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PRIVATIZATION WITH A PURPOSE
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ISSUE # 42 ----- Oct 20 - Oct 26, 2014
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Around the world nations have tested and experienced various economic systems that included capitalism, socialism and communism. Each has its own merits and demerits and with the passage of time they are busy in carving a system with certain basic points. These include: 1) the government should not be in the business of managing business but play the role of facilitator and regulators, 2) in certain sectors/industries there is a need for public-private partnership mainly because of huge capital requirements and 3) due to strategic nature control of some of the industries must remain with the government........

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PAGE TOP STORIES

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EXCLUSIVE INTERVIEWS
& PAGE SPECIAL REPORTS

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PRIVATIZATION PROCESS WILL GET MOMENTUM AFTER OVERCOMING POLITICAL DEADLOCK
INTERVIEW WITH MR BARKATULLAH LONE, AN ANALYS
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The private sector is a major driver of economic growth. In a mixed economy like Pakistan, private sector is the key determinant of the country’s economy. Investment/divestment by the private sector will directly affect the employment ratio and revenue to the government. Many developing countries are not fully benefiting from the opportunities that can be generated by a robust private sector. Developing countries often have weak domestic private sectors, and do not have sufficient tools and policies in place to encourage private-sector-led economic growth. The potential benefits of private financial flows are not being maximized to contribute to economic and social development outcomes........

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PRIVATIZATION WILL REDUCE FISCAL DEFICITS, ENHANCE CASH FLOWS
INTERVIEW WITH MR SHAHID GUL MOTIWALA, CEO AL AMEEN FUNDS
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The investment scenario in Pakistan is very attractive as the country offers immense potential due to its large and young population, burgeoning middle class, growing foreign remittance and untapped sectors in the economy such as agriculture and corporate farming, mining and services sector offering attractive investment opportunities to investors. However, the desired level of investments have not made its way in the economy due to two major reasons -- security situation and energy crises in the country. The government needs to create the climate for investors to do business and provide basic infrastructure for private entrepreneurs to take advantage of these immense opportunities waiting for them...........

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OIL PRICES
OIL WEEKLY BASKET PRICE

 (US Million $)
PERIOD PER BARRELS
Oct 17, 2014 83.53
Oct 10, 2014 88.56
Oct 3, 2014 92.33
Sep 26, 2014 94.25
Sep 19, 2014 95.09
Sep 12, 2014 96.19
Sep 5, 2014 99.05
Aug 29, 2014 99.79
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PREVIOUS ISSUES

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PAKISTAN WEATHER
3 DAYS FORECAST

  MIN MAX HUM% FORECAST.
KARACHI
TODAY 16 28 48 sunny
TOMORROW 16 29 48 sunny
DAY AFTER 17 29 46 sunny
LAHORE
TODAY 18 31 44 sunny
TOMORROW 18 32 43 sunny
DAY AFTER 17 32 42 sunny
ISLAMABAD
TODAY 23 35 35 sunny
TOMORROW 23 36 31 sunny
DAY AFTER 23 37 34 sunny

updated: Sun - Tue, Oct 19 - 21, 2014

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PAGE REPORT
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DRIVE TO ATTRACT BEST HUMAN RESOURCE IN PAKISTAN
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MOL Group, the leading international Oil and Gas Company is launching a new E&P talent acquisition and development program for students and graduates in the fields of geoscience and petroleum engineering. Students at selected universities in 14 countries ranging from Pakistan, UK and Central Europe to the Middle East can apply via the UPPP online simulation game from 1st to 23rd October 2014.
The top three teams will then get the opportunity to join MOL Group and start their careers through the 18-month "UPPP Technical Placement Program". Top three teams at the competition will win a total of €20,000 prize.......

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COVER STORY
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MALALA YOUSAFZAI THE PRIDE OF PAKISTAN
WINS GLOBALLY PRESTIGIOUS NOBEL PEACE PRIZE FOR 2014
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Malala Yousafzai, the youngest-ever recipient of the globally prestigious Nobel Peace Prize has won international reckoning for her courageous struggle for the cause of peace and education in Pakistan.
Her reason and judgment show her great potential of making a difference whenever she may practically enter into political arena with her resolved to spread light of education especially amongst the oppressed female folk in the country.

Malala’s outstanding success deserves acknowledgement with the presence of top leadership from Pakistan in the award distribution ceremony to be held in December this year..........

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COVER STORY
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CHINESE PARTICIPATION IN MEGA ECONOMIC PROJECTS
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The banking scenario in Pakistan, which is certainly the most vibrant segment of Pakistan economy is likely to witness an important development with the arrival of Bank of China with the focus to provide banking facility to the mega economic projects in the energy sector as well as development of economic corridor from Gwadar to Shahrae Resham.
The Acting Governor/Deputy Governor of State Bank of Pakistan (SBP) Mr. Saeed Ahmad in a meeting welcoming the Chief Executive Officer, Ms. Li Tong of Bank of China International (BoCI). BoCI is a wholly-owned subsidiary of Bank of China. Currently visiting Pakistan, she said "closer cooperation in the banking sector will assist in strengthening relationship further with China. Number of mega projects which huge Chinese companies are implementing in Pakistan necessitates smooth and efficient banking arrangements to meet the banking needs", this was the core message conveyed by the BoCI, which is the investment-banking unit of BoC.
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COVER STORY
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KASB BANK OFFERS A WIDE RANGE OF PRODUCTS, SERVICES IN VARIOUS SEGMENTS
AN INTERVIEW WITH BILAL MUSTAFA, PRESIDENT & CEO OF KASB BANK
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KASB Bank offers a wide range of products and services to facilitate its customers in various segments such as high return investment plans, business accounts, saving accounts, agriculture financing, and Home remittance services. KASB Bank also offers technology based innovative products and services to keep its customers abreast with rapid changing banking environment throughout the globe.

The services include, state-of-the-art Mobile Banking solution, VISA Debit cards, online banking, Internet banking and ATMs installed at strategically located KASB Bank branches to ensure customers have access to their funds round-the-clock.......

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COVER STORIES
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SHIPPING
NEWS

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MAERSK SUPPLY SERVICE EXPANDS ITS NEW BUILDING PLAN
Maersk Supply Service has entered into contract with COSCO (Dalian) shipyard for building four Subsea Support Vessels with options for two additional vessels.
All the vessels are of MARIN TEKNIKK design. Maersk Supply Service already has one Subsea Supply Vessel and two Anchor Handling Tug Supply vessels on order from shipyards in Romania and in Chile.
"With this new order in China, we have taken the next step in our extensive new building program.........

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COVER STORY
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WHY TO SELL FAMILY SILVER?
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Since beginning of privatization process, the successive governments have successfully sold out a large number of public sector entities and also divested government holdings but a question often arises, why the government is selling its stake in profit making entities and still holding loss making entities? There will always be buyers for good performing entities, which are also a major source of income for the government. Top of the list entities should be those which swallow nearly half a trillion rupees every year. Experts are of the opinion that these entities should be sold on ‘as is where is’. The basis of valuation should be replacement value because the worth of landholding of these entities runs into billions of rupees.........

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INFORMATION TECHNOLOGY
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GOING THE EXTRA MILE
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Since Intel spawned the microprocessor revolution over 40 years ago, computing has come to affect nearly every element of life, and today we’re seeing it deliver significant changes to all sides of the world of sport.
Like most companies, sports clubs are facing a data explosion – caused by the increasing use of sensors, video feeds, and a variety of sources – providing unprecedented levels of insight into athlete performance, which is being used to enhance sporting capabilities and team personnel.
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RESEARCH CORNER

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WHY PRIVATIZATION OF OGDCL NEEDED?

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Oil & Gas Development Company Limited (OGDCL) is the domestic market leader in terms of reserves, acreage and oil & gas production. OGDCL is well organized to deliver upstream growth and improved profit margins boosting shareholders wealth while sharing to the wellbeing of the communities where it runs. The company is listed on all stock exchanges of the country as well as on the London Stock Exchange. Financial year 2014 showed as the landmark in the history of the company with its PAT (profit after taxation) rising by 35.8 percent and touching a fresh record level of Rs123.915 billion translating into EPS of Rs28.81......

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COVER STORY
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SCOPE OF PRIVATIZATION PROCESS LOOKS DEPRESSING
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Stable, macroeconomic and law and order situation are essential for creating a climate conducive for private investment. At the same time, competition, liberalization and deregulation are required for protecting the interests of consumers and for sending the right price signals to customers and investors. However, in infrastructure and utility services, competition may not be feasible. In such cases, a fair and comprehensive regulatory framework must exist to balance the needs of consumers and investors.

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CAPITAL MARKETS
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COVER STORY
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AN INNOVATIVE PLAN FOR PIA
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Pakistan International Airlines (PIA) incurring a loss of Rs100 million daily. This loss is largely due to ageing fleet, cash shortage, and devaluation in Pak rupee, high fuel prices, and heavy loans resulting in high financial cost, frequent changes in management and a higher number of employees. The national flag carrier, however, had faced losses of billion of rupees due to mismanagement and inaction.
The government has given a package of Rs12.70 billion to the PIA for its reorganization.
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INDIA IN THE NEWS

CHENNAI: Chinese lighting solutions company Opple Lighting has entered the Indian LED lighting market with the launch of its first retail store in Chennai. The Rs 3,000-crore company has a presence in over 50 countries and provides lighting solutions for both retail and commercial users.
Opple plans to invest about Rs 60 crore for its India operations, primarily for brand building and marketing. The company plans to set up 50 exclusive brand outlets and about 400 shop-in-shop stores over the next three years,.
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IN THE NEWS

The Pakistan National Monument is one of the rare recreational places which are still attracting the visitors from all over the country despite the fact of increasing inflation, day-to-day hardships and prevailing political situation of the federal capital due to the sit-ins.The monument, spread over a total area of 2.8 hectares, is located at the west viewpoint of the Shakarparian Hills, represents the four provinces and three territories. The blooming flower shape shows Pakistan’s progress as a rapidly developing country.......

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GULF NEWS

Dubai: The UAE IT market, valued at Dh15.75 billion in 2013, is forecast to grow at a compound annual growth rate of about 8.47 per cent until 2018, a research report published by the Dubai Chamber of Commerce and Industry says. In the UAE, which ranks fourth out 148 countries in technology absorption, about 85 per cent of households have a personal computer. The widespread use of the Internet in homes and offices in the UAE has led to increased demand for computer products..........

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ANNOUNCEMENT

In response to growing market demand, the Chartered Institute of Management Accountants (CIMA) – the world’s largest professional body of management accountants – has launched a new qualification for shared services employers at The Hackett Group’s 2014 European Best Practices Conference, Berlin.
The qualification develops the skills and broader knowledge of shared services centre professionals, to help employers attract, develop and retain talent. Candidates undertaking the training will gain knowledge of shared service best practices, including principles, tools and techniques, along with effective governance and controls..
.......

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COVER STORY
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PRIVATIZATION A BAD EXPERIENCE IN BALOCHISTAN
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It is not the business of the government to do business by it’s own but to play a role of facilitator and conductor to boost both local and private businesses in the country. The privatization of state-owned enterprises endorses this logic. The privatization process, however, has not been a good experience in Balochistan. In some experts’ opinion the rewards from privatization do not seem to be big enough to compensate for all the associated socio-political risks for pursuing the privatization policy.......

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EXCHANGE RATES
Pakistan Open Market Rates

BUYING SELLING
US $ 102.7 102.95
UK POUNDS 164.75 165
KUWAITI DINAR 353.5 353.75
SAUDI RIYAL 27.2 27.45
UAE DIRHAM 27.8 28.05
CANADIAN DOLLAR 90.5 90.75
EURO 130.75 131
JAPANESE YEN 0.92 1.02

MORE RATES

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COVER STORY
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PRIVATIZATION AND ITS IMPACT ON INVESTORS
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In June of this year, the foreign direct investment fell drastically over the past 6 years with economists seeing a weak forecast for future investments in Pakistan due to the increased security issues the country is being facing. The investments coming into the country come in the form of Greenfield investment. According to economists, due to the recent security concerns, foreign investors feel hesitant to either freeze or continue their investments in the country........

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COVER STORY
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PROTECTING THE STAKEHOLDERS
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The stated objectives of privatization are: 1) contain losses being incurred by the state-owned enterprises, 2) confining the government’s role to facilitator, 3) remove inefficiencies of public sector, 4) optimization of cost of doing business, 5) improving competitiveness and above all 6) brining down tariff in case of utilities and sale price in case on tangible goods. The process of privatization was initiated in Pakistan on the insistence of multilateral donors. However, if one reviews the outcome, limited achievements have been made...

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26Sep14 3Oct14 17Oct14
NASDAQ

4,466.75

4,430.19

4,217.39

H.SENG

23,691.24

23,064.56

23,023.21

SENSEX

26,431.42

26,567.99

26,234.08

NIKKEI

16,240.42

15,708.65

14,532.51

CAC-40

4,355.28

4,264.32

3,999.20

DAX

9,510.01

9,195.68

8,764.62

FTSE

6,639.71

6,485.05

6,267.83

S&P

1,965.99

1,946.17

1,862.76

DJIA

16,945.80

16,801.05

16,117.24

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As On Oct 16, 2014

TENOR

BID

OFFER

1 Week

9.71

10.21

2 Week

9.78

10.28

1 Month

9.82

10.32

3 Month

9.94

10.19

6 Month

9.95

10.20

9 Month

9.95

10.45

1 Year

10.02

10.52

2 Year

11.62

12.12

3 Year

12.28

12.78

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RESEARCH CORNER
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LOSS-MAKING PAKISTAN STEEL MILLS FACING LIKELY SELL-OFF
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Pakistan Steel Mills (PSM) has a high admiration for the country as it is not only largest industrial complex in Pakistan but as well as in South Asia. Since it’s founding in 1970, it has been known as the state-owned megacorporation producing steel and iron foundries with a production capacity of 1.1 to 5.0 million tons. It has also given direct employment to thousands of citizens and hundreds of thousands more have been able to achieve careers in its ancillary and downstream units..........

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BUSINESS QUOTATIONS
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Women would be disproportionately affected by the privatization of social security. It is one of the most important safety nets for American women in old age, or in times of disability, to insure financial income for their families.
BARBARA MIKULSKI
First, we will focus on the privatization of small and medium sized enterprises, followed by the medium size industry and then we will move on to the heavy industry.
IBRAHIM RUGOVA
Privatization of the state-owned economy is not yet on the agenda. We cannot do it immediately; my colleagues would not agree to it. But we must put all forms of ownership on an equal footing immediately and let different types of ownership compete with the state firms.
VACLAV KLAUS
The Social Security trust fund is in pretty good shape today and we should not embark upon risky, dangerous schemes which will, in fact, undermine Social Security, such as privatization.
MAX BAUCUS
During the 1990s the United States sought to impose the 'Washington Consensus' on Latin American governments. It embodied what Latin Americans call 'neo-liberal' principles: budget cuts, privatization, deregulation of business, and incentives for foreign companies. This campaign sparked bitter resistance and ultimately collapsed.
STEPHEN KINZER

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COVER STORY
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PRIVATIZATION OF PSM IS NEED OF HOUR

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Pakistan Steel Mills was constructed in early 70's with a cost of Rs25 to 30 billion with the help of USSR former Russia. The actual value of the land now, excluding steel mill plant, which is the main asset, the steel mill officer colony and remaining vacant land may be about Rs300 billion. If we include the plant of steel mill and the officers’ colony it would be around Rs350 to Rs375 billion. With the passing of time the cost of overall Pakistan Steel Mills will be highly increased.

Since its inception Pakistan Steel Mills witnessed a poor financial performance. It has remained mostly in losses since it started full-fledged production in the mid-1980s. From 1969, when work started on the mills under the guidance of then chairman Syed Saeed Jafferi, till 2013, it has seen 26 different managements taking up the reins. Except for three, none of them could exploit the Pakistan Steel Mills preeminent position in the market.........

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CURRENCY CONVERTER
(Open Market)

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THIS WEEK TOP STORIES

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WHT ON IMPORTED USED CARS NOT COLLECTED (DAWN NEWS)
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SHARES RALLY IN EUROPE AND THE US (BBC NEWS)
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CARPET EXHIBITION ATTRACTS THOUSANDS OF VISITORS (THE NATION)
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GAS SUPPLY: LCCI URGES GOVERNMENT TO GIVE INDUSTRIAL SECTOR TOP PRIORITY (BUSINESS RECORDER)
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UAE MARKETS GET HAMMERED (GULF NEWS)
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TEXTILE POLICY STILL AWAITS GOVT APPROVAL (DAWN NEWS)
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CALL TO IMPROVE WORKING CONDITION OF WORKERS (THE NATION)
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CAPITAL MARKETS
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STOCK MARKET ROUND UP
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According to media reports, Pakistan Petroleum Limited (PPL) has announced that it hit another petroleum reserve, fourth discovery in the particular lease located in Sanghar district of Sindh province. The exploration well, Kinza X-1 was spud on July 28 this year and reached the final depth of 3,695 meters on September 13. Initial testing flowed 12 million cubic feet per day (mmcfd) of gas along with condensate, thereby confirming presence of commercial quantities. PPL is the operator of Gambat South block with 65 percent working interest along with its joint venture partners Government Holdings.........

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