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business

BMonday, 29 April, 2013

A budget tells us what we can’t

afford, but it doesn’t keep us from

buying it. — William Feather

Italy's new financeminister wantsspending pact

ROME: Italy's new finance minister

Fabrizio Saccomanni, who will be

sworn in with the cabinet on Sunday,

said he plans to boost growth in the

eurozone's third-largest economy

through a spending pact. Saccomanni,

the former director of Italy's central

bank, said he intends to form a "pact"

between banks, businesses and

consumers which would remove the

"psychological uncertainty factor"

which has blocked investments and

spending. Saccomanni said "a

coordinated effort" could "restore

precious trust" in the economy and

added that he intended to "restructure

spending" -- a move which would be

followed closely by investors concerned

about the country's two trillion euro

debt mountain. He did not provide any

details about the restructuring, or

mention possible tax increases or plans

to increase budgets. The country is

suffering from its longest recession in

20 years and the new government led

by Prime Minister Enrico Letta will have

to act fast to reassure European

partners it can boost growth. The new

minister said he would support

"businesses and the population's

weakest," after months of a gruelling

austerity programme imposed by

former premier Mario Monti that left

Italian citizens reeling. He said he

aimed to bring the spread level - the

differential between Italian and

benchmark German 10-year bonds -

down to 100 points or less. The spread

currently stands at 285 points, and the

ratings agency Moody on Friday

warned the country of an "elevated

risk" that political inaction would harm

investor confidence. AGENCIES

LAHORE

APP

FEDERAL Board of Revenue(FBR) Chairman Ansar Javed onSunday said the Federation ofPakistan Chamber of Commerceand Industry (FPCCI), an apex

body in the country, will be fully takeninto confidence on budget and other taxa-tion proposals.

Talking to a 20-member high leveldelegation of traders drawn from all overthe country led by SAARC Chamber ofCommerce and Industry VP Iftikhar AliMalik, he categorically announced thatFBR and Federal Ministry of Finance willgive due weight to all concrete and viableproposals of the FPCCI and other cham-bers and said he will hold meetings withFPCCI in this regard.

He pointed out that FBR is facingnearly 30 percent shortfall in revenue col-lection target set for the current fiscal yearwhich he hoped will be achieved till theend of June through good governance byappointing top officers with highest de-grees of integrity coupled with profes-sional competence.

He said all officers of FBR posted in

field formations have also been directedto expedite pending adjudication cases oftax payers without further loss of timewithin the ambit of law so that tax payerscould pay their financial liabilities timely.

Javed said since his induction in in-come the tax group in 1979, he alwaysattached great importance to tax payers,the main sources of strength of the na-tional economy. He said he had also di-rected all members, chiefcommissioners, chief collectors andcommissioners and collectors to redressgenuine problems being confronted bytraders, importers and exporters.

On the other hand, he said, businesscommunity must pay their due taxestimely and contribute their shares to-wards nation building. He said the busi-ness community always contributed amajor chunk towards the national ex-chequer and their solid and concrete pro-posals will be taken care of so that morerevenue could be collected besides im-proving the national economy. The FBRchairman said direct interaction of pri-vate sector at highest level would yieldpositive results besides restoration ofconfidence of foreign and local investors.

Iftikhar Ali Malik stressed the need for

evolving "Pakistan friendlyand business friendly" fis-cal policies so that eco-nomic growth could beaccelerated on priority inreal terms. He said the en-tire business communitywas loyal to the countryand ready to brave allchallenges, provided theywere taken into confi-dence before giving afinal shape to nationalpolicies related to trade.

He hoped that the char-ter of economy will be pre-pared with a consensus of thebusiness community that wouldbail the country out of a bleak eco-nomic condition. He said elected of-fice-bearers of FPCCI and otherchambers must be made permanent members in all policymaking forums at federaland provincial gov-ernment levelsto makethem vi-able infuture.

ISLAMABAD

APP

The National Accountability Bu-reau (NAB) is contemplating to

broaden its scope down to thedistrict level and revamp

the regulatory mecha-nism of the countryfrom grass root lev-els, the collapse ofwhich has begot-ten corruption.

"We intendto reach out tothe complaints ofthe general pub-lic andstrengthen theregulatory andaccountabilitysystem in thec o u n t r y , "N A B

Chairman Admiral (r) Fasih Bokhari said on Sunday.He said NAB was promoting a culture of resilience through

awareness activities and efforts for character building of the fu-ture generation with help from educational institutions acrossthe country.

He said the prime minister had also been approached toplace NAB under his purview through Cabinet Division as afirst step towards its autonomy.

"We have also requested the prime minister for getting backthe Economic Crime Wing and Anti Corruption Wing from FIAto strengthen the Bureau," he said, adding that it would enablethe bureau to reach the district level much faster than startingfrom scratch. He said the old mechanism of full dependence onenforcement had not worked because more than 60 legislationson combating corruption made in the past failed mainly becauseof emphasis on enforcement.

The NAB chief said when he assumed charge, NAB was onthe verge of closure as premier Gilani had also revealed on thefloor of the National Assembly that the government planned toclose down NAB.

Two of its important wings including Economic Crimes andAnti Corruption Wing were handed over to FIA.

However, he said, he started restructuring and revamping ofthe bureau, working with only 28% of its strength.

"We have recruited 260 new investigators which are beingtrained by the experts from FBI, European Union and other for-eign countries. But in a situation like Pakistan’s, we need morethan 8,000 workforce while we are working with 1,700 people,"Bokhari added.

He said our mandate was not only to recover money fromthe corrupt but also to revitalize the regulatory mechanism ofthe country, suggesting measures to rebuild organisations andmake them responsible to the extent that corruption could beprevented at initial stages.

He said NAB was actively perusing a recovery drive fromelectricity defaulters who owed more than Rs 160 billion to thenational exchequer. On direction of NAB, electricity connec-tions of defaulters are being disconnected, he said.

"The officials of distribution companies showing negli-gence in this regard would also be tried under relevant law,"Bokhari said adding that the bureau has started arresting elec-tricity defaulters after expiry of the deadline for volunteerpayment of dues.

Responding to a question, he said the existing NAB was dif-ferent from the bureau under previous tenures that had usedNAB as a political tool while the incumbent administration wasfocusing on corruption prevention and strengthening of the reg-ulatory mechanism in the country.

NAB to reach out to district level tocurb corruption, says Bokhari

FBR to take FPCCI into confidenceon budget proposals

LAHORE: Gross irregularities and large scale malpractices were committed during theregularisation of smuggled vehicles and containers clearance that inflicted a colossal lossto the national kitty. On Sunday the Federal Board of Revenue (FBR) expressedextreme displeasure on the abysmal performance of Collector Customs(Appraisement) Lahore Zeba Hai Azhar who miserably failed to achieve thedesired results and was unable to check rampant corruption in her area,especially at NLC Thokhar Niaz Baig and Lahore Mughalpura dry port.It was also told that Assistant Collector, NLC, Thokhar NiazBaig, Muhammad Moazzam Raza patronised a specialgroup of Customs Inspectors Amir Moin, IftikharButter, Amjad Saeed, Ashfaq Hamdani and ArifNaveed who charged duties on various types ofvehicles and containers according to their owncriteria after receiving bribes, while the other15 inspectors were sidelined. It was furtherbrought to the chairman's notice thatMuhammad Moazzam Raza, on behalf ofthe collector also unlawfully collected Rs1.25 million from his subordinates. TheFBR chairman taking serious note decidedto take to task all inefficient officerswithout succumbing to pressure from anyquarters. The chairman during his recentmeeting with office-bearers of the FPCCIhad also promised to transfer all corruptand inefficient officers. APP

Gross irregularities committed in containers’ clearance

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businessMonday, 29 April, 2013

02

B

Being good in business is the most fascinating kind

of art. Making money is art and working is art and

good business is the best art. — Andy Warhol

JOnAtHAn WEIL

BlOOmBERG

Give credit to Apple Inc. (AAPL) and itschief executive officer, Tim Cook, for get-ting serious about returning unneeded cap-ital to shareholders. As for the details, someof them don’t seem well thought out.

The maker of iPhones and iPads thisweek said its board approved a sixfold in-crease in its stock-repurchase plan to $60billion. Not long ago, even discussing theidea of large share buybacks was a non-starter for Apple. Now that its stock hastanked, the company is acting like they area must-do, no matter what else the futuremight bring. At about $408 a share, down42 percent since its record high in Septem-ber, Apple has a stock- market value of $383billion. “This is the largest single share re-purchase authorization in history and is ex-pected to be executed by the end of calendar2015,” Apple said in an April 23 news re-lease, the same day the company reportedits first quarterly profit decline in a decade.

How could Apple be so confident itwill spend the whole $60 billion by then?That’s hard to say. The company is underno obligation to complete the repurchaseprogram, although it obviously wants themarkets to believe it will. Apple’s state-ments this week suggested it would carryout the plan without regard to price, whichshould be the most important considerationof all.

SHunnIng REpuRCHASES

Nobody knows what Apple’s stock willdo next month or next year. Would Applekeep doing buybacks if its price-earningsratio tripled? That would be a high-classproblem to have if the P/E soared becauseof a rising share price, but not if the mainreason was a plunge in profits. Either way,you have to think Apple would reconsiderits plans, except Apple didn’t say whatmight cause its expectations to change. Thestock now trades for a mere 9.8 times earn-ings for the past four quarters.

Berkshire Hathaway Inc. (BRK/A), theconglomerate run by Warren Buffett, alsoused to shun buybacks. Like Apple, it, too,changed tacks recently. In 2011, Berkshiresaid it would begin repurchasing shares foras much as a 10 percent premium to itsbook value, or common shareholder equity.The company’s board raised the limit inDecember to 20 percent. (Berkshire hadpaid about $1.4 billion to buy back stockas of the end of last year.)

Unlike Apple, Berkshire providedwell-defined parameters from the outset.

The stock currently trades for a 41 percentpremium to book, so investors have a clearunderstanding that Berkshire isn’t a buyerat today’s prices. The company has said itwouldn’t do buybacks if they would reduceBerkshire’s cash to less than $20 billion. Italso has said it expects the program to con-tinue indefinitely. There is no timetable.

Apple’s buybacks are part of a programto return $100 billion to shareholders bythe end of 2015, including $11 billion ofannual dividend payments. The companyhad $12 billion in cash and $133 billion ofmarketable securities as of March 30.About 70 percent of that was held offshore,which means the company would face alarge tax bill if it repatriated the assetsunder current laws. Because of that, Applethis week said it plans to borrow money tohelp pay for returning capital to sharehold-ers. The company has no debt now.

Criticisms of Apple’s disclosures mayseem minor, compared to the importantstep the company is taking to bring somerationality to its capital structure. Appledoesn’t need $145 billion of cash and se-curities on its balance sheet earning next tonothing. No company does. Most of it be-longs in the hands of shareholders who canput the money to better use.

That said, there’s little to be gainedfrom creating long- range expectations thatlater might prove unwise to fulfill. Sure,Apple used wiggle words to describe its in-tentions. It also created a needless risk toits credibility in the event that circum-stances warrant a change. The board wouldhave been better off simply authorizingmore buybacks and describing the condi-tions under which Apple would followthrough with them. An Apple spokesman,Steve Dowling, declined to comment.

BuyBACK MISStEpS

Plenty of technology companies, no-tably Dell Inc., have hurt themselves by re-purchasing huge quantities of their ownstock at inflated levels. (For more on Dell’sdisastrous buybacks, see this excellent col-umn from January by Floyd Norris of theNew York Times.) If the shares stop look-ing like a bargain to Apple, it shouldn’thesitate to quit buying them. Other meth-ods for distributing capital, such as a largespecial dividend similar to the one Mi-crosoft Corp. paid in 2004, might be a bet-ter option at some point.

Apple will have lots of chances to im-prove its transparency and better explainhow it will execute its buyback plan. Itshould take a cue from Berkshire: Themore detail, the better.

KARACHI

STAFF REPORT

Adcom dominated the night at the PASAwards 2013, walking away with sixawards, including two big wins in theBest Original Local Campaign andCampaign of the Year categories for Te-lenor Easypaisa Khushaal.

The PAS Awards 2013 were held atthe Expo Centre. The other big winnersfrom the night were JWT Pakistan (5Awards) while Lowe and Rauf and RedCommunications won 2 Awards each.

Following is a complete list of winnersfrom the evening:Campaign of the Year: Adcomfor Telenor EasyPaisa KhushaalBest Original Local Campaign:

Adcom for Telenor EasyPaisaKhushaalPassion for Pakistan: Shoot atSight for National Ka PakistanBest in Digital: Creative Chaos forMagnum The Royal TreatmentAgriculture and Related

Industries: Adcom for Engro Zarkhez

Beverages (cold): Walter forPepsi Made for CricketTextile, Fashion and

Accessories: Red CommunicationArts for Servis Shoes for EveryoneTelecommunication and

Hardware Manufacturers: GreenMan’s Ark for Nokia Liked by a MillionSoaps and Handwash: Lowe &Rauf for Lifebuoy Global HandWashing DayPackaged Foods: JWT Pakistanfor Shan Shoop LaunchHousehold Care: ManhattanInternational for Harpic MohallahHealthcare and Fitness: BEDDB for Sucral Zero Calorie SugarConfectionary and Snacks: JWTPakistan for Halls AeroplaneFabric Care: Spectrum Y&R forBonus Tristar Do Gunnah SastaConsumer Electronics: RedCommunication Arts for Pel ArcticSub Sey Thand FridgeHaircare: JWT Pakistan for SunsilkExpert StudioCosmetics, Personal Care and

Hygiene: JWT Pakistan for Vaseline

Total MoistureIce-cream and Desserts: JWTPakistan for Walls Badami – KhaoBadamiMedia: Jang Media Group for KaisaHoga 2012Telecom Service Providers:

Adcom for Telenor Mobile InternetBeverages (Hot): Maxus forNescafé BasementAutomotive and

Transportation: ManhattanCommunications for Servis Tyres,Grip Servis Jaisi Toh Fikar KaisiBanking and Financial

Services: Adcom for TelenorEasyPaisa KhushaalChildren’s Products and

Services: Ogilvy & Mather Pakistanfor Cerelac Chanda MamaCSR and Public Servis: Geo forZara SochiyeRetail: Adcom for GourmetCorporate CampaignBreakfast Food and Dairy:

Lowe & Rauf for BlueBand BradmanCulinary: IAL Saatchi & Saatchi forNational Recipe Mix Rung Bharti Jaao.

Adcom wins big at thePAS Awards 2013

What Apple can learn from Warren buffett

Trade ties betweenDenmark and Pakistanstable: envoy KARACHI: The Ambassador of Denmark to Pakistan Ole E Moesby termed trade ties betweenthe two countries as very stable and improved. "We can do more than what we are doing now,”he remarked and added that trade relations between Denmark and Pakistan can be improvedfurther. He said Denmark is at the forefront internationally in the sector of energy and energyconsumption. The envoy pointed out that in the aftermath of the energy crisis in the 1970s; theyhad made a more energy efficient society in Denmark. He was of the view that Pakistan can alsolearn a bit from the Danish experience in this regard. Moesby believed that Pakistan has the

ability to overcome energy problems and move forward. Healso conferred the Danish award-the Order of

the Night of Dannebrog-on ConsulGeneral of Denmark in Karachi

Naheed Irshaduddin for herexcellent contribution in

developingrelations betweenDenmark andPakistan. Aceremony to thiseffect was held at a

local hotel onSaturday evening.Naheed has beenserving as the

Honorary ConsulGeneral of Denmarkin Karachi for the past19 years. APP

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