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DAWN WIRE SERVICE
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Week Ending : 12 December 1998 Issue : 04/49
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Contents | National News | Business & Economy | Editorials & Features | Sports
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CONTENTS
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NATIONAL NEWS
+ No devaluation till June, says minister
+ IMF package for Pakistan to be implemented soon, says US
+ Clinton enjoyed Nawaz visit
+ Steps suggested to prevent nuclear war over Kashmir
+ Governor's rule may continue for one year, says Moin
+ HR issues absent from Nawaz govt agenda
+ Military Courts: Motion notice in Senate submitted
+ LHC seeks position of forex deposits
+ FM expects full refund: US given Dec 30 deadline on F-16s
+ SC reserves judgment on Benazir's petitions
---------------------------------
BUSINESS & ECONOMY
+ IMF ready to reveal details if govt agrees
+ Exports fall by 12.3pc, imports by 19.9pc
+ Pakistan fails to avail $50m credit
+ Retail sales tax collection 'dismal'
+ Banks to quote Euro rates from Jan 5
+ FCAs deposits utilized: LHC
+ $4.11bn FCY deposits encashed in 6 months
+ Only one company listed on KSE in 1998
+ Forex reserves up at $476m
+ Stocks fail to extend rally, lose 10.06 points
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EDITORIALS & FEATURES
+ The city of Karachi-2 Ardeshir Cowasjee
+ Between a rock and a hard place Irfan Husain
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SPORTS
+ Malik 2nd Pakistani to play 100 Tests
+ Pakistan, India hope to down South Korea
+ Amjad to face Zarak in final
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NATIONAL NEWS
981212
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No devaluation till June, says minister
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Bureau Report
ISLAMABAD, Dec 11: Pakistan has decided not to opt for any upfront
devaluation or doing away with the prevailing multiple exchange
rate system at least till June 1999, Finance Minister Ishaq Dar
said here on Friday.
"Let me categorically state here that we have said a big 'No' for
further devaluation, elimination of dual exchange rate or
increasing the prices of petroleum and electricity during the
current financial year," he stated at a news conference here.
He also very confidently said that Pakistan will not default on
repayment of its debt and continue to make payments to its
preferred creditors within the grace period.
"I assure you that we will not default and can tell you that even
today we have made a payment of 36.8 million dollars -27.5 million
to IBRD and 9.3 million to Asian Development Bank.
The finance minister claimed that the government will get about 2
billion dollars from the multilateral agencies by June 1999. During
1997-98 Pakistan has received 1.7 billion dollars from various
international lending agencies, he added.
Giving details, Dar said Pakistan's reserves position was not all
that bad and that they now stood at 480 million dollars. There has
been an increase of 178 million dollars in the reserves during the
last few weeks. "If we are returning money, funds are also flowing
in at the same time," he added.
"We have lined up resources to make the payment of around 400
million dollars by January 15," the finance minister said.
He pointed out that a larger understanding has been reached with
the World Bank and the IMF to secure their funding line. "Neither
Paris Club has declined to hold any meeting nor the IMF has
postponed its meeting," he said adding that the Paris Club met on
Thursday and, "we hope to have some positive feed back any time
tonight". Also meetings with the members of the G-7 countries
including the United States have been very positive, he said.
Mr Dar said that IMF's executive board will meet in the middle of
January to approve a funding package for Pakistan.
He pointed out that the World Bank was likely to provide 450
million dollars as part of the Structural Adjustment Loan (SAL).
"We will try to get maximum upfront payment after the Bank's
mission visit to Pakistan shortly".
Responding to a question, the finance minister said that Foreign
Currency Accounts (FCAs) worth 3.8 billion dollars have been
converted into Pakistani rupee accounts. "Then we have successfully
sold 230 million dollar worth of foreign currency bonds", he added.
Discussing the overall economy, he said that agriculture growth was
close to the target. He said that cotton production was estimated
at 10 million bales while sugarcane production has been estimated
at 52 million tons. Last year its production was 28 per cent less
than the current year.
Rice production, he continued, was likely to be 4.4 million tons
while maize production has been estimated at 1.5 million tons.
The industrial growth, Dar said, was negative last year (2.29 per
cent) and the first five months of the current fiscal showed that
large scale manufacturing was 4.1 per cent so far.
Inflation, the finance minister said, has been recorded at 6.6 per
cent during July-November against 10.2 per cent in the
corresponding period last year.
He denied that prices have shot up after 2.5 per cent increase in
the GST rate. "The Whole Sale Price (WPI) index was not more than
1.2 per cent on the annualised basis while the Consumer Price Index
(CPI) registered marginal increase in 47 essential commodities.
There was absolutely no increase in 24 items, he claimed.
The commerce minister disagreed with a questioner that 2.5 per cent
increase in GST would cause a lot more inflation. He maintained
that it would not be more than 1.2 per cent.
He said exports decreased by 12.3 per cent during the first five
months of the current financial year. He said exports worth little
over 3 billion dollars were made as against 3.5 billion dollars of
the corresponding period of last year.
The commerce minister said that imports had declined and these were
to the tune of 3.62 billion dollars against 4.53 billion dollars of
last year during the corresponding period. So imports decreased by
19.85 per cent in first five months of 1998-99, he added.
Trade deficit, Dar said, was now 102 million dollars much less than
the figure of November when it was 555 million dollars and as such
it has recorded a reduction of 47 per cent. He said that the
government would save Rs3 billion due to worldwide reduction in the
oil prices. He did not agree that the government would save Rs72
billion and said, "Rs69 billion petroleum surcharge was already the
part of the budget".
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981212
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IMF package for Pakistan to be implemented soon, says US
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ISLAMABAD, Dec 11: The United States on Friday said it has thrown
its support and full weight behind the IMF package for Pakistan and
it will be implemented very soon.
US Assistant Secretary of State for South Asia, Karl Inderfurth,
said at a worldnet dialogue that Washington has encouraged the
International Monetary Fund to seek a rapid conclusion of the
package to Pakistan.
"We have encouraged the IMF to seek as rapid a conclusion to that
package as possible given the economic situation of Pakistan," he
said.
Karl Inderfurth said, the US has signalled support for IMF package
that is under consideration where there has been agreement and it
"will be implemented very soon."
The US, he said, recognized that the economic situation in Pakistan
needs immediate attention.
"We understand the Paris Club is meeting, the IMF Board will meet
in early January and we are supporting an early resolution of
this."
Referring to Prime Minister Nawaz Sharif's recent visit to
Washington he said, the US expressed its support for a quick
conclusion of that package.
"When we were discussing these matters with the Prime Minister
Nawaz Sharif, Finance Minister Dar and Foreign Minister Aziz in
Washington, we let it be known that we want to see that package go
through as quickly as possible."
Karl Inderfurth stated that the international community and the US
are coming to the assistance of Pakistan at this very important
time but there are steps that Pakistan must also take.
"The economic situation there is one that will require strong
leadership by the Prime Minister and other issues including those
associated with the IPPs must be addressed by Pakistan," he said.
"It is a process that is mutually reinforcing."
Inderfurth appreciated that Pakistan is close to resolving the
Independent Power Producers issue, saying it is very important for
restoring investors' confidence in Pakistan.
The Assistant Secretary of State for South Asia rejected the
impression that the US is playing a "cat and mouse game" with
Pakistan vis-a-vis the IMF meetings.
"That is not the case we don't play cat and mouse game with our
friends and we are not doing that with Pakistan."
The IMF, he said, is responsible for its negotiations with
countries.
"It is not the US which dictates or directs the IMF negotiations,"
he said.
Inderfurth said, the US "sent a signal to the IMF in July that we
thought because of the economic situation in Pakistan that
negotiations should resume that was an important step taken.
"And despite the sanctions that were put into place after the
nuclear tests in May we gave that signal because we understand the
very serious nature of the situation."
Then, he added, as a result of important steps taken by the
Pakistani Government Washington was able to go further.
"And that is to support and throw our full support behind an IMF
package which will include lending from the international financial
institutions the World Bank and the Asian Development Bank."APP
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981206
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Clinton enjoyed Nawaz visit
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Shaheen Sehbai
EVEN a cursory reading of the official statements and press
releases issued by US and Pakistani sides after the Nawaz Sharif
visit will give the impression that hardly any breakthrough was
made and both sides stuck to their guns, but the satisfaction and
relief in Prime Minister's family circles betrays that conclusion.
So what has actually happened and why are the Sharif brothers so
happy and enjoying the rest of their visit? This remains a
challenging subject for investigative journalists to dig out.
The blunt and terse White House comments a few hours after the two
leaders ate lunch and briefings by top administration officials
later give some clues to what the Americans are expecting from Mr
Sharif. Because they were given not-so-public assurances, they
could afford to keep their tough public posture for the US media.
In return what Mr Sharif will get was clearly indicated by Mr
Clinton himself when he virtually asked opposition parties in
Pakistan and India to give their governments "a little elbow room"
to deliver what they had promised to the Americans.
This was taken by Mr Sharif as an open and public expression of
support for him personally which his media spin masters would
project as Washington's stamp of approval and authentication to
curb any traces of opposition in the military, judiciary,
parliament or the media.
Thus Mr Sharif is likely to become even more tough in dealing with
his adversaries and the most likely target would be the print
media, the sections which keep their independence and try to
portray the facts as they are, rather than as the PM sees them.
According to Karl Rick Inderfurth, the official who was present
almost in every meeting except the one-to-one between the two
leaders, "Mr Clinton enjoyed talking to Mr Sharif in their closed
door meeting." Rick had seen the President immediately after their
talks to seek guidance on how the White House Press Corps had to be
briefed and it was he who talked tough and appeared rude at times,
giving the vibes that the US would not concede anything more unless
Pakistan comes forward with more concessions. That is the public
position knowing what time frame Mr Sharif had indicated would be
followed to meet these targets.
The same Rick was much more sober at his briefing on Friday but he
was asked about his demeanour on Wednesday and why was he so tense,
discourteous and blunt. "It was Wednesday and today is Friday," was
his curt reply but he tried to put some spin for South Asian
journalists by saying it was his first White House briefing and his
ABC TV senior Sam Donaldson was sitting in the front row making him
nervous. But he did get a "well done, my son" compliment from Sam
at the end.
Yet in both the briefings Rick said almost the same thing and on
Friday he was a little bit more specific about what the US was
expecting. The four important indicators he gave were: - Pakistan
is on the path of signing and ratifying the CTBT. - The future may
hold interesting, surprising new developments. - The important
thing is that we are in the middle of a process and what we will do
will be mutually reinforcing. - I cannot discuss specifics of what
Mr Nawaz Sharif said when he was asked to assist in arrest and
extradition of Osama bin Laden to the US.
The family circles and those closest to the prime minister,
including almost everybody who is anybody in the Sharif mini-
kitchen cabinet or decision-makers club, was present in Washington,
are displaying big smiles. "Mr Clinton has assured Nawaz Sharif
that America would not let him go down, come what may," a confidant
who knows what is going on said.
"In return Mr Sharif has promised that he would sign the CTBT once
the IMF approves the loans and the economy comes under control. And
that time frame is just a few weeks, not even months. He has also
promised that ISI would be asked at least to push the Taliban to
get Osama ben Laden out of Afghanistan, if actually arresting him
and dispatching him to the US was difficult," he said.
The key to the whole visit is the 20-minute one to one that Mr
Sharif had with the President and the confidant said it was there
that Mr Sharif convinced the President that he would deliver on his
promises.
The threat from the army, fundamentalists and Benazir Bhutto was
raised and the assurance was given that Pakistan would continue to
talk to India on all issues, even keeping the talks on for the sake
of just talking and appearing to meet the US demand to keep
tensions from rising, the aide said.
The breakthrough has come on the F-16s and Mr Clinton told the
Prime Minister that a case in the US courts would be embarrassing
for him but he would provide a solution before the deadline for
filing the case expires. An amount of $350 million was mentioned
and that is precisely what would Pakistan get after adjusting the
lease money which the US gets from New Zealand.
The idea is that Pakistan will get the lump sum money from a US
commercial bank which will receive the New Zealand payments over
the years. How the US pays its part is to be seen.
Pakistan will also get a full certification on the drugs issue this
year which means that the President will have to issue a waiver as
he did last year in US national interest.
The US is meanwhile keeping the pressure on Pakistan on the
economic front and the IMF Board meeting has been put off to
January while it is also not clear when the Paris Club would
announce its decision to reschedule the loans that Pakistan has to
pay.
So the twin pressure would continue and unless Mr Sharif implements
his assurances, both public and private, the time frame for bailing
out Pakistan would remain vague.
Personally if Mr Sharif has won support of President Clinton, the
agenda he has now to implement is tough and practically impossible.
That is where he will be tested.
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981206
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Steps suggested to prevent nuclear war over Kashmir
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Correspondent
ISLAMABAD, Dec 5: Scholars, participating in a three-day
international conference on peace and security in South Asia, held
here, agreed on the need for building a culture of consensus and
confidence in the region in order to maintain a balance of
deterrence between the two newly nuclearized countries.
Organized jointly by the Defence and Strategic Studies Department
(DSSD) of the Quaid-i-Azam University and Hanns Seidel Stiftung of
Germany, the conference was attended by experts from Pakistan,
India, the United States, China, Russia and Germany.
Addressing a press conference on the conclusion of the moot on
Saturday, jointly with Dr Hein Kiessling of Germany and US Embassy
charge d'affaires, Dr Zafar Iqbal Cheema, head of the DFSS
Department of QAU, said scholars generally agreed that Kashmir was
the core issue, with the potential of igniting a nuclear holocaust
in the region.
He said the Indian nuclear tests, which forced Pakistan to follow
suit, had qualitatively changed the situation in the region and it
was, therefore, considered essential to elicit views of scholars
not only from within the region but other countries as well on the
ways to tackle the situation, and this was the objective of the
conference.
Dr Cheema said a number of proposals were made for the development
of a strategic doctrine with a view to obviating the danger of an
accidental nuclear conflict. This could be achieved through
evolving command and control systems and taking measures for
confidence building, etc. The scholars, he said, were of the view,
nevertheless, that continuous efforts were needed for maintaining
and strengthening stability, which should be vigilantly
safeguarded.
Responding to a question, Dr Cheema said Pakistan could least
afford to engage in a nuclear arms race; it was not even in its
interest.
Dr Kiessling expressed satisfaction with the outcome of the
conference because it had led to an intellectual debate among
scholars. The initial five nuclear powers, he said, were moving
towards controlling nuclear arms race and eventually
denuclearization.
The US diplomat remarked that nuclear issue was more a political
than a technological problem. The need was to see that those, who
were in a position to advise leaders on the top, were apprised of
the ideas expressed by the participants of the conference.
Some of the scholars were of the view that developed countries
should provide to Pakistan and India the technology necessary for
improving their command and control systems in order to preclude an
accidental outbreak of nuclear war in the region . In this context,
Dr Tariq Rauf had said on the second day of the deliberations that
there had occurred a serious leakage of radioactivity at KANNUP in
Karachi about 20 years ago. This highlighted the need for
international cooperation in enhancing safeguards against such
exigencies, he added.
Col Sarwar Cheema, former minister of state for defence, had said
he did not see any peace in the region so long as the concept of
peace was pursued on the basis of the old adage," might is right."
The challenge was how to cater for national security of both India
and Pakistan, he added. What was needed to build a culture of
consensus in place of culture of confrontation, he had said, was
finding a middle course between extreme positions taken by the two
countries.
Dr Saeed Shafqat had not agreed to the view that Kashmir was the
potential nuclear flashpoint between Pakistan and India.This view,
he had said, had blurred the low-intensity conflict already going
on in Kashmir for the past several years through the use of
conventional weapons.
He had also drawn the participants'attention to massive trafficking
in portable arms such as Kalashnikovs and stinger missiles, which
were being used in a variety of civil strifes in both the
countries. It was necessary to apply some control over their
movement, he had suggested.
Dr Shafqat had said that while the two governments adhered to their
positions, the scholars should work out alternative solutions to
the Kashmir dispute and other sources of conflict which might not
necessarily be similar to the official view.
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981210
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Governor's rule may continue for one year, says Moin
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By Our Staff Reporter
KARACHI, Dec 9: Sindh Governor Moinuddin Haider has said he would
ask the prime minister to specify the minimum period of governor's
rule in Sindh which can be one year.
He said this when some people pointed out the prevailing political
uncertainty which is also effecting the performance of the
administration. The governor, who had invited notables from a
cross-section of society at the Governor's House on Wednesday
evening to get feedback on the governor's rule, also agreed to a
proposal to acquire the services of honest and efficient
administrators from other provinces on deputation to clean the
stable of inefficient personnel and to provide good governance.
Referring to the measures he had taken to provide an efficient
administration in Karachi, Governor Haider said: "All efforts are
being made to provide a clean administration, but over the years
successive governments had made many appointments on administrative
posts on political grounds by bypassing the Sindh Public Service
Commission which affected the quality of governance."
But, he added, now he had already taken a policy decision that from
now onwards all appointments in grade 11 and above would be made
only through the Public Service Commission.
Governor Haider said besides the administration, he had also been
paying attention to public utility organizations such as KESC,
KWSB, KDA, and KMC, against which there were complaints of
inefficiency.
He asked the people that in case of facing difficulties, they
should contact him though the Complaint Cell set up at the
Governor's House which was working round the clock on Phone 136 or
drop suggestions in writing at the letter boxes: one in the
Governor's House, and the other at Sindh Secretariat.
He also agreed that if the top officials of the administration set
examples of honesty and efficiency, their subordinates would
emulate them and this would definitely bring about a positive
change in their attitude.
When his attention was drawn to that major problem of lack of
coordination among different agencies providing civic services
which in a megacity like New York are under one head, the Governor
said: "You are talking of metropolitan government. We are quite far
away from the city government. However, we have taken initial steps
towards metropolitan police."
He made it clear that it was not a governor's rule under martial
law but under the provisions of the Constitution, and as such, he
could not bring change overnight as expected by the people.
Effective results could only be achieved through the participation
of the people.
He said "people who are hesitant in expressing themselves" should
give up their hesitation and express themselves and raise their
voice that they were no more in the politics of terrorism, but keen
to have a setup which could deliver the goods.
This was the governor's response to the impression that there is a
gulf between his orders and their implementation, and as a result
the required impact of change is not being felt.
He said for want of funds road building and carpeting scheme could
not be taken up, and at the moment he was getting reports from the
departments concerned that their cheques had been bounced. In reply
to a question, the governor said the province had already crossed
the limit of credit facility of the State Bank for Rs1.7 billion
due to delay in release of funds from the federal government.
When his attention was drawn to an important problem, that is, the
police should not harass the relations, parents, brothers and
sisters of the wanted persons as it would provide an excuse to give
a bad name to the governor's rule, Governor Haider said he had
already formed committees at the district level with the
participation of the CPLC and notables which would visit police
stations and check the record of police stations of the last 24
hours about timing of arrest, release and detained persons.
About sending the cases to the military courts, he said he himself
was taking decisions about it to ensure that no innocent person was
punished. He agreed to a proposal that if any person or official
found of giving cooked-up statements to implicate an innocent
person, he should be tried under in the military courts.
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981211
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Human Rights Watch report: HR issues absent from Nawaz govt agenda
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Correspondent
NEW YORK, Dec 10: The Human Rights Watch said in a report issued on
Wednesday that "human rights were absent from the agenda" of Prime
Minister Sharif's government this year and faulted it for continued
deterioration of law and order situation in the country.
The report said that "as the Pakistan government focused on
security concerns from outside, little effort was expended to
prevent the human rights violations stemming from threats within
its borders."
It observed that little action was taken by the government of
Pakistan to stem custodial violence by police, while threats
against judges and members of the press further eroded the
independence of a few democratic institutions in Pakistan.
"Pakistan continued its slide into economic chaos in 1998. The
decision in May to answer India's five nuclear tests with six of
Pakistan's own was widely condemned and triggered sanctions from
the US, Japan and a number of European countries that helped push
the economy into a near-collapse," the report said.
"In the aftermath of the tests, the government of Prime Minister
Nawaz Sharif declared a state of emergency and attempted to suspend
all fundamental rights but was checked by the Supreme Court. Human
rights were otherwise completely absent from the government's
agenda; instead, as sectarian clashes worsened in the course of the
year and renewed violence threatened to break out between the
ethnically-based opposition parties and the government in Karachi,
Prime Minister Sharif proposed legislation to further strengthen
the powers of the executive in the name of bringing Pakistan's
Constitution into conformity with Islamic law. The bill was passed
the National Assembly on Oct 9 but was expected to face major
opposition in the Senate," the report said.
The Human Rights Watch noted that "despite the economic crisis,
Pakistan continued to intervene in two conflicts on its borders, in
Afghanistan and in Kashmir. In Afghanistan, Pakistan provided
substantial financial and military support for the Taliban
movement, backing an August offensive that consolidated the
militia's hold on much of northern Afghanistan. In Kashmir, an
escalation in cross-border exchanges between Indian and Pakistani
troops along the territory's ceasefire line led to more than one
hundred civilian deaths on both sides in July and August."
"In Karachi, an upsurge in fighting between the Mohajir Movement,
or MQM), a group representing Urdu-speaking migrants who left India
in 1947, and the Muttahida Qaumi Movement (United National
Movement), a group that split from the MQM, left more than 700
dead, 300 in the months of June and July alone. It was the highest
number of killings since 1995.
"On Aug 12, unidentified gunmen shot four Mohajir (MQM) men,
including one sixteen-year-old, who was the only one to survive.
Later that evening nine Muttahida activists, ranging in age from
fifteen to twenty-two, were killed and five were injured by unknown
gunmen. In apparent retaliation, the next day two Mohajir (MQM)
activists were forced off a public bus before being shot, and two
vehicles were burned on the streets.
"Despite the fact that until September the Muttahida formed part of
the governing national coalition headed by Prime Minister Nawaz
Sharif's Pakistan Muslim League (PML), some of the attacks were
believed to have been perpetrated either with official
participation or at least the acquiescence of various government
agencies.
"In September, the Muttahida Qaumi Movement quit Sharif's
coalition. After four of its activists were killed on Oct 5, the
group called a strike that sparked widespread rioting in Karachi",
the report added.
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981211
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Military Courts: Motion notice in Senate submitted
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Correspondent
ISLAMABAD, Dec 10: Senator Aftab Sheikh of Muttahida Qaumi Movement
(MQM) has submitted a notice of adjournment motion to the Senate
secretariat for discussion in the forthcoming session of the Upper
House about the situation arising out of the promulgation of an
ordinance, and setting up of military courts in Karachi.
The Senate chairman has summoned the session on Dec 15 on the
requisition of 25 senators.
In his adjournment motion, Sen Aftab Ahmed Sheikh said that the
privilege of the senator and of the House had been breached by
promulgation of the ordinance (No XII of 1998) which he described
illegal, unconstitutional, undemocratic and un-Islamic.
He said through the ordinance the armed forces had been empowered
in the garb of acting in aid of civil power to try civilians in
Sindh.
The mover said that parallel judicial system had been established
by violating Articles 2A, 175, and 203 of the Constitution of 1973.
He said the matter was very urgent and be taken immediately.
Mr Sheikh added that the action was beyond the scope of Article
245. Paralysing Sindh High Court and the entire judicial system in
Karachi and elsewhere, was mala fide and unconstitutional in the
alleged exercise of power, he said.
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981211
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LHC seeks position of forex deposits
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Reporter
LAHORE, Dec 10: The Lahore High Court asked a federal government
law officer on Thursday to place before it on Monday the correct
position in respect of foreign currency deposits before and after
the May 28 nuclear blasts.
Deputy Attorney-General Sher Zaman Khan was also asked to find out
whether the 1992 Protection of Economic Reforms Act, which
protected forex deposits, was adopted by both the Houses of
Parliament or was treated as a money bill and passed by the
National Assembly only like the Foreign Exchange (Temporary)
Restrictions Act, 1998, which seeks to override it.
The state of past and present state of forex deposits was sought by
Justice Mian Allah Nawaz, who heads the three-member bench hearing
the FCAs case, when State Bank counsel Abid Hassan Minto said that
the kitty is empty because no foreign exchange is being earned and
that the rupee value vis-a-vis dollar showed a slight improvement
only because of the reported IMF-World Bank package.
Mr Minto emphatically said that the court would not like to issue a
writ impossible of enforcement.
Justice Karamat Nazir Bhandari, a member of the bench, however,
referred to the 1964 Supreme Court judgment in Maulana Maudoodi's
case which declared that no court would decline to make an order
only because it could be rendered ineffective.
Thursday's order also takes care of applications moved by certain
petitioners and appellants that the SBP be asked to provide a list
of those FCA holders who withdrew or transferred abroad their forex
deposits just before the May 28 blasts. The government also has
been saying that there were massive forex withdrawals after the May
11 and 13 Indian blasts.
Nevertheless, the position taken by Mr Minto runs counter to the
finance division's denial of the then finance minister Sartaj
Aziz's assertion in an article published on August 8 that all but
$200 million worth of forex deposits had been utilized by
successive governments by the time the PML assumed power for the
second time in February 1997. At its peak the amount was worth $ 11
billion.
The petitioners' counsel, however, pointed out that the federal
government and the SBP both have claimed in their para-wise
comments and written statements that all forex deposits were in
safe custody of the banks concerned.
Justice Bhandari wondered whether the SBP wanted to present the
court with a Fait Accompli after giving the same treatment to the
petitioners. The judge also expressed his surprise why special
bonds have been offered only against dollar depositors. What about
those holding pound sterling or d-mark accounts? he asked.
The SBP counsel replied that they will have to first convert their
pounds or marks into rupees at the rate fixed by the bank on May 28
and then buy dollars in order to benefit from the special bonds
scheme.
"The FCAs have only been eclipsed", remarked Justice Allah Nawaz
when Mr Minto said that the right to hold forex has only been
suspended. They exist but cannot be seen for a while, he said. The
counsel said the account holders were free to get their deposits
back at the rate of Rs 46 to a dollar. He said the depositors were
not prepared to accept bonds, though they offered very attractive
terms. The petitioners only wanted their dollars back.
"Bring down the value of the dollar vis-a-vis the rupee and they
would have no grievance", Justice Bhandari remarked.
The protection of Economic Reforms Act, 1992, was adopted on the
Diktat of the IMF and the World Bank, Mr Minto said earlier,
commencing his arguments. It marked a turning point in Pakistan's
economic history. It represented a shift from mixed economy to a
completed privatized, free market economy.
The bench agreed that the law dollarised the economy and diverted
savings from industry and all other sectors to trading in
currencies.
Mr Minto argued that the 1992 law does not repeal the Foreign
Exchange Regulations Act of 1947, the State Bank of Pakistan Act of
1956 or the Banking Companies Ordinance of 1962. It takes effect
notwithstanding anything contained in these laws and its provisions
should be narrowly construed.
For example, while the 1992 Act protects FCAs, it does not directly
protect them as collaterals for loans. It also does not alter the
SBP's power to regulate credit policy. The exemptions and
immunities provided by the Act discriminate against rupees account
holders, who must pay Zakat.
The bench noted that while dollar was worth only Rs 23 in 1992, the
value of the rupee declined more rapidly since.
Mr Minto said that SBP sought no benefit from the state of
emergency but cannot, at the same time, ignore the fact of its
imposition. It is bound by all laws made under it. However, he
pointed out, the September 1998 Foreign Exchange (Temporary)
Restrictions Act, unlike its predecessor ordinance of May 28, was
not linked to emergency. It will not lapse on the expiry or
withdrawal of emergency. The use of the word 'temporary' in its
title was not of much consequences.
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981209
-------------------------------------------------------------------
FM expects full refund: US given Dec 30 deadline on F-16s
-------------------------------------------------------------------
Nasir Malick
LONDON, Dec 8: Pakistan is understood to have given Dec 30 deadline
to the United States to decide whether it would release the F-16
planes purchased by Pakistan or refund the money paid for them, it
is learnt. After that date, Islamabad may exercise its option to
take the issue to Congress.
Sources close to the Nawaz Sharif government told Dawn that
Pakistan had been avoiding this option because it felt it might
complicate the matter and "create problems for President Clinton."
Besides, they said, Islamabad had a pretty strong case if it chose
to go to a court of law but had been delaying the move because it
wanted to settle the matter out of court.
They said the case had been already prepared by a US lawyer who
visited Islamabad last month. "Pakistan hopes for a full refund of
the money in lump sum or, at best, in two instalments," the sources
said.
Pakistan has already received around $157 million out of the $650
million it paid for the planes.
According to the foreign minister, Sartaj Aziz, the US had made
some proposals for repayment of the money, but he refused to give
any details.
"There is a combination of proposals which we will consider," he
said. "But our stand is that either they should provide the planes
or return the money," he said.
The United States has leased these planes to New Zealand at a
throwaway price. New Zealand will pay $65 million each for a 10-
year-lease. It will pay $20 million for each of the planes in the
first five years of the lease and the remaining $45 million in the
last five years.
New Zealand has also been given the option to buy the planes on the
expiry of the lease period by paying $150 million more for each
plane.
It is understood that one of the US proposals is that Pakistan be
given the money in instalments in the manner New Zealand pays it.
Another is that the money be adjusted against the US loans given to
Pakistan.
Education Minister Ghous Ali Shah told Dawn of "some good
beginning" on this issue. "We are demanding the money. They are
applying their mind (to our demand)," he said.
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981212
-------------------------------------------------------------------
SC reserves judgment on Benazir's petitions
-------------------------------------------------------------------
Bureau Report
ISLAMABAD, Dec 11: The Supreme Court on Friday reserved judgment on
the petitions of Benazir Bhutto and Asif Ali Zardari, seeking the
transfer of their Ehtesab cases from Punjab to Sindh. It said it
would make an order on Monday.
A three-member bench, headed by acting CJ Justice Saiduzzaman
Siddiqui which heard the petitions for the whole week, concluded
the hearing on Friday.
Attorney General Chaudhry Mohammad Farooq who started his arguments
on Thursday concluded them on Friday and half an hour was given to
Chaudhry Aitzaz Ahsen to respond to his arguments. The court asked
the attorney general to submit his reply in writing to the
suggestions made by Ms Bhutto's counsel.
Barrister Aitzaz Ahsen suggested that two references Ehtesab
references 26 and 27 be transferred to Sindh and the remaining
references pending in the Lahore High Court be heard at the LHC's
Rawalpindi bench. He asked the SC to direct the high court to fix
the references in such a manner that the petitioners were given
enough time to prepare their case properly. The apex court was also
asked that Mr Zardari should be allowed to pursue his cases pending
in Sindh as most of the time he was kept in Punjab.
Resuming his arguments, the attorney general stated that the
references were sent to the LHC chief justice with a secret
covering letter. He claimed that he could not get a copy of the
letter but if the court wanted to see it he could try to get a
copy.
Opposing the request for transfer of references, the AG stated that
both the references were in advanced stages. Most of the witness
had been produced and a majority of them had been cross-examined,
he added.
Justice Nasir Aslam Zahid observed that the counsel had stated that
he had raised the objections at the very outset of the proceedings
but nobody paid any heed to him.
The AG stated that if the disputed properties were located in Sindh
then the question of jurisdiction could be raised but in these
cases the property was either in foreign countries or in Islamabad.
He submitted that he had instructions to inform the court that the
prosecution would produce 15 witnesses in reference-26. He said out
of these witnesses, 11 had already recorded their statements. In
reference-27, out of 15 prosecution witnesses, 7 had been cross-
examined.
He said he was making a categorical statement that the prosecution
would not summon any more witnesses. He assured the court that the
petitioners would be provided a fair chance to defend themselves.
The AG said he understood that the petitioners were in a difficult
position and offered that the state would bear the expenses of
defence witnesses coming from Sindh. He said it was difficult to
believe that the petitioners had no money to bring the witnesses to
Lahore but if that was the position, the state was ready to bear
the expenses of defence witnesses.
The AG also stated that the law and order situation in Sindh was
such that it would be difficult for the parties to appear in the
cases and narrated his own story when he was attacked with eggs and
tomatoes in the Sindh High Court.
===================================================================
BUSINESS & ECONOMY
981209
-------------------------------------------------------------------
IMF ready to reveal details if govt agrees
-------------------------------------------------------------------
Haris Anwar
KARACHI, Dec 8: The International Monetary Fund has no objection in
making the details of Policy Framework Paper and Letter of Intent
public if approved by the Government of Pakistan, Washington-based
official of the Fund said.
In reply to an e-mail inquiry sent to the IMF, the official said
that with the approval of concerned member countries, IMF has been
publishing letters of intent and policy framework papers.
"We have not published Pakistan's LoIs/PFP in the past but will
certainly do so if this is approved by the government," replied
Vasuki Shastry, Asia Pacific Press Officer at the IMF.
There are 29 countries whose latest LoIs/PFPs are available at the
IMF website (www.imf.org). These countries belong to turmoil-hit
South East Asia where the political fallout is more severe than
Pakistan and to remote Africa where democracy is a rare thing.
Letters of Intent are prepared by the member country. They describe
the policies that a country intends to implement in the context of
its request for financial support from the IMF.
The Policy Framework Papers are prepared by the member country in
collaboration with the staff of the IMF and the World Bank. These
documents, which are updated annually, describe the authorities'
economic objectives, macroeconomic and structural policies for
three-year adjustment programmes supported by ESAF resources, as
well as associated external financing needs and major sources of
financing.
Independent analysts say the issue of release of details of the
bail-out package signed with the IMF has become more important
amidst the conflicting statements made by the higher authorities.
"The market is confused as there are so many conflicting news daily
pouring in the Press and nobody knows the exact details of the
package," said a senior banker.
Commerce Minister Ishaq Dar at a news conference held on November
25 claimed that Pakistan had signed a home grown package with the
Fund without accepting up-front conditionalities.
The prime minister, on the other hand, during an interview to CNN
said that bail-out package contained tough conditions.
"They must make it public as this was part of the democratic
process," said a young economist. Pakistan had signed various PFPs
with the IMF since 1988, whose details have always been kept
secret. But the investigative Press off and on kept feeding the
market about these agreements.
"After the spending package negotiated with the US, now IMF is
bound to show a greater transparency while concluding agreements
with member countries," said a leading analyst.
Under the agreement with US Congress for $14.5 billion emergency
credit line, IMF will have to impose stiff lending terms on crisis-
hit borrowers and it must secure greater transparency in decision-
making.
Furthermore, the borrowers would pay interest rates at least three
percentage points above the broader market rates and repay the
loans within 30 months.
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981210
-------------------------------------------------------------------
Exports fall by 12.3pc, imports by 19.9pc
-------------------------------------------------------------------
Muhammad Ilyas
ISLAMABAD, Dec 9: Pakistan's exports during the period July-
November, 1998, totalled $3.072 billion, short of the proportionate
target for the current fiscal by over 26.27 per cent, an official
source told Dawn here on Wednesday.
On the basis of the annual target fixed at $10 billion, the exports
should have been at least $4.16 billion; in fact, these left a gap
of over $1 billion between actual and desired achievement.
On the basis of this target, the average exports should be $0.833
billion per month. In reality, however, the country has exported
merchandize at the rate of $0.614 billion. In 1997-98, the
comparable five months had achieved a monthly average of $0.700
million.
Compared to the corresponding period of last year when the
merchandize exports of Pakistan had amounted to $3.504 billion, the
exports during the first five months of 1998-99 showed a decline of
12.3 per cent.
At the same time, the imports fell by 19.9 per cent. These totalled
$3.627 billion, compared to $4.525 billion worth of goods imported
during July-November of the last financial year.
Consequently, despite the continued drop in exports but thanks to
drop in imports, the trade deficit also declined to $0.555 billion,
down 45.64% from last year.
*From the point of view of the government's resolve to reduce the
trade gap to $1.5 billion, the statistics show that Pakistan is
well ahead of that target. This provides some relief from the
gloomy performance of the exports, particularly, in view of the
default situation facing Pakistan and desperate efforts by Pakistan
to obtain balance of payments support from IMF and other donor
agencies.
The statistics also show progressive decline in exports from month
to month. In October, 1998, these had amounted to $615 million.
Exports during November 1998 plummeted to $612 million.
During November, 1997, the exports had totalled $771.4 million.
Compared with this, the export during November also fell by over
20.66 per cent.
Even more drastic is the fall in imports last month $781 million,
showing a decline of 23.74%, compared to corresponding month of
last year.
However, November 1998 registered a slight increase of $36 million
over October, 1998, when imports had amounted to $745 million.
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981210
-------------------------------------------------------------------
Pakistan fails to avail $50m credit
-------------------------------------------------------------------
Parvaiz Ishfaq Rana
KARACHI, Dec 9: A $50 million soft-term credit line offered by the
royal family of Abu Dhabi, about three months back to Pakistan, for
meeting the import bill of urgently needed commodities has not be
utilized, so far.
The credit line offered at 2 per cent above LIBOR was arranged by a
business house which is also willing to arrange more credit lines
once this was fully utilized.
A spokesman of the local representative of the business house of
Abu Dhabi, who worked as a bridge in arranging this loan told Dawn
that even after the lapse of three months the credit-line was not
used because of bureaucratic snags.
He further said that the intervention of federal ministers Ishaq
Dar and Power Capt Haleem Siddiqui has not succeeded.
Pakistan accepted the $50 million facility for import of fertilizer
which was required to meet the shortfall of this commodity during
the Rabi season. Two separate agreements were reached for the
import of 50,000 tons urea fertilizer and another 50,000 tons for
Di-Ammonium Phosphate (DAP).
A local representative for Abu Dhabi's royal family business house
and the Director General, Fertilizer Imports Department (FID),
singed these documents on Oct 19, 1998.
FID started raising issues which have caused long delays and so far
very little progress has been made.
In a recent letter the assistant director FID has asked the local
representative to name manufacturer and supplier of fertilizer
which the spokesman believes is against the business norms and
could be used by the rivals to win over the deal.
However, he said once the L/C was established they will disclose
the required facts.
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981209
-------------------------------------------------------------------
Retail sales tax collection 'dismal'
-------------------------------------------------------------------
Ikram Hoti
ISLAMABAD, Dec 8: The efforts of Central Board of Revenue to
collect sales tax from retailers with a turnover of above Rs5
million has not borne much fruits. Sources said these retailers
were to pay ST at the standard rate of 12.5 per cent by end of
November 1998, as per the Finance Act 1998, but by the end of
October 1998, only 529 of them got registered with the Sales Tax
Department.
More than a million retailers were targeted to be registered during
the whole of the current financial year 1998-99. Half of that
number was estimated to be registered by December 1998, but at the
present pace, the target seems "impossible" to be met, said senior
CBR officials.
They revealed to Dawn that the total returns received by end of
October 1998 were 308, while the total money deposited by the 529
retailers so far registered was Rs5.1 million.
CBR had announced in August 1998 that all the retail traders with a
turnover of Rs5 million or above "shall have to file their first ST
returns for the quarter ending September 30, 1998 by October 15,
1998, and are liable to registration with the ST Department".
A CBR officials said while no coercive measure was taken by the
department until October 20, 1998, all such retailers were advised
to obtain its registration at the earliest. Other retail traders
below the threshold of Rs5 million annual turnover were given the
option either to obtain voluntary registration or to obtain taxable
goods with one per cent further tax, in accordance with the law.
The fixed sales tax schemes were thus abolished with effect from
July 1, 1998, and the manufacturers who worked under the fixed
sales tax scheme in 1997-98 or earlier, "should now file normal
sales tax returns and work under-invoice-based GST system or under
the turnover scheme as may be applicable in their respective
cases", as the scheme was worded.
However, the response to this scheme has been "depressingly poor",
say the CBR officials, and they are now suggesting to the federal
government to "demonstrate political will to get the scheme
imposed", said one senior official. He added that the latest
response on the performance on scheme has been "pathetic". The
ministry told the CBR last week that "a policy of wait and see is
the only resort in this respect. The government is being asked to
chalk out a modus operandi for getting the Rs2 billion targeted
from the scheme", said a ministry official.
The records of CBR on the retail stage sales tax collection and
registration so far compiled from reports of ST collectorates say:
ST Collectorate Hyderabad (registered 39; returns 16; collection Rs
0.332 million); Karachi West (registered 18; returns 8, collection
Rs 0.191); Lahore (registered 139; returns 82; collection Rs
3.105); Multan (registered 92; returns 67; collection Rs 0.164);
Quetta/Hub (registered 13; returns 10; collection Rs 0.152);
Rawalpindi (registered 35; returns 26; collection Rs 0.054);
Peshawar (registered 8; returns 3; collection Rs 0.072); Faisalabad
(registered 55; returns 40; collection Rs 0.560); Gujranwala
(registered 56; returns 44; collection Rs 0.002); Karachi East
(registered 74; returns 12; collection Rs 0.485).
The CBR records put the initial estimates of the prospective
retailers with turnover above Rs5 million and taxable under the
Retail Tax Order beyond half a million only in Karachi, Lahore,
Hyderabad, Rawalpindi; and Multan.
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981208
-------------------------------------------------------------------
Banks to quote Euro rates from Jan 5
-------------------------------------------------------------------
Mohiuddin Aazim
KARACHI, Dec 7: Banks operating in Pakistan will start quoting
exchange rates for the Euro from January 5, 1999 but it would take
some time before they grasp its complexities and give practical
tips to their clients.
The Euro will be launched a day earlier i.e. on January 4, 1999
the first working day next yearin the Eurozone comprising 11
countries which will adopt th Euro as a single currency.
"We will include the Euro on our rate sheets from January 5,"
treasurer of a foreign bank told Dawn. He said banks operating in
Pakistan cannot quote the exchange rate for the Euro before because
of the time difference between international and local money
markets.
The banker said his colleagues in the computer department are busy
developing a new pattern of the rate sheets that would show
exchange rates of the Euro vis-a-vis some major currencies from
those 11 countries that are going to adopt it as a single currency.
The countries that will adopt the Euro from January 4, 1999 are:
(1) Austria (2) Belgium (3) Finland (4) France (5) Germany (6)
Ireland (7) Italy (8) Luxembourg (9) Netherlands (10) Portugal and
(11) Spain. On January 4, 1999 these countries will announce the
conversion rates of their own currencies vis-a-vis the Euro that
would remain unchanged for the next three years.
People around the world be free to do business with these 11
countries either in their individual currencies or in the Euro up
to December 31, 2001 but these countries would determine the
exchange rates by crossing any foreign currency with the Euro and
with their individual currencieslike Deutsche Mark or French
Franc.
That is why banks operating in Pakistan need to put the Euro on
their rate sheets even if Pakistani businessmen opt for doing
business in the individual currencies of the said 11 countries and
not in the Euro as such.
"Our bank will also be quoting the Euro rate from January 5," said
treasury manager of a state-run bank. He said a separate section of
the bank has been working out the specifics for this purpose. "We
may start running trials for Euro transactions from the middle of
this month."
The State Bank of Pakistan is yet to announce its policy with
regard to the new currency. "We are waiting for instructions from
SBP," said treasury manager of another state-run bank. "But like
all other banks we on our part are preparing to put the Euro on the
rate sheet from January 5."
Bankers say the exchange rate between the Euro and the rupee will
be determined by crossing the Euro with the US dollar and then the
dollar with the rupee.
The mere inclusion of the Euro on the exchange rate sheets of banks
is not sufficient. The bank clients would need a whole range of
services before they make up their mind on how to go about the new
currency. How the banks are going to address this issue?
"I should say banks will not be able to offer practical tips to
their clients in the first one or two weeks," says treasury manager
of a European bank in Pakistan. "But we will welcome our clients
willing to open Euro accounts and establish letters of credit in
Euro instead of individual European currencies," he adds.
So far opening of LCs in Euro is concerned at least a section of
the trade and industry appears to have educated themselves on how
to proceedthanks to the seminars and workshops organized by some
foreign banks here.
The International Chambers of Commerce and Industry has already
published a document detailing important features of international
business transactions in Euro but no major trade body has so far
obtained its copies for its members.
In the inter-bank market confusion persists on whether Pakistan
will convert some of its foreign exchange reserves in the Euro or
not and how much liberty the central bank would accord to the banks
with regard to change of their foreign exchange obligations from
individual currencies of 11 countries of the Eurozone to the Euro.
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981210
-------------------------------------------------------------------
FCAs deposits utilized: LHC
-------------------------------------------------------------------
Shujaat Ali Khan
LAHORE, Dec 9: Any declaration in favour of foreign currency
account holders will be futile if the deposits have already been
utilized by the government, Justice Mian Allah Nawaz, senior member
of the Lahore High Court bench hearing the FCAs case, told the
petitioners' counsel on Wednesday, making it clear that the court
would not like to make a futile declaration.
The counsel said neither the government nor the State Bank has made
a statement to the effect. In fact, both have denied 'the
allegation' in their written statements and according to Deputy
Attorney-General Sher Zaman Khan, a finance division official came
from Islamabad to contradict the assertions made by (the then)
finance minister Sartaj Aziz in this regard in an article written
by him and published on Aug 8.
They said the alleged appropriation of forex deposits should not
work as a constraint on the court and in any case, it does not
stand in the way of striking down the liquidation of securities
circular.
The hearing was adjourned to Thursday for SBP counsel Abid Hasan
Minto's arguments.
At the end of Wednesday's proceedings a petitioner, Riaz A Mian,
complained that though he represented a US-based firm, he has not
been allowed the exemption extended by SBP circular No 17 to
resident representatives of foreign concerns on account of his
Pakistani origin. His representation to SBP Governor Dr Mohammad
Yaqub has been of no avail. The complaint would be probed, Mr Minto
promised on behalf of the SBP.
The first to address the court on Wednesday was Advocate Imtiaz
Rashid Siddiqui, who submitted that his clients had obtained
industrial loans against their FCAs. Even if the SBP governor's
statement, on the basis of which Justice Faqir Mohammad Khokhar
dismissed their petitions, that liquidation was ordered to prevent
speculators from buying more dollars with their loans was accepted
as gospel truth, their accounts should remain intact as security
because they were tied down to industrial loans.
Arguing next, Advocate Jawaid Shaukat Malik said that the
Protection of Economic Reforms Act, 1992, extended cast-iron
guarantees to FCAs, which cannot be annulled by a temporary law
suspending forex dealings, particularly when the 1992 law has not
been repealed. He said 'freezing of assets' was an action provided
against Ehtesab cases accused and ordinary, innocent citizens
should not be subject to it.
Strangely enough, he added, the government was prepared to pay a
hefty amount as interest on dollar bonds issued against forex
deposits but was not ready to defreeze the foreign accounts or even
treat them as fixed accounts for specific periods. Where would the
government get the forex to pay the principal amounts and interest
on maturity of bonds? he asked. "Who is going to act on the
government's promises now? That the SBP is not prepared to accept
FCAs as fixed deposits but wants to pay a higher interest on three-
year bonds betrays its malicious intent," the lawyer said.
Arguing for self, Advocate M Asadullah Siddiqui submitted that the
right to acquire, hold and dispose of property ensured by Article
23 could not be infringed even during emergency because Article
233(1) permits temporary deviation from Article 24 only.
Pakistan's parliament, he said, was not supreme in its own right
like those of secular countries. It exercises power delegated to
the chosen public representatives by the Almighty and since He does
not alter His promises, the delegatee can also not go back on the
commitments made by it through the 1992 law.
When the bench pointed out that the 1992 law exempted forex
deposits from the mandatory Islamic levy of Zakat, the lawyer
rejoined that a Zakat fund doled out to ministers, MNAs and MPAs
was anything but Islamic. Any exemption from such Zakat was not un-
Islamic.
Besides, he argued, while the 1992 law was adopted by both the
houses of Parliament, the 1998 Foreign Exchange (Temporary)
Restrictions Act was not placed before the Senate on the pretext of
its being a money bill. The real reason was that it would have been
rejected by the Upper House.
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981211
-------------------------------------------------------------------
$4.11bn FCY deposits encashed in 6 months
-------------------------------------------------------------------
Mohiuddin Aazim
KARACHI, Dec 10: Some $4.11 billion worth of foreign currency
deposits (FCDs) were encashed in over last six months reducing the
total amount of frozen FCDs to $6.89 billion on December 9 from
around $11 billion on May 28.
Senior bankers told Dawn that nearly $3.876 billion worth of FCDs
were converted into rupees and $234 million worth of FCDs into
dollar bonds during May 28 to December 9 1998. The banking system
had a total of around $11 billion worth of FCDs when frozen in May.
The conversion of $3.876 billion worth of FCDs into rupees created
a permanent huge liquidity of a little more than Rs178 billion only
a part of which came back to the banking system thanks to some
attractive deposit winning schemes launched by the banks. It also
created an additional liquidity of around Rs90 billion for the time
being through conversion of FCDs into dollar bonds issued under
revised scheme.
Banks were allowed to use the rupee counterpart of the dollar bonds
being issued against FCDs initially for one year in the middle of
last month when the State Bank issued policy guidelines for the
implementation of the revised dollar bonds scheme.
But the banks were asked to pay a return on such rupee funds at the
rate equal to the average of the yield on six-monthly Treasury
Bills offered in the last three auctions. Senior bankers say a
little less than $200 million worth of FCDs were converted into
dollar bonds after the scheme was introduced early last month.
They say that the pace of conversion of FCDs into dollar bonds has
picked up after the introduction of the revised scheme which offers
increased rate of return on reduced periods of maturity. Senior
bankers believe if the pace continues the amount of frozen foreign
currency deposits might be reduced sharply in the days to come. But
what is disturbing is that in the last six months banks have not
found enough room for employing the rupee funds created out of
conversion of FCDs partly because of the near-recession like
situation that hit Pakistan economy and partly due to seasonal
slump in the demand for private sector credit.
Project financing a major avenue for funds employment by the
banks is not going to claim any big share in the huge liquidity
available with the banks as long term investment activities are
currently at a near-halt. Besides banks are also being extra
cautious in project lending in the light of their bad experiences
in the past.
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981211
-------------------------------------------------------------------
Only one company listed on KSE in 1998
-------------------------------------------------------------------
A Correspondent
KARACHI, Dec 10: The Karachi Stock Exchange listed only one company
during 1998 - the least figure during the last five years.
Only Altern Energy Limited with a paid-up capital of Rs221 million
was listed up to September 30, 1998. There was also only one
listing of Term Finance Certificate offered by Gatron Industries
Limited.
The number of total listed companies also fell to 774 from 781 last
year as exchange delisted 8 companies by November, 1998.
During the period under review, very few companies raised the
equity for expansion as the amount raised through right shares fell
to over Rs533 million compared to Rs2.8 billion in 1997.
The amount of bonus issues also recorded a decline and it dropped
to Rs2 billion against Rs2.8 billion last year. However, paid-up
capital of the exchange increased to Rs211.4 billion from Rs208.8
billion last year.
According to the report only Rs221 million were added in the
companies' listed capital compared to Rs2270 million in 1997.
"The market saw one of the worst years in its history when the KSE
100 index lost 651 points and lost Rs160 billion in terms of market
capitalization during just 19 trading sessions", said KSE annual
report released on Thursday at the Annual General Meeting of the
Exchange.
On the future outlook, report says that comprehensive rules for the
debt market are under way which will pave the way for short to long
term listing of new debt instruments.
"The listing regulations of the exchange are being updated to
ensure the quality listing", it says.
In the Annual General Meeting, members were also presented the
financial results of KSE for year ended 30th June, 1998. The total
revenues of the exchange were Rs93.76 million down by 7.3 per cent
compared to last year.
These fall in revenues was attributed to a substantial drop in the
listing fee by Rs20.2 million.
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981211
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Forex reserves up at $476m
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Reporter
KARACHI, Dec 10: Pakistan foreign exchange reserves witnessed a
nominal increase of $4 million in the first week of this month. The
reserves rose to $476 million on December 5 from $472 million on
November 28.
The latest State Bank report issued on Thursday showed that on
December 5 Pakistan had $345 million worth of approved forex
reserves and $131 million worth of balances outside the country. On
November 28 the country had the same amount of approved forex
reserves but cash and short term securities held abroad totalled
$127 million.
The nominal increase in the reserves is attributable to faster
inflow of export proceeds into the financial system and rolling
over of some commercial credit.
In the middle of this month the State Bank cut Nostro limits and
Net open positions of the banks and reduced the permissible period
for the exporters to sell 50 per cent export proceeds to the banks.
Bankers say the twin measures accelerated inflow of foreign
exchange on the one hand and contained outflow through import
financing on the other which led to a continual build-up in the
forex reserves.
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981212
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Stocks fail to extend rally, lose 10.06 points
-------------------------------------------------------------------
By Our Staff Reporter
KARACHI, Dec 11: The overnight rally failed to extend itself
further on Friday as investors took profits at the available
margins owing mainly to weekend considerations but larger decline
was resisted thanks to the presence of support at the dips in some
of the pivotals.
After falling by more than 30 points in the early session, the KSE
100-share index finally managed to recoup losses and ended with a
decline of 10.06 points at 939.30 as compared to 949.36 a day
earlier.
The total market capitalization also fell by Rs 2.235 billion at Rs
267.529 billion as compared to Rs 269.764 billion, reflecting the
weakness of massively capitalized issues, notably PTCL.
Analysts said the sharp contraction in trading volume to only 52
million shares from an average 80 million shares reflects that
leading investors are not inclined to part with their holding,
apparently for some good reasons.
"The general perception is this that sailing on the corporate front
will be pretty smooth as the hold on the bail-out package is
expected to be removed by early next year, possibly in January 8
IMF meeting," they said.
The current lower levels attained by most of the pivotals provide
an attractive bait for any prospective investor and those who have
the courage to take risk are building up long positions in them,
they added.
Shell Pakistan, PSO, Engro Chemical, Fauji Fertilizer, Hub-Power
and many other blue chips have the potential to rise to their pre-
reaction level in a given situation, said another analyst.
"The market could witness a buying euphoria with the advent of the
new year and leading investors and brokerage houses are adjusting
portfolios to grab the choice scrips at the current levels," he
added.
He apparently based his assessment on the fact that the aid package
will be approved by IMF board when it meets on January 8 and the
approval will also lead the way for the recently approved $800
million credit line by the ADB.
"The indicators on the aid front appears to be now a bit promising
and if all goes along the market thinking, there could a price
flare-up," he predicted.
Most of the blue chips again fell but fractionally as selling came
largely from the jobbers and short-dealers, while others held on to
their positions.
It was largely weakness of the energy, bank and chemical sectors
which took the market again in the minus column as follow-up
support turned shy owing partly to weekend considerations.
Although losers maintained a fair lead over the gainers, some of
the blue chips managed to put on good gains under the lead of PSO,
Pakistan Refinery, Pak Elektron, Sitara Energy, Shifa
International, Shell Pakistan and Glaxo-Wellcome Pakistan, which
posted gains ranging from one rupee to Rs 5.00. English Leasing
reacted favourably to the news of 20 per cent cash dividend
announced by its management for the year ended June 30, 1998. It
finished with a gain of one rupee.
Losers were led by Soneri Bank, Gadoon Textiles, General Tyre, BOC
Pakistan, Colgate Pakistan, Lever Brothers and Millat Tractors,
which suffered decline ranging from Rs 1.10 to Rs 4.00.
Trading volume fell to 53 million shares from the previous 84
million shares. Losers held a strong lead over the gainers at 60 to
29 with 34 shares holding on to the last levels.
The most active list was again topped by PTCL, off 40 paisa at Rs
18.95 on 21 million shares, followed by Hub-Power, easy five paisa
at Rs 14.10, Fauji Fertilizer, lower 70 paisa at Rs 45.05 on 6
million shares, PSO, up Rs Rs 1.15 at Rs 75.40 on 5 million shares,
and KESC, easy 25 paisa at Rs 8.85 on 1.557 million shares.
Other actively traded shares were led by ICI Pakistan, lower 25
paisa on 1.105 million shares, Engro Chemical, off 75 paisa on
1.079 million shares, MCB, easy 25 paisa on 0.916 million shares,
Dewan Salman, off 60 paisa on 0.854 million shares, FFC-Jordan
Fertilizer, lower five paisa on 0.550 million shares, and Dhan
Fibre, easy 120 paisa on 0.487 million shares.
DIVIDEND: Indus Bank right shares at the rate of 66.67 per cent and
English Leasing cash 20 per cent for the year ended June 30, 1998.
Back to the top
===================================================================
EDITORIALS & FEATURES
981206
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The city of Karachi-2
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Ardeshir Cowasjee
TO SAY that the vast majority of the men and women who misgovern
Pakistan are morally and mentally flawed is a gross understatement.
To say that those who sit in opposition are equally, if not more,
fatally flawed is also an understatement.
We must, therefore, correctly assume that in the short term, say,
of fifteen years, no progress or improvement can be expected in the
governance of this country. It will not be governed, as opposed to
ruled, within the bounds of democracy even as we accept the
definition of the practice of that political system.
We have just handed to the US irrefutable proof that we as a nation
meekly suffer a government of clowns. We sent to Washington 120
trippers to carry our empty begging bowl. The size of the circus
undoubtedly helped lower to VIP-2(B) the category of the official
welcome afforded. President Clinton threw in a couple of sops,
barely replenishing the life supporting system. Can the prime
minister not realize that we are being kept alive in the critical
care unit because the morgue is full?
As for the city of Karachi, it will for long, until the present
system and its manipulators are revolutionized, remain
ungovernable. We who live here must thank our stars for any respite
good luck may bestow on us. That the last incompetent and corrupt
coalition government of Sindh broke up and vanished is a boon. That
our prime minister, in a rare fit of wisdom, finally made up his
mind to impose governor's rule, and that the sitting governor
happens to be a reasonable man, are two further strokes of good
luck. For their own safety and sustainability, the people of
Karachi must now take the maximum advantage of the present
situation, and waste no time in an effort to try to set some things
as right as is possible.
The fish has rotted from the head downwards, but this does not mean
that we cannot start a salving and healing process from the tail
upwards the tail being the killings, the violence, and
maladministration with particular regard to the police force.
Coincidentally, with governor's rule, a Colombian team sponsored by
the UNDP, arrived in Karachi facilitator Dr Paul Oquist, chief of
the Governance Unit of the UNDP based in Islamabad, mission chief
Dr Dario Barberena, Coordinator of the Colombian High Commission
for Peace, and Dr Edgar Suarez, a former police chief and now
adviser to the Colombian Presidency High Commission for Peace. They
are hardened men, used to dealing with the methods adopted by
terrorists, drug dealers and other dangerous criminals. Their
objective was "to contribute to the restoration of sustainable
peace and citizens' rights and security" in Karachi, no mean a
challenge.
The Colombians recommended deweaponization as the first step. To
achieve this, we need: computerised re-registration of arms; a
geographic information system and spatial crime analysis; voluntary
and paid surrender of arms, and amnesty for petty criminals who
surrender; rewards for information leading to arms recovery; a mass
media campaign; CPLC and other NGO participation; direct campaigns
by parents, teachers, students and mosques; surprise raids and
speedy punishments; swift and strict action against arms and drug
smuggling; control of national arms production and infiltration.
The second recommendation was the formation of the Metropolitan
Police. The police force must be depoliticized, controlled by an
autonomous police commission; it must be technically equipped,
modernized and professionalized. Needed are municipal and community
contributions for funding. Salaries and social benefits for the
police force need to be at least doubled, and its members will have
to be subjected to a cultural change whereby they gain self-
respect. Similarly, public confidence and respect will have to be
built up. The citizens and their rights are to be defended, not the
politicians and their powers, and the community will have to learn
to participate in policing.
Next in their recommendations were judicial reforms, jail reforms
and the legal protection of citizens' rights.
The team was here for ten days and during that period talked to a
cross-section of around 200 citizens of Karachi, including
politicians of the MQM, the PML, the PPP and the JI (the MQM-H was
non-cooperative, laid down unrealistic preconditions, and a meeting
could not be arranged), businessmen, journalists, bureaucrats, and,
of course, members of the city's police force.
I met them at the end of their visit. They were obviously field
men, not mere pen-pushers. They answered my questions succintly. If
you think you have touched bottom, you are wrong. Living conditions
will worsen a lot if the rot is not stemmed. You have a long way to
go. Sustainable peace may be achieved after fifteen years from the
start, and then too only if you consistently have governments with
a singular will for peace, lasting peace. You are fortunate in
having an NGO as organized, as efficient, and as clued-up as the
CPLC. The CPLC data base will enable the about-to-be- organized
Karachi Metropolitan Police Department to take off with a flying
start. From the number of people killed or kidnapped, from the
tally of vehicles stolen, assess for yourselves, citizens of
Karachi, how the PML-MQM coalition government has served this city.
Killings : 1997: Jan - 6, Feb - 8, (enter Jatoi & partners), March
- 22, April - 26, May - 34, June - 67, July - 72, August - 52, Sept
- 17, Oct - 27, Nov - 42, Dec - 23; Total 396, including 64 MQM(A),
53 MQM(H). 1998: Jan - 30, Feb - 45, March - 43, April - 41, May -
57, June - 139, July - 76, August - 79, Sept - 62, Oct - 70, (exit
J&P). Nov - 9; Total 651, including 125 MQM(A), 69 MQM(H).
Kidnappings : (Three figures are given for each year - kidnappings
for ransom; criminals arrested/cases solved; organized gangs
unearthed/apprehended.) 1990 79, 68, 8; 1991 45, 43, 24; 1992
22, 17, 9; 1993 9, 7, 5; 1994 15, 12, 4; 1995 8, 6, 3; 1996
7, 4, 4; (enter J&P) 1997 19, 15, 7; 1998 20, 14, 7. Ninety-
nine per cent of the success is attributable to the CPLC and the
detection system it has delivered.
Vehicles stolen : Two figures are given for each month (four
wheelers, two wheelers) 1997 Jan - 371, 456; Feb - 348, 435;
(enter J&P) March - 507, 721; April - 581, 759; May - 468, 624;
June - 445, 564; July - 504, 617; Aug - 524, 658; Sept - 544, 669;
Oct - 487, 549; Nov - 434, 613; Dec - 517, 576; 1998 Jan - 539,
817; Feb - 549, 538; March - 658, 690; April - 612, 735; May - 504,
676; June - 614, 771; July - 539, 668; Aug - 641, 646; Sept - 628,
651; Oct - 742, 600; (exit Jatoi & Partners) Nov - 414, 391.
These statistics are not police figures, but people's figures,
collated by the CPLC, the NGO of the people, financed by them.
Taking the above figures and those for other crimes, such as land-
grabbing, illegal constructions, and other forms of corruption, one
finds that their graph follows the same pattern.
My bureacratic friends, both retired and serving, tend to decry the
efforts and achievements of the CPLC. Despite the prime minister's
endorsement and the governor's insistence, certain serving head-
honchos are still surreptitiously blocking the establishment of the
Karachi Metropolitan Police. If there is to be progress, they
should be transferred. Bureaucrats are extremely jealous of their
territory and highly resentful when another breed delivers what
they have failed to deliver. This, as Soros says, is because they
are more interested in self- preservation than in carrying out
their duties. When I ask the retired and other sceptics, whether
they would like to help the CPLC by donating time or money, they
run.
J&P are letting it be known, unsubtly, that they intend to be back
with us soon, that moves are afoot for a kiss-and-make-up scenario
and the PML-MQM combine will then be ready to climb back into bed
together. But do we want them, or a similar lot, back? Jatoi and
his family are so confident that they have not bothered to return
their commandeered government vehicles son Jatoi, brother-in-law
Jatoi, third cousin twice removed Jatoi, and so on. They not only
have cars, but police mobiles in attendance. Jatoi still indulges
in his illegal practice of ordering that traffic lights be switched
off along the route he is to travel so that he is not
inconvenienced by having to stop. Let the rest of us boil! Will the
new IGP please ensure that this malpractice ceases.
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981212
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Between a rock and a hard place
-------------------------------------------------------------------
Irfan Husain
IN Pakistan, it seems that when the going gets tough, the tough go
to Washington. At last count, 120 of them made the trip, and the
exchequer is still reeling from the blow.
According to press reports, no tangible benefits accrued to the
state of Pakistan, and apart from the PM's party being upgraded
from the Cumberland to the Hilton in London on the return trip, the
freeloaders contributed nothing to the proceedings. We are informed
by reporters who accompanied this three-ring circus that the beds
in the 4-star Cumberland were not wide enough for our cabinet
ministers, hence they moved to the more expensive Hilton. But hey,
who's counting the pounds and dollars when Mr Nawaz Sharif hits the
road? Did anybody say we are going through a foreign exchange
crisis?
The fact that our PM's visit to Washington was scarcely noted by
the US media should come as no surprise: reporters and editors in
the American capitol are hardened to the sight of Third World
leaders coming to the White House, begging bowl in hand.
Fortunately for our spin doctors, nobody was impolite enough to
mention aloud Nawaz Sharif's famous vow to break this same begging
bowl, and our collective memory is too short to remind him of this
embarrassing promise. But then we have all heard politicians make
and break all kinds of solemn oaths. What annoys me most is that my
mother was naive enough to believe him and actually contributed to
his "self-reliance fund", as, I fear, did thousands of other
Pakistanis.
But more serious than individual disillusionment is the state of
the Pakistani economy in the aftermath of Mr Sharif's Washington
visit. Normally, the details and mechanics of a deal are worked out
beforehand by the economic and diplomatic managers of the two
countries, and the leaders smile for the cameras and sign on the
dotted line. The fact that this well-worn formula did not work this
time bodes ill for our future. This dismal truth was drummed home
when the IMF board abruptly postponed its meeting scheduled for
December 15 without setting a date for the next meeting to confirm
the bailout package negotiated earlier in Islamabad. Nawaz Sharif
goofed yet again when he linked our signing the CTBT with a
resolution of the Kashmir issue. Although he recanted in London,
the damage had been done. Whether we like it or not and millions
of Pakistanis do not the plain, unadorned fact is that without
Uncle Sam's blessings, there are virtually no loans available from
bilateral or multilateral donors at reasonable rates of interest.
Our further downgrading by international credit rating agencies has
ensured that commercial loans will be granted grudgingly and at
extortionate interest rates. And if we don't like it, tough. This
is the only game in town, and if we don't want to play by the rules
laid down by the richest player, we are free to find another game
elsewhere.
With our baggage of impending default and looming economic
meltdown, for a responsible leader to travel to Washington with a
serious attitude problem is mind-boggling. If all he had planned to
do in the White House was to remain on his high horse, Nawaz Sharif
could have stayed in Islamabad and saved us all a lot of money. Did
his motley crew have to hire 50 limousines at $50 per hour,
commandeer a PIA Airbus and visit Niagara Falls at state expense
just to tell Bill Clinton that we were not going to budge an inch?
I mean, given me a break! Why didn't the man use the diplomatic bag
to send a letter, or use e-mail like the rest of us?
The deadlock in our negotiations with the IMF and the US regarding
some sort of bailout is mirrored in the stalemate in our talks with
India. The usual one step forward, two steps back is being repeated
with predictable results. After each desultory session, we are told
by official spokesman that "both sides made their positions clear."
This moronic statement overlooks the fact that after fifty years of
bickering, even Eskimos in the Arctic Circle are familiar with the
tired arguments put forward by India and Pakistan. Enough, already.
One of the first things negotiators need to learn is that you never
get everything you ask for. This is doubly true when one is
negotiating from a position of weakness. And God knows we have a
very weak bargaining position: India has the real estate we covet
and the military and economic might to hang on to it. And if it
doesn't have a strong legal case, it doesn't seem unduly concerned.
Meanwhile, we continue to harp on Kashmir without anybody in the
world giving a damn.
Our bargaining position in Washington is even weaker: it does not
take a genius to figure out that our economy is in free fall, and
unless we get a swift infusion of dollars, there is no way we are
going to stay solvent. This means that very soon, we will be unable
to pay for imported oil, grain, raw material and spare parts. Under
these circumstances, for Nawaz Sharif to go all the way to
Washington just to repeat the old Kashmir mantra leads one to
suspect that our leader with the heavy mandate is losing his
marbles.
After observing him and his merry men in action for nearly two
years now, one despairs of ever getting sane leadership in
Islamabad. This was the leader who was supposed to be a rational
businessman who would use his overwhelming parliamentary majority
to put the economy back on keel after Benazir Bhutto's
depredations. Now, as we watch the economy sink slowly under the
weight of criminal corruption and mismanagement, all we can do is
wonder when it will actually be put out of its misery. If our
current credit rating is any indicator, that moment is not very far
off.
Although the two sets of failed negotiations in Washington and New
Delhi have taken place thousands of miles apart, let nobody doubt
that they are the two sides of the same coin. We are begging the
IMF (and by extension, the US) for a lifeline to save us from a
situation created by our generations-long animosity with India. A
bailout should one miraculously materialize out of the disastrous
Washington visit will be a very temporary respite. What is needed
for our long-term viability is a quick resolution of the festering
Kashmir problem.
Having the law on your side isn't always enough: sometimes you need
some common sense, too.
===================================================================
SPORTS
981211
-------------------------------------------------------------------
Malik 2nd Pakistani to play 100 Tests
-------------------------------------------------------------------
Correspondent
LAHORE, Dec 10: Salim Malik has joined the select club of the 20
cricketers who have a century of test matches to their credit. He
achieved the landmark when he played the second Test against
Zimbabwe which started here at the Gaddafi Stadium on Thursday.
Salim Malik is only the second Pakistani after Javed Miandad who
achieved this distinction.
Salim Malik cut a cake during the tea interval to celebrate the
occasion. Malik has scored 5639 runs in Test cricket with an
average of 45.11.
The other 19 world cricketers who played 100 Test matches before
are: Allan Border (156) of Australia, Kapil Dev (131) and Sunil
Gavaskar (125) of India, Javed Miandad (124) of Pakistan, Vivian
Richards (121) of West Indies, Graham Gooch (118) of England, David
Gower (117) of England, Desmond Haynes (116) of West Indies, Dilip
Vengsarkar (116) of India, Colin Cowdrey (114) of England, Clive
Lloyd (110) of West Indies, Geoffery Boycott (108) of England,
Gordan Greenidge (108) of West Indies, Steve Waugh (108), Ian Healy
(108), David Boon (107) of Australia, Courtney Walsh (103) of West
Indies, Ian Botham (102) of England and Mark Taylor (101) of
Australia.
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981208
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Pakistan, India hope to down South Korea
-------------------------------------------------------------------
BANGKOK, Dec 7: Traditional hockey skills are set for a dramatic
revival as former giants India and Pakistan attempt to dislodge
South Korea from the Asian Games pinnacle.
The 10-nation men's tournament, which starts here on Tuesday,
assumes added significance as the winner gains a direct entry into
the 2000 Sydney Olympics and leaves the rest battling a trecherous
qualifying route.
The supremely-fit Koreans rode on their aggressive European style
to end the sub-continent's domination by winning two of the last
three Asian Games titles.
South Korea's wins at home in Seoul in 1986 and in Hiroshima in
1994 forced India and Pakistan to modify their tactics, a decision
that proved disastrous for both teams.
India, eight-time Olympic champions, finished eight in the Atlanta
Olympics and ninth at this year's World Cup in the Netherlands.
Pakistan, who won their seventh Asian Games title in 1990 and the
World Cup in 1994, failed to make the finals of both events next
time around.
Worried officials in both countries reacted swiftly.
Pakistan sacked coach Islaluddin Siddiqui and stalwarts like
versatile playmaker Shahbaz Ahmed and gooalkeeper Mansoor Ahmed.
India, with little reserve strength to choose from, retained the
players but brought in a new coach Maharaj Kishen Kaushik.
Pakistan's current coach Shahnaz Sheikh, a former international,
said it was a mistake to ape the Europeans.
"We have overhauled the whole team. Nearly 75 percent of the team
has been changed after the Commonwealth Games in September and the
improvement is already showing."
Pakistan, which failed to reach the semi-finals of the Commonwealth
Games, finished runner-up to the Netherlands at last month's
Champions Trophy in Lahore.
Shahnaz, like his Indian counterpart Kaushik, knows the Koreans
will be hard to beat, but he remains optimistic.
"I think we have found a clue to match the aggressive Korean
strategy. We are ready for them," he said, but warned the absence
of injured captain Mohammad Usman could prove crucial for his
team's chances.
The Koreans, however, have little to fear. They defeated India in
both the Atlanta Olympics and the World Cup and overcame Pakistan
4-2 in the recent Champions Trophy.
"We want to win badly," a South Korean official said. "It will take
the pressure off us for the Olympics and allow us to experiment for
the next two years."
India, who have the Koreans in their preliminary group alongwith
China, Bangladesh and Singapore, realise this tournament is a last-
ditch opportunity to return to the elite group.
If India come second behind the Koreans in the league, they face a
tough semi-final against Pakistan, who are expected to top the
other group ahead of Malaysia, Japan, Thailand and Hong Kong.
Malaysia, who rode on the inspiring presence of their German coach
Paul Lissek to enter the Commonwealth Games final, are beset with
problems.
Lissek was not released by the German hockey federation for the
Asian Games and the retirement of veterans Nor Saiful and Ramu
Shankar has left a void.
Malaysia lost a three-match series to lowly Egypt last fortnight,
including a 63 rout in the opening match. Captain Mirnawan Nawawi
remains their main hope to secure a seventh Asiad bronze.
In the women's event, it is hard to look beyond South Korea, who
have won three successive Asian Games titles.
The Korean girls finished fifth in the last World Cup, way ahead of
their nearest Asian rivals China (11th) and India (12th).AFP
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981212
-------------------------------------------------------------------
Amjad to face Zarak in final
-------------------------------------------------------------------
BANGKOK, Dec 11: Amjad Khan reached the final of the Asian Games
squash here Friday to make it an all-Pakistan final.
Amjad, currently ranked world No 15, easily defeated Abdul Fahim
Khan of Hong Kong 9-0, 9-3, 9-3 in the first semi-final.
Team-mate Zarak Jahan Khan, the reigning Asian champion, won the
other semi-final against Malaysia's Ewe-Loong Low to ensure
Pakistan the expected 1-2 positions in the first squash competition
at the Asian Games.
Zarak struggled 10-8, 9-7 in the first two games against the
Malaysian, before romping through the third without dropping a
point.
The final will played on Saturday.
Earlier in the quarter-finals, Amjad beat Ong beng Hee of Malaysia
9-3, 95, 7-9, 10-8 while Zarak defeated Mohammad El Sad 9-6, 5-9,
9-2, 9-7.AFP
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