some newspapers. Interestingly, only the newspapers accepted the CCP verdict with an open heart while most of the others have appealed against its decisions in the Supreme Court of Pakistan.
CCP's efforts to enforce the competition law have annoyed the powerful segments of the society. After failing to get CCP Chairman sacked, the vested interests are now endeavouring either to dilute the Competition Ordinance, 2007 by taking the sting that hurts them, or allow this ordinance to lapse. Along with 36 other ordinances, the Competition Ordinance is required to be presented in the Parliament by November 27, 2009. The Supreme Court set the deadline.
In the production process, the economies of scale can confer a cost advantage to the large manufacturer. This cost advantage can be translated into lower prices for the consumer. But, it is most often converted into a monopoly rent for the producers in Pakistan. Because of the economies of scale in manufacturing and in marketing the product, the minimum efficient plant sizes being large and capital intensive, barriers to entry are high in the industry. This provides producers with a further opportunity for earning above normal returns.
Cartelisation is considered a criminal offence in almost all developed countries, including Australia, EU countries and the USA, carrying jail terms up to 10 years and fines of $10 million or more. However, CCP has no powers to award prison terms to those who aided or abetted the formation of a cartel.
From the perspective of competition policy, if the past is any guide, restrictive practices have been the bane of commerce and industry in Pakistan. When banks levy unwarranted charges, when stock exchanges accord discriminatory treatment or trade associations facilitate the formation of cartels, in all such cases transaction costs rise, SME's and investors pay higher input costs or are denied access to capital and face constraints on buying and selling.
As investors are not philanthropists, they pass on the higher input costs to the consumers after charging profits, which in Pakistan range from 65–70 percent against the global norm of 15–20 percent profit. This results in periodic price hikes.
Globally, it is now accepted that promoting competition enables economy to maximize productivity and efficiency. On the other hand, curtailed competition prevents an economy from achieving its true potential by restricting output and creating inefficient monopolies.
It goes without saying that longer-term survival is bound with efficiency and not in quasi rent-seeking behaviour in the form of periodic relief packages from the government. Special privileges for particular industries (e.g. textiles), howsoever justified, invariably tend to distort incentives, if allowed for long periods because in the final analysis they merely serve to protect inefficient producers, skew incentives and assist in misallocation of resources.
Individual firms thus need to understand that their long-term survival rests not on price-fixing arrangements but on boosting efficiency and their competitive ability through investment in skills, innovation, technological up-gradation and moving up the value chain.
Alauddin Masood is a freelance columnist based in Islamabad. [email protected]
All the fundamentals are improving, foreign aid has been restored, investors have returned and the stock market has seemingly returned to its normal business
By Shujauddin Qureshi
After a prolonged depression, the Pakistani shares market has bounced back and the key Karachi Stock Exchange (KSE)-100 index has started recovering its heavy losses incurred due to one-and-a-half year of recession. The index touched the 13-month highest level of 9836.50 points this week on Wednesday and there are hopes among brokers that the index would further increase to cross the 10000-point psychological barrier.
According to analysts, the market has risen by about 60 percent since early this year and this was expected much earlier. However, the frequent terrorist attacks and on-going military operation in Malakand division marred the equity market growth.
Pakistan's stock market has witnessed capital flight due to domestic as well as international crises during the last fiscal year. Pakistan's political and economic situation has always been a matter of concern for the investors. Pakistan's capital market situation worsened in August last year, which further aggravated when the authorities had imposed a floor on the KSE benchmark index. The decision was made in a panic-like situation, but it took five months for the authorities to withdraw the floor (on Dec 15), which further ruined the investment climate in the market.
The recent bullish activity in the market was expected long ago as the market pundits believe that Pakistani equity market has a potential to bounce back and further grow. But due to the military operation in Swat and other terrorist incidents in the country, the market stayed in depression.
Now when all the fundamentals are improving and foreign aid has been restored, the investors have returned and brokers say if law and order and the economic situation remain under control the market would return to its normal business.
Increase in the already approved IMF loan to $11.3 billion in July (from previous $ 7.6 billion) and improvement in Pakistan's credit rating by the leading international credit rating companies as "stable" has given the investors a confidence to invest in the country's capital market. The market has also witnessed the first ever listing of the current year, Nishat Power that was formally listed at the KSE on Wednesday.
Moreover, the brokers said the KSE board has recently recommended to the Securities and Exchange Commission of Pakistan (SECP) to introduce two leverage systems -- Margin Financing System and the Margin Trading System. The investors see these recommendations as a big boost to the market as this step was expected to considerably increase the market volumes. The volumes are already at the higher side as the investors are making big deals. On Wednesday, the market record the volume of 341 million shares as against 266 million shares traded a day earlier.
According to market sources, the Pakistani share market has received $240 million from foreign buyers since July and more foreign portfolio funds are waiting outside to enter into the market in the near future.
"Local investors have also gained confidence," said Abid Ali Habib, a member of the Karachi Stock Exchange. Foreign investors' buying in oil sector has also encouraged the local buyers to enter into rings, he added.
Habib said the economic situation in the country is improving particularly after upgradation of Pakistan's credit rating by Standard and Poor's and Moody's. Moody's Investor Service had raised Pakistan's Credit Outlook rating from negative to "stable" on August 17, 2009 after the increase in the loan amount by International Monetary Fund (IMF) to $11.3 billion.
Moreover, Habib said the government has recently settled the issue of lingering circular debt after it sold Term Finance Certificates (TFCs) worth Rs85 billion and promised to clear the balance of Rs12 billion shortly.
The new US aid package after passage of controversial Kerry-Lugar Bill may further boost the market. However, the controversy in the media and debate in the National Assembly over the US Aid bill has put the investors in a cautious mode during the current sessions. Investors are adopting "wait and see" policy before making big deals.
Karachi Stock Exchange witnessed a bearish session on Thursday on the news over tension between government and the county's Military authorities over Kerry-Lugar Bill. The Corps Commanders meeting had expressed reservations on the US Aid bill, which is being supported by the present Pakistan People's Party government. The KSE-100 index lost 95.63 points at 9,740.87 points on Thursday due to political uncertainty.
If the bill got approved smoothly and the parliament gave a nod of approval, the country would receive US$ 1.5 billion annually over the next five years for democratic, economic and social development programmes. Analysts said the US aid bill issue has been much politicised, otherwise, in economic terms, it would boost the over all development activities in the country.
Stock market analysts said the Pakistani stock market stands out in comparison with other Asian countries; while, the prices of most of the companies' scrips stand at 50 percent lower, which acts as catalyst for the foreign investors. Both foreign and local investors have returned to Pakistani capital market as they see good return on their investment.
Moreover, the local investors have no other avenue to invest because gold prices have touched all time high levels (Rs27,775 per 10 grams) and property market has dipped due to international property market recession and financial crisis. Moreover, the investment in currency market is also quite risky. Therefore, investors have again started looking at the option of investing in equity market. Those investors, who had lost major portion of their money in Dubai and other UAE markets, have also returned to Pakistani stock market. This is reflected through the statistics released by State Bank of Pakistan. The SBP usually posts the foreign equity investment under the Special Convertible Rupee Account (SCRA), which is updated regularly.
Brokers said there is genuine buying of the investors in the market, mainly from the US and UK and it is expected that the bullish Pakistani market would attract more foreign investors from other countries.
As the Pay and Pension Committee prepares its recommendations to upgrade the pay scales of public sector employees, the primary school teachers in the Frontier are desperately trying to bring to its notice the lack of service structure for them
By Tahir Ali
Ali, a primary school teacher, started his career in 1990 in the basic pay scale 7. He had done his intermediate and had also passed the Primary Teaching Certificate (PTC) course with distinction (the basic requirement for this post was matriculation with PTC at the time). In 1991, he was awarded BPS-9 for his additional qualification. He continued in the same scale for next 17 years.
During this time, he improved upon his academic qualification from FA to MA and also passed certificate in teaching (CT), Bachelor in Education (B.Ed), and Masters in Education (M.Ed) -- all required for middle, high and administrative posts respectively. Luckily, last year he was amongst thousands of teachers who were promoted to BPS-12 for having completed ten years of service. His younger brother, whose qualification is intermediate only and serves in another department, has been promoted to BPS-14 from his initial BPS-7 in the year 2000.
The success of any education system largely depends on the success of its teachers. No system of education is better than its teachers. They are the architects and harbingers of change, modernisation, reformation, prosperity and development in a given society. They are transmitters of knowledge and promoters of ideas and values.
Although teachers are criticised for their unsatisfactory performance, lack of commitment and devotion, the fact is that their amelioration has been at the lowest in the list of priorities of successive regimes. Their terms of service have never been improved adequately. Teachers rarely figure in the honours' list announced each year. They have received relatively less recognition than other professionals.
As Dr Ishrat Hussain-led Pay and Pension Committee prepares its recommendations to upgrade the pay scales of public sector employees, the PSTs in Frontier are desperately trying to bring to its notice the lack of service structure for them.
Malik Khalid Khan, the president of All Primary Teachers Association (APTA) NWFP, said around 75,000 PSTs in NWFP have been neglected so far. "They started and finished their career as PSTs. There was no service structure and promotion rules for them. They had benefits of selection grade (which was given after some years of service), move-over (which was given after an employee crossed the last stage of his scale) and advance increments but all these were withdrawn in 2001. The decision was enforced from retrospective effect and thus thousands of PSTs were reverted from 13th and 14th scales to 9th and 10th scales. This was a great injustice."
Regarding his meeting with Dr Ishrat, Khan said "I found him sympathetic to primary teachers. He agreed with my proposal that rural teachers should be given preferential treatment. I think allowances should be done away with. There should be different categories of public employees and each should be given a lump sum salary. I suggested a minimum take home salary of Rs40,000 pay for urban and Rs45,000 for rural area PSTs."
Mian Abdul Bari, divisional president of the All-teachers association (ATA) Mardan, also said that the doors of move-over to next grades were permanently closed on PSTs in 2001. "Before 2001, for scales 1 to 16, the stages were 15 while for scales 17 to 22, there were 10 stages. In 2001, these were increased for the former to 30 stages. For 17th to 19th scales, these were made 20 while for scales 20 to 22, these were made 14. Isn't it injustice?
"This simply means that those with fewer stages would reach the last stage of a particular scale quickly and will be promoted to next grade automatically. The PSTs however may retire in that very scale as they will have to cross thirty stages for which they must wait for thirty annual increments. The government should decrease the stages in scales for the lower grades as well."
According to Bari, the initial take home salary of a PST was around Rs5500 which should be increased. "The PSTs serving in scales 7, 9 or 12 receive fixed house rent allowance from Rs1069 to Rs1306 and medical allowance of Rs500. It is well short of their needs and market rates."
He said the government last year awarded BPS 12 to PSTs on the basis of completion of ten years of service. "But it was clear injustice on several grounds. First, there were teachers who had completed thirty to forty years of service but they were also given that scale. Second, those with Matric and MA qualification were also equated. Promotions should be based on both seniority and qualification." maintained Bari.
"The PSTs should be given special pay scales and the existing BPSs should be abolished. They should also be provided opportunities to get advance training on state expenses," urged another teacher Najmul Aleem.
Khan said that PSTs had never been given their due but now, thanks to All Pakistan Teachers Association, they were being considered and given respect. "The PSTs would soon hear good news about their age long demand of service structure. They would be promoted to higher scales on the basis of experience."
There are indications that the worst days of PSTs may be over soon as the ANP-led provincial government has closed in on the much-awaited service structure for the PSTs.
When contacted, NWFP minister for education Sardar Hussain Babak confirmed that the service structure is in final stages. "I don't have update information on the package and don't remember the exact details. But I can safely say that the package would be of immense benefit to thousands of PSTs in the province. The fact is that successive regimes of the past have neglected the teachers. They should have been given a service structure but unfortunately they weren't. They deserve it and we would be shortly announcing it." The minister however urged them to be dutiful and punctual in discharging their duties.
A senior official in the NWFP's ministry of education, who is privy to the deliberations, wishing anonymity, said that inputs from ministries of law, finance and establishment and other quarters had been received and incorporated into the draft. "The structure will be given a final shape in a meeting to be held shortly and then it will be notified," said the official.
He said that promotions to scale 16 till now were made from middle and high schools teachers. "But as per the structure, for the first time PSTs would also be promoted to 16th scale. They could even become head masters in high schools on the basis of experience (length of service) and getting through required courses."
"After five years of continuous service in their existing scales and completing a 60 days course, PSTs would be promoted as CT/middle schools teachers (MSTs). After a service of another five years and undergoing another 60 days course, they will be promoted as SET/high school teachers (HSTs). They would also be eligible from then on to be part of general SET seniority which is no less an achievement. PSTs would be the biggest beneficiaries as, being in majority, they would receive bulk of share in promotions to the above posts," added the source.
It seems move-over, selection grade and advance increments on higher qualification are not going to be revived.
When the official was asked whether PSTs who had been in service for many years would get any benefit for their length of service, he said the service structure would not be applied from retrospective effect but from the date it was issued and it would benefit the younger and ablest teachers.
Markets go bland
All eyes are set on the October 16 Apex Court decision to see what direction the sugar crisis takes in the country
By Jawwad Rizvi
The Apex Court's order of fixing sugar price at Rs40 per kg across the country has taken another twist with the sugar again disappearing from the markets.
This time around the shopkeepers were seen in queues to purchase sugar for their shops at the wholesale markets of Lahore. The complex situation has created problems for the farmers as the next sugarcane crushing might be delayed due to the entire issue of price fixing by the court and the prices increased by the millers.
The sugar drama has been taking new turns everyday; still the big players affiliated with the political parties are the main beneficiaries. Two sugar mills owned by the top PML-N leadership had sold all of their sugar stocks during the crisis at higher rates. Another mill owned by their close relative had already sold all its stocks before the court's decision of fixing price.
Due to this act of selling sugar at higher rates, before the court's verdict, there was some resentment in the other millers against the management of these three mills. The millers claimed that the management of these three mills was well aware about the expected decision from concerned quarters so they timely sold their sugar stocks at higher rates maximising their profits.
A member of the Pakistan Sugar Mills Association Punjab on condition of anonymity said these three sugar mills had quickly sold their sugar stocks in short period which provided them extra profit as compared to the rest of the industry as they were bound to abide by the court orders.
In August one of these mills had over 62 percent of sugar stock and more then 33,000 metric tonnes, the other had over 25 percent sugar stocks and more then 9,600 metric tonnes and third one carried over 84 percent stocks of more than 30,000 metric tonnes. These three mills sold this stock quickly in almost one month knowing the future price of sugar.
Similarly, the PML-N sugar dealers were being obliged in the sale of sugar in the Akabri Mandi as the government has been supplying sugar to only two dealers who are affiliated with the ruling party in Punjab after restoration of sugar supply.
In Lahore two dealers namely Asghar Butt who is chairman of sugar dealers association and was also a union council nazim of PML-N and Ziaudin Butt has been getting sugar from the mills only.
Asghar Butt on the issue of non-supply of sugar to other dealers said the government has been registering the other dealers and once the dealers would be registered it would be available to everyone. He further said the situation would not last for long and would normalise in a couple of days. He further added that the dealers were serving the people on the instructions of Chief Minister and selling sugar on non profit no loss basis.
The limited availability of sugar after restoration of supply has created a mess. Long queue of shopkeepers were seen in Akbari Mandi for buying sugar.
On the other hand, the Apex court sugar rates were also not observed at the wholesale level. The price of sugar at wholesale level was Rs3900 per 100 kilogram bag against the orders of Rs3800 per 100 kg bag.
Till the last information, the Punjab Cane Commission Office has served letters to all sugar mills of the province to intimate their crushing season plan for the year 2009-10 which had commenced from October 1, 2009. Despite getting letters from the concerned authority, none of the mills had informed the office about their plan.
According to the Punjab Sugar Factories Control Act 1950, the crushing season of sugarcane always commences on October 1 every year. Under the law, the sugar factories are bound to start crushing season from October 1 to November 30. In case of delay in the crushing season, the Punjab Cane Commission can take many actions including imposing huge penalty.
Under Section 8 of the Act, the occupier of a factory shall send a notice to the cane commissioner in the prescribed form, intimating him of his intention to start crushing one clear month before the crushing season. So under this section of the Act, the office of the cane commissioner had sent notification to the sugar mills.
Sources in the sugar milling industry revealed that the mills were waiting for the Apex Court decision on October 16, 2009 hearing. If an acceptable decision is announced by the Apex court, millers would announce their crushing plan. Otherwise they would delay the crushing season. A group of millers are in a mood to not start their mills this season due to government actions and Apex Court action, they disclosed.
The sugar stocks position in Punjab is so far easy if a timely sugarcane crushing season started. The province has over 450000 metric tonnes sugar in their stocks out of which some 360000 metric tonnes would be supplied to the province in the next three months while remaining could be sold to other provinces or the Trading Corporation of Pakistan (TCP) to supply to Utility Store Corporation.
The sugar mills of Lahore division have a left over stock of 257,000 metric tonnes, Sahiwal division 4350 metric tonnes, Sargodha division 15640 metric tonnes, Multan division 1710 metric tonnes, Bahawalpur 157513 metric tonnes, Gujaranwala division 7454 metric tonnes, Faisalabad 171998 metric tonnes and D G Khan division 67000 metric tonnes. There is no sugar mill in Rawalpindi division and one sugar mill in the province was inoperative.
The sugar mills will supply 672 metric tonnes sugar daily to Lahore division dealers, 297 metric tonnes to Sargodha division, 425 metric tonnes to Bahawalpur divisions, 460 metric tonnes to Multan, 608 metric tonnes to Gujaranwal division, 523 metric tonnes to Faisalabad division, 355 metric tonnes to Rawaloindi division and 373 metric tonnes to D G Khan division.
Now October 16 Apex Court decision will decide the direction the sugar crisis takes in the country.
The recently published Global Corruption Report 2009 declares public officials of the country as most corrupt
By Dr Noman Ahmed
Fracas erupted in the power echelons of the country after the release of the Transparency International's Global Corruption Report 2009 recently. Salient outcomes in the publication are based on the feedback of population, who generally believe that public officials and members of lower judiciary are perceived as most corrupt. They say the government has been ineffective in curbing the menace of corruption -- tax evasion has reached beyond a fifth of the total revenue targets; the loan default from premier banks has been largely concentrated within the politically powerful clans; and procurement of goods and services is largely done in violation of standard operating procedures. A rather dismal declaration. Even more dismal is that a majority of people are not hopeful for any radical change.
The Transparency International (TI) received scathing criticism on the 'untimeliness' of the release, which was tagged as malafide, almost tantamount to high treason. Rhetoric aside, objective review of corruption has become a taboo in our society. Those who attempt to blow the whistle on smelling corruption are dealt with contempt. Interestingly, all the overt and covert stakeholders in the power corridors bear the same view: criticism on corruption is an attack on the newly resurrected democracy in the country. Therefore, the regime appears to steer clear of all tangible efforts that could eradicate corruption in an effective manner.
In order to move forward, the various dimensions of corruption must be comprehended. As a basic definition, corruption can be defined as acts of deviation by an individual or group of people from the stipulated roles and responsibilities for self-benefit. Political corruption is considered as actions in which government officials, political functionaries or employees seek illegitimate personal gains. Bribery, extortion, cronyism, nepotism, patronage, embezzlement and rent seeking are few commonly prevailing ailments.
Also, professional domains are infested with corruption. Disregarding the standards, ethical and technical demands of any profession in the delivery of service to the society is tagged as professional corruption. Wrong doings of doctors, engineers, accountants, auditors, lawyers, architects and real estate experts fall in this slot. Ordinary people also become a vehicle of corruption, both knowingly and otherwise. A common attitude is to keep silent after observing any illegal or inappropriate act.
For objective assessment of corruption, the intent and motivation behind it must be found out. Study of precedents unveils such motives. Complying with illegal orders, living beyond means, sporting a lavish lifestyle, supporting folks of native clan, cadre or party are few of the common reasons that lead to corruption of various forms. Financial corruption -- which is perhaps most rampant -- evolves from the desire to adopt ostentatious living beyond the available legitimate means. It is common observation to find people in responsible positions and roles guilty of this misconduct which is callously overlooked by power wielders. A cleric, who is in active politics, can be found living in a huge mansion on one the capital's high streets. When our generals retire from service, they have enough to survive on for ages. A Grade-17 officer in a 'sensitive' department can be found driving an imported luxury jeep worth millions of rupees. They may not be officially entitled to vehicles, yet green number plates on luxury sedans and cruisers are on the rise. It will be difficult to tag Pakistan as a low income country if one visits the federal or provincial secretariats during the day.
Corruption will be controlled only when we stop respecting embezzlers of public funds, rent seekers and the likes. This category of individuals amends financial management procedures and decision-making in their favour. Fixation of salaries and perks of the occupants of the three sacred houses on the Constitution Avenue in Islamabad is an example. Gone are the times when ruling elites used to curtail their daily appetite in situations of famines, disasters or emergency. It is ironic to note that the media, opinion leaders and political parties do not consider financial accountability as a worthwhile agenda. The honest officers and politicians are hardly celebrated as role models. Contrarily, they are tagged as losers and out of fashion breed no longer in consonance with the present day requirements.
Several approaches to curb corruption have been tried and tested in the past. Once a regime came and declared all the politicians as corrupt on an enmasse basis. Circumstances proved that majority were not. Successive regimes would level up charges and cases through institutional arrangements best suited to their political camps. More than witch-hunting, the exercise could not achieve much. At a later stage, the practice of plea bargain started. Large-scale looters and plunderers were hounded up. When they agreed to return a fraction of the gains, they were set scot free. It gave the message that one should always go for the big kill to share some left over crumbs for the regulators.
No amount of aid or external assistance can solve our financial woes. Practicing a frugal lifestyle and strict dealing with malpractices in an institutional manner is the way out. Work of right minded regulators such as Competition Commission of Pakistan can serve as worth emulating case studies. Corruption can be fought in a strategic manner by certain basic steps. The foremost is the identification of corrupt practices. Our media corps is doing a meticulous job in this respect. The common people must assist the rightful journalists in identification of malpractices. Whistle blowing on corruption with valid evidences must be encouraged. Caution, however, need to be applied to differentiate facts from hearsay. Existing institutional framework may be approached to seek redressal of grievances pertinent to corrupt practices. It may be pointed out that the proactive citizen's action has always brought useful results.
An integrated Asian Union seems to be quite strongly in the works eventually leading towards a possible unification of the world's economies into one super global economy
By Aziz Omar
Regional economic integration has been the name of the game in the aftermath of the cataclysmic events that defined the 20th century. The end of World War II saw the emergence of the later European Union (EU) as a means of centralising control of the financial and economic resources such as through the forming of European Coal and Steel Community (ECSC) in 1950 and the establishment of the European Unit of Account (EUA) to regulate exchange rates.
Though the existence of the actual entity of the European Union began in 1993, it was basically a formal amalgamation of the pre-existing associations already part of the European Economic Community (EEC) such as the ECSC and the European Atomic Energy Community. The formation of the EU also constituted the Euro that itself emerged from the EUA and European Currency Unit (ECU) and has been in circulation since 2002.
In a similar fashion, an Asian Union of sorts has also been in the making for the past five decades. A decade after the foundations were laid for the EU, an Association of Southeast Asia (ASA) materialised with an alliance being formed between Philippines, Malaysia and Thailand. Six years later in 1967, Indonesia and Singapore joined the ASA which was renamed as Association of Southeast Asian Nations (ASEAN). Though the objectives of ASEAN were similar to that of the EU with regards to promoting regional economic and cultural growth and development as well as political stability, it aims to serve nationalism rather than staunchly doing with it as in the case of EU.
However, ASEAN's member states only include 10 countries out of a total 37 Asian states as opposed to EU's 27 out of a 50 odd countries in Europe. The major Asian economic giants China, Japan and South Korea are only associated with ASEAN+3 with regards to a cooperative context ad geared towards realising the goal of an Asian Currency Unit (ACU).
The ACU is being developed on the same lines as that of the now defunct ECU and hence is being structured to be a basket or weighted index of the currencies of ASEAN+3 before a formal centralised currency can be introduced. No surprises that the Asian Development Bank is masterminding this so-called initiative to stabilise the Asian financial markets. It is being termed by some as a sort Asian Yuan, after Chinese currency, as most of the flow of trade and finances is being concentrated on mainland China.
The whole shebang of Asia specific regional integration seems to be nothing more than taking advantage of cheap labours, removal of trade barriers and intra currency exchange normalisation to maximise financial prosperity of the key corporate players in western economies. Most notable is the context of the United States, which has drastically stepped up its trade with mainland China while curbing imports and exports with its rich neighbours such as Japan and South Korea. In the last 10 years, US imports and exports with regards to China have both undergone four to five times increases, but with the former flow of goods taking the lion's share of total trade. In 2008, US imported $338 billion worth of goods from China whereas exported goods valued only $72 billion. Contrast this with US imports from South Korea hovering around $40 billion and exports around $30 billion as well as imports and exports valuing around $130 billion and $60 billion respectively in Japan's all through the last decade.
The real story behind this trend is the increasing flow of Foreign Direct Investment (FDI) into mainland China is that other Asian countries, especially the eastern ones including Japan, Korea, Taiwan and Hong Kong China are the ones pouring in the vast amounts of funds. These usually end up in the massive urban industrial cities bordering the coastal areas such as Tianjin and Hangzhou which have direct access to the Pacific Ocean and host a wide assortment of manufacturing complexes dealing in machinery, textile, agriculture as well as aerospace and aviation. Interestingly, it is these very high-quality products that constitute the monetary chunk of Chinese exports to the US, taking over from toys, electric toothbrushes and child safety car seats from six years back.
It is no wonder then that a formal economic alliance between the ASEAN countries and Japan, Korea and China termed as the East Asia Economic Caucus (EAEC) in 1990 proposed to serve as a Free Trade Zone could not see the light of day. The concept of the EAEC originally put forward by Dr. Mahathir bin Muhammad the then PM of Malaysia faced strong opposition from Japan and the US, with the former later aligning itself with Canada, Australia and Mexico to form the Asia-Pacific Economic Conference (APEC) by 1993.
The purported goals of this strategic multilateral partnership between the countries on both sides of the Pacific were in fact cantered on removal of trade barriers so as to derive maximum benefit from selective investment and directional flow of trade.
The Bogor Goals (named after the city of Bogor in Indonesia) agreed upon in the 1994 summit of APEC countries clearly stated a long-term plan of "trade liberalisation" to accelerate the prospects of economic prosperity of firstly the so-called developed countries by 2010 and then later that of developing countries by 2020. It also alluded to the East Asian Caucus as an "inward-looking trading bloc that would divert from the pursuit of global free trade". Last year in November in Peru, the leaders of APEC economies renewed their commitment to achieving the Bogor goals and termed them instrumental in enabling the region to recover from the global economic meltdown.
An integrated Asian Union seems to be quite strongly in the works eventually leading towards a possible unification of the world's economies into one super global economy. Yet it seems that is typically going to be certain individuals, corporations and regions of the world that are going to reap the glorious benefits like manna from the economic Gods. It has to be ensured that the quality of life is enhanced for the general populace rather than further siphoning off resources from it. Hence it is extremely imperative that the workforce of participatory countries of various trans-continental unions wake-up and smell the stench of the stark realities of the genie -- or spectre -- of globalisation (read economic enslavement).