US envoy headed home after India 'revenge' expulsion

Indian diplomat Devyani Khobragade (C). PHOTO: REUTERS

NEW DELHI: A US diplomat in New Delhi was headed for home Saturday after being expelled in a bitter row over an Indian envoy’s arrest that has seriously strained ties between the two countries.

The US embassy official’s expulsion was splashed over newspaper front pages along with photos of the Indian diplomat, Devyani Khobragade, arriving in New Delhi late Friday, her palms pressed together in a traditional Indian greeting.

“I am really thankful for all your support. My government will speak for me, my lawyers will speak for me,” Khobragade, 39, who has left her husband and two children behind in the United States, told reporters Saturday.

The United States said late Friday it “deeply regrets” India’s expulsion of the US embassy official and wanted to mend a partnership that Washington hopes could be a bulwark against China’s growing might.

However, India’s orders to the US diplomat to leave within 48 hours, just as the row appeared to be cooling, suggested New Delhi was still not in a forgiving mood.

With general elections due by May, politicians have pounced on US actions calling them a violation of national sovereignty and saying the United States should not be allowed to ride roughshod over Indian interests.

“India hits back with diplomat expulsion,” said the Mail Today tabloid while the Indian Express newspaper said: “Delhi goes for revenge expulsion.”

Ties have frayed since December 12 when Khobragade, India’s deputy consul-general in New York, was arrested on charges of visa fraud involving her domestic servant and lying about how much she paid her.

She allegedly obtained a visa for her maid by promising to pay her $4,500 a month and then struck a secret deal to pay her 30,000 rupees a month, far below the US minimum wage.

But shortly before her US grand jury indictment Thursday, Washington granted the Indian officer – who has denied all charges – full diplomatic immunity, allowing her to return.

“Her head is held high. She knows she has done no wrong,” Khobragade’s lawyer Dan Arshack told AFP.

As the diplomat was flying back to New Delhi, India announced it had asked Washington to withdraw an embassy official in a fresh retaliatory measure.

“I can confirm a US official accredited to the mission in India will be leaving his post,” US State Department spokeswoman Jen Psaki, said.

The exact timing of his departure from India was unclear as the US embassy was not returning telephone calls.

“We deeply regret the Indian government felt it was necessary to expel one of our diplomatic personnel,” Psaki said. “We’re looking to move our relationship forward. We’re looking to move past this challenging time.”

At the same time, Psaki said Khobragade cannot return to the US unless she surrenders to the court.

The US embassy would not identify the expelled official but Indian newspapers named him as Wayne May, who managed security staff and was the US side to the anti-terrorism aid programme.

The expelled US diplomat was of “similar rank” to Khobragade and is suspected of having helped the maid’s family travel to United States.

US prosecutors said the maid’s family were evacuated from India because of alleged intimidation attempts, accusations that also riled India.

Khobragade’s arrest outside her children’s school and treatment in custody, where she was cavity searched, outraged India, which insisted she had diplomatic immunity.

US prosecutors disputed this, contending she was not a ranking embassy official, and filed charges.

India used bulldozers to remove security barriers at the US embassy in New Delhi and even stopped the mission importing duty-free alcohol.

Washington views India as a key ally in countering China’s regional rise and has invested heavily in improving ties. In 2010, US President Barack Obama called relations with India “one of defining partnerships of the 21st century”.

India has benefited from US backing to gain access to foreign nuclear energy technology.

While Americans took the maid’s side, many affluent Indians who pay their servants far less than Khobragade was accused of paying hers, supported the diplomat and viewed her treatment as high-handed superpower behaviour.

Even traditional US supporters were angered by Washington’s actions.

“The US is so good at arm-twisting – India is just playing their game,” the national president of the Indo-American Chamber of Commerce, Chella Srinivasan, told AFP in a recent interview.

Former Israeli Prime Minister Sharon dead: Army Radio

Ariel Sharon PHOTO:AFP

JERUSALEM: Ariel Sharon, former Israeli general and prime minister who was in a coma for eight years after he had a stroke at the height of his power, died on Saturday aged 85, his family and the government said.

Sharon’s son Gilad announced the death at the hospital where his father had been treated. Doctors there had predicted his imminent death after his health declined sharply last week.

Ministers in Israel’s right-wing government, and the political opposition, mourned a tough and wily leader who left big footprints on the region through military invasion, Jewish settlement building on captured land and a shock, unilateral decision to pull Israeli troops and settlers out of the Gaza Strip in 2005.

“The nation of Israel has today lost a dear man, a great leader and a bold warrior,” Strategic Affairs Minister Yuval Steinitz said in a statement.

There was no immediate comment on the death from Palestinian President Mahmoud Abbas, with whom Sharon’s Likud party successor, Prime Minister Benjamin Netanyahu, has been holding US sponsored peace talks.

Meanwhile in Gaza, the Hamas militants whose political fortunes rose with the Israeli withdrawal savored Sharon’s demise.

“We have become more confident in victory with the departure of this tyrant,” said Hamas spokesman Sami Abu Zurhi, whose movement preaches the destruction of the Jewish state.

“Our people today feel extreme happiness at the death and departure of this criminal whose hands were smeared with the blood of our people and the blood of our leaders here and in exile.”

Higher speed: Car sales move up a gear during first six months of fiscal year

Year-end dip: 7.5% is the month-on-month decline in car sales in December 2013, as customers preferred to wait for newer model next year. PHOTO: FILE

KARACHI: 

Local car sales (including light commercial vehicles (LCVs), Vans and Jeeps) reached 61,252 units during the first half of fiscal year 2013-14 (1HFY14), up 6.5% compared to 57,540 units during the same period of the previous year.

However, in December 2013, sales dipped to 8,868 units, showing a decline of 7.5% month on month (MoM). During November 2013, local car sales stood at 9,588 units, 3.7% down as compared to 9,955 units in October 2013.

Analysts say the drop in December sales was due to the year-end phenomenon, as every year buyer prefers to buy the newer model from January 1.

“Car sales in the first six months of the fiscal year usually remain dull but jump in the second half of the year,” said JS Global Capital analyst Atif Zafar. “So I expect better sales in the remaining six months of the current fiscal year.”

As an example, Zafar said that if 10 cars are sold in the first six months (Jul-Dec), 15 are sold in the second (Jan-Jun).

However, he said that the government could increase the age-limit for used car imports from the current three years to five in the upcoming Auto Industry Development Plan 2 (AIDP 2), which may hit the sales of locally-produced cars.

“Local car sales declined continuously from October to December 2013,” an official of a car company commented. “But it was not shocking for us as we know car sales usually drop in the last months of each year mainly because of the year-end phenomenon.”

On a year on year (YoY) basis, car sales improved by 5% compared to 8,448 units in December 2012.

Among individual companies, Pak Suzuki – the country’s largest carmaker with 55% market share – saw sales improve by 3.4% to 35,492 units in 1HFY14 against 34,324 units in the same period last year. In December 2013 alone, sales remained stable at 5,981 units as against 5,989 units in November 2013.

Sales of Indus Motor –makers of Toyota Corolla – also improved by 3.3% to 15,179 units in 1HFY14 compared to 14,699 units in 1HFY13. On a monthly basis, Indus’ sales declined by 9.2% to 1,982 units in December 2013 but were up 26% YoY.

Honda Atlas Cars saw sales surge by 20.5% YoY to 9,989 units in 1HFY14. During December 2013, sales of Honda Cars significantly dropped to 655 units compared to 1,310 units in November 2013 and 864 units in December 2012.

“Car sales usually remain strong in second half of a fiscal year (Jan-Jun) so we expect further improvement in car sales in coming months,” a Topline Securities report said on Friday.

However, the report said the sales would not be 8% as it maintained its previous prediction that the car sales to remain between 5-8% in FY2013-14

Resolve: Businessman fights to save RC Cola

Small bottlers struggle in the face of capacity tax. PHOTO: FILE

KARACHI: 

For Ikram Elahi, Chief Executive of Pakistan Fruit Juice Company, which sells Royal Crown Cola, giving up is out of the question. Failure of a brand, which had been with the family for over two decades, would be a disgrace.

RC Cola is nowhere near its two main multinational competitors in Pakistan. But the brand once controlled a sizeable part of the market, especially in Lahore and some other cities of Punjab.

“I have no option but to fight to the very end,” he told The Express Tribune in an interview. “I know the odds are against us but all we want is a level playing field.”

Since the government came up with a controversial way of collecting revenue from the beverage industry in the 2013-14 budget, small bottlers like Ikram Elahi have been struggling. Many have shut their plants and cut capacity by more than half.

Pakistan Fruit Juice (PFJ) also makes Hico Ice Cream, which has dominated the take-home segment in Lahore since the 1950s and makes up most of the company’s revenue.

RC Cola accounts for just 30% of the PFJ’s sales and has a minuscule share in the beverage market, which is largely controlled by multinational bottlers.

Prior to making and selling RC Cola, Ikram’s family was one of the bottlers of a multinational beverage company. That agreement ended around early 1980s on a bitter note.

“RC Cola is ranked third globally. In the first year after taking the RC franchise, we imported the concentrate, which is used to make the drink, free of charge. That left us plenty of room initially to pass on the lower price to consumers,” he said.

Like most family businesses, Ikram was made to earn his way up the managerial chain. He was in college when he started assisting his father Inam Elahi, known as the pioneer of the beverage industry.

“My first job was to take measurements of billboards over shops. But before I knew it there was a tough assignment in front of me.”

By the late 1980s, RC Cola controlled 30% of the beverage market in Lahore. The company had already expanded its beverage operation with bottling plants in Multan and Islamabad.

Then in 1990, the government introduced capacity tax, which bound aerated drink makers to pay tax on the potential of machines instead of actual production.

What followed was a battle between small bottlers and big multinational companies. “To be honest, in the beginning we couldn’t even understand what had happened. The repercussions were yet to come.”

During those years, there was an association of beverage makers, which had taken up the issue with tax authorities. However, it soon became apparent that there was a clash of interest between the members.

Smaller companies didn’t have the financial muscle to compete with multinational brands, which had built extensive distribution channels. Some of the local firms couldn’t even afford television commercials.

By the time the tax was rolled back in 1994, 10 beverage firms and 13 juice plants had ceased to exist. Multinational brands now control 95% of the beverage market.

“It wasn’t just the tax. The competition at the stores had become dirty. We found out that our glass bottles were disappearing from the market. There was just one company that made bottles and waiting time to receive new deliveries ran into months,” Ikram said.

The capacity tax was introduced again in July 2013. And once again small companies are on the brink. The government expects to raise Rs33 billion through this tax against Rs28 billion which it earned last year from the beverages industry.

The Federal Board of Revenue (FBR) has realised that the tax has instead brought down tax collection and it is already reviewing the matter.

Removing ban: Govt planning to allow CNG kit and cylinder imports

OGRA had pointed out that the ban on the import of CNG cylinders/conversion kits resulted in the installation of unsafe smuggled cylinders. PHOTO: FILE

ISLAMABAD: 

At a time when the country faces a severe crisis, the government is planning to reverse the previous government’s ban on the import of CNG kits and cylinders for conversion of vehicles.

The installation of CNG stations was one of the major reasons for the crisis, as gas was being diverted towards cars, which posed a threat to the country’s export oriented industry.

The crisis took a toll on Pakistan’s textile industry, which was being wiped out in the world market due to the rising costs as a result of energy crisis.

“With the current gas crisis, government’s plan of allowing the import of CNG cylinders and kits will further aggravate it in the country,” officials said.

Official sources in the cabinet said the Ministry of Petroleum and Natural Resources had submitted a summary to the Economic Coordination Committee (ECC), proposing that the original equipment manufacturers may be allowed to import CNG cylinders, kits and parts for conversion of vehicles at their manufacturing/assembling facility.

The ministry said that the Oil and Gas Regulatory Authority (OGRA), in its various letters, had pointed out that the ban on the import of CNG cylinders/conversion kits is resulting in the installation of smuggled, unapproved and unsafe cylinders in the vehicles especially public transport which is hazardous to public life and safety. Accordingly, Ogra believed that the federal government may revisit its policy regarding the imposition of ban on import of CNG cylinders and conversion kits.

The previous government had imposed a complete ban on Landi Renzo, a multinational company, which installed CNG cylinders/kits in locally manufactured vehicles. The company allowed the import of parts and components of CNG kits which were for export purposes only.

Landi Renzo is a multinational company that produces auto gas and compressed natural gas kits for cars with its headquarters in Italy. The multinational has foreign direct investment in Pakistan through Landi Renzo Pakistan in the form of CNG kit manufacturing and assembling plant. The approximate size of their investment is €7.7 million. Along with local supply, the company exports CNG kits to Brazil, China, Iran and Italy having an export volume of €3.7 million.

The company has contributed Rs684 million in the form of taxes from 2009 to 2012 to the government’s revenue. Due to the imposition of the ban, their sale revenue has drastically dropped. Therefore, they had raised serious concerns about their further projects and investment in Pakistan. The firm believes that the government should review its decision on the ban, keeping their investments in Pakistan in mind.

The previous government had allowed the import of parts and components for CNG kits. The Supreme Court, then, took suo motu notice of this decision.

Profile: Dawood Takaful expects to reach break-even point soon

CEO satisfied with company’s show over the last six years. PHOTO: dawoodtakaful.com

KARACHI: 

Dawood Family Takaful is expected to break-even in 2014 by turning a profit in the sixth year of its commercial operations, according to the company’s chief executive officer Rizwan Ahmed Farid.

Talking to The Express Tribune in a recent interview, Farid said the performance of his company has been exemplary because few insurance/Takaful companies in Pakistan have generated this kind of business in the early years of their establishment.

According to the company’s latest financial statements available to the public, total gross contributions of Dawood Family Takaful were Rs523.3 million in 2012 as opposed to Rs326.2 million in 2011, reflecting a year-on-year increase of 60.4%.

However, the company made a net loss of Rs42.9 million in 2012 compared with a loss of Rs90.3 million in 2011.

Other than the Dawood Family Takaful, Pak-Qatar Family Takaful is the only Islamic insurance company in the life segment operating in the country. Pak-Qatar Family Takaful posted its first profit in the fifth year of operations.

The life-segment of Pakistan’s Islamic insurance market is rather miniscule compared with its conventional counterpart which collected gross premiums of Rs85 billion in 2012, as per the latest available figures.

In contrast, regular contributions on individual policies − excluding top-up and single contributions − collected by the two family Takaful companies in 2012 amounted to Rs2.5 billion. Dawood Family Takaful’s share of that figure was Rs408.8 million, which translates into a market share of roughly 16%.

It is surprising that such a lucrative market with a low gestation period and amazingly high growth rates should only have a couple of players, even though the Securities and Exchange Commission of Pakistan (SECP) had issued rules governing the Islamic insurance industry back in 2005.

The reason, according to Dawood Family Takaful’s CEO, is the inconsistent policy of the regulator with regard to Islamic window operations to be set up by conventional insurance companies.

Takaful Rules 2005 stated that no windows would be allowed for the first five years at least. But there were talks of allowing conventional insurance companies to set up Islamic windows as early as 2008, Farid said, which discouraged interested companies from entering the market.

“I know of at least three companies that were planning to set up standalone Takaful firms here. We had also raised the money and applied for permission to set up a separate general Takaful company. But reports about Islamic window operations changed everything,” he noted.

The SECP notified Takaful Rules 2012 in July of that year under which conventional insurance companies were allowed to carry on Takaful business through window operations. All general and Takaful companies went to court against the decision and the case is currently sub judice.

Farid said revenue growth in the first nine months of 2013 was 36% compared with the same period in the preceding year (the company does not make its quarterly accounts publicly available). Noting that about 22% of new business is traditionally generated in December every year, he said the revenue growth rate for 2013 is expected to be over 60% as well.

Commenting on the avenues for investment, Farid said more Ijara sukuks and government-guaranteed bonds should be issued to provide Takaful companies with riba-free investment opportunities. “As a conservative vehicle for investment, we want to put more money into government securities,” he said, adding that the company’s funds under management are growing by Rs3 million a week these days

EAC meeting: Dar highlights steps taken to fix economy

Ishaq Dar chairing the first meeting of Economic Advisory Council in Islamabad on January 11, 2014. PHOTO: PID

ISLAMABAD: 

While addressing a gathering of the country’s top economists, Finance Minister Ishaq Dar discussed the state of affairs with his colleagues, and steps being taken by the government to fix the economy.

Dar claimed that the government would be able to increase foreign currency reserves to $16 billion by end of this calendar year. Excluding the liabilities, the reserves would stand at $10 billion, he informed.

He said the World Bank will give Pakistan a $1 billion loan, and the Asian Development Bank will provide $400 million, while the Islamic Development Bank will provide $730 million.  He said the government was vigorously pursuing non-conventional sources including launch of Euro bonds of $1 billion and remittances-backed bonds of also $1 billion.

He said Pakistan will soon recover $800 million from Etisalat, and will also receive $1.54 billion from the United States on account of the Coalition Support Fund.

The EAC members questioned the authenticity of official data, particularly of inflation, unemployment and economic growth. They demanded that a committee should be formed to improve the quality of data and the International Monetary Fund’s (IMF) input should also be taken into consideration.

The inflation figures were unrepresentative and unrealistic to the extent that if the State Bank of Pakistan prints notes three times more than its present level, there would not be much impact on inflation statistics, said a member of the EAC.

During the meeting, Dar said he was running most of the government’s affairs and without his assistance the matters of other ministries would not be smooth. Critics say the centralised decision making bars others from taking any initiatives, while proponents argue that it will ensure fast decision-making, at least to the extent of economic ministries.

“I am overstretched and am a member of all committees, and without my assistance no matter proceeds further,” Dar was quoted as saying in the first meeting of the EAC. The EAC is a consultative group of the country’s leading economists, headed by Dar.

Dar consumed most of the time and spoke at length about all issues affecting the economy and people’s daily lives.

The issue of Dar’s involvement came under discussion when members of the EAC asked how they can give recommendations in sectors such as water and power. Dar said that without his involvement the dispute with Karachi’s transporters was impossible to be resolved. In the outgoing week, he also directed Ministry of Commerce to resolve 15-year old dispute with Russia, a matter which pertains to Ministries of Commerce and Foreign Affairs.

During the meeting, Dar told the economists that his four priority areas are: power, oil and gas, agriculture and social sector, the latter two are provincial subjects.

Dar sounded optimistic in the meeting, believing that the PML-N government was doing the right things, according to a participant of the meeting