'I can't discuss it' - Van Gaal won't comment on Bale links

The world's most expensive player has been linked with a move to Manchester United in recent weeks, with the manager insisting he would only broach such matters internally

Louis van Gaal refused to entertain questions over Manchester United's rumoured bid for Real Madrid starGareth Bale. 

The 13-time Premier League champions have been linked with interest in the 25-year-old for some time, with ex-manager David Moyes admitting he made an approach ahead of the winger's move to Real Madrid.

Bale's agent, David Manasseh, has rubbished talk of his client leaving the Santiago Bernabeu recently, but Van Gaal did not rule out a move when questioned by reporters on Tuesday.

"I cannot discus that with you," Van Gaal told reporters. "I discuss that with my CEO and not with anyone of the media."

Bale scored as Real Madrid won the Club World Cup final on Saturday, taking his tally since joining the Liga giants to 33 goals and 24 assists in 66 appearances.

Fabregas: Barcelona are Messi and 10 others

The midfielder admits he would love to see his old team-mate join him at Chelsea but suggests he has never been more important to the Catalans than in 2014-15

Cesc Fabregas has claimed Barcelona have been little more than "Lionel Messi and 10 others" this season.

Messi's future at Barcelona has come under a lot of scrutiny after he suggested last month he could leave the club in the near future.

Barcelona have struggled to reach consistent form this season, with Real Madrid setting the pace in La Liga, while it took a top-class showing from Messi to help the Catalans beat Paris Saint-Germain 3-1 to top their Champions League group.

Fabregas played alongside the Argentine in the Barca youth system and again in the first team when he returned to Spain following his time at Arsenal and, while the Chelsea ace admits he would love to see Messi alongside him at Stamford Bridge, he suggests his importance to Barcelona has never been greater.

"This season Barca are Messi and 10 others," he told Radio Marca. "Messi has saved his team on many occasions."

When asked if he thinks Messi should join him in west London, Fabregas added: "I wish! Why not? I'd love that to happen. I'd be all for it. 

"As a Barca man, I believe that Messi deserves to retire there for all that he has given the club. 

"He is a legend that has changed Barca's history. But, as his team-mate and friend, without doubt I'd love to have Leo by my side."

The World Cup winner was also asked if he felt Jose Mourinho would be a good fit to coach the Camp Nou club.

"I'd say that Barcelona have a style that he has already experienced and understands perfectly," he replied.

"Chelsea play a very similar game: we want to be the protagonists, have possession and look to score. We may have a different system, but the philosophy is similar.

"Mourinho adapts to the players he has. What makes him so great as a coach is that he adapts to any situation and his teams can play in many different ways. It's a very intelligent way of managing."

Pak-China Economic Corridor to help all

Pakistani and Chinese leadership have reached an understanding for investment to facilitate road and railway links, said Xinjiang province influential personality Yuan Jianmin STOCK IMAGE

ISLAMABAD: The establishment of the Pak-China Economic Corridor would upgrade the border regions of both countries by connecting Gwadar port to the northwestern region of Xinjiang via highways, railways and pipelines.

This was stated by Yuan Jianmin, an influential personality of the Xinjiang province of China, while speaking on the topic “Pak-China Relations: Pak-China Economic Corridors” at the National University of Modern Languages (NUML).

“The Pak-China Economic Corridor isn’t aimed to undermine the interests of any country,” said Yuan, who holds portfolios of deputy secretary general at the China Council for International Investment Promotion, vice chairman of the Xinjiang International Chamber of Commerce, China among others.

Yuan said that the idea of connecting different countries of the region with one common route was quite old. Different programmes had been proposed at different times. American Foreign Secretary Hillary Clinton, during her visit to India in 2011, floated the idea of an economic zone, Russia president proposed the idea of Euro-Asia silk route, while Japan extended the concept of Asian Silk route for the region, he added.

He reiterated that Pakistani and Chinese leadership held a number of meetings and reached an understanding for the investment of billions of dollars to facilitate road and railway links between the two countries, energy and power provision, development of telecom, trade, livestock, export of sea food to China and many other products between the two countries, he said. 

Oil prices strike five-year lows, weighing on energy stocks

The unabated price plunge comes after the 12-nation Organization of Petroleum Exporting Countries opted Thursday to keep its collective output ceiling at 30 million barrels per day, where it has stood for three years. STOCK IMAGE

Crude oil prices sank to five-year low points on Monday, dragging down the share prices of energy companies, while miners were hit by weak Chinese manufacturing data, traders said.

“Oil sector stocks have driven the FTSE lower,” said market analyst Alastair McCaig from the IG trading group.

Countering the downward trend, shares in German power giant E.ON soared on the company’s plans to spin off its conventional energy operations and focus on renewables.

Oil futures tumbled to their lowest levels for five years, extending last week’s sharp sell-off in response to OPEC’s decision to maintain output despite a supply glut and plunging prices.

US benchmark West Texas Intermediate (WTI) for delivery in January hit $63.72 a barrel — the lowest level since July 2009.

Brent crude for January sank to an October 2009 low of $67.53.

“Investors see crude as remaining vulnerable after last week’s OPEC announcement,” said Michael McCarthy, chief strategist at traders CMC Markets in Sydney.

“We have not yet seen any piece of news or development that could trigger a bottoming-out phase in oil prices,” he told AFP.

The unabated price plunge comes after the 12-nation Organization of Petroleum Exporting Countries opted Thursday to keep its collective output ceiling at 30 million barrels per day, where it has stood for three years.

OPEC’s powerful Gulf members, led by kingpin Saudi Arabia, resisted the calls from poorer members, including Venezuela and Ecuador, unless they are guaranteed market share, particularly in the United States where rising production of shale oil has contributed to the global glut.

Sliding oil hurts stocks

London’s benchmark FTSE 100 index shed 0.78 per cent to 6,669.93 points in afternoon trading.

Frankfurt’s DAX 30 lost 0.27 per cent compared with Friday’s close to stand at 9,954.40 points and the CAC 40 index in Paris dropped 0.46 per cent to 4,370.19.

“General profit-taking after a stellar November and reassessment of the time frame of possible further action by the ECB is putting pressure on stocks,” said Markus Huber, senior analyst at broker Peregrine & Black.

“There is also more disappointing news out of China,” he noted.

The slowdown in Chinese growth, and hence oil demand, has also added to downward pressure on oil prices.

Among the biggest fallers were Tullow Oil, which dived 4.7 pe cent to 405.90 pence and miner BHP Billiton, which lost 1.5 per cent to 1,494.50 pence.

Slumping oil prices are adding to worries about slowing eurozone inflation — a situation that is likely to make the European Central Bank increasingly nervous and pave the way for further monetary easing, according to analysts.

Ruble knocked

In foreign exchange on Monday, the euro rose to $1.2485 from $1.2443 late in New York on Friday.

The European single currency fell to 79.29 British pence from 79.54 pence, while the British pound gained to $1.5746 from $1.5641.

The beleaguered ruble meanwhile hit new record lows, dropping by 8.0 per cent during the session at one point, as sliding oil prices increased worries about the economy in Russia, a major producer of crude.

The ruble has now depreciated by some 40 per cent this year, due not only to falling oil prices but also Western sanctions imposed against Russia’s support for a separatist uprising in eastern Ukraine.

On the London Bullion Market, gold slipped to $1,178.75 an ounce from $1,182.75 on Friday.

The metal took a hit after the Swiss on Sunday voted against the idea of their country significantly increasing its gold reserves.

Asian markets mostly fell Monday after China released data pointing to further weakness in its manufacturing sector, but Tokyo hit a seven-year high as the yen slipped against the dollar.

A downgrade of Japan’s credit rating by Moody’s weakened the yen, which helps the country’s exporters, and helped lift Tokyo stocks 0.75 per cent to the exchange’s best finish since July 2007.

Elsewhere the slowing Chinese manufacturing raised concerns about the growth outlook.

Sydney sank 1.98 per cent, Seoul fell 0.79 per cent, Shanghai slipped 0.10 per cent, while Hong Kong tumbled 2.58 per cent lower.

US stocks also opened lower Monday on the disappointing Chinese economic data.

Five minutes into trade, the Dow Jones Industrial Average was down 0.28 percent to 17,778.05 points.

The broad-based S&P 500 dropped 0.38 per cent to 2,059.64, while the tech-rich Nasdaq Composite Index 0.24 per cent to 4,779.9

Power generation: A trash-y economy is the future

Large metropolitan centres organised trash collection using a fleet of city-owned trash trucks to collect and 

recycle

. STOCK IMAGE

KARACHI: China Aviation Planning and Construction Development (CAPD) is ready to invest in the Waste To Energy (WTE) project of the Lahore Waste Management Company (LWMC) by installing a plant at Lakhodair, according to a report published in newspapers. The attractive idea is timely on the backdrop of the prevailing energy crisis.

However, the idea seems to be on the backdrop, like previous such endeavours. In a bid to find means for cheap power generation, the Sindh Board of Investment (SBI) recently arranged a presentation from a Swiss firm, EAWC Technologies, which offered generation of electricity from the management of waste.

Producing energy from waste without burning, this technology has potential to produce more power from the same amount of fuel. This is done through plasma convertors, through which steam turbines generate electricity, also providing purified water for areas suffering from salinization.

EAWC CEO Ralph Hafmeier, in a meeting with the LWMC, proposed a plant capable of producing 1 megawatt of electricity, with a further potential to increase the capacity to 100MW in the future. Meanwhile, LWMC MD Waseem Ajmal Chaudhary said that plasma technology helps treat hazardous waste, especially when it comes to medical waste. He further said that the plant setup is a quick process if the government of Punjab approves it.

In the present scenario, this technology may help in bringing some relief to the country. Pakistan faces electricity shortage as the main hurdle for its economic development, and the best way to answer this challenge is to utilise the waste for power generation. The facilities can be for variable sizes like 10MW (small towns) or 3000MW (cities like Karachi).

India is also working upon a proposal to generate electricity by recycling the municipal solid waste and has identified around eight hectares of land in for the development of a landfill site. The proposal has been included in the project report for the plant currently being finalised by the authorities. The authority has invited expressions of interest from consultants for setting up the plant – which would generate around 12MW. Apart from generating electricity, the authority has also proposed to produce compost from the bio-degradable waste collected at the site.

In Karachi, a pilot project costing $5 million to produce 486 metres cubic feet of bio-gas and 25 kilowatts of electricity per day from cow dung was commissioned in the Landhi Cattle Colony in August 2008. A British company, HiRAD Technology, had installed this plant as a pilot project. The formal inauguration ceremony of the project was to be held after the successful results of the commissioning. But nobody knows what happened to the project.

It is said that one man’s trash is another man’s treasure. Unfortunately, this statement is more reality than idiom for a large number of people in Karachi, living in shanty slums and forced to find their daily ration in city dumps. Significant valuable resources are created from processing the trash. For example, daily output of processing 1000 tons of waste at a large municipality could be produce a hefty amount of electricity, many gallons of drinking water and millions of  cubic feet of hydrogen gas for sustainable power generation.

According to Muhammad Abdul Rahman, a researcher at the Sustainable Development Policy Institute, recycling is not done countrywide on permanent basis. The sector is mainly involved in this business informally. Modern machinery and mechanism for recycling is not available, and each year the economy is losing a fair amount of potential revenue. A study conducted in Lahore on recycling business reveals that it is fruitful. According to a study, only 21.2% of the solid waste collected from the city is being recycled, which is roughly generating revenue amounting to Rs271 million. It is a remunerating business and scavengers (waste collectors) and the junk-shoppers gain a profit of 15% and 14% respectively.

“Recycling has not yet been given the status of an industry,” said Rahman. “However, it can generate revenue of more than Rs530 million in only Lahore.”

It may be mentioned here that trash disposal became a major industry with the growth of suburbs and the institution of federal antipollution laws in the 1960s, which prohibited burning trash in the backyard of any locality. Environmental laws also mandated safe disposal of industrial wastes. Large metropolitan centres organised trash collection using a fleet of city-owned trash trucks to collect and recycle. Many companies have a revenue model solely based on waste management and recycling.

Sweden last year imported around 850,000 tons of burnable waste, and was paid to do so. In all, it incinerated 5.5 million tons. Sweden is not the only EU country importing trash. Germany, Belgium and the Netherlands are in the list as well. Germany is the biggest in actual amounts, but as a share of rubbish burnt, Sweden is the leading importer. Oslo, a recycling-friendly place where roughly half the city and most of its schools are heated by burning garbage — household trash, industrial waste, even toxic waste from hospitals— has a problem: it has literally run out of garbage to burn.

Unfortunately, over here, garbage is only partially processed, whether produced by industry, households and agriculture. Often seen as unnecessary materials that must be disposed of, waste can instead become a highly recoverable raw material. Keeping in view that a large number of European countries are successfully converting garbage into electricity and there is an acute shortage of trash in those countries, we may even think of earning a huge foreign exchange by exporting waste, which is otherwise adversely affecting our environment.

Post-GSP Plus status: Despite hurdles, textile exports rise considerably

Pakistan’s textile exports to the EU increased to $3.512 billion in the first eight months of 2014, up 21.4% compared to $2.894 billion in the same period of previous year. PHOTO: ONLINE

KARACHI: Is Pakistan really taking full benefit of the European Union’s (EU) Generalised System of Preferences (GSP) Plus scheme?

Apparently, the answer is no, especially if one goes through recent news stories about acute energy shortages and security challenges. But the situation is not as bad as it may seem.

Despite all difficulties, Pakistan’s textile exports – constituting more than 50% of total overseas sales – to the EU have grown considerably since January 2014, the month when the country got the GSP Plus status.

Though exports of bed wear and cotton cloth have dropped, textile mills, especially those that produce knitwear and garments, have significantly increased shipments to the EU in the last 11 months. Therefore, those who are portraying the dismal picture, especially people from the textile industry, are not showing the complete picture.

Our friends in Europe have done their part by giving us the opportunity to export at preferential import duties until 2017. Now is our turn. However, for that we first need to change the attitude as we always blame the external factors or our internal structural weaknesses.

Pakistan is going to complete a whole year in December since it started enjoying the advantages of zero or low import duty structures under the scheme. It is high time the exporters and government sit together to find out what is pulling them back.

Pakistan’s textile exports to the EU increased to $3.512 billion in the first eight months of 2014, up 21.4% compared to $2.894 billion in the same period of previous year, according to the recent government data.

This $600-million jump in textile exports means Pakistan can easily achieve its target of adding $1 billion every year to total exports to the EU that it set after receiving the GSP Plus status.

“Our exports to the EU have jumped by 10-11% in the last 11 months,” said Babar Khan, CEO of Multinational Export Bureau, a Karachi-based factory which exports over 50% of its knitwear products to EU states.

During the last four months (Jul-Oct), overall knitwear exports have jumped by a handsome 25% compared to the same period of previous year. Similarly, readymade garment exports have increased by 10% in the same period.

However, what is worrying for the industry is the drop in cotton cloth and cotton yarn exports that declined by 36% and 10% respectively.

Despite energy shortages, security challenges and delay in sales tax refunds, Khan is optimistic that knitwear exports to the EU will remain significantly higher in the next 12 months.

But sales of some garment exporters have remained stagnant despite getting all the positives of the duty preference.

“Our exports have not grown in the past 11 months despite garment shipments to the EU markets,” Jawed Suleman, CEO of Sun Textiles, told The Express Tribune.

“After receiving benefits of the scheme, Pakistan’s textile exports should have been doubled in the last 11 months. But we cannot achieve this until we reduce our cost of production and improve the tax collection machinery,” added Suleman, who is also chairman of the Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA).

However, the double-digit growth in exports of knitwear and other garments despite impediments such as the appreciation of the rupee is a healthy sign for the textile industry.

With relative stability in the exchange rate in recent months, strong macroeconomics and declining oil prices, Pakistan has many positives on its side. The winners will be those who innovate and diversify their products according to the market needs. Let’s see how smart the exporters are.

Insight: A fizzy beginning but a strong recovery

As per company officials, the demand for carbonated soft drinks is continuously increasing. STOCK IMAGE

LAHORE: 

Unknown to many, one of the world’s largest non-alcoholic beverage manufacturers and a renowned international brand – Coca Cola – struggled to find its footing in Pakistan. Its inception paved the way for a whirlwind performance with the company losing its market share in 1987 that passed on to local retailers.

However, after the company lost market to local rivals, it has passed through a transition period since 2006. During the time, Coca Cola Beverages Pakistan Limited (CCBL) changed their business model to match its global company’s.

Speaking about their days of struggle, CCBPL Director Public Affairs and Communications Zafar Abbas Jafri said, “Acquiring back the franchises from local investors was slow and painful; we did this because the local franchise investors were not following the CCBPL strategy.”

Since 2006 and particularly after 2008, the company has started investing heavily in its infrastructure and around $350 million has been invested in new factories and product diversification, he added.

CCBPL was established back in 1996 and was a subsidiary of its parent company. In 2008, Coca Cola Icecek (CCI) acquired 49% shares of CCBPL and since then the company is continuously improving both its commercial operations as well as its environmental sustainability practices in Pakistan. Since 2008, the company has increased its market share by 30% and doubled its sales volume.

The CCBPL currently has 35% market share in the carbonated soft drink segment, second to its rival Pepsi Co, which is enjoying 49%.

“Our vision is to be a market leader and we are reducing the gap every passing day. We gain 10 share points in a year.  In Lahore, we became the market leader in 2008 and in Rahim Yar Khan in 2012,” Jaffri said.

CCI today operates six plants and 13 warehouses in Pakistan, as per company officials, the demand of carbonated soft drinks is continuously increasing. They are now targeting expansion, aiming to increase its capacity 1.5 times by 2017, building three plants in Multan, Islamabad and Karachi.

Pakistan is a highly growing country and is ranked among the top 20 markets within the Coca Cola system.

According to 2013 year end results, Pakistan constitutes 19% of the total production volume of CCI. In 2013, CCI grew by 22% in Pakistan as sales volume went over 200 million unit cases. For the first six months of 2014, CCI’s sales volume was 16% higher than the same period previous year.

Despite this impressive growth, the company is still facing several problems, with taxation woes and issue of counterfeited products.

Jafri claims that local brands are exempted from taxes; a level playing field that should be given to multinationals for better competition.

Talking about counterfeited products, Jaffri said that this has resulted in a loss of 10-15%, and the government is bearing a loss of around Rs1 billion annually due to such products.

Pakistan a key for regional development

In Pakistan, TUV Austria Holdings is making some investment, particularly in the oil and gas sector, to perform services for the industry and is providing management system certifications for local companies.

LAHORE: The world is very optimistic about the future and potential of Pakistan as its geographical position, coupled with huge natural resources, is a key in the eyes of many global business groups which consider the country a game-changer for the region.

However, considering Pakistan an interesting marketplace with a large population, many stress the need for policy development, especially in the oil and gas sector, along with timely completion of mega projects.

“Pakistan is an important country in the region with an ideal geographical location, so we should not underestimate its role and importance for future development of the region,” said Stefan Haas, Global Chief Executive Officer of TUV Austria Holdings, in an interview to The Express Tribune.

For Haas, the Gwadar Port and the railway and road links with China are key projects on which the future of the region depends.

“This port will really make a difference for Pakistan as currently all goods transported to this region take long routes which makes them somehow costly. Once completed, the transportation time will come down and if you are faster, then you are more connected to the markets,” he said.

He cited the example of the Port of Rotterdam, which had connected European nations. Though industrial clusters do not exist in Rotterdam, but the port is a key for European countries for a faster shipment of goods to the market.

TUV Austria Holdings has been active in the areas of occupational safety, quality and environmental protection since 1872. In Pakistan, the company is making some investment, particularly in the oil and gas sector, to perform services for the industry and is providing management system certifications for local companies.

Talking about oil and gas deposits, Haas said there were lots of oil and gas reserves waiting to be explored in Pakistan. But to tap them, a firm government policy is the need of the hour as many active oil companies are willing to invest.

“As the world is growing so is the oil and gas demand and what this tells us is that this industry will be a cornerstone for the oil producing countries and for Pakistan also.”

Haas said currently global oil prices were falling and it seemed unwise to invest in such a scenario as new discoveries might not pay off to the companies. But the expectation is that oil prices will rise significantly in the future to levels where investment will be feasible.

In Pakistan, he added, the policy did play a significant role as oil companies were getting more or less fixed prices and it depended on the price level, whether new exploration activities should be financed or not.

Talking about hurdles to doing business, Haas was of the view that the potential was much more than the impediments. “We are not thinking about the problems but the solutions and potentials at this time.”

Interestingly, he had not many complaints against the bureaucracy as he believed that bureaucratic hurdles were a global issue.

Tuwairqi Steel warns: If gas doesn’t come cheap, company will pack up

Tuwairqi Steel Mills, which is Pakistan’s first private-sector integrated steel manufacturing project, would create 5,000 jobs in Balochistan and 3,000 jobs in Karachi. PHOTO: REUTERS

ISLAMABAD: 

The top management of Saudi Arabia-based Al Tuwairqi Holding, while cautioning the government, has said that it will consider packing up if its steel mill in Pakistan is not provided promised gas at a discounted rate.

“Enough is enough, after one and a half years of bleeding, we don’t want to leave Pakistan, but when it comes to business, we have to act like a business,” said Dr Hilal Hussain Al-Tuwairqi, Chairman of Al Tuwairqi Holding, while speaking at a press conference here on Wednesday.

“If they don’t meet our demand, there is no way that we make investment here,” he said. “What you commit, you have to do.”

According to the management, the government has assured them that it will take up the matter in the upcoming meeting of the Economic Coordination Committee (ECC), but they could pull out of the country if the issue is not addressed.

In an effort to reach a settlement, the company has even offered 15% (126 million shares) in the steel mill to the government without any payment in response to gas supply at a concessionary rate. After 10 years, it is estimated that the share value would be Rs162.

The chairman said former prime ministers Shaukat Aziz, Yousaf Raza Gilani and Raja Pervaiz Ashraf had made the commitment, but when the prime minister of South Korea, whose steel giant has co-financed Tuwairqi Steel Mills, spoke to premier Nawaz Sharif, he got no response.

The ambassador of Saudi Arabia also discussed the matter with Finance Minister Ishaq Dar, but it produced no solution.

“If the Korean premier got no response, who will pay heed to me,” the chairman asked. “The government could say yes or no after a month; Al Tuwairqi has plans to make a further investment of $900 million in next phases.”

Replying to a question, he stressed that if they were denied cheaper gas supplies, they would take input and guidelines from legal advisers on what to do next.

The government, according to him, had also committed provision of water and power in a memorandum of understanding (MoU), but it did nothing. Al Tuwairqi has itself set up a power plant and laid a 19km pipeline.

He said Tuwairqi Steel Mills, which is Pakistan’s first private-sector integrated steel manufacturing project, would create 5,000 jobs in Balochistan and 3,000 jobs in Karachi. Tuwairqi Steel Country Head Zaigham Adil Rizvi said the steel complex would have a production capacity of 1.28 million tons per annum compared to Pakistan Steel Mills’ 1.1 million tons.

He pointed out that Pakistan Steel Mills was banking on imported coal and iron ore whereas Tuwairqi would rely entirely on the iron ore produced in Balochistan.

In May 2004, an MoU was signed with Pakistan, under which the government was to provide a level playing field in provision of gas as fuel and feedstock.

“It was promised that gas would be supplied at a lower tariff to enable the company to compete in the international market,” he said, adding the Ministry of Industries had recommended a tariff of Rs123 per million British thermal units for five years.

However, the Ministry of Petroleum and Natural Resources cautions that the financial impact of the reduced tariff on Sui Southern Gas Company will be about Rs5 billion, requiring a 3.3% increase in gas prices for all consumers, except for domestic and fertiliser sectors.

Tuwairqi Steel is a joint venture between Saudi Arabia’s Al Tuwairqi Group of Companies and South Korea’s Pohang Steel (Posco), who have planned to set up Pakistan’s largest steel complex.

On its part, the Ministry of Industries argues that though the mill is seeking a support of Rs4 to Rs5 billion per annum, its Direct Reduced Iron (DRI) plant will contribute to the country’s economy an estimated Rs12 billion. Apart from this, foreign investment worth Rs89 billion will be made in forward and backward linkages of the DRI plant.

After establishing the linkages, the ministry says, the mill will contribute Rs100 billion annually to the economy in import substitution.

Phase-I of the DRI plant has been completed with an investment of $340 million while capital injection in phase-II and III could be in the range of $850 to $900 million. This, however, has been linked with commercial success of the DRI plant.

Pakistan refuses to sign three multilateral pacts at SAARC summit: officials

Bhutan's Prime Minister Tshering Tobgay (L), India's Prime Minister Narendra Modi (C), Pakistan's Prime Minister Nawaz Sharif (C, standing) and Nepal's Prime Minister Sushil Koirala attend the opening session of 18th Saarc summit in Kathmandu November 26, 2014. PHOTO: REUTERS

KATHMANDU: Hostilities between India and Pakistan on Wednesday threatened to scupper efforts by South Asian leaders to boost trade among almost a quarter of the world’s people, throwing into doubt any prospect of a regional customs union.

India and Pakistan have fought three wars, and just last month exchanges of fire across the border in Kashmir killed 20 people.

The bickering spilled into a two-day regional summit in Kathmandu, and their leaders refused to meet.

Indian and Nepali officials said Pakistan declined to sign three multilateral pacts with the eight members of the South Asian Association for Regional Cooperation (Saarc).

The agreements aim to boost road trade and electricity sharing, including across Pakistan’s heavily militarised border with India.

In an apparent reference to Pakistan, India’s foreign ministry spokesman said one country had cited incomplete “internal processes” for not signing the pacts, but stopped short of naming it.

Pakistani officials did not respond to telephone calls seeking comment.

Such a refusal threatens efforts by Indian Prime Minister Narendra Modi to make South Asia a viable economic counterweight to China and limit Beijing’s role in the region.

Regional integration would happen “through Saarc or outside it,” Modi warned the summit, if the grouping failed to agree on the pacts.

Nepal’s former foreign secretary, Madhu Raman Acharya, echoed the sentiment, urging the grouping to step up “sub-regional cooperation”.

Almost all the leaders at the summit expressed dismay at Sabre’s sparse achievements since it was founded 29 years ago aiming to become a European-style union.

Despite a free trade pact since 2006, trade among South Asian nations makes up five percent of their total trade. They share few transport and power links.

China, free of the baggage that makes much of the region wary of India, has built ports and sold weapons across South Asia, where its new Asian Investment Infrastructure Bank has attracted interest, including from India.

Through Pakistan, China suggested it play a larger role in the regional grouping, but India rebuffed the proposal.

Modi met all Saarc leaders but PM Nawaz

Meanwhile, Modi held two-way talks with every leader except Prime Minister Nawaz Sharif, since neither was ready to make the first move to defuse tension.

The region’s first summit in three years follows some of the worst cross-border violence in the disputed region of Kashmir in a decade, and comes as Nato-led troops prepare to pull out of Afghanistan, intensifying the India-Pakistan rivalry for influence there.

It is also the first time the eight leaders are meeting for the first time since the election of a new government in New Delhi that is taking a more assertive stance on both China and Pakistan.

India’s Prime Minister Narendra Modi held his first talks with Afghanistan’s new President Ashraf Ghani on the summit’s sidelines on Wednesday, as New Delhi seeks to develop its involvement in a country that Pakistan considers part of its sphere of influence.

Much of the attention has focused on whether the leaders of India and Pakistan will meet on the sidelines of the summit however, PM Nawaz was reported as saying the ball was in India’s court after New Delhi cancelled talks earlier this year.

“After the recent snub from India, which cancelled foreign secretary-level talks, Pakistan is not going to take the initiative. It will depend whether Modi says he wants to meet,” Pakistani political analyst Talat Masood told AFP.

Hopes of a move towards reconciliation were raised when Modi invited Pakistan’s prime minister to his swearing-in ceremony, but his right-wing nationalist government has adopted a more aggressive policy on Pakistan than its centre-left predecessor.

Modi warned during the recent upsurge in violence in Kashmir that “times have changed and their old habits will not be tolerated”.

On Tuesday, Modi oversaw a $1 billion agreement to build a hydropower plant in neighbouring Nepal, where China has invested heavily in recent years, saying he wanted to “move forward” with deals long delayed by mutual mistrust.

But the mistrust between India and Pakistan – widely seen as the main obstacle to greater South Asian integration – is unlikely to be resolved so easily.

“Saarc’s main problem is that Saarc is basically about India and Pakistan, with the Afghanistan dimension thrown in now,” said Sujeev Shakya, chairperson of the Nepal Economic Forum.

Trade between the Saarc nations – Afghanistan, Bangladesh, Bhutan, India, Nepal, the Maldives, Pakistan and Sri Lanka – has grown from under $140 million in 2008 to $878 million in 2012, according to Saarc figures.

But it still accounts for less than five per cent of the region’s total commerce, according to the Washington-based Brookings Institution. By contrast, trade between East Asian nations accounts for nearly 35 per cent of that region’s total.

Security is also likely to be discussed after al Qaeda announced a new South Asia branch and claimed responsibility for a deadly attack on a Karachi naval yard.

Analysts said domestic political concerns would likely take precedence during the Saarc summit, with Modi eager to appear tough on Pakistan during local elections in Indian-administered Kashmir.

Authorities in Kathmandu have spent a reported $10 million on sprucing up the city, repairing its notoriously potholed streets and declaring a two-day public holiday to avert traffic gridlock.

But there is little optimism that much will be achieved.

“It’s time to develop other regional groupings instead of getting bogged down by Saarc, where the conflict between India and Pakistan is a huge obstacle to progress,” said Shakya.

In trouble: A once-flying carpet industry faces crash

Many families in rural areas rely on rug manufacturing as the sole source of income. A single piece of rug requires six months to a year’s labour. PHOTO: AFP

FAISALABAD: 

The once-booming carpet industry has taken a nosedive in the last one decade. As regional players take giant leaps and capture world markets, Pakistan’s exports of rugs have been constantly declining, falling below $130 million per year.

In the past decade, exports came down 60% as a huge potential remained untapped because of a lack of support from the government, industry people say.

In comparison, India’s carpet exports have shown a phenomenal growth. A decade ago, India and Pakistan had annual rug exports of roughly $350 million and now Indian shipments have reached $1 billion.

While most countries have adopted modern methods of manufacturing, the carpet and rug makers in Pakistan still operate like a cottage industry. Rugs are made at home in rural areas and thousands of people rely on this profession.

“It is the small-scale factories in rural areas that give a vital boost to the industry,” said an expert.

Many families bank on rug manufacturing as the sole source of income. A single piece of rug requires six months to a year’s labour.

The small-scale industry is mostly dominated by women who make carpets at home. “These traditional workers lack proper training and require financing to complete the supply chain,” the expert added.

According to industry experts and exporters, there is an absence of research and development institutes in the country that could work to strengthen the sector. The largest buyers of Pakistan’s hand-knotted rugs are the United States and Europe.

“A few years ago, China and Turkey were the leading exporters, but their industries were wiped out due to expensive labour,” said Usman Ghani, Chairman of Pakistan Carpet Manufacturers and Exporters Association (PCMEA), while talking to The Express Tribune. “Now, China has become a big importer of rugs.”

Pakistan should explore new markets for rug exports including China where the demand was quite high, said Ghani, who is also the chief executive officer of Prince Rug Palace Private Limited.

Rug exporters have met government officials a number of times, seeking state support for including rug in the Free Trade Agreement (FTA), but to no avail.

“Machine-made carpets are in the FTA list and we have asked the government several times to add handmade rugs as well.”

Ghani added any relief provided by the government would help revive the ailing industry and create employment opportunities.

He stressed that global recession and declining exports necessitated concessions and incentives for the industry like credit financing and bank loans. “The carpet industry could be one of the main exporters of the country,” he remarked.

He also suggested that the government should hold exhibitions for the promotion of the country’s products.