------------------------------------------------------------------- DAWN WIRE SERVICE ------------------------------------------------------------------- Week Ending : 24 October 1998 Issue : 04/42 -------------------------------------------------------------------
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CONTENTS ===================================================================
NATIONAL NEWS + Text of joint press statement + Nawaz hails move to lift sanctions + Govt borrowings from banks exceed Rs50bn + IMF asks govt to resolve IPPs, tariff issues + PM seeks report on Karachi police plan + Restructuring of debts: Pakistan to raise issue at Paris Club + Four suspects in Hakim Said's murder identified + Kapco: Wapda petition adjourned + PIA not to be affected in case of default: Abbasi + Provincial setup to be revamped, hints PM --------------------------------- BUSINESS & ECONOMY + Shortfall in tax revenue feared: Snags delay revamping of CBR + Exemptions encourage withholding tax evasion + Fresh incentives offered to sick units + Rs1.4 billion shortfall in Corporate Region target + $15.14m net foreign investment in KSE + Importers undertaking demanded by NCBs + Businessmen asked to raise $5bn deposits + No trade deficit by June 1999, says Dar + MNCs withdrawing essential drugs from market + Dual forex rates to go if IMF aid restored + Hub-Power, PTCL help stocks improve performance --------------------------------------- EDITORIALS & FEATURES + People-friendly police Ardeshir Cowasjee + Teetering on the brink Irfan Husain (Mazdak) ----------- SPORTS + 14-man team for Dhaka to be named today + Tennis: Khaliq and Nida retain singles title

Text of joint press statement

ISLAMABAD, Oct 18: The text of the joint statement issued on Sunday 
at the end of official talks between Pakistan and India on issues 
of peace and security and Jammu and Kashmir, in Islamabad held from 
October 15-18.
Mr Shamshad Ahmad, Foreign Secretary of Pakistan, and Mr K. 
Raghunath, Foreign Secretary of India, met in Islamabad from 
October 15-18.
They held separate meetings on Agenda item (a) Peace and Security 
including Confidence-building Measures, and (b) Jammu and Kashmir 
on the basis of the 23rd June, 1997, Agreement.
The talks were held in a cordial and frank atmosphere within the 
framework of the composite and integrated dialogue process.
The deliberations between the foreign secretaries were guided by 
the shared belief of their prime ministers as expressed in their 
joint statement of 23 September, 1998, that an environment of 
durable peace and security was in the supreme interest of both 
countries and the region as a whole, and that the peaceful 
settlement of all outstanding issues, including Jammu and Kashmir, 
was essential for this purpose.
The Foreign Secretary of India called on Prime Minister Nawaz 
Sharif and conveyed to him a message of goodwill from Prime 
Minister A.B. Vajpayee. The Prime Minister of Pakistan warmly 
reciprocated the Indian prime minister's good wishes. The Indian 
foreign secretary also called on Foreign Minister Sartaj Aziz.
The meeting on October 16, 1998, discussed issues of Peace and 
Security including CBMs. Both sides underscored their commitment to 
reduce the risk of a conflict by building mutual confidence in the 
nuclear and conventional fields.
The meeting on October 17 discussed Jammu and Kashmir. The two 
sides reiterated their respective positions.
The two foreign secretaries agreed that the next round of talks on 
the issues of Peace and Security and CBMs and Jammu and Kashmir 
respectively and a review of the round would be held in the first 
half of February 1999 in New Delhi.APP

Nawaz hails move to lift sanctions

HATTAR, Oct 23: Prime Minister Nawaz Sharif on Friday welcomed the 
US Congress move giving President Bill Clinton waiver power to lift 
economic sanctions terming it a positive development.
Addressing inauguration ceremony of the Bestway Cement Plant at 
Hattar near Islamabad, the prime minister expressed the hope that 
other countries would also try to understand Pakistan's position 
regarding its recent nuclear tests conducted to restore strategic 
balance in the region.
Nawaz Sharif described as unjustified sanctions imposed on Pakistan 
by certain countries and international financial institutions in 
arguing that it had no alternative but to carry out nuclear tests 
to avoid nuclear blackmail by India and ensure its national 
security and vital interests. He thanked those countries who showed 
understanding of Pakistan's situation in this regard.
Nawaz Sharif spoke of serious financial difficulties with which 
Pakistan was faced with because of international sanctions and 
reiterated the country's resolve to overcome them with 
determination and commitment to its ideals. He pointed out that 
even the advanced countries had passed through difficult times and 
God willing Pakistan will soon be out of the current financial 
The PM reaffirmed Pakistan's policy to co-exist with other 
countries in environment of peace and expressed the hope that the 
dialogue process with India would help resolve the core issue of 
Kashmir and other disputes with that country. He observed that 
India seemed to have realized imperative of solving the Kashmir 
dispute and it was for the first time in 50 years that New Delhi 
discussed the issue in Islamabad recently, in an exclusive session.
He said peace and security were the two outstanding issues between 
India and Pakistan, which if settled would help both the countries, 
tread the path of prosperity. NNI

Govt borrowings from banks exceed Rs50bn

KARACHI, Oct 22: The government's borrowing from the banking system 
during July-September 1998 quarter exceeds Rs50 billion, which is 
in excess of Rs43 billion borrowing target set for the government 
in 1998-99 credit plan, the prime minister's adviser on finance and 
economic affairs, Dr Hafiz Pasha, said at a press conference on 
However, a joint secretary of the finance ministry, present in the 
press conference at the State Bank of Pakistan, hastily added that 
the government's net borrowing came to Rs20 billion only as, he 
explained, Rs30 billion had been deposited with the State Bank of 
Pakistan towards debt-servicing in foreign exchange.
This amount was still retained with the State Bank as accumulated 
arrears of debt payment, he added.
Despite this excessive borrowing from the banking system by the 
government, Dr Pasha said inflation had been contained into a 
single digit at 8 per cent, mainly because of the contraction of 
foreign exchange reserves.
The agricultural sector, the adviser said, deserved full credit for 
giving the country a bumper wheat harvest this year plus good 
sugarcane and rice crops which had resulted in steady supply of 
food items in the market. Onion, he said, was an exception.
He claimed that industrial productivity had also shown positive 
signs in the first quarter and an estimated growth rate at 2.4 per 
cent, which was slightly less than 2.5 per cent of industrial 
production growth, had been noted in first quarter of 1997-98.
He rejected the observations made by economic writers and analysts 
that decline in imports in the first quarter of this fiscal year 
reflected a slowdown in the economy and more particularly in the 
industrial sector.
Acknowledging that there had been a significant decline (about 24 
per cent) in the overall imports during the July-September 1998 
quarter, he explained that was mainly because of fall in import 
bill of food items, petroleum products and power generating 
machines. He asserted that the import of raw material and chemicals 
had shown a rise which indicated increase in their consumption by 
the industry.
Overall, he said, that there had been an improvement in the 
balance-of-payments position in the first quarter but that was 
mainly because of 24 per cent fall in imports. Exports, too, had 
shown a drop of 9 per cent in this period.
The prime minister's adviser also told newsmen about the revenue 
collection during the July-September 1998 quarter which, according 
to him, showed a shortfall of Rs3 billion in meeting the set 
He said the tax collection target for the first quarter was Rs62. 1 
billion as against which the actual collection was Rs58.7 billion, 
showing a shortfall of Rs3.5 billion. He attributed the shortfall 
in tax collection to a drop in imports resulting in less recoveries 
of custom duties. Other factor affecting tax recoveries was 
extension in last date for submission of income tax returns.
Collection of surcharges on petroleum amounted to Rs17.4 billion, 
exceeding the target of Rs10.9 billion.
The total collection of taxes and surcharges during the last 
quarter was Rs73 billion as against the target of Rs76 billion.
During the last quarter, he said, the government had paid Rs4 
billion to the exporters and settled the entire backlog of rebate 
claims. This had been done to improve the cash flow position of the 
He said the government had come out with a new system in which 
rebate claims would be settled within 72 hours.

IMF asks govt to resolve IPPs, tariff issues
Shaheen Sehbai

WASHINGTON, Oct 20: The IMF finally came out into the open on 
Monday and asked Pakistan to resolve the IPP and electricity tariff 
issues if Islamabad wanted the IMF programme back on the rails.
"The resumption of discussions depends to a great degree on the 
satisfactory resolution of the government's conflict with IPPs and 
the issue of WAPDA, including electricity tariffs," a Fund 
spokesman said, in what was a rare statement made by the IMF on any 
on-going negotiation with any country.
"If these issues are satisfactorily resolved, the IMF stands ready 
to proceed on a mission to finalise details of Pakistan's 
macroeconomic programme," the IMF spokesman said, after a day of 
hectic meetings on how to respond to what a source said was being 
described as "the Pakistani defiance."
"The proposed IMF mission to Pakistan has been postponed and no new 
date has been set," the spokesman said, adding that the visit was 
to have begun October 21.
Some of the Pakistani diplomats in Washington were surprised that 
the IMF had included the tariff issue as well among its conditions 
to resume a dialogue with Pakistan.
The official announcement by the spokesman left many more questions 
unanswered as it confirmed that the tariff issue and the IPPs 
tussle had all along been the major hurdle in the five- day talks 
held by Dr Hafeez Pasha and minister Ishaq Dar last week in 
International monetary experts said the postponement of the IMF 
mission would now delay the proposed rescheduling of debts at the 
Paris and London clubs which could land the government in serious 
trouble to avoid a default.
"There has to be something cooking in Islamabad to come out of this 
corner," a Pakistani diplomat said, expressing total surprise on 
how these sensitive matters were being handled.
The key question being asked by all experts was: If these matters 
were not resolved by the Pasha mission, what was being discussed by 
the two sides for five days?
No one seemed to have an answer to that query but a Pakistani 
source said there was a difference of perception on both the tariff 
and the IPPs issue between IMF and Pakistani officials.
"The Pakistani side was pressing that IMF should concentrate on 
structural reforms and raising the WAPDA tariff was a liquidity 
issue which could be resolved by other measures," a Pakistani 
source said.
Likewise on the IPP issue the Pakistanis were saying that the 
corruption aspect of the whole affair should be separated from the 
tariff question, the source said.
"When the talks concluded and Hafeez Pasha gave an interview to 
Dawn claiming that policy level agreements had been reached, there 
was still the divergence of opinion on these two critical matters," 
the source added.
What really surprised everybody was the announcement by the prime 
minister to cut the tariff by 30 per cent, which flew directly into 
the face of everybody.
Experts now believe Islamabad would soon have to announce some 
sweeping measures on revenue generation side to bridge the huge 
gaps that are to be created if the IMF programme was not brought 
back on the rails.
On the IPPs experts agree that if the government could quickly 
produce solid evidence of corruption against some of them in courts 
of law, this issue could be resolved. But if no evidence is 
produced and the matter keeps lingering on, it could cast serious 
shadows on the overall relations with international donor agencies.
Pakistani diplomats in Washington are gearing up to the Nawaz 
Sharif visit to the White House and many of them believe this could 
be the only way out for Pakistan to get out of this bend they are 
in at this moment.
"What Pakistan will have to sign away to receive a massive dose of 
aid and support is still not clear," experts said.
Informed sources told Dawn here on Tuesday that the government has 
contacted the IMF on Monday and sought 600 million dollar from the 
revived ESAF/EFF to avoid imminent default, Our Islamabad Bureau 
Sources said that the government was told that new events have 
overtaken the IPPs issue which should be resolved directly in 
consultation with the World Bank. "We were asked to sort out issues 
related to power sector if we want fresh funding from the IMF", 
said an official.

PM seeks report on Karachi police plan  
Sarfaraz Ahmed

KARACHI, Oct 20: Prime Minister Nawaz Sharif has asked the interior 
ministry to prepare a report within seven days on the 
implementation of metropolitan police department plan in the 
capital cities of all the four provinces.
Presiding over a meeting on the proposed metropolitan police setup 
for Karachi at the Governor House here on Tuesday, the prime 
minister asked Sindh chief minister Liaquat Jatoi to give him his 
observations on the proposed setup within 10 days.
The two different implementation plans  one each by the Prime 
Minister's Monitoring Cell assisted by the Citizen-Police Liaison 
Committee, and senior government officials whose perspective was 
represented by the home department  were presented in a report at 
the meeting.
The report also contained reservations and apprehensions of the 
government officials and the answers to those apprehensions by the 
Monitoring Cell/CPLC were also made part of that report.
The chief minister had reportedly taken the plea that since he had 
been out of town for the past many days and had recently returned 
to the country, he did not have any idea about the proposed system. 
Therefore, he added, he needed some time to evaluate and examine 
the proposed plan before the prime minister took a final decision 
on that matter.
The provincial law minister, Saleem Zia, also sought time saying 
the PML-led government was yet to discuss that issue with its 
coalition partners, the Muttahida Qaumi Movement.
Before the presentation of the report on the implementation plan by 
Jamil Yousuf, chairman of a high-powered committee set up by the 
prime minister last week, the chief secretary and home secretary 

spoke on the matter, expressing their apprehensions as mentioned in 
the report.
The CPLC chief said he in his capacity as an adviser of the PM's 
monitoring cell and the head of the CPLC had found the objections 
as a judgement against the plan of a metropolitan police 
The CPLC chief said he believed that a lot of improvement could be 
brought about at various stages. But, he added, what was needed now 
was the need of setting up of a safety commission and the 
subsequent establishment of a metropolitan department.
Senior government officials such as the additional interior 
secretary, the chief secretary and the home secretary have 
expressed apprehensions on various aspects with regard to the 
setting up of a Metropolitan Public Safety Commission (KMPSC) and a 
Karachi Metropolitan Police Department (KMPD).
On operational implications, these officials said Karachi badly 
needed police revamping and reorganisation to meet the present day 
challenges. It certainly needed a well-equipped system backed by 
computerised data bank and quality manpower to deal with terrorism 
and crime syndicates. Simultaneously, they added, there is a need 
for greater checks and accountability.
One of the questions raised by the government officials was about 
the proposed composition of the commission and its constitutional 
position under the proposed setup.
They said constitutionally maintenance of law and order was the 
responsibility of the state or the provincial government. "Can it 
be left to a commission where majority shall be nominated by 
They asked how the government would respond to a demand that the 
KMPD should be placed under a lord mayor, and what would be the 
status of provincial government vis-a-vis its responsibility to 
maintain law and order under the law and the constitution.
The government officials pointed out that the present system did 
not envisage any role for the commissioner or the deputy 
commissioner. These posts had to be redefined which would require 
restructuring of general administration and revenue administration 
at least in urban areas, they said.

Restructuring of debts: Pakistan to raise issue at Paris Club
M. Ziauddin

ISLAMABAD, Oct 23: The next Paris Club meeting which is being held 
tentatively on December 7 will consider a debt restructuring 
request from Pakistan.
If approved, Pakistan will get a debt relief amounting to 2 billion 
dollars in immediate payments.
The government has started depositing with the State Bank of 
Pakistan rupee equivalent of the debt repayment arrears which so 
far has gone up to Rs. 30 billion.
Though only an expression of the government's commitment to meet 
its debt obligations if and when it has earned the required 
dollars, this gesture has, however, already brought the budget 
under extreme pressure by increasing the bank borrowing to Rs.52 
billion against the full year target of Rs.12.6 billion.
In another development the monthly home remittances are said to 
have been almost halved since July this year declining to 52 
million dollars in September from 100 million dollars in July. In 
August the figure was 70 million dollars.
This declining trend in the home remittances coupled with the sheer 
drop of exports by 9 per cent in the first three months over the 
same period last year has seemingly rendered bleaker the chances of 
Pakistan meeting on its own the fast approaching debt obligation 
Meanwhile, it has been learnt that the Paris Club may not consider 
Pakistan's debt restructuring request if it is not backed by the 
IMF, negotiations with whom have come to a standstill at the 
In fact, according to informed circles the request for debt 
restructuring will be taken for formal consideration by the Club 
only if it is moved by the IMF at the scheduled meeting and not 
directly by Pakistan.
The World Bank which is an important player at the Paris Club is 
also not very happy with Pakistan presently because of the recent 
announcement of 30 per cent decrease in the power tariffs and the 
on going problems of the government with the IPPs.
Pakistan has signed a covenant with the World Bank for reforms in 
WAPDA under which the government is obliged to restructure WAPDA, 
plug leakages in transmission and distribution and enable the 
Authority to generate on its own 40 per cent of its development 
The reduction of 30 per cent in electricity bills is being regarded 
by the WB as a step in total violation of the covenant.
In view of this the chances of the Fund and the Bank helping 
Pakistan at the forthcoming Paris Club meeting appear rather slim, 
experts said.
Lifting of sanctions which has become a certainty after the US 
president Bill Clinton has been empowered by the US legislators 
with a one year waiver, however, is expected to have very little 
impact on Pakistan's financial woes which have now come under 
pressure more because of Pakistan's deteriorating relations with 
the Fund and Bank rather than any adverse effects due to sanctions.
Lifting of sanctions would at best mean resumption of operations of 
US investment related OPIC and EXIMP bank activities.
Pakistan has already accumulated debt arrears of about a billion 
dollars and if these arrears are not cleared between Nov 21 and Dec 
31 when the grace period for repayment of various debts would end, 
the creditors may finally declare Islamabad a defaulter.
However, the scheduled meeting between Nawaz Sharif and president 
Clinton in early December is being viewed here as a favourable 
development which, it is believed, would perhaps buy for Pakistan 
the needed support at the Paris Club.

Four suspects in Hakim Said's murder identified

KARACHI, Oct 23: Four out of the eight alleged terrorists involved 
in the assassination of Hakim Said and two others have been 
identified following the arrest of one of them, a senior police 
official claimed on Friday.
The official, who did not want to be named, told Dawn that the gang 
of terrorists had been identified following the arrest of a 
suspect, Amirullah, in Liaquatabad on Wednesday.
"The suspect was arrested by the anti-burglary staff of the central 
district police on intelligence information," he said.
The official claimed that the suspect had confessed to his, as well 
as seven others, involvement in the killing of Hakim Said  all of 
them belonging to the Muttahida Qaumi Movement.
"According to the suspect, ex-ASI Naushad, Nadir Shah, Ajmal Pahari 
and four others, who are not known to him, took part in the 
terrorist operation," the official claimed.
The motive behind the assassination of Hakim Said, the official, 
quoting the suspect, said the gang had only been told by their 
superiors to eliminate Hakim Said.
He claimed that the suspect had told the interrogators that all of 
his accomplices were in the city. "The investigators have tracked 
down two of them, but their arrest cannot be effected as they are 
hiding in a 'safe house' in central district," he said.
Moreover, he said, the prime minister had directed the law 
enforcement agencies not to lay hands on any political activist 
unless corroborating evidence was found against him, though he had 
been shown a video cassette containing disclosures and confession 
of suspect Amirullah.
Meanwhile, other sources claimed although the official agencies and 
police had unofficially held activists of the Muttahida Qaumi 
Movement, allegedly responsible for the killing of Hakim Said, the 
investigation into the murder case might not be made public 
officially until the passage of the CA-15 Bill in the Senate.
Even the arrest of Amirullah was not officially confirmed as none 
of the police officers wanted to be quoted in this connection, 
while each of them made unofficial claims about the progress of the 
On the other hand, two MPAs of the Muttahida Qaumi Movement were 
reportedly placed on the exit control list. Sources at the airport 
immigration section confirmed that they had been directed not to 
allow MPAs Shoaib Bukhari and Zulfiqar Haider to leave the country. 
The law enforcement agencies refused to confirm if these two were 
also wanted in connection with the investigation into the Hakim 
Said murder case.

Kapco: Wapda petition adjourned 

LAHORE, Oct 22: The Lahore High Court adjourned the hearing of a 
WAPDA petition for supersession of the Kot Addu Power Company till 
November 11 at the request of the company's counsel.
The petition first came up before Justice Malik Muhammad Qayyum on 
October 14 when he passed an interim order directing Kapco to sell 
electricity to WAPDA at Rs 1.98 instead Rs 3.44 per unit, and 
issued notices to the company and its parent concern, the National 
Power Company, which holds a 36 per cent share in it.
The WAPDA had alleged in its petition, filed through advocates Ali 
Sibtain Fazli and Azmat Saeed, that National Power was calling the 
shots with minority shares while it had little say in the Kapco's 
management despite a 64 per cent shareholding under an agreement to 
which it was not a party. 
It also alleged mismanagement and claimed that a power generation 
unit in the nearby Muzaffargarh was supplying it (WAPDA) 
electricity at the rate of Rs 1.98 per unit against Kapco's price 
of Rs 3.44 per unit.
Appearing for the Kapco and the National Power Company, 
respectively, Barristers Abdul Hafeez Pirzada and Makhdoom Ali Khan 
said on Thursday the Kapco-WAPDA relationship was regulated by a 
solemn agreement freely and voluntarily entered into by them or on 
their behalf. The contract provided for arbitration to resolve any 
dispute arising between the parties signatories to it.
The WAPDA, the respondent companies' counsel said, could not bypass 
the arbitration clause in violation of the agreement and approach 
the high court straightaway for alteration of the terms of 
Subject to this preliminary objection to the competence and 
maintainability of the petition, they said they needed time to file 
their comprehensive rebuttals to the averments made in the 
The court gave them until November 11 to file their replies and 
adjourned further hearing for that date.

PIA not to be affected in case of default: Abbasi
Bureau Report

ISLAMABAD, Oct 22: The chairman, PIA, Shahid Khaqan Abbasi, said 
here on Thursday that the national airline would not be affected in 
case the government committed default on the servicing of foreign 
"We do not foresee any financial problem for the PIA if Pakistan 
goes into default", he said. He, however, did not believe that the 
country was rapidly heading towards default on the repayment of 
Talking to reporters here on Thursday, he said that new measures 
were being taken to reduce the losses and make PIA a profitable 
organisation . He said ever since he took over, he made sure that 
there were no false claims as has been the case in the past.
Responding to a question, Mr. Abbasi, who is also the Prime 
Minister's adviser on aviation said that the PIA was about to open 
new foreign routes for Melbourne (Australia) and Hong Kong. "Later 
more routes will be opened for which we are currently holding talks 
with foreign countries and their airlines", he said.
Shahid Khaqan Abbasi, MNA from Murree, said that the PIA was buying 
four new aircraft to expand its foreign network. Negotiations, he 
pointed out, had almost been completed to acquire these aircraft 
In reply to a question, he said that there was no plan to have 
further retrenchment in the PIA. About 3,500 people, he added, had 
been laid off. "Now we are left with 17,000 employees and none from 
among them will be fired", he assured.

Provincial setup to be revamped, hints PM

KARACHI, Oct 22: Prime Minister Nawaz Sharif, who spent four days 
in the metropolis for taking "far-reaching" decisions for restoring 
peace and normality, said his government was trying to hit at the 
core of the ongoing conspiracy of terrorism aimed at destabilizing 
He also sought his coalition partners' support in identifying and 
eliminating the culprits involved in criminal activities and in 
banishing terrorism.
Talking to newsmen at Terminal-1 of Karachi airport, before leaving 
for Islamabad, Mr Sharif said the murder of Hakim Said was part of 
a conspiracy to destablize the country, and vowed to break the back 
of terrorism.
The prime minister, who had discussed the problem with the ISI 
chief and representatives of other law enforcement agencies earlier 
in the day, said his main thrust was on taking corrective measures 
for banishing terrorism once for all so that the past glory of the 
city was restored.
Although the prime minister did not specify the "far-reaching 
decisions", he did indicate changes and revamping of the provincial 
In this context, he had earlier indicated structural changes in the 
police setup which was also indicated by his keenness in the CPLC's 
presentation on the metropolitan police set up.
Recalling Hakim Said's assassination, Mr Sharif said he had been a 
real well-wisher of Pakistan and had rendered great services for 
the cause of the country, especially the poor people.
"Taking his life is nothing but a nefarious act of destabilizing 
Pakistan," he said.
He said the police were investigating the incident and they were 
also aware of the serious concern of the government. It was "a 
great challenge for all of us," he said.
The prime minister said that during his stay here he had got a very 
good opportunity to review the law and order situation and discuss 
measures to bring about improvement in it and to restore peace to 
the city.
Asked about his meeting with the MQM delegation, the prime minister 
said the main topic of his discussion was the prevailing law and 
order situation in the city .
He said he had asked his coalition partners to play an effective 
role in eliminating terrorism which had retarded peace and 
He did not specify in which manner he had sought the MQM's 
cooperation when the coalition partners had been complaining that 
they were not taken into confidence on the decisions about the 
maintenance of law and order and had not been invited to attend 
meetings on the issue even when they were in the government.

Mr Sharif also referred to his meetings with the businessmen and 
said a number of decisions had been taken for boosting the economy. 
In this context, he referred to decisions on sick units and 
increasing exports.
He also referred to the presentation he had on the Karachi Electric 
Supply Corporation and hoped that the acute problem of power supply 
to the city would be overcome through some structural changes.
While the PML supporters were describing the unusually long stay of 
the prime minister in the city as significant, critics said he had 
taken decisions that would increase the centre's interference in 
the affairs of the province, especially the maintenance of law and 
During his stay in the city the prime minister had avoided meeting 
his coalition partners until the last moment, though their role was 
considered crucial for the maintenance of law and order in the 
This had given rise to apprehensions among his coalition partners 
that some of the unspecified decisions would affect them.

Shortfall in tax revenue feared: Snags delay revamping of CBR
Ihtashamul Haq

ISLAMABAD, Oct 23: The snags in restructuring of the Central Board 
of Revenue (CBR) has started impacting on tax revenues and the 
possibility of shortfall of over Rs50 billion in current year's 
target cannot be ruled out, official sources said.
Sources told Dawn here on Friday that Chairman CBR Moeenuddin Khan 
was facing difficulties and was unable to deliver because of the 
non-implementation of the restructuring plan approved by the 
Cabinet and fully supported by the prime minister.
One of the major reasons, contributing to low revenues, was the 
delay in the appointment of five new members in the CBR as was 
sought by the chairman and duly agreed by the prime minister. 
Sources said the matter was pending due to the opposition by the 
Establishment Division which did not want to offer market-based 
salaries to the four new members and other staff planned to be 
inducted in the organization.
The chairman had called for the appointment of Member Audit, Member 
Management Information Service, Member Legal, Member Human Resource 
Development and Member Budget and Evaluation. "So far there is no 
progress towards the appointment of these members with the result 
everything is suffering and the hope for increasing revenues has 
fast become a dream", said an official of the CBR.
The CBR had also decided to appoint experts from the private sector 
and a number of them had been inducted in the organization. 
However, they did not join and have told the authorities that 
unless their notification was issued by the Establishment Division, 
they would not assume any responsibility.

Sources said that Moeenuddin Khan took over the charge of the CBR 
in January and since then there was no progress towards the 
restructuring plan.
"Our main thrust is to develop an information technology system 
despite the fact that we have no money for it", said Tariq Iqbal, 
Member Policy of the CBR. He told this correspondent that the 
development of the information technology was must to increase 
revenues. "We have received 1.4 million income tax returns and we 
need to assess them and we can not do that properly unless we have 
a information technology system", he added.
Sources said that due to the shrinking of the economy and less and 
less imports, the CBR was facing difficulties to increase its 
revenues. The shortfall during the first quarter was due to low 
imports. "Under these circumstances, it is anybody's guess to have 
new resource mobilization", an official of the organization added.
One of the reasons to have low revenues was due to more refunds 
offered to the exporters. For example, the CBR paid Rs13 billion 
refund during the first quarter of the 1998-99 compared to Rs9 
billion of the same quarter last year. 

Exemptions encourage withholding tax evasion
Parvaiz Ishfaq Rana

KARACHI, Oct 23: The exporters of rice and raw cotton are evading 
billions of rupees in taxes which are payable by them on 
procurement of these commodities.
Under the withholding tax regime, on all purchases of rice and raw 
cotton by private and public limited companies one per cent is 
required to be deducted from the purchase price paid to cotton 
ginners, rice mills and any other intermediataries.
However, the same statute exempts all sole proprietorships and 
registered partnerships having paid up capital of less than Rs 1.5 
million from this deduction.
As a result of this anomaly in the law, massive evasion of 
withholding tax on domestic purchases of rice and raw cotton are 
going on resulting in revenue losses of billions of rupees to the 
Trade sources said that this anomaly was created about two years 
back by certain 'big fish' in collaboration with CBR high-ups on 
flimsy grounds that limited liability companies can keep books of 
account and could make deductions whereas sole proprietorships and 
partnerships are small and disorganized and incapable of keeping 
Various representations made by trade to Ministry of Commerce and 
CBR demanding rationality and equity in levy of this tax have gone 
It was also suggested by the concerned associations that all 
exporters should deduct withholding tax from rice millers, ginners 
and intermediatary traders but even this was turned down by the 
It was also proposed that exporters with turnover exceeding Rs 1 
million should make such deductions irrespective of whether they 
were sole proprietors, partners or limited liability companies, but 
this was also overlooked, these sources added.

As a result of this, a loophole was created whereby all major 
exporters have now closed down their limited liability companies 
and have formed sole proprietorships and partnerships with capital 
less than Rs 1.5 million in order to avoid or 'evade' this 
liability of withholding tax.
These sources accused the CBR authorities of purposely creating a 
major anomaly whereby sole proprietorships and partnerships having 
turnovers in billions of rupees, which employ chartered 
accountants, are fully computerized and maintain full sets of 
books, don't deduct withholding tax whereas much smaller limited 
liability companies make this deduction.
It is ironical that sole proprietorships and partnerships are 
considered in the organized sector when it comes to sales tax and 
they have to pay sales tax and file sales tax returns, but they are 
not considered organized enough to make withholding tax deductions.
If they are organized enough to file sales tax returns then they 
are equally capable of deducting withholding tax, trade sources 

Fresh incentives offered to sick units

KARACHI, Oct 22: The management of the closed and sick industries, 
who defaulted on payment of banks and financial institutions' 
loans, are being offered fresh opportunities and incentives to 
settle their debts which will now be closely monitored by a high 
powered committee headed by the Prime Minister's Advisor on Finance 
and Economic Affairs, Dr Hafiz Pasha.
These opportunities and incentives being offered to the loan 
defaulters are same as given by the State Bank of Pakistan last 
year and in fact provide a chance to those defaulters also who did 
not respond to the scheme last year.
Last year, the SBP offered all borrowers who could not adjust loans 
for the last 7 years and more to pay the principal amount plus a 
fixed amount in instalments within a prescribed time frame. Similar 
incentives were given to five-year loan defaulters and three-year 
loan defaulters.
On Thursday, Dr Hafiz announced that all those borrowers who had 
already paid 10 per cent of the settled amount up to June 30 under 
the old SBP scheme but were not able to pay the balance amount 
would be given an opportunity to make this adjustment.
Similarly, borrowers with Rs 10 million loan default who did not 
respond to the last year's SBP incentive scheme are being asked to 
participate in the scheme and get their debts adjusted.
"The idea is to revive the closed units which are viable and 
quickly liquidate all those industrial units which are not viable," 
Dr Pasha outlined one of the three objectives of his operational 
plan which he finalized at a meeting attended by the Governor of 
State Bank of Pakistan, Dr Muhammad Yaqub, presidents of the 
nationalized and partly privatized banks, Chairman of Board of 
Investment Humayun Akhtar and leaders of the business community.

He said a high-level committee headed by himself with Humayun 
Akhtar as the Vice Chairman will monitor the implementation of the 
plan and submit a report to the prime minister after every two 
This committee will monitor the revival process in context of the 
macro economic policies and will make suitable recommendations as 
and when needed.
Another committee is being formed to oversee the operational part 
of the plan in the banking institutions to be headed by a corporate 
leader Shaukat Mirza.
The advisor said that the government will issue in a day or two the 
notification for the formation of this committee and its term of 
He said the plan has been formulated by a committee formed by the 
prime minister and who gave consent to the recommendations only a 
day before.
According to Dr Pasha, there are about 4,000 sick industrial units 
which include about 1,000 big units and 3,000 small units. The 
small units, he said, will receive special attention as these have 
greater potential for revival and generate more employment.
In about next two weeks, he said that the committee will submit 
sectoral recommendations focussing on textile, cement, sugar and 
other sub-sectors.
He promised to make public the findings of his committee on 
industrial sickness but was unable to identify how many of these 
sick units are viable for revival and what are the main causes of 
"It is for the committee working at operational level to find out 
the causes of industrial sickness," he replied.
He avoided to answer when asked if the government would take legal 
action against those sponsors who over capitalised their projects 
and rendered them sick before the commencement of operation as has 
been done in case of Hubco.
"Ask this question to Governor of State Bank of Pakistan," replied 
the advisor when asked to informed newsmen of the fate of 
government sponsored FIA operation against the loan defaulters.

Rs1.4 billion shortfall in Corporate Region target
Parvaiz Ishfaq Rana

KARACHI, Oct 22: The first quarter (July-Sept) collection of direct 
taxes of the Corporate Region of Income Tax, Karachi fell short by 
around Rs1.4 billion against the target of Rs6.4 billion.
According to official figures made available by the local tax 
offices on Thursday, the Corporate Region has collected Rs4.989 
billion during the first quarter of the current fiscal year against 
a target of Rs6.4 billion.
These sources said that a huge shortfall of Rs1.378 billion in 
direct taxes collection during the month of September, against the 
target of Rs4.2 billion upset the performance of the region. 
"Extension in filing of tax returns allowed by the prime minister 
on Sept 30, drastically reduced the collection which could have 
otherwise realised for the same month," the official added. 
Otherwise, historic trends indicate that collections during the 
month of September are usually higher than those of other months 
because of revenue received along with returns and collection of 
advance tax instalment.
Giving other details the official said that the Corporate Region 
made a nominal increase in collection during the month of July when 
Rs781 million were netted as against the target of Rs770 million. 
Similarly, a slight excess of Rs1.386 billion was made during 
August, against the target of Rs1.370 billion.
However, the entire target for the first quarter of current fiscal 
year was upset by poor collection of Rs2.822 billion made during 
September as against the target of Rs4.2 billion.
The Corporate Region of Income Tax, Karachi which has been given 
the task to net Rs44.256 billion or 22 per cent higher than the 
preceding year's target of Rs36.5 billion, is to face an uphill 
task under the sluggish economic activity of the country.
The region has been asked by the CBR to collect Rs42.347 billion on 
account of income tax (IT), Rs0.852 billion against wealth tax 
(WT), Rs0.458 billion from capital value tax (CVT) and Rs0.599 
billion against workers welfare tax (WWT).
However, collection on account of arrears and demand created by the 
tax department has shown substantial increase which stood higher by 
Rs1.3 billion up to Sept 30, than a corresponding period of last 
Refunds made by the region against access payment of taxes against 
imports, supplies and partly against appeals up to August stood at 
Rs1.207 billion against Rs1.185 billion of a corresponding period 
of last year.

$15.14m net foreign investment in KSE

KARACHI, Oct 22: The Karachi Stock Exchange (KSE) has registered a 
net investment of Rs 696.6 million ($15.14 million) by foreigners 
during the month of September bringing the total investment since 
January to Rs 11.3 billion.
According to the statistics of the Exchange released Thursday, 
foreign investors purchased 41.8 million shares worth Rs 696 
million and sold 30.5 million shares worth Rs 583.9 million.
During the Jan-Sept period, foreigners purchased 429.5 million 
shares and sold 450 million shares worth Rs 11.39 billion and 10.2 
billion respectively.
'Erosion in value of shares led to heavy losses to domestic and 
foreign investors,' said a stock dealer while referring to the KSE 
He said the 100-Index of KSE which was currently fluctuating 
between 800 to 1000 provides ample opportunities to new domestic 
and foreign investors to make their debut in the market.
A stock broker leading in foreign funds, said on condition of 
anonymity that the recession in major economies of the world has 
severely jolted the confidence of investors in stocks.
'Foreigners have ruled out any new investment or allocation of 
fresh funds for investment in all the Asian region,' he observed.

He said that currently the foreign investors were playing in stocks 
with already allocated funds and would rather opt to move to 
strategic portfolios to cover losses registered early this year.

Importers undertaking demanded by NCBs
Sabihuddin Ghausi

KARACHI, Oct 21: In the wake of reports on steep fall in country's 
foreign exchange reserves, now estimated at around 500 million 
dollars, the nationalized commercial banks have started demanding a 
firm undertaking from the importers to arrange foreign exchange 
from their own resources in the event of non-availability of 
foreign exchange cover from the State Bank of Pakistan.
Importers faxed to Dawn on Wednesday the copies of the undertaking 
to be given by them to the banks where they open their letters of 
credit for import.
One of these banks is the top most NCB and the other is a partly 
privatized NCB. In this undertaking, the importer offers a firm 
commitment to arrange the foreign exchange from own resources and 
deposit the entire sum within two days of the receipt of demand for 
payment in event the State Bank is unable to provide required 
amount of foreign exchange.
A number of foreign banks in Pakistan were already demanding such 
undertaking from the importers much earlier.
Vegetable ghee manufacturers, who are importers of edible oil, are 
reported to have brought this fact in notice of the Commerce 
Minister, Ishaq Dar on Wednesday at a meeting held at the State 
Bank of Pakistan.
Responding to this complaint, the deputy governor of the State Bank 
is reported to have declared that the central bank has met all 
foreign exchange obligations in respect of imports till Tuesday.
However, the State Bank did not offer any comment on the demands 
being made by the NCBs from importers to furnish an undertaking.
Importers, however, believe that this demand of the NCBs has 
created a panic in the market and might lead to further confusion 
in the trade. They expect that this issue will be high on the 
agenda of the meeting of bankers with Prime Minister's Advisor on 
Finance Dr Hafiz Pasha on Thursday at the State Bank of Pakistan.
On Wednesday, the leaders of the Association of Vanaspati Ghee 
Manufacturers in their meeting with the commerce minister warned of 
a serious ghee crisis after two months when Ramazan sets in if no 
measures are taken to ensure steady and unhampered supply of edible 
They were obviously not happy on government's decision to take out 
edible oil import from the list of those seven items which were 
being imported against officially fixed rate of Rs 46 a dollar.
A blanket imposition of 30 per cent cash margin on imports has also 
hurt the edible oil importers who acknowledged increase of Rs 3 per 
kilo in ghee prices which may go up to Rs 5 per kilo when full 
impact of these measures would be felt.

Blaming the importers of dumping edible oil in the last three 
months, Ishaq Dar calculated that total cost of edible oil import 
during July-September 1998 was 200 million dollars which is 40 
million dollars in excess to normal import.
Maintaining that the country has now six weeks stock of edible oil, 
the ghee manufacturers in their representation admitted that "some 
of the manufacturers have imported in excess to their capacity".
The ghee manufacturers have proposed the government to form an 
Edible Oil Regulatory Board to regulate edible oil import after 
determining the capacity of each ghee unit.
"The capacity of the ghee unit should be supported by consumption 
of electricity, payments on gas bills plus their sales shown in the 
balance sheets," Amjad Rashid, a leading dealer of food items told 
Dawn. "An average of the last three years should be taken to 
determine the edible oil requirement of each plant," he added and 
said that this formula is in line with the arrangement worked out 
by the Ghee Corporation of Pakistan.
Amjad Rashid suggested that edible oil import be allowed on 
contract as floating cargo for which there is a provision in the 
1998-99 import policy for the petroleum products. The Import Policy 
provides import of POL products already on high seas (floating 
cargo) shall be exempted from opening of letters of credit prior to 
the issuance of bill of lading. 
He wants inclusion of edible oil in category of floating cargo.
Commodity merchants also speak of prices of a large variety of 
kitchen items creeping up following government's decision to import 
all items but two (wheat and POL) on composite rate and a blanket 
provision of 30 per cent cash margin.
Following pressure of imports on the Interbank foreign exchange 
floating market, the composite rates of dollars have also started 
creeping up. 

Businessmen asked to raise $5bn deposits
Pervaiz Ishfaq Rana

KARACHI, Oct 20: Prime Minister Nawaz Sharif has asked the business 
community to raise $5bn through fresh bank deposits to improve 
forex reserves for which the government is willing to give legal 
and constitutional cover.
Prime Minister asked the participants to find about 100 businessmen 
capable of giving $50m in deposits for raising a total of $5bn.
He also set up a committee to be headed by chairman APTMA, Humayun 
Elahi Sheikh for raising $5bn and promised to provide legal and 
constitutional cover to these forex deposits.
Nawaz Sharif has also constituted two other committees to make 
concrete proposals to double exports by the year 2000 and improve 
taxation system.
The announcement was made by the PM at a meeting with members of 
the Federation of Pakistan Chambers of Commerce and Industry 
(FPCCI) held on Tuesday, in Federation House.
Sources said the marathon meeting which lasted for over five hours 
could not bring on the spot results because the proposals presented 
by the business community before the PM were not only deficient but 
also lacked direction to meet the on-going economic crisis.
The Prime Minister was disappointed and was reported to have said, 
'the proposals have turned out to be against my expectation,' a 
participant told Dawn.
However, after listening to the proposals made by president FPCCI, 
Fazal-ur-Rehman Dittu, vice president Maqsood Ismail and immediate-
past president Senator Ilyas Ahmed Bilour, the PM announced the 
establishment of the three committees.
Sources privy to the meeting further disclosed that the Prime 
Minister asked FPCCI to form these committees which will be given 
ten days period to come up with recommendations on their respective 
'I am sorry to say that the private sector has exposed its 
inefficiency by holding parleys with the Prime Minister without 
carrying out proper home-work on such issues of national 
importance," said a participant.
The Prime Minister asked FPCCI to nominate eight members on the 
committee which will recommend concrete proposals to double exports 
by the year 2000 and another eight member on the committee which 
will recommend proposals to improve taxation system and revamp CBR 
Nawaz Sharif said he was prepared to accept the FPCCI proposals 
provided they give commitment for doubling exports by the year 2000 
and revive all viable sick units and help the government in 
recovering loans from wilful defaulters.
The Prime Minister agreed to include five nominees of FPCCI on the 
Industrial Revival Committee (IRC) which was to hold meeting on 
Tuesday, under the chairmanship of Commerce Minister.
FPCCI vice president Maqsood Ismail proposed the formation of 
Export Development Authority under the chairmanship of Prime 
Minister and executive chairmanship of FPCCI nominee to solve the 
problems of exporters at the highest level. The Prime Minister 
welcomed the proposal and asked that mechanism of its working and 
the role of public and private sectors be worked out so that no 
confusion arises afterwards.
Nawaz Sharif was highly critical of those businessmen who were 
indulging in under-invoicing and over-invoicing at a time when the 
country direly needed foreign exchange. He warned that if those who 
indulged in the malpractice did not bring in due foreign exchange, 
the government will be forced to take strong action against them.
President FPCCI Fazal-ur-Rehman Dittu said that one of the main 
problems being faced by exporters was the domination of revenue 
culture over export culture.
He opposed the devaluation of rupee and instead suggested that 
creeping adjustment should be made in the exchange rate to counter 
inflation in the economy.
The PM was accompanied by Acting Governor of Sindh Nawab Mirza, 
Chief Minister Liaquat Ali Jatoi, Commerce Minister Ishaq Dar, Dr 
Hafiz A Pasha, Advisor to Prime Minister on Finance, Syed Ghous Ali 
Shah Minister for Education, Sheikh Rashid Ahmed Minister for 
Labour, Manpower and Overseas Pakistanis, Mushahid Hussain Minister 
for Information, Humayun Akhtar Khan, Minister of State, Ehsan 

Iqbal, deputy chairman Planning Commission and other high 
government officials.

No trade deficit by June 1999, says Dar
Omar R. Quraishi

LAHORE, Oct 17: Pakistan will have no trade deficit by the end of 
the next financial year, federal commerce minister Ishaq Dar said 
here on Saturday.
Speaking at the convocation of the Hajvery Group of Colleges at the 
Alhamra-II auditorium, the commerce minister said the trade deficit 
for 1996-97 was $3.74 billion. The next year, 1997-98, it was 
brought down to $1.5 billion and by next year, June 1999 that is, 
there will be no deficit, the minister said.
The minister said that the persistent trade deficit government had 
constantly dogged government efforts to curtail external borrowing.
He said that curbing the trade deficit was a high government 
priority also because it help in bringing down the budget deficit.
He said the government had wanted to eliminate the trade deficit in 
three years but had to bring this forward by a year after economic 
sanctions were imposed last May.
He claimed all economic targets for the current financial year 
would be met by June 30, 1999.
The minister said the economy during the time of the previous PPP 
government was much worse than it is now. Gross Domestic Product 
(GDP) then had grown at 1.3 per cent, and now it was 5.4 per cent 
(a figure disputed by the IMF and many independent economists). 
Growth rate in the industrial sector then was 2.29 per cent then 
compared to 4.5 per cent now, minus 0.7 per cent in agriculture 
then, 5.8 per cent now, and the services sector had grown 2.7 per 
cent during that government and by 4.5 per cent now.
DENIES DIFFERENCES WITH PASHA: Later talking to reporters, the 
commerce minister said that he did not have any differences with 
Hafiz Pasha, the prime minister's advisor on finance.
He said the advisor had no intention of resigning and had already 
contradicted reports indicating that he might do such a thing.
Responding to another question, the commerce minister indirectly 
admitted that he was involved with the finance ministry. Dar said 
that the prime minister holds the finance portfolio and if he (Dar) 
does do any assignments pertaining to the finance ministry then it 
is on the prime minister's directives.
The commerce minister has taken an adversarial stance against the 
conditionalities set down by the International Monetary Fund for 
sanctioning a renegotiated extended structural adjustment facility 
(ESAF). He publicly said recently that Pakistan would not devalue 
its currency, nor would it raise electricity charges. Both are part 
of conditions set down by the IMF for Pakistan to get loan.

MNCs withdrawing essential drugs from market
Haris Anwar

KARACHI, Oct 21: The multinational companies have started to 
withdraw essential drugs from the market and are replacing them 
with new and a higher cost products to offset their losses, 
industry sources said.
"This is a strategy we have adopted to keep ourselves afloat as the 
government has not allowed to increase the prices since November 
1996", a managing director of multinational firm said on Tuesday. 
He said government didn't control the prices of newly registered 
products hence the new and expensive products are replacing the old 
and cheaper products.
Market survey reveals that there is acute shortage of some of drugs 
produced by the multinationals. The whole asthma group which 
includes Ventoline, Ventide, Becolide, Beconase, products of Glaxo 
Pakistan was not available at many chemist shops. Similarly, Agrol, 
Dilantin, produced by Park-Davis, are also rarely available. 
Penidure LA, Gevirol Capsules and Minocin, products of Wyeth, too, 
are in great scarcity.
"This will have severe impact on consumers as cheap medicines have 
started to disappear from the market, but the government is unable 
to understand the issue", sources added.
Sources in the industry said the government had withdrawn the raw 
material from essential goods list since September and only 
finished products were being allowed to be imported at the official 
rates. The government on Friday removed five items from the list of 
seven essential items, including medicines, on which foreign 
exchange was being provided by the State Bank at the official rate 
of Rs 46 to a dollar.
"There are some products on which even raw material cost is not 
being recovered, said chief of a multinational company. He said the 
MNCs usually maintain 3-6 months inventories and impact of this 11 
per cent differential between official and composite rate would 
start to hit the companies within three months.
There is an indexation formula for controlled products linked to 
inflation and devaluation from July 1, 1994. Last adjustment in the 
prices of controlled was allowed in November, 1996 when the prices 
were raised by 6 per cent.
A summary, prepared by Dr Hafeez A. Pasha, advisor to Prime 
Minister on Finance and forwarded by ministry of health is awaiting 
the cabinet's approval, which sources said had recommended a price 
increase of controlled drugs by 9-15 per cent.

Dual forex rates to go if IMF aid restored
Ihtashamul Haq

ISLAMABAD, Oct 21: The government has expressed its readiness to do 
away with the dual exchange rate during the next two months period, 
provided the IMF restores the country's assistance.
Informed sources told Dawn here on Wednesday that the government 
has approached the IMF and said it needed at least two months to 
have some unified exchange rate and that it was not possible to 
immediately concede over to the issue keeping in view the "extreme 
vulnerability of the economy".
While the IMF has asked the government to sort out the issue of the 
IPPs specially that of the Hubco and KAPCO with the help of the 
World Bank, it was at the same time urged to immediately remove the 
multiple exchange rate.
Sources said that the IMF was putting the elimination of dual 
exchange rate as number one conditionality in the proposed $5 
billion bailout package. Islamabad has been told that in case this 
conditionality was met before the end of this month, the Executive 
Board of the IMF could meet in early November to disburse $600 
million out of the revived $1.6 billion Extended Structural 
Adjustment Facility (ESAF) and Extended Fund Facility (EFF).
"We are told that this ESAF/EFF could be stretched to $2 billion if 
Pakistan was ready to accept some of the main conditionalities", an 
official of the ministry of finance. When contacted he told this 
correspondent that the IMF wanted Pakistan to adopt the new reform 
agenda that sought to increase general sales tax (GST) from 12.5 
per cent to 15 per cent, increase revenues from Rs350 billion to 
Rs370 billion during 1998-99, increase the utility charges of 
electricity, gas and water and undertake certain comprehensive 
restructuring plan for Water and Power Development Authority 
(WAPDA) and the Central Board of Revenue (CBR).
Sources said that the government hoped to re-start negotiations 
with the IMF in the middle of next month. "We are given to 
understand that talks between Pakistan and the fund authorities 
could be resumed before November 20", said another official.
The foreign exchange reserves which had gone down to below $500 
million, insufficient for one week import, were causing too much 
concern in all the economic ministries. 
Sources said that the policy makers have started pondering as to 
what would happen in case international sanctions continued for a 
long period and no new were loan materialized.
"The prime minister has been told that under the present 
circumstances there must a real 50 per cent reduction in the non- 
development expenditure and an effort to achieve over $10 billion 
export target for the current financial year", a source in the PM 
Secretariat said. 
He said the prime minister realised that without tightening the 
belt, the economic crisis would only aggravate.

Hub-Power, PTCL help stocks improve performance

KARACHI, Oct 23: Stocks gave another improved performance on Friday 
as the strength of Hub-Power and PTCL spilled over to other 
counters amid light trading.
Analysts said the perception that the post-nuclear test US economic 
sanctions might be eased after the Congress waiver for President 
Clinton appears to be the chief stimulant behind the market's 
improved performance during the last two sessions.

The underlying sentiment in part was also influenced favourably by 
the prime minister's four-day stay in the city and his desire to 
end the prevailing uncertainty both on political and economic 
fronts, dealers said.
"The positive nod from the IMF about the bailout package could 
prove a decisive factor in putting the market back on the rails," 
they added.
The KSE 100-share index managed to close fractionally higher, by 
1.02 points, at 809.98 as compared to 808.96 a day earlier. Losers 
forced a slight edge over the gainers at 47 to 41, with 40 shares 
holding on to the last levels.
The volume figure fell to four-month lows at 51 million shares, 
reflecting lack of support both from the institutional traders and 
the speculative forces owing partly to weekend considerations.
The low volumes also reflect that both the sellers and the buyers 
want to maintain a status quo awaiting some positive news from the 
economic front, said a broker.
"The market is literally banking on the economic bailout package 
from the IMF and the recent waiver given to President Clinton to 
remove some of the post-nuclear sanctions on Pakistan and India has 
raised hopes that the green signal might be around," said a member 
of the KSE.
Some others said as the economy is fundamentally weak the chances 
of any robust rally appears a bit remote. However, selective 
support could re-emerge strong, largely based on good dividend 
news, they added.
Analysts said news that six of the private power producers have 
shown their willingness to cut tariff rates as demanded by the 
government halted the last two days run-up under the lead of Hub-
Power and some other foreign sponsored units.
"The steep decline in the trading volume reflects that investor 
interest in share business is fading out each day," they said 
adding "only some instant stimulants could put the market on the 
road to a sustained recovery."
Big gainers were led by KASB & CO and Colgate Pakistan, which 
posted gains ranging from Rs 6.00 to Rs 12 on active support. Other 
good gainers were led by PSO, Fauji Fertilizer and Nimir Resins, 
which rose by one rupee to Rs 2.00.
Top losers included Shell Pakistan, which ended with a clipped 
gain, off Rs 8.40. Others leading losers were led by Clover Foods, 
Balochistan Wheels, Security and Union Banks, Adamjee Insurance, 
National Refinery, Dewan Salman and some others, falling by one 
rupee to Rs2.30. About 90% of the volume was confined to PTCL and 
Hub-Power followed by most of the low-priced MNCs, notably Engro 
Chemicals and Fauji Fertilizer.
DEFAULTING COMPANIES: Mixed trend was seen on this counter. While 
Bolan Casting and Khyber Textiles managed to finish unchanged on 
500 shares each, Fawad Textiles was marked down by 25 paisa on 

Back to the top
People-friendly police
Ardeshir Cowasjee

ISLAMABAD: The beauty, the greenery, the weather, the prevailing 
atmosphere of indolence coupled with sycophancy, the grandeur of 
the prime ministerial hacienda-cum-palace, the silent uniformed 
flunkies padding around, the utter calm  all is more than enough 
to lull anyone into believing that everything is more, much more, 
than well with this nation.
On October 12, I met our prime minister. Alone, at a one-to-one 
session, he is as 'normal' (within the meaning of the word 'normal' 
as applied to those who conform to a certain mundane norm) as any 
other man. He makes his views known to all, he hides little, 
devious or otherwise, that goes on in his mind. He and I know each 
other well enough to agree to disagree, without acrimony, and to be 
able to talk on, to further disagree.
He now has about him an invincible air, all-powerful, having so far 
sorted out to his satisfaction what are known as the 'pillars of 
state'. Yet, as happens with all those who are 'in', he is unable 
to comprehend that a country wherein subsist some 140 million souls 
cannot survive for long on the misery of its people, though when 
'out' he proclaims he is capable of doing so.
Economy: What can be done to kick-start it? he ponders. Nothing. It 
is not a motorcycle. Credibility and confidence are lost in a 
matter of minutes, but restored in years.
Karachi: Whatever else it may be, it is the sole port city this 
country has, it is the hub, it is the financial centre. The first 
and foremost concern of its people is the safety of their lives and 
properties. All else follows. This government of Sindh, as with its 
predecessors, incapable and inept, is also unwilling to provide 
safety. The chief minister and his coterie concentrate on amassing 
power and pelf. The government can just about survive with a weak 
coalition; the on-off partners are unreliable and thrive on 
terrorism, the means they employ to display their 'strength'. Their 
'demands' are never-ending, pertaining only to their own needs, not 
to those of the people of their city.
What is the answer? Mr Nawaz Sharif asks. Mine is simple  
governor's rule.
The safety and security of the people of Karachi was the main topic 
of discussion. Nawaz's 'monitoring cell' has discussed the subject 
with those who run the Citizens Police Liaison Committee (CPLC). 
Would I help? he asked. An important decision has to be taken on 
police reforms. Why not? I know CPLC chief Jameel Yusuf and his 
crew. I know their competence and dedication. I know the previous 
joint chief, Nazim Haji, and how he and Jamil worked together, 
night and day, at the expense of their own business. Both are 
conscientious, selfless men in whom the people of Karachi have 
faith. Given a choice, any citizen of Karachi in distress would 
turn to the CPLC for help, rather than to the police.
The CPLC has been with us for almost a decade. They have suffered 
and survived the chief ministers with whom Sindh has been blessed. 
At close range they have watched and experienced the modus operandi 
of police officers from the rank of DSP upwards. Their assessment 
of men and material available is reliable and if strengthened, and 
allowed to, they can be of enormous help in cleaning up the muck. 
What is needed is public participation and the people's control of 
their own protective force. Fine, said Nawaz Sharif, talk to the 
CPLC and then come to the meeting I am holding at the Governor's 
House on October 15.
The men of the PM's monitoring cell and of the CPLC have done much 
research and for long have worked on a report concerning the 
reorganization and revamping of the police force. They have no 
doubts in their minds that Karachi would be well served by a 
metropolitan police force to care for the needs of its large 
(probably nearing 12 million) strife-ridden population. They have 
studied the reforms report prepared in July 1996 by that able 
policeman, the then IG, Police, Punjab, Mohammed Abbas Khan.
The aim is to work towards the Japanese model of policing, 
initiated in 1947. Suggestions as to how this is to be implemented 
have been fully covered in yesterday's Dawn.
The Japanese system is unique. It was created by legislation, the 
objective of which was to reverse traditional Japanese policing and 
create a force which would be democratically controlled, and, most 
important, politically neutral (repeat, politically neutral). The 
great warlord who later in life became a far-sighted, firm and 
dedicated administrator, General Douglas MacArthur, originated the 
system, and then enforced it.
In September 1947, the Supreme Allied Commander of the Occupation 
Forces in Japan, whose job was to reform and administer the country 
following the devastation of WW2, asked the Japanese prime minister 
to create a new police force which would support and sustain the 
democratic institutions being introduced in the country. Clear 
guidelines were given. The Japanese prime minister conveyed them to 
each head of the concerned government departments. Each department 
head produced a list of a dozen or so reasons why MacArthur's 
scheme could not work. The PM returned the lists, asking each to 
define in full as to how their objections could be overcome. That 
finished off the objections. A police force came into being in 
December  democratically controlled, politically neutral and 
highly professional.
A new institution, the National Public Safety Commission (NPSC), 
was created at two levels: the NPSC at the national level (five 
members) and the Prefectural Public Safety Commission (three to 
five members) at the provincial level. Before it could ensure the 
maintenance of a politically neutral police, the commission itself 
had to be politically neutral.
Members are nominated by the prime minister and appointed with the 
approval of both houses of parliament. The law allows the 
appointment of members of political parties provided they are not 
politically active, and no more than two members may be affiliated 
with one political party, thereby ensuring that no single party has 
a controlling majority. However, the practice has developed that no 
person with political affiliations is appointed. To fully ensure 
political neutrality, members are appointed from amongst men of 
national eminence  lawyers, retired heads of corporations, 
scholars, journalists, and so forth.
Commission members are appointed for a five-year tenure and may 
only be removed if physically incapacitated or, if found guilty of 
grave misconduct, with the consent of both houses of parliament 
through a process of impeachment. Security of tenure acts as a 
safeguard against pressures.
To illustrate the working of the NPSC, here is an extract from a 
Japanese police experts committee report:
"The Chairman of the National Public Safety Commission is a 
minister of state who represents the cabinet which is responsible 
for public safety and order. The chairman normally has no right to 
vote on decisions, so as to ensure independence of other members. 
He is only called upon to vote in case of a tie.
"While the Public Safety Commissions have overall administrative 
responsibilities for professionalism of the police forces on behalf 
of the citizens, they do not have direct control over specific and 
detailed police matters. They administer indirectly.
"In order for the Public Safety Commission to protect the police 
from outer pressures and influences, the following measures are 
taken in the field of personnel management:
"The National Public Safety Commission has the authority to 
appoint/dismiss the Commissioner-General of the national police 
agency with the approval of the prime minister; to appoint/dismiss 
the Superintendent-General of Tokyo Metropolitan Police Department 
with the consent of the Tokyo Public Safety Commission, and with 
approval of the prime minister; to appoint/dismiss the chief and 
high-ranking police officers (senior superintendent and above) of 
each prefectural police with consent of the Prefectural Public 
Safety Commission."
Nawaz Sharif met us on the 15th and despite opposition from the 
'thekedars' (politicians and bureaucrats) ordered that the reforms 
be implemented. He asked for a fixed schedule to be presented to 
him on his return to Karachi on the 21st. This is the second most 
significant action taken purely in the interests of the people, 
with no extraneous strings, the first being his steadfast 
declaration that the country will revert to Sunday as its weekly 
holiday for its own economic and financial benefit.
Yesterday at 0800 hours I was told that Hakim Mohammed Saeed, a 
good, honest citizen of Pakistan of whom, to the best of our 
knowledge never a bad word has been uttered, had just been shot 
dead. Why, I asked, as we must all have asked why. It defies 
comprehension. The nation's sympathy goes out to his family who 
will forever be asking each other just what it was he died for. We 
must all bear the responsibility for allowing our society to 
degenerate into the disgusting and brutal state in which it now 
finds itself.

Teetering on the brink
Irfan Husain

WHEN they gunned down Hakim Said last week, they deprived us of one 
of the few role models left in a morally bankrupt society.
The news of his cold-blooded murder spread like wildfire. My mother 
was shattered as he had been a family friend for years. A kind, 
gentle man, he was the finest exemplar of the old school still 
alive until his life was cut short by assassins' bullets outside 
his Arambagh clinic. A lifetime of good works and philanthropy were 
not enough to deter the terrorists who shot him down early last 
But this is not intended to be Hakim Said's obituary:; other, more 
qualified people have written about his enormous contribution to 
this city and this country. For me, this crime was yet another 
reminder of how unlivable and ungovernable Pakistan has become. It 
demonstrates the government's incompetence. Unfortunately, it also 
underlines the failure of the system.
I have often been accused of being a foot soldier of the doom-and-
gloom brigade, but every week when I sit down to write this column, 
the news from all over the country inspires very little optimism. 
Living in Karachi, one has become hardened to the daily death toll 
as terrorists carry on their rampage unhindered by the state. But 
Hakim Said's murder touched me more closely than most such killings 
because he was neither a politician nor an activist. A healer and 
an educationist, he was the last person one would have expected to 
be a target. So if a man like him can be gunned down, who is safe? 
And more to the point, if the state cannot protect him, whom can it 
There is much talk these days of the "commissionerate system" as a 
replacement for the present sorry excuse for a police force that we 
have. The problem is that when the entire structure is close to 
collapse, changing a brick or two is not going to help stave off 
the inevitable. So no matter what model is adopted to replace our 
present law and order apparatus, I am afraid it won't make Karachi 
a safer place. While it will no doubt be an improvement over the 
obsolete, ineffective system now in place, the new proposals cannot 
operate in a vacuum: there will still be interference in 
recruitment, police stations will still be auctioned, and salaries, 
being linked to government scales, will continue to be absurdly low 
and force policemen to extort bribes.
Above all, the fresh recruits will be products of the state 
education system. In our context, this means that they will be 
barely literate and unschooled in morality and ethics, despite 
having undergone years of Islamic studies. The quota system further 
ensures that the substantial majority of the new intake will be 
from the rural areas, where state schools are even worse than their 
urban counterparts, if such a thing can be imagined. The cops 
inducted with this background will not, alas, tend to be models of 
efficiency and honesty. In short, they will not be as "people-
friendly" as our prime minister would wish them to be.

The calibre of the police officers, too, leaves something to be 
desired. Recruited through the prestigious Central Superior 
Services examination, the Police Service of Pakistan cadre has 
declined significantly in quality over the years, as indeed, have 
all the other services. These officers have mostly graduated from 
our ramshackle college and university system, and they, too, have 
become infected with the get-rich-quick virus that has laid the 
country low.
These, then, will be the backbone of any law and order system 
introduced in Karachi. Even if somehow selection is on merit, I am 
afraid the manpower available will be of such poor quality that it 
is difficult to be enthusiastic about improvements. Also, the 
present policemen will have to be retained, and the prospects of an 
overnight transformation in their efficiency or attitude are fairly 
Compounding the whole law and order problem is the fact that the 
state no longer commands any respect: people know that the chances 
of actually being convicted are fairly remote. Scores of suspected 
terrorists were released by the government as part of a deal with 
the MQM, and alleged murderers are routinely released on bail. The 
law has little credibility left and can therefore not act as a 
Frankly, I would love to be proved wrong in my assessment of the 
new proposals being debated now, especially when some intelligent 
figures are involved in framing them. But my experience over the 
years has led me to conclude that there are strong and direct 
linkages between education, good governance and public morality. 
This is not any sudden insight, but a readily demonstrable truth 
that obtains around the world.
In Pakistan, education has been neglected over the years to the 
point where it bears no relationship to the needs of the economy 
and society. Grossly underpaid, untrained and poorly motivated 
teachers work in appalling conditions, while the students who do 
manage to gain admission endure the abysmal instruction that is 
inflicted on them. Day in and day out in classrooms around the 
country, the bored confront the apathetic, and the result is a 
waste of time for all concerned. To expect the products of this 
system to become reformers and nation-builders is a bit 
We have reached the point where the disease is too far advanced for 
medication in the form of rhetoric to cure. Radical surgery is 
required. The points I have made about the police can be extended 
across the gamut of national activities. While law and order issues 
may touch us daily and directly, all government departments are 
equally decrepit and crying out for change. Easier said than done, 
I know. There are no surgeons on the horizon capable of removing 
the gangrene-infected extremities, especially when the body is 
rotting at the top.
At this point in Pakistan's history, politics and politicians have 
become so inextricably a part of the problem that we can hardly 
expect them to provide the solution to the country's many urgent 
dilemma. We desperately need a stout broom to clean up the system 

ruthlessly and impartially. Unfortunately, the only institution 
that has tried to do so repeatedly in the past has botched the job. 
the army's record in this area has been so heavily tainted by Zia 
and Yahya Khan that we cannot have any great expectations from this 
While we ponder over our problems, and as our leaders unleash one 
crisis after another, the next millennium advances implacably on 

14-man team for Dhaka to be named today

KARACHI, Oct 23: The 14-man Pakistan cricket team for the 
International Trophy starting at Dhaka from Saturday will be named 
at the National Stadium on Saturday.
Pakistan play the opening match against the West Indies on Oct 29.
The chairman of selectors, Wasim Bari, said he would finalized the 
team after consulting his colleagues on Saturday.
"Since it is a foreign tour, we will have to inform the cricket 
board about the team who would seek clearance from the executive 
council. But in all probability, we will be announcing the team 
tomorrow," Bari said.
Bari said there wouldn't be many changes in the team that beat 
India 4-1 in the Sahara Cup last year.
"Barring a couple of changes here and there, the team would almost 
be the same," he stated.
The chief selector said he has not been informed about Mushtaq 
Ahmad's decision to skip the nine-nation tournament.
"I will get the feed-back about Mushtaq tomorrow," he said.
But skipper Aamir Sohail said the leg-spinner has confirmed to him 
that he would not go to Dhaka in an effort to give rest to his 
badly bruised knee.
"I and Javed Miandad had a long chat with Mushy. We advised him to 
miss the Dhaka event so that he is fit for the series against 
Zimbabwe and later for the tour of India.
"He agreed to our proposal," he said.
Saeed Anwar has also been given a clean bill of health and would be 
going to Dhaka after stomach upset forced him out of the third Test 
against Australia.
"It was in fact back strain because of stomach disorder. But I 
consulted a specialist who has prescribed some medicines.
"I have not been advised any rest," Anwar said from Lahore.
Pakistan are unlikely to make any major changes in the Sahara Cup 
side except that Wasim Akram would replace an injured Mohammad 
Zahid and Arshad Khan would come for Mushtaq Ahmad.
Aqib Javed, who was Sohail's deputy on the Canadian trip but 
overlooked for the series against Australia, is set to regain his 
place to add more punch to the bowling line-up.
The likely 14 are:
Aamir Sohail (captain), Saeed Anwar, Shahid Afridi, Ijaz Ahmad, 
Inzamam-ul-Haq, Salim Malik, Yousuf Yohanna, Moin Khan, Wasim 
Akram, Azhar Mahmood, Shoaib Akhtar, Aqib Javed, Saqlain Mushtaq, 
Arshad Khan.

Tennis: Khaliq and Nida retain singles title
A. Majid Khan

KARACHI, Oct 18: Top seed Mohammad Khaliq inflicted a 6-1, 6-1 
defeat on Tahir Iftikhar to retain the men's singles title while 
teenage tennis star Nida Waseem, the defending champion, prevailed 
over second seed Haleema Rahim 6-1, 7-6 (7-3) to keep the ladies 
singles trophy of the second Salma Noorani Ranking Tennis 
Tournament which concluded on Sunday at the Karachi Club hard 
Davis cupper Khaliq of Habib Bank Limited, who in partnership of 
Aqeel Ahmed, last night won the men's doubles final, today earned 
the double crown, a feat he performed last week in the Union Cup at 
the Karachi Gymkhana.
He got the men's singles winner cash prize of Rs 50,000 and a 
beautiful cup , while top seeded Nida Waseem, a student of Convent 
of Jesus and Mary, received the cup and a cash prize of Rs 30,000 
for retaining the ladies singles title of the tournament whose 
prize money was raised from 1,80,000 to Rs 2, 00,000.
Fateha was offered for Hakim Mohammad Said, Chancellor of Hamdard 
University and former Governor of Sindh, who on Saturday was shot 
dead by unknown assailants. Hakim Said was to preside over the 
prize distribution function of the tournament today.
Chief guest Capt Haleema Siddiqui, the Minister of State for Water 
and Power, who gave the prizes, in his speech recalled the 
invaluable services of Hakim Said to Pakistan and his assassination 
is a great tragedy for the nation. Hakim Said was a great man and 
served every man, he stated Capt Haleema Siddiqui stressed on the 
need of promoting healthy sports activities among the youth and 
praised the organisers for holding tennis tournament. He extended 
his help and support for the development of sports and games.
The President of the Organising Committee, Mr Jamil A. Sakrani, 
also paid tribute to Hakim Said and announced to hold a tournament 
in memory of Hakim Said, who himself used to play tennis even at 
this advancing age.
Mr Sakrani, who is the President of the Karachi Club, stated that 
the tournament has become a popular event. He said the KC would 
continue to provide every facility for the ranking tournament, 
instituted last year by Salma Noorani, a former national hard court 
ladies and mixed doubles champion.
Earlier, Mr Munawar Z. Noorani, vice-president of the organising 
committee, said that tournament attracted a large entry of over 300 
and thanked all those who made the event ends in tremendous 
He said the organisers have now decided to sponsor teenage champion 
of the ladies singles Nida Waseem for sending her for the coming 
Asian Games to be held in December this year. The participation of 
women in the Asian Games tennis depends on the sponsorship but the 
men's team is to be funded by the Pakistan Tennis Federation, an 
official of the PTF said here today.
According to the announcement already made, the winner of the 
Under-18 singles champion would be sent for participation in the 
ITF junior circuit of Bangladesh, Sri Lanka and India. Junior 
champion Ahmed Wahla, a student of lahore American School, has 
emerged the junior champion of the tournament.
The men's singles battle between defending champion Mohammad Khaliq 
and last year runnerup Tahir Iftikhar turned out to be a one-sided 
affair as the third seed from UBL could not match the brilliance of 
the top seed.
Khaliq served with tremendous amount of power and accuracy, 
unleashing a series of magnificent backhand passing shots and 
returning the ball with blistering pace to force Davis Cupper Tahir 
Iftikhar commit mistakes. Iftikhar's ground strokes lacked depth 
and accuracy and he made many unforced mistakes.
Tahir did produce some fine double-fisted backhand drives down the 
line but that were far and few. He only managed to break only one 
serve of Khaliq in the fourth game of the second set and once he 
held his own in the first set before he was virtually outplayed by 
the defending champion.
Playing superably Khaliq went 3-0 up in the first set breaking 
Tahir in the second game. Tahir held his serve to be 1-3 but there 
after Khaliq took three more games in a row to take the opener 6-1 
in only 25 minute.
Erratic Tahir was also 0-3 down in the second set as Khaliq 
hammered a brace of forehand and backhand winners. However Khaliq 
lost his serve and Tahir was 1-3.
Top seed looked in devastating form and seized every opportunity 
for hit a winner as Tahir turned frustratingly erratic in the match 
won by Khaliq 6-1.
Haleema Rahim of ABL last year runner-up, started in a confident 
way when she broke Nida Waseem opening serve in the first set of 
the ladies singles final. Nida Waseem found her touch and took 
control of the game when she exerted pressure by hitting winner 
after winner. Haleema was beaten by pace and power of Nida who won 
by 6-1.
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