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CONTENTS ===================================================================
NATIONAL NEWS Withdrawal from fresh deposits allowed US scientists doubt defector's claim NA approves Ehtesab Amendment Bill Imposition of emergency: SC to start hearing petitions on July 13 Pakistan reassessing position on CTBT Govt spells out measures to bring peace to Karachi Another tallest man of the world from Pakistan ANP to launch joint struggle for rights of Balochistan Bailable warrants for Benazir Water to reach Sindh in a few days MQM favours quota on basis of population --------------------------------- BUSINESS & ECONOMY $ down to Rs52.25 in kerb Rupee loses ground to dollar Soft loans Gold prices soar in line with dollar $1.3 billion withdrawn from FCY accounts N-tests not to affect trade ties with France: FPCCI Accord with Southern Electric scrapped Sanctions not to affect economy seriously 83.9pc of tax revenue target collected Killings affect stocks, index loses 10.35 points --------------------------------------- EDITORIALS & FEATURES Fraud! Ardeshir Cowasjee Stalemate in Karachi Irfan Husain Self-reliance Hafizur Rahman Ambitious trade policy Dr Akhtar Hasan Khan ----------- SPORTS Pakistan retain Davis Cup squad PCB Council meeting on July 5

Withdrawal from fresh deposits allowed
Mohiuddin Aazim

KARACHI, July 2: The State Bank on Thursday allowed withdrawal of 
foreign exchange from the foreign currency accounts mobilized after 
July 1, 1998. Restrictions on the withdrawal of foreign exchange 
from accounts frozen on May 28 still remain.
A SBP circular (F.E. no 31) said "as announced by the prime 
minister the foreign currency accounts frozen on 28th May 1998 
stand revived" from July 1 1998.
"The foreign currency deposits as on May 28 1998 can continue to be 
converted in rupees at the official exchange rate but restrictions 
on their withdrawal in foreign exchange will continue." The 
statement is clear. Your foreign currency accounts frozen on May 28 
1998 now "stand revived" but you cannot take out foreign exchange 
from these accountsyou can only withdraw money in rupees at the 
rate of Rs46 to a US dollar. In the open market dollar was sold for 
Rs53.25 on Thursday and there are indications the rate would not go 
below Rs52.
The circular said "amounts of incremental (foreign currency) 
deposits after July 1 1998 could be withdrawn in foreign exchange 
although the prime minister has appealed to all such depositors to 
keep even the incremental amount in their accounts as far as 
It said "all immunities in relation to the foreign exchange 
referred to in para 2 of Foreign Exchange (Temporary Restrictions) 
Ordinance 1998 stand restored for an indefinite period both for old 
and new foreign currency accounts as well as for the amounts that 
have been or will be converted into rupees." It said the government 
is in the process of providing the necessary legal cover to this 
This means revival of all protections meant for the foreign 
currency depositors contained in the Protection of Economic Reforms 
Act of 1992 which include non-disclosure of the source of foreign 
currency deposits and exemption from Zakat and withholding tax etc. 
Legally it should also mean lifting of all restrictions on movement 
of foreign currency deposits including its withdrawal in foreign 
Senior bankers reached by Dawn said the inclusion of the PM appeal 
in the State Bank circular would create problems in day to day 
operations of the banks. "The State Bank circular should contain 
only such instructions which it issues on authority to make them 
binding on the banks," said senior executive of a bank. He said 
reminding the bankers of the PM appeal through a circular might 
lead some banks to put an informal ban on withdrawal of foreign 
exchange from incremental foreign currency accounts on the one hand 
and invest some discretionary powers with them on the other hand.
The SBP circular said "the State Bank will continue to provide 
exchange risk coverage to the balances held in the old foreign 
currency accounts as on 30-6-1998 as well as additional foreign 
currency deposits flowing into these accounts on regular payment of 
forward cover fee as determined by the State Bank of Pakistan."
Exchange risk coverage or forward cover is obtained by foreign 
currency account holders to save their foreign currency deposits 
from possible rupee devaluations in the future. The State Bank 
provides the cover at 5.5 per cent for the US dollar accounts. It 
charges different rates of forward cover on different currencies.
The circular said that the new foreign currency deposit scheme 
announced on June 20, 1998 "will continue concurrently." Under the 
rules of the scheme: (a) residents and non-residents can open 
foreign currency accounts with banks in Pakistan; (b) banks are not 
under obligation to surrender the foreign currencies received in 
these accounts to the State Bank; and (c) no forward cover on 
deposits received under this scheme will be provided by the State 
Senior bankers say no bank has so far opened foreign currency 
accounts under the new scheme though people are making inquiries 
about it.
The circular further said that "borrowing facilities against the 
security of balances held in the foreign currency accounts/ 
certificates as on 30-6-1998 has been withdrawn." It said the banks 
and non-bank financial institutions would have to meet this 
requirement by July 31, 1998.

US scientists doubt defector's claim 
Masood Haider

NEW YORK, July 3: Most American nuclear experts and scientists have 
expressed serious reservations about Pakistani defector, Iftikhar 
Chaudhry Khan, claiming knowledge of a Pakistani pre-emptive 
nuclear strike against India as early as April 25.
Mr Gary Millhoun, a nuclear research scientist respected in the 
American scientific community, in an interview with CBS Radio 
service said "I am skeptical about Mr Khan and his assertions." 
"His story is plausible but not possible," Milhoun said.
Mr Khan, claiming that he was a nuclear research assistant at 
Khushab facility, sought political asylum in the United States.
He told a news conference on Wednesday that the plan for a pre-
emptive strike was dropped after he and other researchers who 
opposed the attack threatened to expose it publicly.
Most Pakistanis interviewed by Dawn on Wednesday night were of an 
opinion that Khan could possibly be an Indian "mole" employed as a 
researcher at one of Pakistan's nuclear projects.
They seriously doubted his assertions, saying "all he wants is a 
green card and this is the best ploy he could use."
Besides, they noted that "most of the things Khan is telling the 
Americans have already been printed in the Western media weeks ago. 
It's just a rehash."
Meanwhile, the United States said on Wednesday it was unable to 
confirm or deny his allegations and declined to comment.
At the news conference, Khan said military and political officials 
agreed at an April 25 meeting to attack within a couple of days. 
Khan opposed the plans and fled Pakistan after receiving death 
threats from government officials. He said army chief Gen Jehangir 
Karamat and Foreign Minister Gohar Ayub Khan attended the meeting 
at which the decision was taken.
Khan entered the United States from Canada on May 22 to seek 
political asylum. 

Imposition of emergency: SC to start hearing petitions on July 13

ISLAMABAD, June 29: The Supreme Court decided on Monday to hear 
petitions challenging the imposition of emergency and suspension of 
fundamental rights, on their merits, from July 13.
Despite summer vacation, starting on July 4, the court decided to 
hear the petitions. The court ignored the technical objections 
raised by the attorney-general and three advocates-general, that 
the petitions, to be heard by the court, had become infructuous 

after the passage of a resolution by the Parliament affirming the 
Proclamation and Order by the president issued on May 28.
After a day-long preliminary hearing of the five petitions, it was 
announced by the court that the question of maintainability of the 
petitions would be decided along with their merits as was done by 
it in the case of Nawaz Sharif in 1993.
"We are of the view that it would be just and proper if the 
question of maintainability is decided along with merits of the 
petitions, which course was adopted by this court in the case of 
Mian Mohammad Nawaz Sharif versus President of Pakistan (1993. 
The seven-member bench consisted of Chief Justice Ajmal Mian, 
Justice Saiduzzaman Siddiqui, Justice Irshad Hasan Khan, Justice 
Raja Afrasiab Khan, Justice Bashir Ahmed Jehangiri, Justice Nasir 
Aslam Zahid and Justice Munawar Ahmed Mirza.
The court also announced that it would not take up any other 
petition on the subject till the court's decision on the petitions. 
The court informed Ahmed Raza Kasuri, counsel for Ms Ghinwa Bhutto, 
to wait for the result of the petitions taken up it. When Mr Kasuri 
pressed that his petition should be taken up along with others', 
the chief Justice said he had missed the bus.
On Monday, when the five petitions, filed by Farooq Ahmed Leghari, 
Ajmal Khattak, Mian Manzoor Wattoo, Ghulam Qadir Jatoi and Imran 
Khan, were taken up, AG Chaudhry Farooq contended that all the 
petitions had become infructuous as the Proclamation and Order, 
issued on May 28, were affirmed by the parliament.
He stated that the impugned Proclamation and Order were merged into 
the resolution of the parliament, and if the petitioners wanted to 
challenge the imposition of emergency. they would have to amend 
their petitions.
He further stated that fundamental rights were not suspended but 
their enforcement was suspended. The chief justice inquired what 
was the use of those rights which could not be enforced.
Justice Irshad Hasan Khan observed that the petitions challenging 
the proclamation of emergency and the order suspending the 
enforcement of fundamental rights were not infructuous as laying 
them before the Parliament was one of the constitutional 
requirements. "In my view the resolution, affirming the 
Proclamation and Order, need not be challenged," Justice Irshad 
NA approves Ehtesab Amendment Bill
Bureau Report

ISLAMABAD, June 30: Ehtesab Amendment Bill, 1998, was passed in the 
National Assembly on Tuesday amidst severe criticism on the PML 
government's ehtesab drive as opposition and independent members 
demanded across-the-board accountability under an impartial head 
having an unblemished record.
The government's accountability process was criticized not only by 
the Pakistan People's Party members but also by PPP (Shaheed 
Bhutto), Awami National Party and independents.
Opposing the amendment, Asfandyar Wali, parliamentary group leader 
of ANP, said his party was not satisfied with the process.
He said during the last one-and-a-half year not a single case 
against the government members had been registered. He alleged that 
the accountability was being done on political grounds. He called 
upon the government to conduct a fair and free accountability.

Pakistan reassessing position on CTBT
Shaheen Sehbai

WASHINGTON, June 30: Pakistan is re-evaluating its position on CTBT 
and FMCT as it believes both these treaties no longer remain valid 
after the May 11 nuclear blasts by India, Pakistan's top foreign 
ministry official revealed on Monday.
In what appeared to be a major policy shift by Pakistan, Secretary 
Shamshad Ahmed told the US leaders about the "strategic review" on 
Monday when he met Acting Secretary of State Strobe Talbott and 
Ambassador Tom Pickering at the State Department.
"I have told the Americans that we are now in the process of a 
strategic review which involves re-evaluation of our position," 
Foreign Secretary Shamshad Ahmed told a Press briefing at the 
Pakistan Embassy after his meetings at the State Department.
Diplomatic observers said the latest shift in Pakistan's policy, 
announced specially after the top level meetings, meant Islamabad 
was delinking its nuclear policy with India, and was now seeking 
the option of signing the CTBT before India does so or not signing 
it even after India has done it.
Secretary Shamshad was pinned down by probing questions on the 
subject by Pakistani journalists but he never ruled out the option 
that Pakistan could sign the CTBT before the Indians.
In his written statement the secretary mentioned the policy shift 
in these words: "This strategic review involves monitoring of 
regional and global situation and will also include an assessment 
of Pakistan's requirements in the strategic fields.
"Needless to emphasise that our position will depend on an 
objective assessment of India's nuclear and ballistic capabilities 
and future orientation. We are examining the level of India's 
nuclear weaponisation, the sophistication of devices it tested and 
its future intentions. While it is important for us to maintain 
parity in these fields - parity not in numbers but in terms of 
strategic balance and nuclear deterrent capability  this is 
necessary for safeguarding the country's security as well as peace 
and security in our region.
"Our demonstrated capability is only expression of self defence. 
Unlike India we have shown no desire of seeking and acquiring a 
formal nuclear status. For us it was question of life and 
existence, survival and security. For India it may be a question of 
status or legitimization of its status.
"Now that strategic parity has been restored in the region, 
Pakistan is willing to work in tandem with the international 
community for peace and security in South Asia, for confidence 
building, for conventional arms imbalance, nuclear stabilisation 
and disarmament and finally no-proliferation.
"We do not wish to engage in nuclear arms race and do not want to 
embark on a weaponisation programme or one that involves deployment 
of nuclear warheads on our missiles. However we will match any 
escalation by India to ensure strategic balance," he said.

Govt spells out measures to bring peace to Karachi

ISLAMABAD, July 2: The leader of the House in the Senate, Raja 
Zafarul Haq, on Thursday spelled out comprehensive political and 
administrative steps which were being taken by the government to 
find out solution to the problems confronting Karachi.
Raja Zafarul Haq was winding up a three-day debate on law and order 
situation in the country in context of Karachi on Thursday.
The debate was initiated by Senator Raza Rabbani. Senators from 
both sides of the House took part in the debate. Senators 
especially from Balochistan and the NWFP made analytical speeches 
from socio-economic and political angles and came to the crux of 
the matter.
One of the proposals made during the debate was for sending a 
parliamentary team to Karachi to assess the situation there and 
make recommendations aimed at addressing the core problems. The 
other was for holding an All Parties Conference on Karachi 
The leader of the House, who is also minister for religious 
affairs, said that as a part of political measures to improve law 
and order situation in Karachi, the government would not hesitate 
in seeking opposition's advice.
He called upon all political forces in the country to come forward 
in resolving the law and order situation in Karachi. He said it was 
essential politically to involve the allies and the opposition in 
setting right the affairs of the disturbed city. He termed Karachi 
as political and financial capital of Pakistan.
Raja Zafar said peoples from 27 countries lived in Karachi and the 
facilities and resources of the city were overburdened not only by 
the people from other provinces but also by immigrants from Burma, 
Iran, Afghanistan and other countries. 
He touched on the administrative steps taken by the government by 
cordoning off sea and land routes to check infiltration of arms and 
entry of illegal weapons into Karachi. He said there was 
proliferation of arms in the city.
The leader of the house stressed the need for economic, social and 
judicial justice in the city. He said when people do not get 
justice, conspiracies ensue. He said that smuggling of arms was 
continuing to this city.
He said political efforts were being made by prime minister Nawaz 
Sharif for finding out political solution to the Karachi situation. 
For that purpose, he said, Mr Sharif had held a number of meetings 
with the MQM leadership in Karachi.
The minister stressed that the problem of factional fighting had to 
be tackled. He said industry in the city was on the brink of 
He said working of the Special Branch has been streamlined and a 
vigil was kept on the elements involved in anti-national 
activities. Communication between various agencies had been 
stepped, he said. He said that about nine people involved in 
sectarian killings and general crime in the city had been arrested. 
The leader of the House said it was the national requirement of the 
country that things should be brought under control. He said that 
proposals and suggestions made by the Senators in the course of the 
debate have been taken note of and efforts would be made to resolve 
them by mutual process of consultations.
Earlier, Senator Ajmal Khattak, winding up the debate on behalf of 
the opposition, said that concerted efforts by all political 
parties were direly needed to resolve the problems confronting 
Karachi. He said the country belongs to all the nationalities who 
lived here and its future lay in federalism.
He regretted that the decisions of the three smaller provinces were 
not accepted. He said Pakistan would be strengthened through 
adherence to principles of federalism. He referred to what Senator 
Qazi Anwar had stated about the plan to abolish Senate and reduce 
its powers.

Another tallest man of the world from Pakistan

ISLAMABAD, July 2: Naseer Ahmed Soomro, 22, is set to become yet 
another tall wonder from Pakistan, after Alam Channa, and is likely 
to make his entry in the Guinness Book of World Records in August 
this year.
Naseer claims he is 2 inches taller than world's tallest man - Alam 
Channa (7 feet 7 inches).
In an interview with APP here on Thursday, he said that the 
managers of the Guinness Book of World Records had invited him to 
take part in the international competition of tallest people on 
August 5, this year, in London.
"Like me, there are also other claimants from other parts of the 
world," he added. The height of Naseer Soomro was declared to be 7 
feet and 9 inches by physicians at Aga Khan Hospital, Karachi.
He hails from district Shikarpur in Sindh province, 350 km north 
east of Karachi.
"I have been advised by my doctors to prefer fruits over bread so 
that I may not gain un-necessary weight," he said.
Mr Soomro said that his body had started becoming taller speedily 
at the age of 12, it was only two months back that he came to know 
that he had crossed the height of Alam Channa who is now in America 
for medical treatment.
ANP to launch joint struggle for rights of Balochistan

QUETTA, June 28: The Awami National Party announced on Sunday that 
it would launch a joint struggle with two Balochistan-based parties 
the Pashtoonkhwa Milli Awami Party and Pashtoonkhwa Qaumi Party 
for Balochistan's rights.
"We have decided to launch a collective struggle to maintain 
supremacy of the parliament, to protect the interests of all 
nationalities," Senator Ajmal Khattak, president of Awami National 
Party (ANP), said at a joint Press conference.
Mr Mehmood Khan Achakzai, chief of Pashtoonkhawa Milli Awami Party 
(PMAP) and Mr Latif Afridi, president of Pashtoonkhawa Qaumi Party 
(PQP), also attended the Press conference.
They said they had felt that the problems being faced by Pakistan 
needed a joint struggle.
Senator Ajmal Khattak said they had discussed various issues and 
reviewed the political situation. Further discussions would be held 
with Khan Abdul Wali Khan, he added.
A joint declaration issued at the Press conference said they would 
discuss the issues of lifting emergency, provincial autonomy, 
achievement of national rights, supremacy of parliament and the 
"growing influence" of Punjab.
Bailable warrants for Benazir

LAHORE, July 2: An Ehtesab Bench of the Lahore High Court on 
Thursday issued bailable warrants for former prime minister Benazir 
Bhutto in connection with a reference against her.
The order is applicable also to the co-accused including former 
federal minister for agriculture Yousaf Talpur and former 
Agricultural Development Bank of Pakistan chairman Badruddin 
Zahidi. Notices were issued to relevant authorities in Sindh to 
ensure appearance of Senator Asif Zardari in the court on the next 
date of hearing. The next date of hearing is July 20.
The reference accuses the former prime minister of taking a 
commission of $2 million from a Polish tractor manufacturing firm 
for introducing their tractors in the Awami Tractor Scheme.
Water to reach Sindh in a few days
Bureau Report

ISLAMABAD, June 28: Federal government has turned down Sindh's 
demand to close Chashma-Jhelum link canal and supply water to the 
province from Mangla dam but it held out assurance to immediately 
release additional 24,000 cusecs.
The government realizing the acute shortage of irrigation water in 
Sindh has held out the assurance to the members from the province 
to immediately release 20,000 cusecs of water from Chashma barrage 
and 4,000 from Chashma-Jhelum link canal.
The additional 24,000 cusecs of water is likely to reach Guddu 
barrage in a few days.
The assurance was given to the MNAs from Sindh at a meeting held 
here on Friday at the ministry of water and power in response to 
the repeated demands for the increase in water releases to the 
province to save its crops.
Mir Hazar Khan Bajarani, Ghous Bukhsh Mehr, Pir Noor Mohammad Shah 
Gillani, Pir Bukhsh Khaskheli and Pir Bukhsh Junejo from Sindh and 
Mir Faridullah Khan Jamali from Balochistan attended the briefing.
An official of the Indus River System Authority, chairman of the 
Federal Flood Commission, general manager of dams, chief engineer 
Mangla and a representative of Tarbela were also present at the 
briefing conducted by the minister of state for water and power 
Capt Haleem Siddique.
The MNAs asked the ministry to hold a follow-up meeting on Tuesday 
to review the situation and see whether the assurance given by the 
federal government was honoured.

MQM favours quota on basis of population

KARACHI, July 1: The Muttahida Qaumi Movement on Wednesday said it 
favoured quota of the provinces in the federal services on the 
basis of population, but opposed its further sub-division within 
the province.
The MQM did not support the National Assembly resolution on 
proposed extension of the quota system for another 20 years, said 
the deputy convener, MQM coordination committee, Senator Aftab 
Shaikh while commenting on the adoption of the resolution by the 
National Assembly.
Senator Shaikh said the quota system was introduced for 10 years 
under Article 27 of the 1973 Constitution by the PPP government and 
in Aug 1983 it was extended by General Ziaul Haq for another 10 
After August 93, he said, quota system had no legal or moral 
backing and it was challenged in the Federal Shariat Court, which 
found it un-Islamic and unconstitutional.
*From that day onwards, the quota system was invoked without any 
sanctions, and now the government wanted to legalise that, he said 
adding mere passing of the resolution would not serve the purpose, 
the Constitution has to be amended.
"There should be a quota of the provinces in federal services and 
it should be protected, but there should be no quota within the 
province, as is the situation in Sindh where the quota system is 
implemented in the rural and urban areas," he said.

$ down to Rs52.25 in kerb

KARACHI, July 3: The rupee gained Re 1 against the US dollar in the 
open market on Friday after losing 75 paisa on Thursday.
Money changers said the greenback closed at Rs 52.00 and Rs 52.25 
for spot buying and selling on Friday against the Thursday close of 
Rs 53.00 and Rs 53.25.
Official exchange rates remained unchanged in the band of Rs 46.00-
Rs 46.46 for buying and selling.
They linked the gain in the rupee value to the State Bank decision 
to allow partial operation of foreign currency accounts which ended 
uncertainty to some extent. "Some people including speculators 
might have off-loaded their stocks of dollars thinking that the 
panic buying of the greenback would now subside," said a banker 
explaining the rise of the rupee.
But money market analysts say so far the stock market remains in 
depression the buying spree for the dollars would not die and the 
spread between the official exchange rate and the open market rate 
would not come down substantially. On Friday the Karachi Stock 
Exchange 100-share index fell to 868 points from 878 on Saturday.
The huge fall in the KSE index has forced some investors in the 
equity market to shift their funds into the currency market and 
earn high premiums overnight.

Rupee loses ground to dollar

KARACHI, June 30: The US dollar fetched the highest ever price of 
Rs 54.50 in the open market on Tuesday as falling of Karachi Stock 
Exchange 100-share index to a historic low of 811.03 points on 
Monday provoked panic-buying of the greenback.
Money changers said the dollar ended at Rs 54.20 and Rs 54.50 for 
spot buying and selling in the open market on Tuesday against the 
Monday close of Rs 51.70 and Rs 52.00. The official exchange rates 
remained unchanged at Rs 46.00 and Rs 46.46.

Soft loans

FAISALABAD, June 30: Agricultural Development Bank of Pakistan 
(ADBP) will provide soft loans for the purchase of 30,000 tractors 
during the fiscal year of 1998-99.
A spokesman of the ADBP talking to newsmen here on Tuesday said 
that instructions to all the ADBP branches had been issued to 
provide soft loans to the tillers so that the mechanized farming 
could be introduced for the maximization of per acre yield of all 
cash crops. 
He said that this step had been taken by the ADBP in pursuance of 
the national agenda announced by prime minister Muhammad Nawaz 

Gold prices soar in line with dollar

KARACHI, June 30: Gold prices on Tuesday soared by Rs 200.00 per 
ten grams on the local market, making the total post-devaluation 
gain of Rs 400.00 per 10 grams.
After touching the year's peak level of Rs 5,010.00 per ten grams 
at one stage, it was last quoted at Rs 4,998.00 but dealers said 
the current panic buying could push it further higher. On Monday, 
it closed at Rs 4,810.00.
'The gold is rising in line with the dollar as the shaky investors 
are out to buy both at whatever prices they are available,' dealers 
said, adding the dollar yesterday was not easy to get at Rs 54.50 
in kerb.
They said the inflow of both the dollar and the gold is drying up 
progressively for various reasons including the fading confidence 
in the official policies and panic on the financial markets.
Physical business was light as the sellers were not inclined to 
part with their holding on predictions of an imminent price flare-
'The deteriorating city law and order situation and daily killing 
has forced investors to seek safe havens,' they added.

$1.3 billion withdrawn from FCY accounts
Sabihuddin Ghausi

KARACHI, July 2: A sum of $1.3 billion (Rs59.8 billion at Rs46 a 
dollar) is understood to have been withdrawn from the foreign 
currency accounts during the period May 28 to June 30.
During this period, bankers claim an inflow of $60 million in these 
foreign currency accounts but have no idea of the source from where 
these funds were generated.
On May 28, total deposits in foreign currency accounts were said to 
be $11.16 billion which are now over $10 billion. According to 
bankers' analysis 63 per cent of these deposits are in the name of 
resident Pakistanis. A sum of $1.55 billion represent institutional 
deposits. Almost half of this institutional fund is in the name of 
non-banks financial institutions (NBFIs), and the other half in the 
name of the banks while remaining amount has come from the 
Pakistanis living abroad.
It may be recalled that immediately after the nuclear blast on May 
28 afternoon, the government in a rather surprise move, clamped 
down the foreign currency accounts and restricted withdrawals in foreign
exchange. It fixed dollar rate at Rs46 and advised the 
account holders to withdraw their money in Pakistani currency.
A day after the nuclear blast and subsequent clamp-down on foreign 
currency accounts, the Federal Finance Minister, Sartaj Aziz in his 
press briefing at Islamabad advised the account holders of foreign 
exchange to withdraw their money rather quickly in local currency 
and invest it in national saving schemes which offer attractive 
rate of returns.
Foreign exchange account holders were then given a deadline of 
August 31 to withdraw their deposit in local currency.
In a further follow-up directive on June 20, a new scheme of 
foreign exchange accounts was launched which allowed resident and 
non-resident Pakistanis to open their accounts with banks in 
Pakistan. Under this scheme banks are under no obligation to 
surrender the foreign currencies they receive in foreign currency 
accounts to the State Bank and were given a free hand to invest 
these funds where they like.
However, State Bank made it clear that it would offer no forward 
cover on these foreign currency deposits exposing banks to exchange 
fluctuation risks.
On Thursday (July 2), the State Bank of Pakistan, in pursuance to a 
directive of prime minister restored all immunities on foreign 
exchange for an indefinite period, both for old and new foreign 
currency accounts as well as for the amounts that have been or will 
be converted into rupees.
It further announced that the foreign exchange currency deposits as 
on May 28, 1998 can be converted in rupees at the official exchange 
rate, but restriction on their withdrawal in foreign exchange will 
continue. It however informed that "amounts of incremental deposits 
after July 1, 1998 could be withdrawn in foreign exchange, although 
the prime minister has appealed to all such depositors to keep even 
the incremental amount in their accounts as much as possible".
Now there are two separate foreign currency accounts in operation 
enjoying same immunities but with a difference that on old accounts 
State Bank offers foreign exchange risk cover while in the new 
scheme the investors and banks have been allowed to invest their 
foreign currency funds in their schemes of choice.

N-tests not to affect trade ties with France: FPCCI

KARACHI, July 1: The nuclear tests conducted by Pakistan will have 
no negative impact on Pak-France economic and trade relations.
This was stated by French Economic and Commercial Counsellor Hubert 
Colaris who called on chairman, FPCCI standing committee on 
Diplomatic Affairs, Enver Baig at FPCCI office, Islamabad on 
He said that French companies are interested in joint venture with 
the Pakistani counterparts in telecommunication, packaging, 
processed food industry like fruits and vegetables, pharmaceutical, 
chemicals, ship building/port development, confectionery, 
refrigerating equipment, packaging of fish and milk etc.

Colaris stressed the need for having closer cooperation between the 
private sectors of both the countries and felt that frequent 
interaction could help promote economic and trade relations between 
the two countries.
There is a strong potential, he said, for export of leather 
garments, footwear, cotton waste, fish and mushroom dried etc to 
France. He offered French investment and know-how in textile, 
packaging and processing industry and in telecommunication 
satellite projects on BOT basis.
He informed his host that France is interested in the water 
management projects in Pakistan and in this regard a seminar 
sponsored by the Ministry of Petroleum and Natural Resources is 
being organised on 27-28 Nov, 1998 at Lahore to introduce French 
gas equipment in Pakistan.

Accord with Southern Electric scrapped
Faraz Hashmi

ISLAMABAD, June 27: The government on Saturday terminated agreement 
with the Southern Electric Plant and issued cancellation notices to 
eight Independent Power Producers (IPPs) on charges of corruption 
and violation of agreements.
The major policy decision was announced here at a press conference 
jointly addressed by the Federal Minister for Water and Power, Raja 
Nadir Pervaiz, the Federal Minister for Law, Khalid Anwer; and the 
Chief of Ehtesab Bureau, Senator Saif-ur-Rehman.
The decision to take action against these IPPs, which were 
sponsored by the World Bank, has been reached with the consent of 
the World Bank President, James Wolfson said the law minister.
He said the World Bank would support the decision against the 
corrupt power companies. Wolfson had recently written to the Prime 
Minister, Nawaz Sharif suggesting stern action against the 
companies found involved in corrupt practices, Anwer said.
Six IPPs had been issued notices of "Intent of Termination" on the 
basis of corruption while two others were served notices on 
technical grounds, Pervaiz said.
The six IPPs issued notices to explain their position in 90 days 
were Uch Power Project (525mw), Kohinoor Energy Limited (1240mw), 
Sabha Power (190mw), AES-Lalpir (337mw), AES-Pak Gen (337mw) and 
Habibullah Coastal Energy (123mw). Sabha Shipyard (274mw), and 
Power Generation System (110mw) were issued notices on technical 
ground, while the agreement of Southern Power having a generation 
capacity of 112mw had already been cancelled.

Sanctions not to affect economy seriously
M. Ziauddin 

PAKISTAN EXPECTS the nuclear sanctions to be lifted by December 
1998. On the other hand, the impact of those sanctions which have 
already come into effect since their imposition is being estimated 
officially to be minimum.
While it is yet to be seen how long the sanctions are going to 
last, the conclusion that the impact of those in force would be 
minimum appears accurate as most American assistance to Pakistan 
had already been prohibited. OPIC had only recently reopened in 
Pakistan and had not taken even one single investment operation in 
hand since. On the other hand, EXIM Bank which was also reopened at 
about the same time as the OPIC, has only one expression of 
interest pending for a paltry $1.1 million.
The decision of the G-8 to postpone consideration of non-basic 
human needs (BHN) loans for Pakistan by international financial 
institutions is still to take effect because no IFI loans for 
Pakistan have so far been presented for board consideration.
The action of postponing IMF assistance amounting to $25 million 
does not come under the sanctions. This amount was not disbursed 
because Pakistan did not meet some of the economic targets fixed 
under the three-year structural adjustment loan of $1.6 billion.
The officials are not very wrong when they say that Pakistan was 
not likely to experience any severe economic jolt in the immediate 
run. And perhaps they are also right in assuming that the sanctions 
would be lifted by December 1998 because the world has suddenly 
come to realize that the threat of sanctions appeared valid only in 
a pre-testing scenario. In the post-test scenario they appear 
83.9pc of tax revenue target collected
Ihtashamul Haque

ISLAMABAD, June 29: The first 11 months of the current financial 
year has witnessed a big revenue shortfall despite downward 
revision of annual target from Rs 324 billion to Rs 297.62 billion.
According to a latest "Review of the Economic Situation" released 
here on Monday by the Finance Division, the provisional tax 
collection during (July-May 1997-98) was Rs 249.8 billion against a 
three time revision of revenue target at Rs 297.62 billion.  
Provisional tax collection during the first 11 months of the 
current fiscal has been termed as 83.9 per cent of the annual 
revised target. This collection, the government now claimed, is 2.2 
per cent higher than the collection of the comparable period last 
The performance of the tax collection has been mixed. While direct 
taxes and central excise have performed reasonably well and 
increased by 22.3 per cent and 10.3 per cent respectively, sales 
tax and customs duties have been on the decline. This drop is 
attributable mainly to a sharp decline in imports.
According to provisional estimates, the real GDP has grown by 5.4 
per cent during 1997-98 as against 1.3 per cent of last years.
Agriculture sector grew by 5.9 per cent in 1997-98 as against the 
target of 5.1 per cent and previous year's level of 0.06 per cent.
Industrial production during the first ten months of the current 
fiscal year i.e July-April 1997-98 has registered a growth of 8.4 
per cent against the target of 6.5 per cent for the whole year.
The target of monetary expansion (M2) for 1997-98 was fixed at Rs 
150 billion or 14.2 per cent higher than last year. During July-May 
1997-98 total money supply (M2) increased by 15.0 per cent, 
amounting to Rs 157.6 billion compared with an expansion of Rs 93.2 
billion or 9.9 per cent during the same period last year.
Domestic credit increased by 14.3 per cent amounting to Rs 158.8 
billion against the target of Rs 150 billion for 1997-98 and an 
expansion of Rs 131.8 billion during the comparable period last 
Net foreign assets declined by Rs 1.1 billion compared with a 
sizable contraction of Rs 38.6 billion in the same period last 
Borrowing for budgetary support amounted to Rs 50.5 billion against 
the target of Rs 58 billion for 1997-98 and compared with Rs 79.6 
billion during the corresponding period last year. Tight fiscal 
management resulted into less recourse to borrowing for budgetary 
support. This has helped contain inflationary pressures and has 
improved credit availability to private sector.
Inflation target for the current fiscal year was set at 9.0 per 
cent. During July-May 1997-98 the rate of inflation as measured by 
the changes in the consumer price index (CPI) had declined to 7.9 
per cent compared with 11.7 per cent for the comparable period of 
last year. Both food and non-food inflation remained in line with 
the overall inflation.
It may be noted that the current inflation rate is the lowest in 
1990s, for the first time in the last four years, it has declined 
to a single digit level. Strong demand management has enabled 
government to achieve this.
Export during the first 11 months (July-May  1997-98) increased by 
4.0 per cent, rising from $ 7528.2 million to $ 7826.1 million. The 
growth in exports has come primarily from the exports of primary 
commodities (19.1%) and 'other' (30.5%). 
Export of textile manufactures declined by 0.3 per cent while other 
manufactures fell by 0.8 per cent. Imports during July-May 1997-98 
have declined by 14.6 per cent to $ 9156.2 million. The major 
decline was in the machinery group (28.2%), petroleum group 
(27.0%), textile group (5.6%), agri-chemical group (11.8%), metal 
group (33.4%), and miscellaneous group (7.0%).

Killings affect stocks, index loses 10.35 points
By Our Staff Reporter

KARACHI, July 3: Stocks on Friday fell fractionally on a wide front 
as investors were not inclined to take new positions owing partly 
to city killings and weak economic indicators.
Selective support did emerge on a number of pivotals but mainly for 
jobbing purposes and left the market before the final bell taking 
profit where possible.
"The increased daily killings in the city is taking steam out of 
the market and until there is peace the tension in the investing 
public might note ease," dealers said.
Much will depend on the performance of the central committee set up 
to restore peace, in consultation with the Sindh government, in the 
city, they added.
Owing to bargain-hunting in Hub-Power and weekend considerations, 
the KSE 100-share index fell 10.35 points at 867.83 as compared to 
878.18 a day earlier, reflecting weakness of the broader market.
The market capitalization also suffered a modest decline of Rs 
2.665 billion at Rs 259.678 billion as compared to Rs 262.144 
billion a day earlier as the market leaders fell though modestly.
"Investors are rolling positions to dollar or gold after 
liquidating long positions in leading shares as the central bank's 
quick moves to restore public confidence in forex accounts failed 
to work but rather added to the current turmoil," said a leading 
floor broker.
He said jobbing in few pivotals, notably PTCL and Hub-Power, 
appears to be the focal point of the trading as both account for 
about 90 per cent of the total volume almost daily.
"Take away both these issues from the list, the turnover figure 
will fall to only 20 million shares from the current average of 
about 80 million shares," said an analyst.
Other actively traded shares were led by KESC, easy five paisa on 
0.360 million shares, followed by FFC-Jordan Fertilizer, unchanged 
on 0.310 million shares, Faysal Bank, lower 20 paisa on 0.228 
million shares, Engro Chemicals, up 40 paisa on 0.269 million 
shares, and Southern Electric, easy 15 paisa on 0.278 million 
DEFAULTING COMPANIES: Trading on this counter remained dull in line 
with the ready section as investors kept away for various reasons. 
Only Khyber Textiles came in for modest support, up 50 paisa on 

Back to the top
Ardeshir Cowasjee

*From a column in this space on January 28, 1994:
"On the afternoon of January 26, Benazir Bhutto completed her 100th 
day in office as the 16th prime minister of Pakistan and as the 
leader of the second of her governments and the third of the PPP. 
There has been much widespread criticism that in this period she 
has achieved nothing. Wrong. At our cost, she has been extremely 
busy. She and her husband are partners not only in matrimony but 
qualified to be partners of a partnership in the legal sense as 
well. Carrying on business with a view to profit is the key to the 
definition of 'parternership'  profit, of course, being a word of 
wide open meaning. And this partnership operates from the 
Secretariat of the prime minister."
"......... In the time of [caretaker PM] Moin Qureshi, the Pipians 
wanted to move one of their men, M. W. Abbasi, from PICIC to head 
the NDFC, the former DFI's funds having dried up and it being left 
with a lot of money to recover. Caretaker finance minister Babar 
Ali, knowing what was happening in the financial world, resisted 
this move. 'Over my dead body,' said he. But whilst he was abroad 
attending a World Bank meeting, Moin ordered the transfer, 
honouring the commitment he had made to the Pipians."
Moin Qureshi, honest as he pretended to be, gave in for two bad 
reasons. One was to oblige Benazir Bhutto, for his own good at our 
expense, and the other was for familial advantage. His brother, 
Bilal, of Johnson and Philips, had a deal going with Abbasi, who as 
head of the NDFC sanctioned and gave him a large loan which he 
otherwise could not have obtained.
M B Abbasi finished off what was left of the NDFC and was moved by 
Benazir Bhutto to a richer pasture, the National Bank of Pakistan. 
He was also made a co-trustee of NIT, the largest open-ended 
government-managed mutual fund of the country, a certified 
depository of pension funds, which holds in trust billions of 
rupees belonging to the people.
Now, five years down the line, we all know what Abbasi achieved. 
When Benazir Bhutto was booted out for the second time, he spent 
over a year in jail, and still has many cases pending against him. 
We must now await the announcement that, as with Salman Faruqui, he 
has been allowed to 'abscond' abroad for health reasons.
*From the same 1994 column: "Come the PPP government, anxious to 
appoint their own chief executive officers to head BEL and NIT, and 
a message is transmitted from the prime minister's secretariat to 
the finance ministry to include the names of Amjad Aziz Khan and 
Asadullah Shaikh in the list of candidates that the ministry was 
asked to propose to the PM. The PM chooses Amjad to head BEL and 
Asadullah to head NIT. Amjad, an SEVP of UBL, who was reportedly 
shot out by Nawaz, is [almost] 59 years old, close to retirement 
and will have to oblige to gain an extension. Asadullah Shaikh, a 
Sindhi officer of the DMG, holding the office of home secretary in 
the Sindh government, has never worked in a bank or DFI, has no 
experience at all of handling finance, shares, investments, etc. 
... NIT holds in trust and handles the funds of over 100,000 
shareholders; it holds 17-18 per cent of the total equity quoted on 
the stockmarket and the present worth of its triple A share 
portfolio is estimated to be around Rs.37 billion. In the last six 
months, the institution encashed in the buying and selling of 
shares capital gains of ... Rs.10 million per day........ 
Inexperienced Asadullah will be controlled by either Mr A or Mr Z. 
By accident or by design, he can cause the NIT unit holders to be 
relieved of perhaps Rs.10 million a day to the advantage of his 
controller without any irregularity being detected."
*From a column printed on October 25, 1996: "When [Asadullah Shaikh] 
was relieved of his position early this month, he had more than 
completed his mission. Copies of Yaqub's State Bank reports on NIT 
prepared in July 1996 were distributed to the NIT trustees at the 
Board meeting on October 1 as a part of the last item on the agenda 
 'Any other matter.' According to this report, Asadullah and his 
Board of government-nominated trustees [which included Hussain 
Lawai of MCB] oversaw the blatant robbing of close to Rs.1 billion 
of unit holders' money held in trust by them.... The public 
perception is that, among others, those culpable for this loss 
which the unit holders (pension funds, pensioners, widows, 
housewives, small savers, the poor) have been deliberately made to 
suffer are the government of Pakistan, the State Bank, the 
Corporate Law Authority, and the government-nominated Chairman and 
Managing Director Asadullah Shaikh (now reportedly enoying his R&R 
leave in England), and the trustees of NIT. The honourable Governor 
[of the State Bank] will doubtless remain silent."
There was no error involved; it was premeditated straightforward 
robbing. The robber did not force entry in the middle of the night; 
he was honourably enthroned by none other than our 'elected' prime 
minister. Though warned, did the people protest? No.  The run on 
NIT was avoided by the government. Without declaring the Net Asset 
Value (NAV) of the Trust, it appeased the people by unequivocally 
guaranteeing that it would repurchase any and all Rs.10 NIT units 
at the minimum repurchase price of Rs 13.70 per unit.
Nawaz Sharif, who followed Benazir Bhutto, continued to mislead the 
people. By a 'Public Notice' inserted in the press on November 3, 
1997 they were misinformed: "In view of the strong performance of 
NIT, the government has withdrawn its guarantee as to the minimum 
repurchase price of the Unit."
When the books reopened on November 10, 1997, the repurchase price 
was announced to be Rs 10.25 per unit, supposedly on the basis of 
the NAV. Since then it has continuously fallen. Yesterday, June 27, 
1998, it was at Rs. 7.00, or half the guaranteed price. "Strong 
No lessons have been learnt. There is no improvement in the 
governance of this country. Right now, I have before me a debt 
instrument, a bond, issued by the government of Pakistan which 
"Government of Pakistan; Five Years US Dollar Bearer Certificate; 
US $xxx,xxx No.DF0000XX. The bearer of this certificate is entitled 
to receive payment of US Dollars xxx,xxx only five years after the 
date of issue and the profit at x.xx % per annum payable half-
yearly in accordance with the Five Years Foreign Currency Bearer 
Certificate Rules 1992 on presentation at the office of issue. The 
certificate has been issued by order of the President of Pakistan, 
has been signed by the Governor of the State Bank of Pakistan, and 
has been issued by the State Bank's authorized office of issue, the 
Standard Chartered Bank at Karachi..." on the date noted thereon.
"Cash it," I said to Zahid Rahim, the chief executive officer in 
Pakistan of the Bank with which our family and firms have had a 
most pleasant relationship over the past 120 years, during which 
neither side has ever (repeat, ever) even dreamt of not honouring 
each other's signature appended in any capacity.
He can not do so. He sent me a note : "Under F.E. Circular No.12, 
Para 6, of 29th May 1998, issued by the State Bank of Pakistan, the 
encashment of FCBC including payment of profit in foreign exchange 
is temporarily suspended. The holders can however encash the 
instruments and obtain the profits in Pakistan Rupees. The 
encashment of US Dollar denomination instruments will be made @ 
U.S. 1 = Rs.46.00. These are the rules received by us from the 
State Bank of Pakistan, Central Directorate, under whose direction 
the FCBC has been issued. The underlying funds of FCBC are 
deposited with the State Bank of Pakistan, and do not remain with 
the Bank."
But this is not in accordance with '..the Five Years FCBC rules, 
1992' in terms of which the bond was issued," I tell him. Zahid is 
embarrassed, but helpless.
Not surprisingly, Pakistani citizens, living here and abroad, are 
not opening fresh foreign currency accounts or subscribing to the 
prime minister's National Self-Reliance Fund. They would like to 
know what has happened to all the money the government collected as 
'Iqra Surcharge' specifically for the purpose of the education of 
the illiterate masses. They also want to know what has happened to 
the money collected for the prime minister's 'Qarz Utaro..' fund 
launched early last year when he took over for his second round. As 
can be read again and again each day in the press, the people are 
disillusioned, and more so by the fact that their prime minister 
and those who sit with him are incapable of realizing that 
credibility lost within minutes cannot be regained for years to 

Stalemate in Karachi 
Irfan Husain

HOW many brutal deaths does it take to engage the minds of our 
rulers? How much murder and mayhem does it take to force them to 
Had 130 people been gunned down in Lahore in a single month, I am 
willing to bet everything I have that some tough steps would have 
been taken to halt the carnage. In Karachi, an average of ten 
citizens a day can be killed by shadowy gunmen without the federal 
or provincial government being unduly bothered. This double 
standard seems to support the MQM thesis that there is an anti-
Mohajir mentality that prevails in the corridors of power in 
Islamabad, whether the prime minister of the day is Nawaz Sharif or 
Benazir Bhutto.
Indeed, it would appear that the administration is willing to 
accept this death toll indefinitely. I know there have been tough 
words emanating from Islamabad from time to time but the streets of 
Karachi are still flowing with blood. There have been rumours that 
governor's rule is about to be imposed, but whether this would 
provide a solution is open to question. The instruments at the 
governor's disposal have been tried before and all proved to be 
ultimately blunt.
The one thing even Benazir Bhutto's most vociferous critics agree 
on is that she sorted the Karachi problem out, despite the 
custodial killings that were committed in the process. Nawaz Sharif 
has tilted in the other direction by releasing 3,000 MQM activists 
who were charged with terrorism, murder and armed robbery. Nobody 
denies that many of them were innocent, but a large number of these 
young men had been involved in crimes of violence. By releasing 
them as part of the political deal the ruling party cut with the 
MQM to establish a coalition government in Sindh, Nawaz Sharif is 
making the residents of Karachi pay a heavy price for his 
Meanwhile, the breakaway Haqiqi group of the MQM seems to continue 
enjoying the covert support of some intelligence agencies. How else 
to explain the fact that despite their repeated dismal performance 
at the polls, they can continue to control large swathes of urban 
territory? Now, to add to the mayhem, another faction of the MQM 
has surfaced to join the fray. This group calls itself BACK (Basic 
Amenities for the Citizens of Karachi). I assume these "basic 
amenities" include bulletproof vests for the non-combatants.
As far as the rest of the country is concerned, this bloody 
conflict is a case of gang warfare, and if all those involved bump 
each other off, nobody will shed too many tears. Unfortunately, 
this simplistic view does not take into account Karachi's grim 
ground realities. The fact remains that the majority of the city's 
Mohajir population continues to support Altaf Hussain, and even 
though the votes his candidates polled in the last election are 
considerably fewer than the number they got previously, the MQM 
still represents large sections of Karachi. Party activists and 
supporters feel their representative character has not been 
adequately recognized by the government or the "establishment," and 
they are barely tolerated in higher decision-making circles.
There is much truth in this perception. Rightly or wrongly, the MQM 
is seen outside Karachi as a gang of trouble-makers who have been 
responsible for thousands of deaths, scores of days lost every year 
to strikes, and millions of dollars in lost investments. Even in 
Karachi, many citizens view the MQM in this light. My driver is 
convinced that the ongoing mayhem is the result of battles over 
turf as each group wants to expand the area in which it can collect 
protection money.
The MQM at the highest level naturally denies that it is in any way 
involved in the ongoing violence, blaming the Haqiqi group and the 
agencies behind it for the killings. Its leaders claim they want a 
political settlement that would include an end to the covert 
official support their enemies are receiving. According to them, 
they have had many meetings with their coalition partners, the PM 
and the President, but none of them have been able to deliver on 
the promise to end the no-go areas controlled by the Haqiqis.
The establishment has a different, security-linked perspective of 
the problem. The army sees the MQM as an organization that receives 
covert aid from India, and therefore not to be trusted. Indeed, in 
his chilling biography of Mir Murtaza Bhutto, Raja Anwar mentions 
the presence of MQM activists in training camps run by RAW (the 
Research and Analysis Wing attached to the Indian prime minister's 
office) where Al-Zulfiqar terrorists were also trained.
Given this perception, it is easy to see why the intelligence 
agencies would want to support breakaway factions as a 
counterweight to the MQM, thus ensuring that the party doesn't get 
too big for its boots. But this divide-and-rule policy is not 
working, as proved by the ongoing bloodshed. Clearly, there has to 
be a lasting political solution. The problem is that the MQM has 
formed coalitions with the PPP and the PML in the past that were 
based more on expediency than any principles, and these 
partnerships remained shaky affairs that were subject to constant 
blackmail for short-term political gains.
But while these moves and counter-moves take place at the national 
and provincial levels, the citizens of Karachi continue to suffer. 
Apart from the daily killings, strikes have shut down the city's 
markets with devastating frequency. While large businesses have the 
resources to tide them over, small traders and daily-wage workers 
have seen their meagre incomes dry up for days on end. If you ask 
them who is responsible for calling these strikes, they say that 
groups of young men go around ordering shopkeepers to pull down 
their shutters or "face the consequences." And we all know what the 
consequences usually are.
In a sense, the MQM has painted itself into a corner. It is trusted 
by none of the major power groupings in the country: the PPP will 
have nothing to do with it; the army doubts its patriotism; the 
religious parties mistrust its secular leanings; and even its 
coalition partner, the PML, barely tolerates it. This is the fate 
of ethnic parties that marginalize themselves by opting out of the 
mainstream. Instead of pressing its demands from within one of the 
major parties, the MQM has pulled the mohajir community willynilly 
out of the national fold.
Unfortunately, its leadership has become a prisoner of its own 
rhetoric: caught between the whims of the absent Altaf Hussain and 
the dictates of its hot-headed militants, MQM leaders have very 
little room for manoeuvre. The intelligence agencies follow their 
own agenda, seemingly out of the control of civilian governments.
Until something changes, Karachi's killing fields will remain 
fertilized with blood.

Hafizur Rahman

FOR men of faith there is nothing more strengthening than the adage 
"God helps those who help themselves." This adage is not a divine 
dictate, though we Pakistanis have assiduously acted on it, but 
only by adding a few words to it. Over the decades our motto has 
become, "God helps those who help themselves  to other people's 
Look at the numerous financial schemes that clever manipulators 
have floated during the last ten years or so and you'll be 
convinced that conmanship is now a national trait and that the 
highest in the land are not ashamed of practising it. All these 
schemes, without exception, turned into scams, leaving lakhs of 
simple-minded people in the lurch. But what a tragedy that these 
simple-minded lakhs were caught in the net of the schemers not out 
of the noble motive to save but because, like those crooks, they 
too wanted to make a quick buck.
Anyway, Prime Minister Nawaz Sharif wants the entire nation to 
concentrate on self-reliance in order to meet the contingency of 
the threatened economic sanctions. The problem is that if the PM's 
appeal is to have any effect, we have to consider the national 
problem as our own. Nothing short of that will yield any results. 
But there is a problem. For most of us, self-reliance is a very 
personal act to be adopted in extreme circumstances. So far as the 
need for national self-reliance is concerned, we have the feeling 
at the back of our minds that the government will find a way out. 
But it so happens that this time there is no way out, except a 
complete and wholesale involvement of the whole nation in the 
The other day I saw something that really impressed me. In the heat 
of the afternoon a young lady went into a beauty parlour to 
transform herself into Marilyn Monroe. The poor chauffeur sat in 
the car with the sun beating down mercilessly on it. Since he did 
not consider himself privileged enough to keep the car AC on, he 
was cooling himself with an old-fashioned palm-leaf hand fan that 
he had prudently brought with him. I call this self-reliance.
In the coming days we too have to do without the air conditioning 
provided by American economic aid. We have to take out the hand 
fans that Grandmother left in the closet and are maybe still there 
if not thrown away as useless junk. But let me tell you that even 
if everyone of Pakistan's crores frantically wave these fans, they 
are not going to dispel the economic heat that the United States 
has vowed to turn on us. Something more will be required to ward it 
off, and that is where national self-reliance comes in.
Newspapers these days, particularly those published abroad, are 
full of how hard the sanctions are going to hit India and Pakistan, 
but the consensus is that we shall suffer more because India has a 
comparatively sound and stable economy whereas ours is not fit to 
be called an economy, so intensive and extensive is the devastation 
wrought during 1993-96. If the Prime Minister's appeal to his 
countrymen (especially those living overseas) meets with a sincere 
response, not only shall we be able to soften the blow of the 
sanctions but also place our economic situation on a better 
Governments in Pakistan have always talked about austerity, 
reducing administrative expenditure and shunning ostentation ever 
since the country came into being. I was a young man in 1947 and 
joined service in 1950 in a department where officials get a closer 
look at government leaders than other public servants. I have 
watched successive regimes, both civil and military, spouting such 
nonsense every few years and watching this nonsense going down the 
drain built for plans nobody wanted to implement.
It is one long story of false promises, of slogans impossible to 
live up to, of government leaders saying one thing and doing quite 
another, and a long-suffering public which could only look on 
helplessly and was deluded into returning the same old ugly faces 
in every election. Few of you will recall that it started with a 
campaign called "Patronise Pakistan Products" and ended 45 years 
later with everyone trying to out-do each other in prodigality and 
showing off at public expense. The autocratic and spendthrift 
rulers of pre-British India, who were accountable to no one, were 
small beer compared to our rulers who, in a masterpiece of 
hypocrisy, paraded themselves as servants of the people.
And now for the first time in the history of this benighted 
country, a ruling regime has sought the cooperation of the people 
in tiding over the economic crisis occasioned by foreign sanctions 
against Pakistan. For the first time the appeal for help sounds 
sincere, not because it is other than a politician who is making it 
but because the politician behind the appeal has established his 
credentials as a prime minister with political integrity.
For the first time a prime minister has set examples for the nation 
to emulate instead of the devilish and heartless behaviour of his 
predecessors who always asked the poor masses to set examples for 
the rich to follow. Giving up many amenities that all prime 
ministers (even he himself in his first term) took for granted as 
rights and privileges, he has done what no one who has ever 
occupied the chair of prime minister could even dream of doing.  
Let us see what the near future has in store for Mian Nawaz Sharif 
and for us, the people of Pakistan.

Ambitious trade policy
Dr Akhtar Hasan Khan

THE trade policy announced by the commerce minister on June 22, is 
in full consonance with the prime minister's national agenda on 
self-reliance. Its basic thrust is to remove the imbalance between 
imports and exports by reducing it to an insignificant level of 
about $100 million.
In the 50 years of Pakistan's history, imports have always exceeded 
exports by a large margin and this gap had to be filled in by 
foreign assistance. In 1996-97 the imbalance between imports and 
exports was $3.5 billion. This has been reduced to $1.5 billion in 
1997-98 which is a remarkable achievement and totally in line with 
prime minister's emphasis on self-reliance. The trade policy of the 
current year aims to eliminate this imbalance by increasing exports 
from $8.5 billion to $10 billion. Imports are expected to remain 
stagnant or increase marginally to achieve the near balance between 
exports and imports. The achievement of this balance will be a 
major national achievement on the economic front.
The trade policy of every year largely deals with removal of 
distortions, anomalies and delays in the fiscal policy and it 
provides incentives on the financial side. The basic target of the 
new trade policy is to have a tax free regime for exporters so that 
they neither pay any taxes nor claim any refunds which leads to 
agonising delays for the exporters. To accelerate the refunds of 
sale tax and duty drawback of custom duty all pending claims will 
be settled within a period of 30 days.
For those export processing units or export and manufacturing units 
which export at least 70 per cent of their output will have a 
completely tax-free regime as they will be allowed to import inputs 
for exports without custom duty, sales tax, or withholding tax. In 
order to avoid delays in sales tax fund the facility of zero-rated 
invoices will also be provided to established exporters. The 
export-cum-manufactures which export at least 70 per cent of their 
products also be allowed to get sales tax free inputs from 
registered people if they opt to remain outside the refund scheme 
and pay sales tax on their domestic output. Hence, the trade policy 
has succeeded in creating a totally tax-free regime of no taxes and 
no refunds for units which are manufacturing more than 70 per cent 
of their output for exports.
On the financial side State Bank of Pakistan will arrange for 
subsidised availability of export finance and arrange at least Rs 
25 billion through the banks for export finance during 1998-99. For 
the small and medium enterprises the State Bank will arrange 
allocation of funds to the tune of Rs 5 billion to be disbursed at 
a reasonable mark-up for enterprises which plan to export more than 
70 per cent of their output and have investment of up to Rs 5 
million in their plant and machinery. The State Bank would also 
make efforts to provide export finance facility to all direct and 
indirect exporters at a maximum mark-up of 8 per cent as compared 
to existing rate of 11 per cent.
The trade policy also does away with ban on 15 items like live 
animals, mutton, grains, pulses etc. It also does away with 
restrictions on exports of coke, rock salt and caustic soda by 
public sector only. These items can now be exported both by public 
and private sectors. The requirement of minimum export price 
applicable to onyx and breeding animals has also been withdrawn. 
The quota restriction on export of maize, gram, cement, and few 
other items has also been removed and they can be exported without 
any quantitative restriction.
The export list has, therefore, been cleaned of all bans, 
quantitative restrictions and minimum price checks. All commodities 
can be exported from Pakistan without any restriction for the first 
time in our history. This is a major break through in the new trade 
On the import side there have not been many significant changes. 
The import of second hand machinery for sugar plants, cement 
plants, oil-refining etc. which is manufactured in Pakistan has 
been banned. The free import worth $10,000 allowed to overseas 
Pakistanis after paying import duty in foreign exchange will now be 
confined to books, journals, magazines, periodicals and few other 
The target of 15 per cent increase in exports is rather ambitious 
as this year with a same target we could only increase our exports 
by less than 5 per cent. This year Pakistan's exports were 
adversely effected by East Asian meltdown in two ways. Firstly, our 
exports to East Asia declined due to recession in these countries. 
Secondly, these countries after massive devaluation offered very 
strong competition to our exports in major markets. The East Asian 
crisis continues and our exports in the next year will face the 
same recession and competition.
The changes brought about in the Trade Policy will not 
automatically take our exports to $10 billion target unless 
concerted efforts were made on a wide scale. Firstly, the 
government organisations dealing with exports specially the Export 
Promotion Bureau has to be reorganised to catch up with the export 
culture of post-Uruguay Round. It also seems to be immune from the 
impact of advances in information technology like internet. The 
first event has made international trade very competitive and the 
rules of international trade have also changed. The ignorance of 
our exporters has brought anti-dumping fines on our cloth exports 
to the EU, restrictions on export of bedwear and continuous threat 
of imposing restrictions on our carpets on the pretext of child 
labour. All discriminatory steps which are not in full conformity 
with the provisions of WTO have so far been unsuccessfully 
contested by Pakistan.
ISO 9000 certification facilitates export as the importer knows 
that he is receiving it from a firm which meets minimum 
international standards. So far, less than 100 Pakistani firms have 
received ISO 9000 certification whereas the count in India is more 
than 1000. Special incentives which have been provided in the Trade 
Policy for engineering and electrical goods will have to be given 
to all exporting firms so that they receive this certification for 
easily entering the global market.
Another disturbing development in the export profile of 1997-98 is 
the increase in percentage share of primary commodities from 11 to 
14 per cent of the total exports and a corresponding decline in the 
share of semi-manufactured and manufactured exports. The 
manufactured exports have almost failed to grow and the four and a 
half per cent increase in exports is almost contributed by the 
sharp increase in the export of primary commodities. Pakistan's 
manufactured exports  mainly textiles and leather goads  are 
considered to be sensitive goods as they are subject to 
quantitative restriction and high tariffs in the major importing 
countries of NAFTA, and European Union. The following table 
indicates the share of sensitive exports to NAFTA and EU in non-
fuel exports of a few countries.    
The percentage share of Pakistan's sensitive exports to EU and 
UNFTA was 42 per cent whereas the same for India was 23 per cent. 
Hence, we have to struggle very hard to penetrate the major markets 
with respect to our "sensitive goods."
The current trade policy and the previous policies provide no 
incentive for quality exports. It would have been better if the 
incentive in exchange rate was not given indiscriminately to all 
exports but to certain value-added exports. For example, exporters 
of more than 30 counts should have been given more incentive and 
those exporting yarn more than 50 counts should have been given an 
attractive rebate. Unless we have incentives for quality and value 
added exports we will continue to have low rate of growth in 
exports. A kilogram of yarn after conversion to good quality cloth 
increases its value by three times and if converted into good 
quality garment, it increases its value by eight times.
The World Bank conducted a study on T-shirts sold by different 
countries. Pakistani T-shirts were found to be the cheapest because 
of their indifferent quality. Most of our products remain at the 
lowest end of the quality spectrum. The next trade policy, whose 
preparation should start right away must move beyond fiscal and 
financial concessions and concentrate only on giving concessions to 
qualitative goods which yield much higher earnings from the same 
volume of exports.
The target of $10 billion exports in 1998-99 can be achieved if:-
i) We adopt the post-Uruguay Round intensely competitive export 
culture by a) obtaining ISO 9000 certification for all exporters; 
b) containerising exports; c) improving our trade representation 
abroad; d) reorganising EPB.
ii) Get on to the information highway through inter-net and 
satellite for establishing contacts with foreign importers. East 
Asian exporters of garments receive design by fax, make samples 
within a week and if approved manufacture 10,000 units within sixty 
days. Our exporters need to match this efficiency.
iii) Give substantial incentives to quality and value added exports 
in all sectors as without gradual increase in per unit value of 
exports we cannot substantially raise our total export value.

PCB Council meeting on July 5
Sports Correspondent

LAHORE, June 30: An important Pakistan Cricket Board (PCB) council 
meeting will be held at the Qadhafi Stadium on July 5 at 2 pm.
This was stated by the PCB secretary Waqar Ahmad on Tuesday.
Presided over by the PCB chairman Khalid Mahmood the meeting will 
give approval to certain decisions like  the appointment of captain 
of the Pakistan team for a long term and formation of new PCB 
selection committee.
Presently, the PCB selection committee is in complete as its 
chairman Salim Altaf has tendered resignation on protest for 
sending speedster Wasim Akram by Khalid Mahmood in midway of the 
last  Pakistan tour of South Africa after by-passing  his 
The council will also give approval to the 15-member Pakistan 
Junior team and its officials which is scheduled to tour  England 
from July 16. 
Probe committee: The Pakistan Cricket Board (PCB) probe committee, 
 investigating  the  match-fixing  and   gambling allegations 
levelled against some Pakistani cricketers will meet at the Qadhafi 
Stadium on July 5 (Sunday) at 11am.
Pakistan retain Davis Cup squad

ISLAMABAD,  July  2: Pakistan Davis Cup team  that  won  the first 
Asia-Oceania Group-II tie here against Pacific Oceania  has been 
The decision was taken by a five-member national  selection 
committee  which  met at Islamabad Club on Thursday  to  finalise 
Pakistan  team  for  its  second  round  Davis  Cup  tie  against 
neighbours Iran being held July 17-19 at Teheran.
However,  the  selection committee headed by  Khawaja  Saeed Hai, 
a former Davis Cupper, unanimously decided to  allow  Aisam- ul-Haq 
 to  appear in trials at Islamabad by July 7  and  prove  his worth 
for selection in the Davis Cup team.
"The  boy is showing remarkable results and his recent win at  the 
ITF  Group-I tournament has pushed him as the  ITF  10th ranked 
junior, therefore, we want to encourage him, but for  that he will 
have to appear in trials," Saeed Haid said.
The  selection committee with its vice chairman  Bashir  A. Gill, 
 members  Lt. Col. Asif Dar, Mohammad Taufeeq  and  acting 
secretary  Ali Ahmed Tabatabai discussed the  options  available. 
However, it was concluded that as per General Council decision of 
PTF it has been made mandatory for all players to undergo  trials 
before selection for national team.
"The  selection  committee  cannot  overrule  the  General Council 
 decisions, however, we feel that some laxity in  special cases may 
be put on disposal for selection committee and we plan to put the 
matter in front of the next GC," Saeed Hai said.

The team leaves for Karachi on July 11 and will catch  the PIA 
Teheran flight next morning.

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