Once the war is won in the Khurasan theater, he plans a march to the Middle East, from where he believes

al-Mahdi to rise and join hands with them to then wage war and liberate Palestine.

Global

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EDITORIAL BOARD
Dr Ashfaq hassan Khan Dr Abid Sulehri Pervez Amir Shah A Hassan Zubair Malik

EDITORIAL

From the Editors Desk

ADVISORY BOARD
Haroon Akhtar Khan Hamidullah Jan Afridi Sajid Gondal

Islamic Banking
slamic Banking is spreading its wings in Pakistan and is positioning for growth but it is also drawn against challenges owing to the actuality that conventional banking in the country is more penetrative and holds a larger share in the economy. Islamic deposits held by fully-fledged Islamic banks and Islamic windows of conven-

tional banks at present stand at 9.7% of total bank deposits in the country; meaning that every 10th rupee is now being deposited in an Islamic bank account. Correspondingly, assets managed by banks offering Islamic financial services are 8.6% of total banking assets in the country. Net Islamic savings and investments are 8.19% of the total savings and investment in the banking sector of Pakistan. There are five full-fledged Islamic banks in Pakistan while 14 conventional banks offer Shariah-compliant banking services through their Islamic windows. At the end of first quarter of 2013, deposits in the Islamic banking system were Rs.704 billion, up by 32% from the corresponding period in the preceding year. However, the current profit rates of Islamic banking are less than conventional banks. The lending rates are superior to those of conventional banks meaning that there is room for more profit making. Existing market has matured in terms of market share, bringing about low growth and profitability. New markets need to be touched with market specific strategy. Specifically in Pakistan, most of Islamic banks shares are either unlisted or being traded below par value (BankIslami: 8.41, Meezan: 29.12, Burj Bank: unlisted, Arbaraka: unlisted, DIBPL: unlisted) or at small premium, which shows less confidence of investors. It has a bearing on capital adequacy ratios achievement targets as set by SBP which in return affects credit generation power of the bank generally. There is lesser number of products compared to conventional banks and there is lesser faith on true shariah businesses by customers as they are commonly blamed for charging late payment penalty on overdue balances which is in contradiction of Islamic shariah laws. Efficient help desk services are unavailable for customers due to lack of knowledge about the overall concept and functioning of Islamic banking which makes it less competitive than conventional banks. The customers often have limited call centers or website service options and are repeatedly referred from one department to another. Few Islamic banks have relevant, personalized, online communications with the digital realm: Web, email, and mobile meaning that approaching customers from every aspect to get the attention, do business and retain them as a happy customer. The sales people are poorly prepared and have little understanding of the products they are selling. This is more pronounced in Islamic banking where customers may require addition explanations of shariah compliant product structures. There is a need to improve responsiveness as customers do not receive a call from the bank within the promised time, if at all. Islamic banks are very reluctant to extend credit to the poor, whereas conventional banks are ready to lend to the poor against little security. The terms and conditions are hard as compared to other banks plus there is no less retail banking options such as types of accounts being offered, credit/debit cards, which are mostly used by the poor or average people. Islamic banks are very small as compared to the conventional banks. Relatively less economies of scale is the result. Such Banks can achieve economies of scales by means of merger and acquisitions, like Islamic banks can be merged to form a bigger bank hence number of branches would increase and optimization can be done, lesser corporate tax as in government can promote Islamic banking by special tax rates etc. Government can also decide to invest its funds in Islamic banks to increase their loan giving power.

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AUG 2013

AUG 2013

20-21

Interview with

Exclusive

Saleem Mandviwalla

Pages 6-7

MQM in Hot Soup

Afrah Jamal

Page 12-13

The National Energy Policy 2013-18

News in Brief......................10-11 Gold and its Impact on World Economy............................18-19 Thirsty South Asia..............22-23 Ever Wondered What We Talk?.................................24 How to Protect Yourself.........25 The Ultimate Flying Machine............................26-27 No Water, No Food............28-30 Mental Toughness.............32-33 Economics of Charity.........34-35 Income Diversification.......36-37 Pages 14-15

Mehmood Ul Hassan

IMF Deal
Shiraz Nizami

Pages 16-17

The Radish Farmers

Utmost care is taken to ensure that articles and other information published are up-to-date and accurate. Furthermore, responsibility for any losses, damages or distress resulting from adherence to any information made available through the contents is not the responsibility of the magazine. The opinions expressed are those of the authors and do not necessarily reflect the views of the editor, publisher and the management. Comments and suggestions are welcome.
5
AUG 2013

M Q M

T O H N I

P U SO

Afrah Jamal
What was it for? The BBC Two anchor asks Farooq Sattar (MQMs Deputy Convener and Parliamentary leader) with an impassive face, referring to stash of the pounds found after a raid on Altaf Hussains London pad. Whatever it was for, he answers, at his inarticulate best. The word body bags ominously flashes on the screen, Mr. Sattar changes tactics; we were all laughing, dismissing it as a joke. The savvy anchor runs more damning clips. It is out of context, Farooq declares. There is no reference to context he adds helpfully. But your own SC took notice O that, mere emotional outburst.

arooq Sattar on his famous denying spree is not news. But the BBC documentary aired in July 2013 that has taken on a party with the power to bring an entire city to a complete standstill, or turn it into a battlefield depending on its mood, is talk of the town

U
AUG 2013

nlike those media types this party member would not speculate on the origins or purpose of the stash. He, like other loyalists filed away the latest episode under more malicious propaganda and sinister witch hunts, accused BBC of falling prey to Taliban influences and continued to

PERSPECTIVE

promote the myth of a secular, working class party. Karachi has been at the receiving end of this emotional outburst post elections when the (self) exiled leader (known as Bhai) openly threatened a small group of protestors via conference call broadcast on local media. Farooq Sattar on his famous denying spree is not news. But the BBC documentary aired in July 2013 that has taken on a party with the power to bring an entire city to a complete standstill, or turn it into a battlefield depending on its mood, is talk of the town. Karachis fate has been inextricably linked with London for two decades and the murky relationship is now under scrutiny as MQM (Mutahidda Qaumi Movement) is now forced to respond to a mix of allegations involving election fraud, hate speech, inciting violence, money laundering and murder. Declarations about loyalists who could turn 3 talwar (3 swords) - the name of landmark where a group of citizens had gathered - into real ones should they be so inclined, lacked subtlety. Some seditious commentary that suggested separating Karachi from Pakistan, should its mandate fail to please, following

this startling pronouncement served as an eye opener for those unused to his style of oratory. The assassination of a 70 year old lady an important political figure from the PTI family that came on the heels of these events on the day of the re-polling was taken by many as a warning shot. In many ways, May 2013 was a game changer and could potentially alter the trajectory of its most formidable power player. MQM, notwithstanding its controversial design is a survivor and has weathered many storms. Its benevolent front is offset by a ruthless core allowing it to maintain its stranglehold. Granted, this is not the only party with affinity of an arms bearing faction but the militant wing is reportedly used as much to keep opposition in check as it is to keep its own people in line and a city of millions in fear. Now that their chief is in a legal bind, the future of the organization is called under question. A few months ago, a talk show host wondered if they had prepared a post-Bhai contingency. Do children sit around the house preparing for a future where their father pops off, came the strange reply. If there was a contingency, it was clearly not open for discussion. Several

things have happened since then. The Committee members were roughed up by their own workers and the setup has been overhauled; its erstwhile head stepped down for 2 seconds and is now under investigation. And the bhatta (extortion) culture which they have developed to an art form and land grabbing was put on hold officially. Since the British governments involvement, the local rumor mill has gone into overdrive and citizens have been taking bets on when and if the London based leader/speechmaker will be arrested and the nature of the ripple effects on Pakistans financial hub. A party that describes itself as a liberal organization, that believes in realism practicalism and has taken three decades to put down roots is unlikely to fizzle out, should that happen. Karachi, always a hair trigger away from violence can expect blowback from the arrest. Once a beneficiary of the infamous NRO (National Reconciliation Ordinance) 2007 that gave a get out of jail free card to the top tier leadership charged with 68 murders, 30 attempted murders, 10 kidnappings and 70 balwa (rioting) cases, MQMs sliding credibility is due in part to their own heavy handed approach, and careless talk about weaponry. Even ardent supporters look sheepish and flinch at the bosses obviously damaged speech mode. An ill advised letter sent to Tony Blair that offered intel on Taliban sanctuaries among other things and asked for help in disbanding the ISI could be one reason for MQMs prolonged lifespan. For whatever reason, Altaf Hussains status has been downgraded from asset to liability and without the safety net of an NRO or a justice system that can be swayed; the coming days could spell a change for its political setup. Some believe this could be pressure tactics from Britains side to get MQM to do more perhaps? Or maybe they no longer find them relevant with the imminent rise of PTI. Either way, the time may have come to start thinking of rebranding the outfit and stop playing games with Pakistans economic heart. The writer is a freelance journalist who blogs at http://afrahjamal.blogspot.com. She can be reached at afrahjh@hotmail.com and on twitter @Afrahjh 7
AUG 2013

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Global

he global jihadi is largely believed to turn against Pakistan and her army after the Lal Masjid incident. Lal Masjid aimed to use the existing Islamic seminaries to rise against the west in war on terror. Negotiations between the government officials and Maulana Abdul Aziz had to fail in light of this aim. Neither did the effort of reasoning by Mufti Taqi Usmani, a known Islamic scholar and Maulanas spiritual guide, who especially flew in from Karachi to reason with the Maulana bear fruit.

The

WAR ON TERROR
ranks of the global jihad, individuals as well as organizations. It draws support from all kinds of people, educated as well as uneducated and semi-educated. Their local objectives are usually supported so long the overall objective does not suffer. Drone attacks made indoctrination of jihadi philosophy easier. It justified acts of terrorism, the bomb blasts, the suicide bombers, the kidnappings, fueling sectarianism - ends justified the means. The internet revolution in the 2000s has greatly helped in the production and distribution of jihadi propaganda. The state machinery in absence of a workable anti-terrorism strategy has inadvertently facilitated the non-state actors in spreading the act of terrorism and leaving death and fear in its wake. The global jihadi is largely believed to have turned against Pakistan and her army after the Lal Masjid incident. Lal Masjid was aimed to use the existing Islamic seminaries to rise against the west on the war on terror. Negotiations between the government officials and Maulana Abdul Aziz had to fail in light of this aim. Neither did the effort of reasoning by Mufti Taqi Usmani, a known Islamic scholar and Maulanas spiritual guide, who especially flew in from Karachi to reason with the Maulana, bore fruit. Peace talks are used by the global jihadi mostly to buy time to regroup. This again makes logical sense in light of the overall philosophy followed. Hence it is not surprising that Ehsanullah Ehsan was sacked as spokesperson of TTP on charges of making comments that raise a danger of divisions between the TTP and its Afghan counterpart. This global philosophy may well be the reason why Doha parleys were a non-starter. As to why the global jihadi agreed to the idea that may well be to give a false feeling of progressing on the issue to those it opposes - playing for time. The cord was snapped early owing to the death of TTP deputy commander Wali ur Rehman in a drone strike. This was followed with the Doha flag row. In a new development recently, the Pakistani Taliban has set up camps in Syria ad joined the rebels in the war against President Bashar al-Assad. Later the Pakistan Taliban denied having sent anyone officially over. This was confirmed by UN as well. A Taliban official told the BBC upon visiting Syria that the base was set up with the assistance of exAfghan fighters of Middle Eastern origin who had moved to Syria in recent years. The sectarian card is being played here, taking the high moral ground that Sunni Muslims, who constitute a majority in Syria, are being oppressed by Syria's predominantly Shia rulers, although UN has investigated and found the allegation of Syrian rebels leveled at the government having used chemical weapons that killed many, is baseless. Rather, it is the rebels who have used them. The Al-Qaeda political philosophy is radical Islamism - the doctrine that governments must be forced to conform to Islamic law as they conceive it to be. It may support Islamist groups and draw support from them but through sustained, focused and objective related materials that imbibes them with their philosophy, swelling its ranks and broadening its own base all the time. This linking- up joins the groups in a bond known as blood brothers. Is this a reaction to the current Tenth Crusade as promoted by some researchers? The fact remains, any interpretation by the Global Jihadi that justifies innocent killing of innocent people, of posing hurdles in the way of education, of treating women as cattle, cannot be justified by any law or religion. Such an approach can only be deemed to be misguided. In the current scenario after nearly 11 years of war led by the American invasion in Afghanistan, Afghan security forces will just not be prepared enough to fight the Afghan Taliban once US exits. Intelligence gathering and logistics need support. This is a soft area and on the eve of American troops withdrawing its combat forces from Afghanistan, may well result in the country descending into civil war. The US is also seriously considering a complete withdrawal in 2014. This however may also be a warning to Karzai to support US-led peace efforts. Pakistan is already facing continuing and on-going terrorism within its borders and is completely ill-equipped to handle a further spill-over of the same. There is an absence of a realistically workable antiterrorism policy. A birds eye view of issues involved must be identified first to make any such policy work.

here is a myth that speaks about the Muslim supremacy. It talks of the ancient Khurasan that will be the cradle for the theater of war and will cinch for Muslims a complete supremacy in the war over infidels. The ancient Khurasan includes modern day parts of Iran, Afghanistan, the Central Asian republics and some areas that are now part of Pakistan. The global jihadi interprets the myth according to his thinking and to suit his own end. According to the thought process of the global jihadi, once the war is won in the Khurasan theater, he plans a march to the Middle East, from where he believes al-Mahdi to rise and join hands with them to then wage war and liberate Palestine. Hence, the global jihadi spurned the thought of starting the movement from anywhere else but from Khurasan. Global jihadists have always been hostile to regimes. Early Islamist revolutionaries in Egypt were virtually always anti-American. Algerian jihadists in the 1990s were hostile to the French. Ayman al-Zawahiri spent thirty years fighting the Egyptian regime before merging his organization with al-Qaeda. Intertwined is the history of Afghanistan having driven out the British, the Russians and now; the Americans. The modern jihadi draws a parallel between the events of 1842 and the present scenario in Afghanistan. So, anything to do with and perceived as western values was also spurned, their education, their medication, their organizational assistance (WHO, UNICEF). Health workers administering polio drops have been repeatedly attacked and killed in Pakistan. Assistance programs have repeatedly been suspended and restarted. Allies of the west were targeted, decried as heretics for standing by them. Fatwas were issued against them- people joined the

The writer is a lawyer, academic and political analyst. She has authored a book, A Comparative Analysis of Media and Media Laws in Pakistan.

AUG 2013

News in Brief
Govt clears 480bn circular debt
The government completed on July 22 a non-cash transaction of Rs138 billion through book adjustments to clear energy sectors circular debt. A sanction order of Rs138bn has been issued. In total, Rs480bn circular debt, including Rs342bn payments made last month, stands cleared, said Finance Ministrys adviser and spokesman Rana Assad Amin. The circular debt stood at Rs503bn on May 31.The adviser said that a partly sum of Rs23bn related to cases filed by independent power producers (IPPs) in the Supreme Court was now outstanding. He said the IPPs had agreed to withdraw cases and resolve the dispute through arbitration envisaged under the power-purchase agreements as part of a deal with PML-N government for payment of outstanding dues. They had filed applications to withdraw cases and hopefully the court would dispose of the matter in the next hearing. The finance ministrys spokesman said the IPPs had also fulfilled their commitment to increase their generation by more than 1700MW after the agreement with the government last month. As a result, average electricity generation has gone beyond 14,000MW compared with less than 12,000MW about two months back, leading to reduction in electricity shortfall to about 3,000MW also contributed by higher hydropower generation and reduced power demand.

28pc in FY 12-13
The jewellery exports from Pakistan witnessed increase of 28.54 percent during fiscal year 2012-13 against the same period of last year.The jewellery exports during the period under review were recorded at US$ 1.17 billion while during last year, the exports stood at US$ 916.43 million.The gems exports increased by 15.79 percent which stood at $4.575 million during July-June 2012-13 against the exports of $3.951 million during July-June (2011-12), according to data of Pakistan Bureau of Statistics (FBS).Similarly exports of furniture, handicrafts and molasses also witnessed increase of 9.44 percent, 607.08 percent and 333.16 percent respectively.The furniture exports during the year 2012-13 remained $7.062 million against exports of $6.453 million during same period of last year. The exports of handicrafts during the corresponding period under review stood at $1.697 million whereas during last year the handicrafts exports stood at $0.24 million.

Malaysian company to invest in Pakistans palm oil sector

The Malaysian Federal Land Development Authority has expressed its interest to work with Pakistan for growing palm oil in its coastal areas and help it reduce dependence on oil imports. A technical team of FELDA led by Dr. Mohd. Emir Mavani Abdullah, Group's President and CEO, called on Chairman Board of Investment Mohammad Zubair and apprised him that Pakistan's palm oil import was around 70 percent of its total imports from Malaysia. Abdullah said that FELDA was ready for cooperation regarding growing palm oil in the coastal areas of Balochistan and Sindh and also agreed to send a technical evaluation team to Pakistan to see the situation on ground.Abdulah also proposed several investment models for the promotion of palm oil cultivation in the country. He said Pakistan might seek the support of World Bank to engage FELDA as its consultant for the project while FELDA would purchase all the farm output and the venture will be risk-free. Pakistan was the fourth largest importer of palm oil in 2012 trailing behind China, India and the Netherlands.Out of the total imports of $1.86 billion of edible oils, import of palm was $1.3 billion (accounting 70% of total imports).

Cabinet extends quota system for recruitment in govt service

The Federal Cabinet has granted extension of another 20 years in the regional quota system for direct recruitment in the federal government.The Cabinet, chaired by Prime Minister Mohammad Nawaz Sharif considered and gave its approval to the constitutional amendment in the first provision of Article 27(1). "The amendment envisages that in the interest of national integrity and harmony, adequate representation in the service of Pakistan for persons belonging to any class or area is only possible when the period is further extended," a press release said. "The proviso provides for merit/regional quota for fulfillment of direct recruitment to posts in the Federal Government. The existing proviso will be extended for another period of 20 years from 14.8.2013." the Cabinet Division press release said. The Federal Cabinet considered and also gave its approval to the amendment in the Federal Employees Benevolent Fund and Group Insurance Act, 1969 (Act-II of 1969). The amendment will remove the age limit of 70 years for the provision of Benevolent Grant to family members of an employee who dies upto the age of 70 years whereas the grants under other schemes viz. Marriage Grant, Burial Charges and Educational Stipends are admissible without restriction of any age limit.

Etisalat interested in bidding for Warid Pakistan

DUBAI: Etisalat, the Gulfs biggest telecommunications operator, has hired Goldman Sachs Group Inc to advise on its planned bid for Pakistan mobile operator Warid Telecom, two sources aware of the matter said. Warid, the countrys smallest operator, has been put on the block in a sale likely to fetch up to $1 billion. Etisalat and China Mobile, who have existing operations in the country, were seen as potential bidders.

Jewellery exports surge

AUG 2013

10

Etisalat, which is also in exclusive talks with Vivendi to buy its 53 percent stake in Maroc Telecom, has existing operations in Pakistan through its stake in Pakistan Telecommunications Co Ltd (PTCL). Acquisition of Warid, owned by conglomerate The Abu Dhabi Group, would give the company an opportunity to consolidate its operations in the country, said one banking source speaking on condition of anonymity as the sale process has not been publicly disclosed. Both Etisalat and Goldman Sachs declined to comment. Pakistans mobile telecommunications sector has five operators and is ripe for consolidation after a period when a troubled economy, increasingly high levels of market penetration and stiff competition has forced companies margins lower. Daniel Ritz, Etisalats chief strategy officer, told Reuters that the UAE telecom group would look at opportunities to bolster its existing portfolio without specifying whether the firm was bidding for Warid. Warid launched its cellular services in Pakistan in May 2005 and had 12.54 million subscribers by the end of March this year, down from 17.39 million in 2010-11. Other operators in Pakistan are Oslo-based Telenor and Orascom Telecom, which operates under the name Mobilink and is the sector leader. Reuters

notification issued on July 24 empowers the commissioner to issue notices to all non-filers of income tax returns. All cases of non-filers of income tax returns, who are potential taxpayers liable to furnish their returns of income and have been identified on the basis of information collected at FBR for broadening of tax base. On the broadening of tax base, the FBR has set a target to bring 100,000 people in the tax net in the current fiscal year. Notices have been issued to more than 10,000 people in July in this regard. Finance Minister Ishaq Dar announced in the budget that 500,000 rich people would be brought in the tax net during the current financial year on the basis of financial transactions and data collected from Nadra. The number of people who file income tax returns fell to less than 800,000 in FY12.

UBLs mutual fund IPO attracts Rs825 million

UBL Fund Managers attracted a total investment of Rs825 million in the initial public offer (IPO) of its UBL Principal Protected Fund II (UPPF II), which took place on July 15-17. UPPF II is yet another feat for us, as it has generated investments of over Rs825 million until the close of its IPO, UBL Fund Managers Head of Marketing and Alternative Distribution Channels RaedaLatif said. UBL Principal Protected Fund IIs IPO has attracted investments from the automobile, banking and power sectors in particular, she added. In the past, UBL Principal Protected Fund I (UPPF I) and UBL Islamic Principal Preservation Fund I (UIPPF I) also generated Rs390 million and Rs764 million, respectively. The absolute return net-of-expenses for UPPF I between its inception on February 3, 2012, and July 23, 2013, has been 62%. It has been 19% for UIPPF I between its inception on April 29, 2013, and July 23, 2013. Like UPPF I, UPPF II is also based on the principles of Constant Proportion Portfolio Insurance (CPPI), which allows investors to have complete exposure to the stock market, while ensuring that their principal amount remains protected. With a term period of two years, investment in this fund could be initiated with Rs10,000 only.

Nishat Chunian acquires Taj Textile for Rs350 million

Nishat Chunian Limited (NCL) has acquired Taj Textile Mills Limited (TTML) at a reserve price of Rs350.1 million, according to a notice issued to the Karachi Stock Exchange on July 25. The acquisition is likely to add 40,000 spindles to NCLs existing capacity of 150,000 spindles for the production of yarn. According to investment group JS Global, the new additions will formally come online by early 2014. NCL is expected to spend up to Rs1 billion to refurbish the spindles. The move comes at a time when demand for yarn has been on the rise. Pakistans yarn exports increased by 30 percent during 2013. Most of the increase was fuelled by China, the worlds largest cotton importer.

SBP measures fail to stem PKR slide

The State Bank of Pakistan's measures to arrest the fast depreciation of Pak rupee seem futile as the PKR further weakened against the dollar in open currency market. Keeping in view the depreciation of PKR against the dollar, the SBP took several measures, issuing new directives to the exchange companies aimed at further strengthening the Anti Money Laundering (AML) and Know Your Customer (KYC) regime, besides arresting the Pak rupee slide. The State Bank directed ECs to obtain copies of identification documents from the customers for the transactions of $2,500 or above and to conduct large transactions through cheques/demand drafts/pay orders. However, these steps seemed to have failed and the Pak rupee further depreciated against the dollar in open currency market. There are speculations in the market that the dollar will touch the mark of 110PKR in a month period.

Bad loans eat up Askari Banks profitability

Askari Bank reported a loss of Rs4.1 billion for the semi-annual period ended June 30 2013, which was down from profit of Rs1 billion for the corresponding period last year, pulled down mainly by a gargantuan increase in provisions for bad loans that the bank made out. According to a notice sent by the company to the Karachi Stock Exchange, banks core business which is represented by net interest income the difference between the interest earned by the bank and the interest expensed fell to Rs3.8 billion in the period under review compared to Rs4.6 billion in the corresponding half-year period of last year as the central bank continues to slash interest rates in successive monetary policies, therefore shrinking banking spreads. Askari Banks Achilles heel was the enormous amount it provisioned against non-performing loans. The provisions rose nine times in the semi-annual period to Rs6.58 billion, compared to a meagre Rs0.727 billion in the corresponding period of last year, bringing net interest income after provisions down 48% to Rs2.02 billion. Major chunk of provisioning was, however, done in the last quarter after post-acquisition where it was recorded 24 times higher at Rs6.36 billion in the quarter against Rs0.266 billion in the corresponding quarter, hurting overall semi-annual earnings statement of the company.

Govt moves to broaden the tax net

The government has created a new post of commissioner of broadening of tax base at the Federal Board of Revenue headquarter. A

11

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The

National Energy Policy

A Critical Review
Mehmood Ul Hassan Khan

2013-18
(d) Restructuring of water and power ministry, National Electric Power Regulatory Authority (Nepra) (It may pay dividends, provided all the key appointments are made on merit and without any political compromise). (e) Oil and Gas Regulatory Authority (Ogra) adjustment of outstanding dues owned by the government and privately owned bodies through federal adjusters (Financial discipline would hold the key of success). (f) Formation of regional transmission and power trading system would be made. (Role of provincial governments would be crucial in the days to come).

generation. It gives certain incentives to potential businessmen and investors (local, foreign) to invest in the power sector. It would support the current and future energy needs of the country.

n the wake of continued power breaks, protests and processions, the new government at the center has succeeded to formulate the much awaited and debated national energy policy 2013-18. The same has already been approved by the Council of Common Interest (CCI). The policy accentuates the diversified but integrated efforts of the government to overcome the energy deficit in the country. It pinpoints the existing socio-economic ills closely associated with the ongoing saga of power crisis throughout the country. A widening supply-demand gap where the demand for electricity far outstrips the current generation capacity (up to 4500-5000mw), highly expensive generation of electricity (Rs12/unit) due to an increased dependence on expensive thermal fuel sources (44 per cent of total generation) and the last but not the least, a terribly inefficient power transmission and distribution system that currently records losses of 25 to 28pc due to poor infrastructure, mismanagement and theft of electricity are the chronic problems of the power sector in the country. It also encourages the participatory role of the private sector in the field of power

Salient Features
Given below are some salient features of the newly announced national energy policy: (a) Power sector subsidy would be phased out till it is put to an end. (Unstoppable flood of inflationary pressure would create havoc in the lives of the common people in the country) (b) End to load shedding would be made possible till 2017 and surplus electricity in 2018. (Without proper utilization of all available natural resources, mix of alternative energy resources and above all creation of strategic balance in the power generation chain, it would not be possible). (c) Privatization of government owned power plants and little power distributing companies (Discos), bringing the double digit cost of power generation to a single digit. (Levels of productivity and efficiency of the private sector of the country is not so encouraging to meet the demands).

Philosophical inputs
Philosophical inputs are always good for reading but hard to implement especially where there is a chain of corruption. It has some philosophical inputs too. It speaks about the importance of honesty, transparency, financial discipline and accountability which are parts of parcels of a bygone story in our parts of the world. It has long term goals aiming to build a power generation capacity that can meet countrys energy requirements in a sustainable manner. It also aims to create a new culture of achievement, rights and responsibility and to form new culture of energy conservation and

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ENERGY
responsibility, ensure the generation of inexpensive and affordable electricity for domestic, commercial and industrial use, minimize pilferage and adulteration in fuel supply and promote world-class efficiency in power generation. Moreover, it envisages creating a cutting edge transmission network, minimizing financial losses across the system and aligning the ministries involved in the energy sector and improve governance. cost sources such as hydel, gas, coal, nuclear and biomass. Local and foreign investment will aggressively be sought for small and medium size run of river hydel projects. Selected hydel projects under development will be positioned for privatization. Multilateral agencies will be invited to partner in large infrastructure hydel projects.

Governance Strategies
According to the national energy policy, the financial efficiency strategy (FCS) will be geared towards punishing private defaulters and it proposes severing the electric connection of defaulters after 60 days of non-payment and only reconnecting them to the grid with pre-paid meters (The ongoing federal and provincial government joint strike against electricity and gas thieves are creating history). External collection agencies may also be sourced to improve cash flows. Overall hauling of NEPRA and OGRA to improve efficiencies is a must for the success of new national energy policy.

Operational Strategies
Different Strategies Details Establishing plant efficiency through external heat rate testing, building a merit order accordingly, and allocating fuel to the more meritorious plants. Allocations will be made public online to increase the transparency. The strategy calls for the privatization or O&M based leasing of GENCOs. Installation of upgraded SCADA software to optimize transmission and monitor its losses. Dispatch will be based on economic order and internal/audit control will be established on dispatch and payment. Plants will be built closer to load centers; high voltage transmission lines will be expanded; and the 220kv rings around cities will be strengthened. The performance contract will be signed with the heads of distribution companies and their respective boards focused on reducing distribution losses due to technical reason, theft, and lack of recovery/ collection. Smart meters will be installed at the feeder level, profit and loss accounts will be managed at the feeder level, and the accountability will be appropriated to the executive engineer.

Result-Oriented Policy
It is envisioned to build energy cities, corridors and sponsor public-private partnership for coal and run of river projects. The government will also redesign and strengthen the national grid transmission network and build a regional transmission and power trading system. The government would like to limit its role to policy making and unless necessary, service delivery will be promoted through a fiercely competitive and transparent private sector. Elements of Supply & Demand Efficiency Details It would be based on merit order, transparency/automation, and accountability. It would be institutionalized through the help of upfront tariff and competitive bidding, and key client management It will be developed and incentives would be provided to attract greater private sector investments. It will be by a worldclass regulatory authority. Up-front tariffs will be set for low cost fuel and competitive bidding will be used to decrease the costs further.

Estimations
It is predicated that successful execution of new national energy policy would reduce the supply-demand gap by 2017. Moreover, there would be power surplus in 2018. The cost of power generation will be reduced to a single digit per unit, and the efficiency improvements in transmission and distribution will decrease the burden of power for the end consumer.

Generational

Competition

Concluding remarks

Transmission

Infrastructure

Tariff

A complete overhauling is urgently needed to put the sinking titanic of power sector on right track because, all important inputs of power generation are at their lowest ebbs. Joint ventures of alternative energy generation with China, Germany and UAE would be fruitful in the days to come. The new national policy of energy 201318 tells the roadmap for attracting domestic and foreign investments in the power sector. It explains different means to increase the power generation capacity in the days to come. It introduces new system of price determination for the household and commercial utilization. It gradually shifts Pakistans energy mix towards low

Distribution

pparently the overarching target of the new national energy policy is to increase generation from the current 12,200MW to 26,800MW in the medium term (3-5 years) and reduce average generation cost from Rs14.67 per unit to about Rs10 per unit by bringing in efficiency, merit order and transparency in the entire spectrum of the power sector is possible but merely on papers. Practically it would not be possible until and unless, optimal utilization of hydro-power is geared. Big fishes of electricity and gas theft must be dealt with iron hands. Call for accelerating power imports from neighboring nations like 1,000MW from Central Asian states, 500MW from India and 1,000MW from Iran and restructuring and renovating or replacing public sector generation plants through publicprivate investment may work. Supply of energy from Turkmenistan, Afghanistan, Pakistan and India (TAPI), Iran-Pakistan dream pipeline (IP) and even India would badly suffer from the emerging geo-political and geo-strategic problems. Durable peace and political stability in Afghanistan would be crucial for importing energy from the CIS. In case of IP, U.S. legislations and diplomatic pressure would not be easy to crack.

Mehmood Ul Hassan Khan is a research scholar, specializes in geo-politics and geo-strategic issues of the GCC, CIS and South East Asia. He has keen interests in cross cultural dialogue and conflict resolution 13
AUG 2013

IMF DEAL an opportunity

AUG 2013

Shiraz Nizami

14

and a risk

awaz government has struck a deal with International Monetary Fund for $5.3 billion extended loan facility, intended to rebuild foreign exchange reserves, pull the plug on energy crisis and a sliding currency in Pakistan. Though, it was a contradiction of PML (N)s election manifesto, but the governments finance minister says there was no way out to retire from past liabilities. The country had long been discussing a fresh bailout package from the IMF after abandoning $11.3 billion loan program in 2011 after the PPP led government refused to carry out strict financial reforms. The program, which is worth $5.3 billion, will carry a floating interest rate of 3% and would be payable over a longer period than conventional arrangements to facilitate Pakistan in repaying the loan, IMFs Pakistan Mission Chief, Jeffrey Franks told the journalists. Franks said that it is a Pakistan designed and built program. The government has developed plans to improve tax collections through improved administration and through a mechanism to eliminate loopholes in the coming years, Franks said, adding that the difficult decisions have already been made. It is hoped that this announcement of support from IMF would encourage other development partners to extend a helping hand to Pakistan Though, unanimously agreed that acquiring bailout package was

ECONOMY
badly needed, economists differ on impact of IMFs loan on inflation, money supply and economic growth. The critics argue that the government must rely on countrys own resources as the new loan is a continuation of pushing the economy into an unending debt trap. They argued that since Pakistan joined the IMF in 1988, the country has availed 11 loan programs. However, all standby arrangements, except for one, did not reach the conclusion because of lack of implementation of tough conditions. The economists suggest local options to raise revenues, e.g. seeking help through the forum of Friends of Democratic Pakistan, obtaining oil facility from Saudi Arabia on deferred payments, recovering USD 800 million pending amount of PTCLs 26% shares that was sold to Etisalat, and generating about USD 800 million by auctioning 3G license and increasing tax revenues by capturing tax evaders and via expending the tax net. It is also suggested that alike India, Pakistans government can borrow from overseas Pakistanis by issuing securities like bonds. By these entire means, the government could raise USD 3 - 5 billion collectively. They also raise a concern that the supply of dollars from the IMF will result in devaluation of rupee up to Rs 105 against a dollar. Long lists of recommendations are there but no one tells how to fasten the bell in cats neck. The government supporters say that the previous government had borrowed extensively during its five-year tenure that shoot the countrys total debt from USD 50 billion to USD 64 billion. Now, it is the time to repay those obligations, with around USD 3 billion payments of interest and principal amount scheduled during the second half of 2013 alone. The existing reserves with the State Bank of Pakistan (SBP) are hardly USD 4 billion (excluding commercial bank liabilities), which are barely enough to foot the import bill of one month against the standard benchmark of having enough reserves to foot the import bill of next six months. Under the above circumstances, borrowing from IMF is the most logical choice to repay foreign obligations, boost foreign reserves and restore investors confidence. Moreover, the concept that paying off low interest IMF loans by floating junk bonds to Pakistani expatriates is ludicrous. Pakistan has to borrow money because its tax to GDP rate is one of the lowest on earth as it wont charge market rates for fuel/utilities, doesnt enforce collection of bills (taxes, utilities etc), wont cut military expenditures etc. The government in power has already shown its mood to implement tough decision like increase in tariffs for electricity and gas, abolishing subsidies, eliminating the circular debt by printing currency, abolishing tax exemptions, tightening the monitory policy, and extension in the tax net. The government plans to generate additional revenues of Rs300 billion in a year by applying all this, but clearly, all this will squeeze the public. Up to Rs 3/unit increase in power tariff, broadening of tax net and printing of additional Rs500 billion to pay off circular debt will ultimately have an impact on inflation. The SBPs tight monetary policy to control inflation will limit the availability of credit to businesses and will slow down business activity. Thus, there would be an increase in prices in coming months and the GDP growth will be lower than expectations which may damage the popularity of incumbent government. However, the newly installed government would boost its public support if it successfully revamps the loss making public sector enterprises e.g. Railways, PIA, Steel Mills, PEPCO and turns them into profitable concerns and saves up to annual loss of Rs 300 billion to national exchequer because of these white elephants.

Up to Rs 3/unit increase in power tariff, broadening of tax net and printing of additional Rs500 billion to pay off circular debt will ultimately have an impact on inflation. The SBPs tight monetary policy to control inflation will limit the availability of credit to businesses and will slow down business activity. Thus, there would be an increase in prices in coming months and the GDP growth will be lower than expectations which may damage the popularity of incumbent government.

15

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RFarmers
G

e h

h s i d a
eorgetown Universitys AlWaleed Bin Talal Center for Muslim-Christian Understanding hosted a delegation from Egypts Freedom and Justice Party on April 4, 2012. I merely made a mental note that a wild donkey does not bray when it has grass. After Egypt hastily scrambled a new constitutional document I wrote about the flaws and my concerns regarding a lack of critical thought within some of the amendments. Things seemed to be off to a rocky start. But I never imagined that President Mohamed Morsi would be a transition guy - like the man a woman dates on the heels of a bad relationship - the man who does not represent future permanency, but a mere dalliance. Perhaps my opinion will not be a popular one, but it is one which must receive careful thought. The removal of the president and his administration from power may present as a lesser evil compared to what may await a newly energized political expression. What we are seeing in Egypt is not democracy. It is chaos. It is a degradation of governance by populist fiat. The West is seeking to tightly control the script. This is the final act of an incomplete revolution. It is unfinished business. I contend that the removal of President Morsi from power is both domestic, political, comedy and geopolitical tragedy. Egypt has yet to achieve anything which remotely resembles democracy. Millions of people on the streets is sheer emotional valence. Democracy is extremely hard work. It only looks easy amongst those who have neither experienced it nor spent centuries working for it. Democracy is governance of the willing, based on the rule of law. Former president Mubarak held tightly to the reins for three decades. He was despised for the manner in which he retained his ascendancy to the presidency after the assassination of Anwar Sadat. Yet the first new Egyptian president seated with official capacity via an election process has lasted a total of 368 days in his position. Knock a few more days off this number if using the AH calendar. Quite simply put, this latest tumult has brought forth yet one more stillborn child within a womb of hope. Is it just me, or is this damn depressing news? Who are the stage hands assisting in this latest Egyptian upheaval? Can we identify them

Egypt has yet to achieve anything which remotely resembles democracy. Millions of people on the streets is sheer emotional valence. Democracy is extremely hard work. It only looks easy amongst those who have neither experienced it nor spent centuries working for it.
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WORLD POLITICS

any easier than the vast majority could have identified those within a different era? If I throw out the name Miles Copeland can you regurgitate the word Mukhabarat? Do you know which Egyptian president he advised? Undoubtedly, both state and non-state actors are complicit in the complexities and hidden order of this latest Arab Gotcha...errr.... Arab Spring. Did the Morsi administration make more than a few mistakes? Absolutely. Destabilized political systems require policies that reach for the horizon regarding human capital and potential. Robust treaties and intricate economic dealings are required for the good of the people. There was too much stooping to engage partisan politics; too swift a response by party loyalists to inflict their own brand of conviction upon the colorful and ethnically diverse population. His administration lacked a strategic and cohesive policy of establishing national identity as the canopy under which all other identifies could find their shade. The Egyptians must learn to be Egyptians first. Then let them enjoy their religio-ethnic freedom, supported by democratic principles of rule. I remain sad that it has come to this. It is just another bloodless coup by calculating senior military officers who have much to lose should they not maintain their own vaunted status as the guardians of the public good. This also, is a

useful script. Democracy is not born in an instant. It is organic in nature. It nestles within the soil of mens hearts. It is nurtured in native soil. But the seed which sprouts is like a redwood. The growth pattern is slow and the shadow of the tree of democracy emerges slowly. This shadow is noted in the writings of men such as Jean Jacques Rousseau. His works, On the Social Contract and Discourse on the Origin of Inequality still echo through the centuries. They bid us to incline our ear to understand the nature of political systems intermeshed with the condition of man. Other philosophic and political thinkers come to mind. You get the point. Democracy cannot be bought. It must be earned. True democracy will not be minimally experienced in Egypt until the third generation of those who rose up against their masters. Democracy is a slow-unfolding miracle. But the democratic experiment cannot come to maturity within population groups unwilling to give due political process a chance. The Arab Spring has the look of a field of radishes. Nascent hopes are quickly dashed. Just as a radish has a rapid cultivation cycle; just as it can as quickly be popped into the mouth and consumed; so goes Egypt. The Egyptian people are just the latest radish farmers. Here is the deal. President Morsi may

not have been the best choice. His administration stands accused of coming to power with a combination of fraudulent actions and more than a few eager international helpers. I cannot confirm such things. But stability precedes democracy. It cannot exist without it. The citizens must learn to engage the quiet grass-roots activism which precedes each election cycle. In my own nation we can be disappointed with political outcome. But we know that another election cycle will allow us to work again for the common good. We embrace small victories and swallow hard when our party loses. It is a superior action to place one good man into office in quiet manner than to follow the Egyptian model. Let me end on a note of hope borrowed from a book which is considered a literary masterpiece: At least there is hope for a tree. If it is cut down it will sprout again, and its new shoots will not fail. Its roots may grow old in the ground and its stump die in the soil, yet at the scent of water it will bud and put forth shoots like a plant. Job 14:7-9

The writer is a freelance journalist and author of the novel Arsenal. She can be reached at tammyswof@msn.com 17
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and its impact on world economy

Is bad news for gold, good news for the global economy?

GOLD
Muhammad Bilal Khan

n principle, holding gold is a form of insurance against war, financial Armageddon, and wholesale currency debasement. And, from the onset of the global financial crisis, the price of gold has often been portrayed as a barometer of global economic insecurity. So, does the collapse in gold prices from a peak of $1,900 per ounce in August 2011 to under $1,250 at the beginning of July 2013 represent a vote of confidence in the global economy? To say that the gold market displays all of the classic features of a bubble gone bust is to oversimplify. There is no doubt that golds heady rise to the peak, from around $350 per ounce in July 2003, had investors drooling. The price would rise today because everyone had become convinced that it would rise even further tomorrow. Doctors and dentists started selling stocks and buying gold coins. Demand for gold jewelry in India and China soared. Emerging-market central banks diversified out of dollars and into gold. The case for buying gold had several strong components. Ten years ago, gold was selling at well below its long-term

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ECONOMY
inflation-adjusted average, and the integration of three billion emerging-market citizens into the global economy could only mean a giant long-term boost to demand. That element of the story, incidentally, remains valid. The global financial crisis added to golds allure, owing initially to fear of a second Great Depression. Later, some investors feared that governments would unleash inflation to ease the burden of soaring public debt and address persistent unemployment. As central banks brought policy interest rates down to zero, no one cared that gold yields no interest. So it is nonsense to say that the rise in the price of gold was all a bubble. But it is also true that as the price rose, a growing number of nave investors sought to buy in. Lately, of course, the fundamentals have reversed somewhat, and the speculative frenzy has reversed even more. Chinas economy continues to soften; Indias growth rate is down sharply from a few years ago. By contrast, despite the ill-advised fiscal sequester, the US economy appears to be healing gradually. Global interest rates have risen 100 basis points since the US Federal Reserve started suggesting quite prematurely, in my view that it would wind down its policy of quantitative easing. With the Fed underscoring its strong anti-inflation bias, it is harder to argue that investors need gold as a hedge against high inflation. And, as the doctors and dentists who were buying gold coins two years ago now unload them, it is not yet clear where the downward price spiral will stop. Some are targeting the psychologically compelling $1,000 barrier. In fact, the case for or against gold has not changed all that much since 2010, when I last wrote about it. In October of that year, the price of gold the consummate faith-based speculative asset was on the way up, having just hit $1,300. But the real case for holding it, then as now, was never a speculative one. Rather, gold is a hedge. If you are a high-networth investor, or a sovereign wealth fund, it makes perfect sense to hold a small percentage of your assets in gold as a hedge against extreme events. Holding gold can also make sense for middle-class and poor households in countries for example, China and India that significantly limit access to other financial investments. For most others, gold is just another gamble that one can make. And, as with all gambles, it is not necessarily a winning one. Unless governments firmly set the price of gold, as they did before World War I, the market for it will inevitably be risky and volatile. In a study published in January, the economists Claude Erb and Campbell Harvey consider several possible models of golds fundamental price, and find that gold is at best only loosely tethered to any of them. Instead, the price of gold often seems to drift far above or far below its fundamental long-term value for extended periods. (This behavior is, of course, not unlike that of many other financial assets, such as exchange rates or stock prices, though golds price swings may be more extreme.) Gold bugs sometimes cite isolated historical data that suggest that golds long-term value has remained stable over the millennia. For example, Stephen Harmstons oft-cited 1998 study points to anecdotal evidence that an ounce of gold bought 350 loaves of bread in the time of Nebuchadnezzar, king of Babylon, who died in 562 BC. Ignoring the fact that bread in Babylon was probably healthier than todays highly refined product, the price of gold today is not so different, equal to perhaps 600 loaves of bread. Of course, we do not have annual data for Babylonian gold prices. We can only assume, given wars and other uncertainties, that true market prices back then, like today, were quite volatile. So the recent collapse of gold prices has not really changed the case for investing in it one way or the other. Yes, prices could easily fall below $1,000; but, then again, they might rise. Meanwhile, policymakers should be cautious in interpreting the plunge in gold prices as a vote of confidence in their performance.

Gold bugs sometimes cite isolated historical data that suggest that golds long-term value has remained stable over the millennia. For example, Stephen Harmstons oft-cited 1998 study points to anecdotal evidence that an ounce of gold bought 350 loaves of bread in the time of Nebuchadnezzar, king of Babylon, who died in 562 BC. Ignoring the fact that bread in Babylon was probably healthier than todays highly refined product, the price of gold today is not so different, equal to perhaps 600 loaves of bread.

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Nitty-gritty of investments

I am from a business family based in Karachi since 1920. We migrated from Gujrat in India. The conventional business of our family is real estate; afterwards we embarked on different businesses like automobile and movies. I was a commercial pilot but I had to finish my flying career since my father was under the weather and I started looking after our family business. I was also the President of the Lasbela Chamber of Commerce and Industry in Lasbela, Balochistan. Later, I met Mohtarama Benazir Bhutto in the year 2002 when she was in exile. She was interested in bringing new people to the party so she insisted me to join, thus I worked with her. When she came back, the ideal place they thought for me was Board of Investment (BOI), Saleem Mandviwalla.

Maria Khalid

T
AUG 2013

E.A.What are the factors that hamper investment flows into Pakistan?

errorism, domestic law and order situation and global slowdown are the factors that have some bearing on the investment inflows to Pakistan in recent years. However in particular, it is the untoward system and bureaucratic hurdles that almost dampen the spirits of foreigners when they intend to invest in Pakistan. Shockingly, our local businessmen resist to foreign investors. They do not even cooperative in initiating joint ventures with foreign investors and create obstacles by collaborating with local bureaucratic officials. It is because the local businesses are enjoying liberty for making cartels and lobbies, unjust profiteering and of tax evasion, and they feel foreign investors are a threat to their traditional market practices of making more profits by investing less. Our domestic investors dont want new players in the market who abide by laws, fulfill their social responsibilities and care for their consumers. Even though, I brought big companies like Yamaha, Japan and Lotte (South Korea) into Pakistan. In fact investment from South Korea the success story of BOI. Yamaha, Japan is intent on installing Asias largest motorcycle 20

INTERVIEW BUDGET 2013-14

manufacturing plant in Hyderabad. It plans to investment 300 million dollars on the said project. Awkwardly, local producers of motorcycles made an alliance against them. Three years have passed and yet Yamaha Japan has not been able to initiate work on manufacturing plant because of invisible hurdles. Similarly, when the South Korean company Lotte started operations in Pakistan, the whole textile industry got united against it, however, now Lotte Pakistan is running its business successfully. Thus, mostly there are individual driven problems instead of institutional hurdles. TCC is the worst example of discouraging investments. It was just an issue of ego of former CM Baluchistan, and nothing else. The TCC case has damaged the investment profile of this country and we will have to pay the price, because we would never win the case in the International Court of Arbitration, which the TCC has filed against Pakistan and we will have to pay for their losses in recompense. and Mr. Hafeez Shaikh were outsiders and not aware of partys aptitude and political commitments. What I observed is that Mr. Hafeez Shaikh was running his own government that was distinct to that run by the prime minister. He had set his own priorities and was making his own decisions and the finance minister was not functioning in accordance with the vision of the prime minister and that was the reason PPP had to face criticism on various issues. Now, PML N has made Ishaq Dar its finance minister and I think its a good choice because he belongs to the party and is aware of his partys vision, therefore running the affairs accordingly. auctioning of 3G licenses, recovery of 800 million dollars from the Eatisalat and privatization of loss making entities.

E.A. Now, the N Leagues government has been installed. How would you judge their performance?
I am glad about PML-N coming in power but they have come with a huge list of promises like bringing prosperity, business and energy. Delivering those promises wouldnt be easy and the hopes of nation are high now. My concern is that they will not be able to deliver and thus will lose their credibility. Media is vigilant and they have started counting 90 days, as promised by N league, to judge the performance of this new government.

E.A. Why is there a sudden rise in value of US dollar?

Its all artificial, just a move to make money by hoarding it first and then selling it at a higher rate. When I was the finance minister, I gave this statement outside parliament that dollar should be for 90 PKR and I came to know that the exchange companies were holding over 2billion dollars in cash, whereas one currency exchange company alone was holding 500 million dollars. That was a move by currency companies to earn profits by devaluing rupee. Similarly, there is no pressure on rupee, there is no shortage of dollar in the country, after signing of loan agreement with IMF, there are no reasons for hike in dollar price. I know, its all preplanned and a move to artificially raise dollar up to 110 rupee and thats when the hoarders will start selling.

E.A. What investment opportunities do you see in Pakistan?

Our biggest sector and opportunity is the agriculture sector. I think it is still unexplored or it has not been really looked at by the real investors who are in the agriculture business. It is a vast area with a number of fields and businesses which can attract massive investment. If we take the example of milk, Pakistan is the 4th largest producer of milk and 80% of our milk is still sold loose. So it means all of this 80% requires investment. Similarly we need huge investment in storage and warehousing. We still store our raw materials in open storages places. These days it is stored in silos around the world which maintains a certain temperature and moisture for every product. We also need investments in exploration, mining and energy. We have no alternate energy in Pakistan which is again an investment opportunity.

E.A. You, as Chairman BOI chalked out an ambitious scheme to establish Special Economic Zones (SEZs) across the country and you have accomplished the task. How do you feel about that?
Typically, a SEZ is a geographical region that has more liberal economic laws than a countrys typical economic laws and regulations. We at BOI undertook a benchmarking study of the best practices in SEZs in regional countries like China, India, Thailand, Malaysia, Egypt, Vietnam, Jordon and UAE to develop policy framework for SEZs in Pakistan. It was my brain child and I am glad that the SEZs have been established and facilities have been provided to investors. Now it is the job of current government to continue to facilitate investors in manufacturing units and factories in these special economic zones.

E.A.What is the difference between the PPP agreement with the IMF and that of PML N?
Pakistan Peoples Party did not agree to those IMF conditions for which PML N has agreed for extended loan facility e.g. increase in sales tax, hike in power tariff and removal of subsidies. We paid price for not accepting the hard conditions as the IMF discontinued the loan program and made it tough for the PPP government to manage financial affairs. Once the loan program was suspended, PPP wouldnt return to IMF and focus of revenue generation was the local resources. The PPP had even introduced a bill in the parliament to expend the tax net. We proposed in the bill that the Federal Board of Revenue shall be allowed to impose first time tax of Rs.50, 000 each on three million tax evaders, for which a list has been prepared already. However, the PML N opposed implementation of the bill. There are alternative options for the government to generate revenue e.g. tax expansion,

E.A. What is the progress on the Pak-US investment treaty?

Well, talks on Bilateral Investment Treaty (BIT) with America have been completed and now it is the decision of the government to sign the treaty. The BIT with US will not only help in multiplying investments and exports of Pakistan, but also lead towards signing of a Free Trade Agreement (FTA) with the US. The BIT is a commitment to reciprocally promote and protect investment, thereby Pakistani investment in US will also get the reciprocity under international laws. The signing of BIT will lead towards FTA between the two countries, resulting in market access with increased exports to US markets and more investment from the US. Here I would like to make it clear that the civil nuclear technology exchange and arms trade are on the restricted list of BIT.

E.A. How was your experience as the finance minister?

I never thought of becoming a finance minister. My only dream was to become a senator and to do some legislative work in the upper house. It was not my wish but I am grateful to the PPP leadership that they chose me for such a momentous responsibility. When I held office of the finance minister, I was surprised to learn that there were about 300 of routine files that were pending for the signatures of the finance minister. I cleared all of them in my short span at the finance ministry. It is misfortunate that PPP doesnt have any suitable person in its senior leadership to be appointed as finance minister. Mr. Shaukat Tareen

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Pakistan is extremely worried that India is planning to build a whole sequence of projects on both the Chenab and Jhelum rivers and the extent to which India then becomes capable of controlling water flows
Nita Bhalla

South Asia River rifts threatenwater wars

s the silver waters of the Kishanganga rush through this north Kashmir valley, Indian labourers are hard at work on a hydropower project that will dam the river just before it flows across one of the worlds most militarised borders into Pakistan. The loud hum of excavators echoes through the pine-covered valley, clearing masses of soil and boulders. The 330-MW dam shows Indias growing focus on hydropower but also highlights how water is a growing source of tension with downstream Pakistan, which depends on the snow-fed Himalayan rivers for everything from drinking water to agriculture. Islamabad has complained to an international court that the dam in the Gurez valley, one of dozens planned by India, will affect river flows and is illegal. The court has halted any permanent work on the river for the moment, although India can still continue tunneling and other associated projects. In the years since their partition from British India in 1947, land disputes have led the two nuclear-armed neighbours to two of their three wars. The next flashpoint could well be water. There is definitely potential for conflict based on water, particularly if we are looking to the year 2050, when there could be considerable water scarcity in India and Pakistan, says Michael Kugelman, South Asia Associate at the Woodrow Wilson International Center for 22 Scholars in Washington. Populations will continue to grow. There will be more pressure on supply. Factor in climate change and faster glacial melt That means much more will be at stake. So you could have a perfect storm which conceivably could be some sort of trigger. Its not just South Asia water disputes are a global phenomenon, sparked by growing populations, rapid urbanisation, increased irrigation and a rising demand for alternative power such as hydroelectricity. Turkey, Syria, Iran and Iraq quarrel over the waters of the Tigris and Euphrates. The Jordan river divides Israel, Jordan, Lebanon and the West Bank, while 10 African countries begrudgingly share the Nile. In Southeast Asia, China and Laos are building dams over the mighty Mekong, raising tensions with downstream nations. A U.S. intelligence report in February warned fresh water supplies are unlikely to keep up with global demand by 2040, increasing political instability, hobbling economic growth and endangering world food markets. A water war is unlikely in the next decade, it said, but beyond that rising demand and scarcities due to climate change and poor management will increase the risk of conflict. humanity and rife with historical tensions, mistrust and regional rivalries. The regions three major river systems the Indus, the Ganges and the Brahmaputra sustain India and Pakistans breadbasket states and many of their major cities including New Delhi and Islamabad, as well as Bangladesh. South Asia is symbolic of what we are seeing in terms of water stress and tensions across the world, says B.G. Verghese, author and analyst at New Delhis Centre for Policy Research. The region is one of the worlds most water-stressed, yet the population is adding an extra 25 million people a year South Asias per capita water availability has dropped by 70 percent since 1950, says the Asian Development Bank. The effect of climate change on glaciers and rainfall patterns may be crucial. Most of the water that is used in Pakistan comes from glacial melt or the monsoon, says Rafay Alam, an environmental lawyer and coordinator of the water programme at Lahore University of Management Sciences. The dry months of June-July offer a snapshot of the extreme water crisis in the region. Hospitals in New Delhi this year cancelled surgeries because they had no water to sterilse instruments, clean operating theatres or even wash hands. Swanky malls selling luxury brands were forced to switch off air conditioners and shut toilets. In Pakistan, the port town of Gwadar ran

MAJOR THREAT
That threat is possibly nowhere more apparent than in South Asia, home to a fifth of

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SOUTH ASIA
out of water entirely, forcing the government to send two naval water tankers. Some government flats in the garrison city of Rawalpindi have not had water for weeks, said the local press. India, as both an upper and lower riparian nation, finds itself at the centre of water disputes with its eastern and western downstream neighbours Bangladesh and Pakistan which accuse New Delhi of monopolising water flows. To the north and northeast, India fears the same of upstream China, with which it fought a brief border war in 1962. Beijing plans a series of dams over the Tsangpo river, called the Brahmaputra as it flows into eastern India. But Indias hydropower plans are most worrying for Pakistan. Water has long been a source of stress between the two countries. The line that divided them in 1947 also cleaved the province of Punjab, literally the land of five rivers the Sutlej, Beas, Ravi, Chenab and Jhelum, all tributaries of the Indus breaking up millenniums-old irrigation systems. Indias latest hydro plans have fanned new tensions. Pakistan is extremely worried that India is planning to build a whole sequence of projects on both the Chenab and Jhelum rivers and the extent to which India then becomes capable of controlling water flows, says Feisal Naqvi, a lawyer who works on water issues. In recent years, political rhetoric over water has been on the rise in Islamabad, and militant groups such as the Lashkar-e-Taiba have sought to use the issue to whip up anti-India sentiments accusing New Delhi of stealing water. India brushes off such fears as paranoia and argues the dams wont consume or store water but just delay flows, in line with a 1960 treaty that governs the sharing of Indus waters between the two countries. in blaming other countries outside, says Sundeep Waslekar, president of Strategic Foresight Group, a Mumbai-based think-tank. It would be more constructive if they looked at what they are doing at home, than across their borders. Their water infrastructure systems, such as canals and pipes used to irrigate farm lands, are falling apart from neglect. Millions of gallons of water are lost to leakages every day. The strain on groundwater is the most disturbing. In India, more than 60 percent of irrigated agriculture and 85 percent of drinking water depend on it, says the World Bank. Yet in 20 years, most of its aquifers will be in a critical condition. Countries must improve water management, say experts, and share information such as river flows as well as joint ventures on dam projects such as those India is doing with Bhutan. Populations are growing, demand is increasing, climate change is taking its toll and we are getting into deeper and deeper waters, says Verghese, author of Waters of Hope: Himalayan-Ganga cooperation for a billion people. You cant wait and watch. You have to get savvy and do something about it. Why get locked into rhetoric? We need to cooperate. Unless you learn to swim, you are dead.Reuters Based in New Delhi, Nita Bhalla is a journalist and primarily focuses on the impact of disasters and conflicts on local populations as well as good governance and women's rights issues. She can be reached at nita.bhalla@ thomsonreuters.com

DAM DISPUTES
For India, damming its Himalayan rivers is key to generating electricity, as well as managing irrigation and flood control. Hydropower is a critical part of Indias energy security strategy and New Delhi plans to use it to reach about 40 percent of people who are currently off the grid. A severe power shortage is hitting factory output and rolling outages are routine, further stifling an economy which is growing at its slowest in years. Indias plans have also riled Bangladesh, which it helped gain freedom from Pakistan in 1971. Relations cooled partly over the construction of the Farakka Barrage (dam) on the Ganges River which Dhaka complained to the United Nations about in 1976. The issue remains a sore point even now. More recently, Bangladesh has opposed Indias plans to dam the Teesta and Barak rivers in its remote northeast.

SINK OR SWIM
South Asias water woes may have little to do with cross-border disputes, however. Shortages appear to be rooted in wasteful and inefficient water management practices, with India and Pakistan the worst culprits, experts say. All these countries are badly managing their water resources, yet they are experts

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What we
Dr. Irfan Zafar

talk?
fact that in the process he or she is degrading his/her identity and exposing the inner hollowness. The problem with such complexes is that even though the person knows that he feels inferior and insecure deep within, still he acts arrogantly. The choice is ours, either to become a bunch of self-satisfying materialistic selfish people who will always crumble or to live a simpler meaningful spiritual life which is close to nature.
The writer is a PhD in Information Technology, alumni of Kings College London and a social activist. He is life member of the Pakistan Engineering Council and senior international editor for IT Insight Magazine. He has authored two books titled Understanding Telecommunications and Living In The Grave and several research papers. Blog: drirfanzafar.com Email: drirfanzafar@gmail.com

(Because the person suffers from feelings of inferiority he compensates it by hanging on to worldly materialistic possessions to impress others without realizing the fact that in the process he or she is degrading his/her identity and exposing the inner hollowness.)

t is generally believed that what we talk is a reflection of what we as human beings are. That in turn depends on our family background, values and how we are raised by our parents. What we see around us are individuals filled with hollowness and extreme complexes which are depicted in a very excruciating way when they open their mouths and spell out their inner self. Surely silence is a virtue for it hides such shabbiness and bizarre display of monetary superiority which manifests in every word which is spelled out. This curse of ravishing vulgarity is visible in both the genders equally. The male discussions are generally centered on the model of latest car they bought recently and parked by the owner at the most prominent place in the parking area to ensure that everyone has a good look at it. What the person doesnt realize is that God has given eyes to others who can see your social standing without even mentioning it to others. Plus, does anybody really care? Discussing it simply brings out worst of conceivable human garbage in the form of words. The next step generally observed is the placing of ones smart phone on the table for everyone to see and admire. The remaining next hour is consumed by comparing different new devices and in a silent way ridiculing the ones who cannot afford it or chose not to buy it for reasons pertaining to choosing a simpler way of life; not a sin in any way. As the Cigars light up while pina coladas (another status symbol) are gulped, the discussion moves towards golf, a sport oriented more towards getting business deals done rather than playing it for health reasons. The zenith of absurdity is sometimes

achieved when someone starts asking questions about ones earnings to ascertain his or her real worth. How pathetic one can be? On the religious front, the performing of Haj has somehow become a status symbol instead of being taken as a humble, down-toearth religious obligation. The club class tickets, opting for high price Haj packages and the talk of Five Star hotel accommodations in the Holy land are considered as essential part of ones religious rituals. In a recent gathering the author heard two women sharing their experience to the holy land. How much amount of Haj package you opt for? One woman asked. When the other women replied that she spent half a million rupees, the lady walked away saying I paid 1.4 Million. Never saw the two ladies talk again in the function for spending half a million, shows ones poor standing in the society. The ever touchy subject of designer bags placed on the tables for everyone to look, designer clothes, waving of ones finger to display the new diamond ring, attending high end parties thrown by high end people and opting for exclusive dining places while ridiculing the common public spots are just few examples of people infected with inner lack of self-confidence while relying on material things to impress others. Ultimately it all ends up to a person suffering from Superiority Complex that develops when a person who suffers from inferiority complex decides to act superior in order to mask his inferiority. Because the person suffers from feelings of inferiority and he compensates it by hanging on to worldly materialistic possessions to impress others without realizing the

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24

Protect
yourself
at workplace from sexual Predators
Devdutt Pattanaik

How to

SOCIAL CRIMES

am a senior HR professional and I am in a fix. My super boss has been making sexual overtures at me and I am very uncomfortable. He is a smooth operator, always says and does things that I have no proof against. But he knows it and I know what he wants. But this has started affecting my career as he takes all the critical decisions and always makes sure he has a reason of making me suffer. I love my job and also I need the money. I can't even complain to higher ups since he is a proven performer and no one will take my side. What do I do? You have not clarified your gender. And I will not assume it. Anyone can be sexually harassed. So read this column as gender neutral. We inhabit three worlds at all times: Sanskriti (society), Brahmanda (imagination) and Prakriti (nature). Sanskriti is based on rules: the rules are clear on this kind of misbehavior. Your super boss is crossing the line, and needs to back off, or be punished. But the legal system is based on evidence; you have to provide evidence else your action will be seen as maligning a good man, an achiever at that, which does not bode well for you. Since you are a senior HR professional why don't you publicly demand workshops on sexual harassment and legal choices that people have. You can say this is important to reinforce the company value systems. No one will argue against it, in public at least. Make sure you send invitations to all senior performers and make it public who attends and who does not attend. Make it a conversation point in the company with newspaper clippings of star performers of other organizations who have been penalized for disrespecting the rules.

Maybe, this will make him back off. Brahmanda is how we imagine the situation. This depends on how we receive and interpret signals from the outside world. This world is fully under our control. We are Brahma, its creators, hence the Upanishadic maxim, AhamBrahmasmi (I am Brahma) and Tat tvamasi (So are you). You know what his signals mean and you are responding to them in a way that informs him clearly that you have understood his intentions and are uncomfortable with it. You have a choice here. You can choose not to show him that you have understood. Use the knowledge to protect yourself but do not give him the pleasure of knowing that you have got it. Play dumb, stick to your professional role, refuse to give him the slightest hint that 'I know what you are up to' because that will only add fuel to fire. If he feels you are not getting his messages, he may intensify his efforts, make one mistake - send ansms or email, and you will have your proof. Prakriti is nature. And in nature, for all our human capabilities, we are just animals: predator or prey. We yearn for power. We therefore use every opportunity to dominate and feel safe. When a person behaves as a sexual predator, it means that they are hungry, in other words they feel inadequate, incomplete or invalidated. In your eyes, your super boss is a performer but clearly he does not feel life has given him what is due to him. Hence his desire to grab and snatch things from others, especially those who he sees as weak. He finds power in flirting with danger and getting away with it. The more you resist, the more excited he gets. It's the thrill of the chase. So remember, you are dealing with a

beast, not a human being who is rational. When confronted, he will deny it with passion. No one likes to be shown the mirror. No one likes to admit they are essentially beasts. If you imagine yourself to be a victim, you will always feel victimized. The predator thrives in fear. Don't nourish him. See yourself as a hero who will not be pushed around by this animal. Take firm steps to protect yourself and the organization. Tell your family and friends about your feelings and the lack of evidence. Make a joke of it, verbalize your doubts and fears, so that no one points fingers at you, but everyone is aware something is amiss. Firmly avoid being alone with the man. Reinforce the rules of Sanskriti. If confrontation is not feasible, then dilution is a possibility: make sexual harassment a major HR initiative in the company. You could befriend the family of the super boss using company initiatives. Let the predator know that he has more to lose if he crosses the line. It will take a few attempts to tame him, but remember, underlying his attempts to dominate is deep fear.

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AUG 2013

ichimasa Fujino began working on Honda Motor Co. (7267)s aviation project 27 years ago at a hangar in Mississippi. Next year, Fujino, now president of the aircraft unit, says the project may finally get off the ground. If so, Tokyo-based Honda would become the first newcomer to get U.S. approval in the $21 billion business-jet market since 2006. That would pit the carmaker against market leaders Textron Incs Cessna and Brazils Embraer SA (EMBR3), who have fended off threats from companies such as Bill Gates-backed Eclipse Aviation, which sought bankruptcy protection five years ago. Though delivery of the HondaJet hasnt started, Fujino said he has clinched two to three years of orders for the $4.5 million plane and signaled the business will turn profitable before the end of the decade. The sevenseater plane, which Fujino calls a flying sports car or flying Acura, will be 15 percent more fuel efficient, have roomier cabin space and fly 10 percent faster than comparable aircraft, he said.

said he expects the unconventionally designed jet -- the engines are on top of the wings -- to get clearance from the U.S. Federal Aviation Administration by next year. To get permission from the FAA, a manufacturer must demonstrate that the plane meets U.S. regulations on everything from the strength of the wings to how it lands in a crosswind. Most of the process is conducted behind closed doors because the test data and designs supplied by aircraft manufacturers are considered proprietary and confidential. Certification is a long and arduous process that typically involves testing four to five aircraft for 2,000 flight hours, Tsopeis said. Once a company gets the nod from the FAA, it becomes easier to win certification from other aviation jurisdictions, he said.

Founders Dream
The start of deliveries would fulfill the wishes of the companys late founder, Soichiro Honda, who died in 1991. Though the carmaker doesnt expect the business to be a big profit contributor, it has pursued the project partly as a tribute to the founder, Chairman Fumihiko Ike said in an interview this month. In the fiscal year ended March 2013, automobiles

Aviator Glasses
Wearing aviator-style prescription glasses, Fujino

Ultimate Flying Machine

The
Honda Readies Flying Acura To Challenge Cessna
AUG 2013

26

BUSINESS

In 1996, in the midst of Japans first lost decade, 35-year-old Fujino had to plead to Hondas board through several presentations not to scrap the unprofitable project. He got the go-ahead and the HondaJet unit was formally established in 1997.
and motorcycles accounted for 92 percent of Hondas revenue and 73 percent of operating profit.

Sweet Spot
Its common sense in the industry never to put anything on top of the wings, he said. But we found it was possible. The idea was to place the engines in the sweet spot above the wings that would be aerodynamically superior, he said. The finding was so bizarre that a friend at NASA advised him to drop it or risk ruining his career, he said. Fujino said he hesitated for half a year. In 1996, in the midst of Japans first lost decade, 35-year-old Fujino had to plead to Hondas board through several presentations not to scrap the unprofitable project. He got the go-ahead and the HondaJet unit was formally established in 1997. Still, Honda has yet to win regulatory approval in U.S., the biggest business-jet market, Zenith Jets Tsopeis said. I believe that they seriously underestimated the certification challenges in bringing an aircraft program to market, Tsopeis said.

Dead End
I joined Honda to make cars, he said. But its a company order so regardless of what I wanted, I was moved to the plane department. So I figured I would do the best I could. Fujino said he was then dispatched to Mississippi State University, where he expected to advance the academic knowledge he had through a University of Tokyo aeronautical engineering degree. Instead, he soon found himself sanding a piece of molded fiberglass, said Fujino, who had never physically worked on a plane before coming to America. I was told I was going to learn state-ofthe-art technology, Fujino, 52, said in an interview. What I ended up doing was sanding a piece of mold. That was a huge gap, but now I think the experience of making parts myself was good. Things did eventually get more advanced as Fujino developed ideas challenging conventional wisdom in aerodynamics.

Expensive Journey
Honda is planning to jump into an industry

still recovering from the global financial crisis. In April, Textron cut its profit forecast on falling demand for Cessna light jets. A month later, Ernest Edwards, president of Embraers business-jet unit, said confidence hasnt returned yet, though hes seeing signs of a rebound. New entrants have found it tougher to hang on. Eclipse Aviation, the closely held company whose shareholders included Microsoft Corp. co-founder Bill Gates and former Ford Motor Co. Chairman Harold A. Poling, filed for bankruptcy protection in 2008 as demand dried up. Fujino says the backing of Honda, Japans third-largest carmaker, gives him an edge because automakers have more experience in customer service and automation in manufacturing than incumbent jet makers. The company stands out for its persistence in sticking to the project, said Jon Kutler, who has followed the Honda project since the mid-80s. Honda has tenaciously kept this program alive to the point where certification is now within reach, said Kutler, founder of Admiralty Partners, a boutique aerospace investment banking firm. It has been a long and expensive journey that I do not expect to be repeated by other new entrants.

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Urgent measures need to be taken in order to avoid a drought-like situation in the near future. These measures need to address issues of both water supply and demand; otherwise nature will take care of the problem through a major reduction in population through famines and wars over limited food supplies.

NO
W
AUG 2013

Water
Vaqar Ahmed Here are the facts:

Food
brushed under the rug and deferred as there is still enough food to feed the population. This assumption that sufficient food will be available to a growing population somehow is closing the eyes to the hard facts relating to the water resources of Pakistan. The Indus Water Treaty (IWT) signed with India in 1961 under the aegis of the World Bank stipulated that the flow from the three Western rivers (Indus, Jhelum and Chenab) will be for the exclusive use of Pakistan while the three Eastern Rivers (Ravi, Sutlej and Beas) will be for Indias use. The average volume of water flowing into the Indus Basin delta is

ith the power shortage taking the front stage in the media and in the new governments pronouncements, an even more important issue has been relegated to the back burner. This serious issue is the future availability of water to support food production in Pakistan. To put it simply, while we can survive with power shortages, we cannot survive without food. Thus, the criticality of water required for agriculture is even greater than that for power. While lack of water for domestic use gets attention due to the immediate impact it has on daily life, availability of water for agriculture is 28

142 Million Acre-Feet (MAF). Nearly 95 per cent of this water is used for irrigation. Following is a breakdown of current water usage:

in agricultural productivity and there is substantial room for improvement a figure of 25 per cent may be achieved by 2025. For the purpose of determining a range of demand for 2025 and beyond, the following three scenarios have been developed: Scenario 1: 50 per cent increase in yield due to non-water means (Wapda assumption) Scenario 2: 25 per cent increase in yield due to nonwater means (most likely) Scenario 3: No increase in yield due to nonwater means (worst case) Irrigation efficiency of 51 per cent has been assumed for all the three scenarios. Also, 18MAF of storage availability is assumed for all cases. Scenario 1 in the table below provides the exact calculation used by Wapda to develop the forecast demand for 2025.

The above figures show that we are close to using all the water. The only additional water that can be made available is 23MAF. To utilise this water, dams need to be built to store it and use it as required. The storage capacity in dams in 2011 stood at 12.1MAF. No new dams have been built in Pakistan since the completion of Tarbela in 1976. Also, the capacity of the existing dams (that was 16.7MAF in 1976), will go down to about 9MAF by 2025 due to silting. There are two projects under construction that will add an additional live storage capacity of 9.3MAF by 2025. These are the raising of Mangla Dam (added capacity 2.9MAF) and the Diamer-Bhasha dam (new capacity 6.4MAF). One practice that is already causing serious problems is the indiscriminate and excessive use of groundwater (this is the surface water that seeps through the ground) through nearly 1 million tube wells. Groundwater contributes an average of 45 per cent of the total irrigation requirement. While the use of groundwater has greatly profited crop production, the rapid rate at which it is being used is causing serious issues of lowering of the water table and salinity in areas where the water is over-drawn and water logging in areas of below optimal withdrawal.

Supply Demand Scenarios

The current population of Pakistan is about 173 million and forecasted population for 2025 is 225 million. This is an increase of 30 per cent. Compared to the increase in demand, the additional water available is 19 per cent of the current use. Obviously, this situation would be become much worse by 2050 when the water supply could remain the same, while the population increases to 395 million. Wapda made an assessment of the water demand for 2025 in the document, Pakistan National Water Resource Strategy 2002 and later in a document titled National Water Policy 2010. The demand forecast assumes that the cultivated areas needs to increase 48 per cent in 2025 compared to year 2000 in order to support the food requirements of the increased population. Wapda concluded in these reports that since the water supply is limited, it would not be possible to produce sufficient agricultural products if the water and yield efficiency due to non-water means (e.g., fertilizer, improved seeds, better farming techniques etc.) stays at the current levels. Following is a quote from the 2010 Water Policy document: In view of past experience, the target of 50 per cent increase in agricultural yields (non water inputs), is achievable and, therefore, additional water of 37 MAF at the canal head should meet all agricultural requirements provided concerted efforts are made, supported by research and other measures besides further improvements in the irrigation network, to enhance the element of demand-based supplies. Wapda have thus assumed a 50 per cent increase in crop yield by non-water means to arrive at a demand of 134MAF for 2025. The facts negate this assumption. A comparison of productivity of two major food crops, wheat and rice shows that the productivity increased 29 per cent and 23 per cent respectively during the period 1997 to 2009 (as per Federal Bureau of Statistics). If it is assumed that half of this productivity increase was due to non-water means, the figure drops to 14.5 per cent and 11.5 per cent respectively. Given that Pakistan is seriously lagging behind Following results and graphs illustrate the water supply-demand for the three scenarios:

Scenario 1:

Scenario 2:

29

AUG 2013

Scenario 3:

Summary of the three Scenarios:

The figures above indicate that even in the most optimistic (Sceto stay on top of this issue and make it a national priority to have a strategy and a team of legal experts to deal with India on the water issue at bi-lateral and international levels. Additional water can be made available by reducing system losses and increasing storage capacity. Better management of groundwater resources is required for maintaining the current level of supply. The cost-benefit ratio of reducing supply losses by lining the canals to prevent seepage should be studied, keeping in mind that if more surface water is available, the cost of constructing tube wells and the associated cost of electricity for pumping is reduced. In order to increase the storage capacity of the reservoirs, a costbenefit study of de-silting the existing reservoirs (Mangla and Tarbela) should be carried out. One cause of silting is the loosening of earth due to excessive deforestation. Pakistan had a forest cover of 6 per cent in 1947 but is now reduced to the alarming level of just 2 per cent. International standard recommend a forest cover of 25 per cent to maintain a good ecological balance. A legislation protecting the forests needs to written and then strictly implemented. Starting construction of new dams is critical since the typical construction duration of large dams is 10-15 years. These new projects could be a mix of large, medium and small dams. On the demand side, there is potential to reduce water requirement by taking measures to increase the per acre yield of the crops and improving water usage to crop output ratio. The feasibility of modern techniques, like drip irrigation and sprinkler system, should be looked into. So far, it appears that these techniques may not be suitable for large scale farming in a technologically underdeveloped country like Pakistan. However, there is good potential for using drip irrigation in small scale farming like fruit farms. Also, replacing of water intensive crops with low water usage crops should be seriously reviewed and the results implemented. There are a myriad of publications by the government, NGOs, and international organisations that have indicated the serious water issue facing Pakistan. However, so far, the government has chosen to take the classic head in the sand approach to this matter of life and death. It is high time that serious analysis and planning is carried out to avoid bringing the water problem to the same scale as the power problem is today. Urgent measures need to be taken in order to avoid a drought-like situation in the near future. These measures need to address issues of both water supply and demand; otherwise nature will take care of the problem through a major reduction in population through famines and wars over limited food supplies. The author is an engineer turned part-time journalist who likes to hang out at unfashionable places like shrines, railway stations and bus stops.

nario 1), the figures for supply and demand indicate a deficit of 12MAF (9 per cent) by 2025 and 87MAF (42 per cent) by 2050. The situation becomes much worse for Scenarios 2 and 3 where the deficits for 2025 are 32 per cent and 46 per cent respectively. The respective shortfalls for 2050 reach 56 per cent and 65 per cent. The above analysis is confirmed by UN statistics that Pakistan is already facing Water Stress and will face Water Scarcity by 2035. The term Water Stress means that per capita water supply is below 1700 cubic meters while Water Scarcity means that per capita water supply is below 1,000 cubic meters. Water scarcity can lead to severe food shortages and thus famine and starvation. The figure below shows the availability of water (in cubic meters) vs. time.

In addition to the above mentioned issues relating to shortage of water, climate change may have a very significant impact on the water flow in the Indus Basin. It is forecast that initially there would be flooding of the rivers due to increased glacier melt that would cause serious damage to the land and the irrigation system. Later, as the glaciers have melted, a draught situation would develop due to lack of water in the rivers.

Solutions:
On the supply side, it is essential that the river flows in the Indus, Jhelum and Chenab are not interrupted or reduced by India. Pakistan has
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30

31

AUG 2013

99 not out and looking good:

Has Pakistan Cricket Team got the

hat is this thing called mental toughness in the world of sports? Mentally tough cricketers believe in their abilities, effectively manage their attentional focus, persevere through tough times, desire success, expect positive outcomes, effectively manage their emotions and understand their sport context.
AUG 2013

Toughness?

Mental
Dr. Fawad Kaiser

n cricket, a batsman nearing a century will frequently manifest signs of negotiating the aptly named nervous nineties and he would hone his skills through mental process while refusing the opposition that cruel moment of satisfaction. Sticky wicket; this phrase comes from the game of cricket and refers to an uncovered cricket pitch that is in the process of dying out after being affected by heavy rain. A hard crust forms over the soft, wet soil. This

helps the ball to bite, turn and lift variably. On a sticky wicket, batting is awkward and sometimes hazardous, as the ball will spin, seam and bounce sharply and unpredictably. Given the absence of material tangibility, symbols occupy the space and I have chosen the sticky wicket metaphor to speak about the conceptual trajectories in the field of cricket which influence ways of thinking and performance in sports. Unsure ground provokes intense focus, as well as anxiety. Together this concentration and uncertainty propels the game. Mental toughness works best when games are played out and on, unstable ground. While it may be easier, safer, and more solid to rehearse tried and true pitches and while those matches might be interesting to watch and play, glory emerges from the space where expertise conditioned through discipline meets determination and any given circumstances. Mental toughness is having the natural or developed psychological edge that enables you

32

SPORTS
therapeutic methods adopted by their current therapists. In an attempt to develop mental toughness among professional cricketers consider strengths-based coaching of mental toughness in cricket. Strengths as things that we do, that we are good at and that energize us, such as realized strengths that we get to do regularly, or unrealized strengths that we don't get as much opportunity to use so much and yet are our greatest areas for development. Learned behaviors, on the other hand, are activities we are good at but drain us of energy, which is particularly relevant for elite/professional cricketers because if activities are not energizing, doing them repeatedly can lead to an increased sense of feeling disengaged, disenfranchised, and even burned out. Finally, our weaknesses are things we are not good at and also drain us. Subsequently, from the model, the best advice is to marshal realized strengths, by using them differently to best effect; maximize unrealized strengths, by finding opportunities to use them more; moderate learned behaviors, by not using them too much; and minimize weaknesses, by finding ways to stop having to focus on them at all. Unlike other aforementioned strengths-finding approaches, however, if weaknesses matter for performance and cannot be ignored, the Realise2 Model provides five ideas on how to minimize their relevance and impact on performance. This includes belief in your ability to achieve success [i.e. self-belief] and an awareness of and ability to use emotions to facilitate optimal outcomes; the desire for achieving success and acting upon such thoughts i.e. success mind set; thriving when challenged to execute the requires skills and procedures effectively and an awareness and understanding of the performance environment and how to apply this knowledge to achieve success [i.e. contextual intelligence]. Understanding the coach's role in the development of mental toughness is paramount and we would anticipate that a strategy designed to combine traditional psychological skills training with strengths-based approaches is considered as an option. Nonetheless, I would encourage David Whatmore to consider using strengths-based approaches to developing mental toughness at any age and at any competitive level because realizing our strengths is the smallest thing we can do to make the biggest difference. Dr Fawad Kaiser is a forensic psychiatrist at Care Principles in Norwich having been Associate Professor of Psychiatry and Assistant Dean of University Affairs at Shifa International Hospital in Islamabad. 33
AUG 2013

to generally; cope better than your opponents with the many demands [competition, training, life style] that sport places on performer; specifically be more consistent and better than your opponents in remaining determined, focused, confident and in control under pressure. Specific exploration of the relationship between mental toughness and coping in cricket is rated as the most important construct that determines success in cricket. Allan Border, famous Australian cricketer, believed that mental toughness was reflected in a cricketers ability to cope with stress and resultant emotion. According to Lazarus and Folkman, coping is a conscious process that consists of thought and actions that are directed towards reducing or eliminating stress. What is this thing called mental toughness in the world of sport? Mentally tough cricketers believe in their abilities, effectively manage their attentional focus, persevere through tough times, desire success, expect positive outcomes, effectively manage their emotions,

and understand their sport context. It is this constellation of key facets that enables a mentally tough cricketer to effectively negotiate the ups and downs of everyday life as well as acute (e.g., being dropped from the national team) and chronic (e.g., long-term injury) stressors. Several researchers have recognized the important role coaches play in the development of mental toughness in sport, whereas others have described techniques and processes specifically designed for this purpose. The specific purpose of this article is to reflect a strengths-based approach to developing mental toughness, which draws on principles from applied positive psychology with the hope that Coach David Whatmore, Acting Chairman, Najam Sethi and new Chief selector PCB, Moeen Khan would cast their attention and help Pakistan Cricket Team improve from the advanced knowledge in the field of Bio-Psychometrics and Cognitive Psychology rather than the orthodox, unreliable, invalid nonscientific

Economics
of Charity
Global humanitarian assistance is

main pillar of the UAE foreign policy

Australian, New Zealand, Palestine, Libya, Iraq, Yemen, Sudan, Bosnia and Herzegovina, Thailand, Afghanistan and the last but not the least Pakistan. UAE is now the second largest nonDAC donor of humanitarian aid since 2004. The government of the UAE, under the visionary leadership of his President, His Highness Sheikh Khalifa bin Zayed Al Nahyan has been rigorously engaged in many diversified programs of humanitarian assistance in the different parts of the world and the UAEs project to assist Pakistan (UAE-PAP) is one of the prime examples. The leaders of UAE always stood first to lessen the sufferings of the struggling people by sending teams and relief goods in the country. It has been one of the salient features of UAE foreign policy since 1971. According to recent UAE Foreign Aid Report, out of a total Dh 310.7million disbursed to Pakistan in 2010, Dh 258.4m was spent on humanitarian assistance, with the largest tranche - Dh 211.4million coming from the UAE Government." Upon the directives of H.H. Sheikh Khalifa bin Zayed Al Nahyan the President of UAE, the UAE-PAP was initiated in January 2011 at a total cost of US$100 million for the reconstruction of infrastructure damaged by devastating floods and natural calamities in Khyber Pakhtunkhwa province, Bajaur and South Waziristan districts of the tribal belt. The projects were started to provide better life to the local people

Tausif ur Rehman

harity is a noble cause and if carried out with the aim and strategy to alleviate poverty and socio economic growth, it can be a game changer as well. The United Arab Emirates (UAE) has been one of the main countries that have been contributing actively and extensively to promote social economic development around the globe. This noble cause has multiplier socio-economic effects on a society. It makes a comfort zone for all the conflicting communities, groups and people. It brings some delight to people living under any deadly military operation or natural calamity around. Global humanitarian assistance drive is one of the main pillars of the UAE foreign policy.The UAE smodel of philanthropy is not based on exchange of goods or services. It is totally deviated from the warm glow" theory and "perfect altruism and executed through various humanitarian assistance programs. Charities can nurture local economic growth as well as social capital. According to many latest research studies/reports, charities are not just part of the solution to existing Europe's social problems; they also have a role to play in solving economic problems. UAE government, charities and its people generously sponsored different humanitarian assistance programs around the globe. It extended humanitarian assistance related activities in

by creating jobs. The said projects focused education, public health, roads, bridges and supply of water treatment plants and networks. Till now, over 100 projects worth millions of dollars focusing on major areas of social development including health, education, water and infrastructure have been completed which are significantly contributing to the development of the areas of these sectors in Pakistan. The ongoing The UAE-PAP program includes the building and equipping of 53 stateof-the-art educational projects, 43 schools and 10 colleges. It is hoped that these projects will benefit around 30,000 male and female students at all educational levels. In the field of health, the said projects embrace the building, equipping and maintenance of 7 hospitals and clinics in Khyber-Pakhtunkhawa and South Waziristan. Two of these, Sheikh Khalifa bin Zayed Al Nahyan Hospital and Sheikha Fatima bin Mubarak Hospital, are specialised maternity and paediatric hospitals to provide health-care and emergency services for women and children. With the aim of providing clean water and protecting people against diseases and epidemics, about 64 drinking water supply projects have been accomplished, 44 of them in Khyber-Pakhtunkhawa and 20 in the South of Waziristan region. Sheikh Khalifa bridge has been rebuilt over Swat River, which was damaged by flood.

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34

FOREIGN POLICY
The 330-metre bridge serves 70 thousand persons which represents an architectural icon and a tourist destination with its unique design that resembles Abu Dhabi's Al Maqta' Bridge and its historic fort. Sheikh Khalifa Bin Zayed Al Nahyan Road, funded by Khalifa Bin Zayed Al Nahyan Foundation, is one of the most important infrastructure projects in the South Waziristan. It is a strategic project stretching from the city of Wana to Angor Adda. The 50-kilometers road, with its 5 over-head bridges, is of strategic importance for transportation between Pakistan and Afghanistan. Most recently, on the eve of holy month of Ramadan 2013, to implement the directives of President His Highness, Sheikh Khalifa bin Zayed Al Nahyan, the supervisory official/team of the UAEs project to help Pakistan in the country has announced a noble initiative, distributing 2,400 tons of food stuff among 30,000 families of internally displaced people (IDPs) living in camps, being victims of horrible series of floods and war against terrorism. On the word of the said project official/ team, the food assistance, worth over $US 1.5 million will be distributed among IDPs families in Jalozai Camp, which is the largest refugee camp in Pakistan having approximately 13,600 families. According to the project team, distribution of this generous food aid campaign would definitely alleviate their daily sufferings and is also instrumental in overcoming their difficult routine circumstances. As part of the initiative, food parcels, each weighing 80 kilograms, will be distributed containing flour, rice, sugar, salt, lentils and tea to all the deserving IDPs families that would be enough to meet the monthly requirements of a single family. Furthermore, the UAE-PAP has inaugurated another new preparatory school in Kalam

village, Khyber Pakhtunkhwa, for further supporting the educational development in the province. It is hoped that the newly established Haryati School will serve 225 male and female students from prep to primary level. The multipurpose school building consists of eight class rooms, a computer lab and administration bloc. The Director General of the UAE Project to Assist Pakistan, Abdullah Al Ghafli, and Major General Akhtar Jamil, Commander of the GOC 45th Engineers Division, Pakistan Army, unveiled a plaque, inaugurating the said school. High brass officers of Armed Forces of Pakistan and senior civil government administration also attended the ceremony. While addressing the ceremony Al Ghafli highlighted the socio-economic importance of these projects and said Thanks to the initiatives by President His Highness Sheikh Khalifa bin Zayed Al Nahyan for boosting qualitative education in Pakistan, students could now easily get the education from primary to secondary levels.

They can even receive high education at many newly built technical/specialised colleges and centers, he further added. This is a development oriented strategy which encourages or facilitates individuals, families and the society at large for joining the ranks of the developed nations, Al Ghafli remarked. The principal of the school said, these projects are the real signs of hope and comfort to our students especially of remote/rural areas. These would be game changer for their lives in the days to come, he added. The students are now blessed to receive education in one of the most advanced schools in the country/province and to secure a better future for themselves and their families. On this occasion, the families of the students personally thanked the UAE President His Highness Sheikh Khalifa bin Zayed Al Nahyan for his extended generosity towards the promotion of qualitative education in Pakistan, Khyber Pakhtunkhwa province.

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Rice farmer Shamsuddin Bin Rus in Pagon village, Indonesia. Low rainfall in recent years has affected his harvest and reduced his familys income.

Income diversification
HELPS INDONESIAS FARMERS TACKLE CLIMATE CHANGE
ti stan ds at h in Pag er mak on vill eshift a ge, Ind shop pouch onesia of jack , holdin fruit s ga nacks. Kaswa

AGON, Indonesia The wife of a rice farmer, Kaswati might seem to have few reasons to smile. Low rainfall in recent years has affected her husbands harvest, causing a decline in the familys income, threatening them with poverty. But 41-year-old Kaswati (who uses only one name) has earned her confident smile by participating in a loan programme that has enabled her to start her own business, diversifying the familys sources of income. The plunging yields from her husbands 2.5-hectare (6-acre) paddy plot in Pagon village, in coastal Subang district some 130 km (80 miles) south-east of Jakarta, Indonesias capital, were a constant worry for Kaswati and her husband. How can we depend solely on farm income any longer when the rainy season is delayed by 25 to 30 days every year and ends 10-

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AGRICULTURE
Indonesia is the worlds largest producer of rice after China and India. But in the past five years this country of 248 million has become the worlds seventh largest rice importer, requiring an annual average of over 1.1 million tonnes of imports to meet its domestic needs.

Saleem Shaikh

15 days earlier, and (it does) not rain as much as it used to? she said. Every year, we do the same labour, sow the same amount of paddy seed on the land, but the crop productivity is no longer the same, she said. Her husband, Shamsuddin Bin Rus, said that where he used to harvest more than five tonnes of rice per hectare, he now reaps fewer than four because of declining rainfall, which is linked by scientists to the changing climate. At one point the 58-year-old farmer considered abandoning his land and moving to an urban area in search of work as a labourer. But the family has been helped by a scheme set up by the International Fund for Agriculture Development (IFAD). The project, set up in 1997 in several villages in Subang district, enables people in farming communities to take out low-interest loans to help diversify their sources of income, so that they can survive economic losses from poor harvests due to unpredictable weather patterns and rainfall

variability. Kaswati says that in 1999, she borrowed 4 million Indonesian rupiah ($400) from the scheme at an interest rate of 1 percent. She also joined an economic self-help group that was part of the programme. Having received training about efficient use of the credit, I launched a small-scale jackfruit snacks stall in my village, Kaswati said. Over the years, her business has boomed. From monthly sales of 40,000 rupiah ($4) in 2000, she now earns 4 million rupiah ($400) each month, having expanded her sales area to markets in other villages of Subang and adjoining districts. Bin Rus acknowledged that without his wifes earnings, the family would have faced poverty and indebtedness. He no longer needs to borrow cash for seed from moneylenders, who charged high interest rates or forced him to sell his crop to them at below-market rates. Ronald Hartman, IFADs country programme manager in Indonesia, said the loan scheme had been scaled up to raise the living standards of the poorest rural families in 18 provinces of Indonesia. He said experience had shown that low-income farmers and fishermen were creditworthy and demonstrated economic initiative when mobilised into self-help groups. Group members have chosen up to 200 types of investment activities, ranging from livestock-raising to small-scale trade, food processing, handicrafts and microenterprises. The programme provides training in financial planning and management to most of the group members, according to Hartman. IFAD reports that over the years the scheme has loaned a total of 113 billion rupiah ($11.4 million at current exchange rates) with a repayment rate of 86 percent. The incomes of participating families have risen by 41-54 percent. Although agriculture is still a major source of income in Indonesia, employing 57 percent of the labour force and accounting for two-thirds of the countys GDP, changing weather patterns have forced many out of farming, putting the livelihoods of whole communities at stake. According to the Indonesian Agency for Meteorology, Climatology and Geophysics,

data gleaned from 174 climate stations in major food-producing areas of the country indicate that rainfall is declining by nearly 250 mm per year. Indonesia receives on average 1755 mm (69 inches) of precipitation annually. Indonesia is the worlds largest producer of rice after China and India. But in the past five years this country of 248 million has become the worlds seventh largest rice importer, requiring an annual average of over 1.1 million tonnes of imports to meet its domestic needs. Zulkifli Zaini, a crop scientist with the International Rice Research Institute in Indonesia, said that although Indonesian rice output has not declined, thanks to the cultivation of improved varieties, the fact that it has remained static during the past five years is cause for concern. Rice accounts for half of the per capita food consumption, so meeting the national demand has become a daunting challenge for the government. Experts are pressing for adaptation programmes that will increase crop planting areas and boost crop intensity and productivity, as well programmes to lower the average consumption of food, especially rice. Improved land management practices that contribute to soil moisture retention and maintain the amount of nutrients in the soil at appropriate levels can strengthen resilience as well as enhance productivity, said Ir Haryono, Director General of the Indonesian Agency for Agriculture Research and Development. He also stressed the importance of helping farming communities to diversify their income sources to survive shocks from erratic weather patterns. Replication of IFADs RIGP to other provinces of the country could help in this regard, Haryono added. Kaswati, meanwhile, is enjoying her economic self-reliance. Before I rolled out the business ... I had no say in our family affairs and was completely dependent on my husband economically, she said. Now, she adds, her husband listens to her and values her decisions about family matters.

Saleem Shaikh is climate change and development journalist 37

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