Huawei anticipates arrival of 3G to unlock further growth

45,000 is the number of cellphones per month currently imported by Huawei. PHOTO: consumer.huawei.com/en/

LAHORE: 

Recent developments in the spectrum auction process have charged up smartphone producers.

One such producer, Huawei Technologies Pakistan (HTP), is looking to increase its footprint in the market, which it believes will start maturing only after it incorporates third generation (3G) technology.

“People believe the smartphone market in Pakistan has already matured,” said Fraz Malik Khan, head of marketing at HTP, in an interview with The Express Tribune. “I believe this is not the scenario as 3G is yet to come, which, if incorporated as scheduled, would approximately double the number of smartphone users in Pakistan.”

The claim regarding smartphone penetration in Pakistan is a healthy sign for the overall market. Pakistan currently has 15 million smartphone users and Khan intends to make HTP the market leader.

HTP started its operations in Pakistan back in June 2012 by launching its first smartphone P-1. After a lack of initial success, the company revamped its strategy a year later to align with the marketing strategy. This was the time when the company’s flagship product, the P-6, was launched globally. The product helped the company grab a foothold in the market against competitors like QMobile and Samsung.

The company claims that before the re-launch, its sales graph was hovering around 4,000 units per month, which then peaked to around 40,000 as of January. “Our flagship product is extremely popular and as of today we are unable to meet the demand for this product,” Khan said. “With the arrival of 3G services, we will be in a position to be number one selling brand in Pakistan as our research and development infrastructure supports this technology, and this will eventually boost our sales graph,” he added.

Huawei is currently importing around 45,000 units per month, while Samsung imports between 50,000 to 60,000. According to Khan, sales of their high-end products are higher than their low-end products. The price factor of their flagship product allows the company to be more competitive compared to Samsung.

Commenting on the company’s future plans, Khan said that they cannot rule out infrastructural investments by Huawei in Pakistan. “Though I cannot confirm anything at this point, I believe that the country’s premier has already communicated to Huawei to make a resource centre in Pakistan.

Oil, gas firms win eight more exploration licences

Of the total, 21 blocks are in Balochistan, 15 in Punjab, six in Sindh and eight in Khyber-Pakhtunkhwa. PHOTO: FILE

ISLAMABAD / KARACHI: 

The government on Friday signed eight petroleum concession agreements and granted exploration licences to oil and gas companies, which will attract a minimum investment commitment of $60.73 million.

Apart from the work commitment, the companies will spend a minimum of $30,000 a year on social welfare schemes in each of the awarded blocks. The blocks are located in all four provinces of the country.

According to a statement issued by the Ministry of Petroleum and Natural Resources, before signing the fresh deals the government had inked 20 petroleum concession agreements and awarded exploration licences earlier in February.

The ministry said after taking all provinces on board for finalising model petroleum concession agreements and model exploration licences, it had provisionally awarded 50 blocks to nine exploration and production companies on January 21.

Of these, 21 blocks are in Balochistan, 15 in Punjab, six in Sindh and eight in Khyber-Pakhtunkhwa.

Petroleum and Natural Resources Secretary Abid Saeed, Director General Petroleum Concession Saeedullah Shah, OMV Senior Vice President Middle East and Caspian Region Erwin Kroll, Oil and Gas Development Company (OGDC) Managing Director Riaz Khan and Pakistan Petroleum Limited (PPL) MD Asim Murtaza signed the agreements. Petroleum Minister Shahid Khaqan Abbasi was also present.

PPL inks three accords

PPL signed three petroleum concession agreements with the government for blocks 2569-5 (Khipro East), 2866-4 (Margand) and 2867-5 (Kuhan).

Margand and Kuhan blocks would be explored in a joint venture with OMV (Pakistan), the Austrian petroleum exploration company, PPL said in a statement.

PPL will be the operator in Khipro East and Margand, located in Sindh and Balochistan, respectively. The two blocks together cover an area of approximately 4,900 square kilometres.

OMV would be the operator in Kuhan, also located in Balochistan, marking the first time in recent years that a multinational firm ventured as an operator, it said.

“The signing allays general apprehension regarding Balochistan’s security situation forestalling exploration activities in the province on the one hand and lack of interest by multinational companies to invest in Pakistan’s oil and gas sector on the other.”

Having played a key role in bringing the Austrian firm to Pakistan in 1990, PPL and OMV have since partnered in successful ventures, including Sawan, Miano, Latif and Tajjal fields.

PPL intends to make an estimated total investment of $50 million in Khipro East and Margand to discharge minimum work commitment, in processing and interpretation of 2D/3D seismic data and exploratory drilling during the first three years.

The signing of new agreements and licences, which is the third round held by the current government, concludes the grant of all the blocks won by PPL in the last bidding round in March 2013.

GDP increases 5%, shows SBP’s first quarterly report

The target set by the government in its Annual Plan for 2013-14 is 4.4% for the full fiscal year. DESIGN: CREATIVE COMMON

KARACHI: 

Pakistan’s gross domestic product (GDP) increased 5% in the first quarter of 2013-14 as opposed to 2.9% in the corresponding period of the preceding fiscal year, according to the State Bank of Pakistan’s (SBP) first quarterly report on the state of the economy released on Friday.

The target set by the government in its Annual Plan for 2013-14 is 4.4% for the full fiscal year.

The report stated that the industry and services sectors led growth while agriculture performed below target, mainly because of water shortages at sowing time, low agricultural prices globally that reduced the area under cultivation, pest attacks and heavy rains before the harvest season.

As for the improvement in the industrial sector, the SBP said better energy supplies and higher capacity utilisation played a key role in generating growth during the first quarter.

With the revival of the industrial sector, import pressures reappeared, especially for capital goods and raw materials. The import of petroleum, machinery and metal was particularly strong, which increased the trade deficit by $0.6 billion during the quarter.

Additional stress on the current account came from delayed inflows of coalition support fund (CSF). As a result, the current account posted a deficit of $1.2 billion in the first quarter against a surplus of $0.4 billion in the corresponding three-month period last year.

Forex fiasco

With regard to the country’s foreign exchange reserves, which dropped $1.2 billion during the quarter, the SBP said repayments on external debt exceeded fresh disbursements while foreign investments remained shy. Resultantly, the rupee lost 6% value against the dollar during the quarter as opposed to 0.3% in the first quarter of the preceding year.

The SBP claimed that the rupee came under pressure due to adverse market sentiments, particularly when the IMF released the detailed letter of intent in September. The market focused on future foreign exchange purchases by the SBP, which caused the interbank rate of the dollar to touch a record high of Rs110.5 on September 26 before closing at Rs105.35 on the same day. “This unprecedented movement in a single day was triggered by the settlement of a large oil payment, which caused some misperception in the foreign exchange market… The fact that the interbank rate settled so quickly reflects how adverse market sentiments can trigger exaggerated movements in the rupee,” it said.

Inflation

The headline inflation figure increased to 8.1% in the first quarter of 2013-14 compared to 5.6% in the preceding quarter.

The SBP said the rupee depreciation against the dollar depreciation was ‘partially responsible’ for the increase in inflationary pressures. “Weaker rupee not only triggered inflation expectations, but also pushed up prices of imported items, like petroleum products,” the SBP said, adding that the impact on the headline inflation was exacerbated by liberal export of onions, lower wheat stocks, and the collusive behavior of traders and distributors, which pushed food inflation into double-digits.

Government borrowing

Government borrowing from the central bank was more pronounced in the first quarter of 2013-14, as commercial banks did not participate actively in T-bill auctions held during the quarter. As a result, the government could not meet the limit of zero quarterly borrowing from the SBP, though its borrowings were well below the limit agreed with the IMF.

Thus, the fiscal deficit fell to 1.1% of GDP in the quarter from 1.2% in the corresponding quarter of the preceding fiscal year. Saying that the improvement occurred on both revenue and expenditure sides, the report stated it was the increase in tax rates and not the base which resulted in higher collection during the quarter. As for the expenditure side, a major role was played by the reduction in interest payments following the interest rate cuts in 2012-13.

Public debt posted a record increase of Rs1 trillion during the quarter, which can primarily be traced to large revaluation losses associated with the external debt stock due to adverse exchange rate movements

Capacity tax: FBR increases tax burden on beverage industry

Officials voiced concerns that three bottlers of a multinational brand were calling the shots. PHOTO: FILE

ISLAMABAD: 

The dispute over capacity tax deepened on Friday after the federal government increased tax rates on production capacity of aerated water in the range of 60% to 70% succumbing to pressure from three manufacturers.

The rates of capacity tax on production of aerated water were increased for all the three categories, according to a notification issued by the Federal Board of Revenue (FBR). This has increased the burden not only on small manufacturers that have already gone to court but also on major players except for the three.

The FBR increased the tax rates despite the fact that Finance Minister Ishaq Dar and FBR Chairman Tariq Bajwa had reservations over the capacity tax regime, said sources.

These three were allegedly being given benefits for being financiers of the ruling party, the sources added.

According to industry sources, other main bottlers having manufacturing licences for Lahore and surrounding areas, Karachi and allied territories, Sukkur and Islamabad-Peshawar have decided to knock the door of courts. There is a possibility that the manufacturer covering Islamabad and Peshawar may go to court in the second phase.

According to the notification, the tax rate of Rs4.7 million per filling valve or spout on factories, which only have foreign-origin filling machines or a mix of foreign and local-origin machines, has been increased 60% to Rs7.5 million.

Tax rate for the second category, which includes factories using local machinery, has been increased from Rs3.76 million per filling valve to Rs6 million, an increase of 61.2%.

For the third category, which includes factories with less than 40 filling valves or spouts, the rate has been increased from Rs1.2 million per filling valve to Rs2 million, up 70%.

The system was highly unfair as the tax rate on higher-speed filling valve and lower-speed filling valve was the same, giving benefit to major players, said a small manufacturer whose company has already gone to court.

The increase in tax rates left the manufacturers with no option but to increase prices of aerated waters, said a big manufacturer, who has decided to file a petition against the government.

The change in the mode of taxation from percentage to fixed amount has already made many small and medium-sized players uncompetitive. In current year’s budget, the PML-N government increased the federal excise duty on aerated water from 6% to 9%. However, on the recommendation of the three players, the capacity tax was introduced.

The three had assured the government that with the change in tax regime, the FBR’s collection from the beverages industry will rise 25% compared to previous year. In the last fiscal year, the FBR had collected Rs30 billion.

However, in the first half of current year, the results were dismal, proving the three players wrong, according to FBR officials. Now, tax rates have been revised to prove that their claims were achievable.

Despite a significant increase in the tax rates, the obligations of the three players were not likely to go up, as they were under-declaring their capacity to evade taxes, said sources in the beverages industry.

Through the same notification, the government has capped tax refunds of the beverages industry at 72% of payable gross amount. This will also increase the cost of doing business.

For instance, on a payment of Rs37.5 million, the FBR will hold Rs3 million in refund. This will block working capital of the manufacturers, as the FBR has had a bad track record in paying the taxpayers’ rightful refunds

Energy import: LNG terminal case referred to prime minister

Finance minister Ishaq Dar presides over the ECC meeting on Wednesday. PHOTO: PID

ISLAMABAD: 

After opposition from the Law ministry, the apex economic decision making body on Friday could not decide the fate of the $1.4 billion Liquefied Natural Gas Services Terminal project, and referred it to Prime Minister Nawaz Sharif for approval. 

Headed by Finance Minister Ishaq Dar, the Economic Coordination Committee (ECC) of the Cabinet had been convened to consider a proposal of awarding the contract of setting up a terminal for import of liquid natural gas (LNG) for a period of 15 years. Last Wednesday, the ECC had deferred the summary approval after the Law secretary disclosed that the Petroleum Ministry did not send a summary to his ministry.

The Ministry of Petroleum and Natural Resources had proposed to award the contract to Elengy Terminal Pakistan Limited (ETPL) – a company owned by the Engro Group. ETPL had been selected through a competitive process, during which the bid by Pakistan Gas Port Limited (PGPL) had been knocked out at the technical stage.

The Secretary Ministry of Law and Justice, Barrister Zafarullah Khan, questioned the authority of the ECC in taking decisions on matters which are purely commercial in nature, according to officials. He also highlighted that after the 18th Amendment in the constitution, the ECC cannot direct the Oil and Gas Regulatory Authority to give policy guidelines on any matter. Such powers rest with the prime minister, he told the ECC.

“In light of the detailed discussion, the ECC decided to approve the proposal in principle, subject to completion of all formalities as indicated by the Law Division and thereafter approval of the Prime Minister,” said a statement issued by the Ministry of Finance.

It added that the Law secretary informed the ECC that in light of the 18th Amendment, Article 90(1) of the constitution lays down that the Executive Authority of the Federation shall be exercised in the name of the President by the federal government, consisting of the Prime Minister and the federal ministers, which will act through the Prime Minister.

Since 2006, Pakistan has been making unsuccessful attempts to import LNG. The country has already entered into negotiations with Qatar to import LNG but before that it needs to set up a terminal. Sui Southern Gas Company (SSGC) and ETPL have already negotiated LNG Services Agreement under which the SSGC will pay $0.66 per million British thermal unit charges to the ETPL. The contract will be awarded for a period of 15 years and on the basis of ensured import volumes, the country will pay $1.4 billion to the company in 15 years, roughly $93 million per annum.

The company is supposed to set up the terminal within 335 days of the signing of the contract. It will have to pay $150,000 per day penalty if it fails to meet the deadline, according to an official of the company. However, if the government fails to bring supplies after the completion of the project, it will have to pay the ETPL the guaranteed amount.

Regarding the approval of the contract as agreed by SSGC and ETPL, the Secretary Law opined that it was a commercial contract between the two commercial entities and their respective Board of Directors are competent enough to grant approval in respect of LNG Service Agreement.

After the Law secretary’s opinion, the ECC did not agree with the Petroleum secretary’s plea to approve the project as it was of paramount importance to meet the urgent energy needs of the country.

Bundesliga butchers: Where on Earth do Bayern expect to play Draxler?

The Bavarians have admitted their interest in bringing the Schalke star to the Allianz Arena, but have absolutely no need for the 20-year-old

COMMENT
By Enis Koylu

It was news that surprised few, but shocked so many. When Matthias Sammer publicly expressed Bayern Munich’s interest in signing Germany wonderkid Julian Draxler, there was a sense of deja vu to it all; the Champions League holders attempting to lure yet another top Bundesliga talent to the club. 

On the face of it, the German champions moving for Draxler makes perfect sense. Though a Schalke boy through and through, the 20-year-old has always seemed destined for bigger and better things and Bayern would help him achieve his goals. 

However, scratch the surface and it is all cynically familiar. Bayern have long made a habit of monopolising the top talent in Germany, signing the best players not just to strengthen their own squad, but to weaken that of potential rivals. 

BAYERN'S BIG BUNDESLIGA BUYS
Player	From	Year	Fee
Pizarro	Bremen	2001	€8.2m
Kovac	Leverkusen	2001	€8.25m
Ballack	Leverkusen	2002	€6m
Ze Roberto	Leverkusen	2003	€12m
Lucio	Leverkusen	2004	€12.5m
Klose	Bremen	2007	€15m
Podolski	Koln	2007	€10m
Gomez	Stuttgart	2009	€30m
Neuer	Schalke	2011	€22m
Gotze	Dortmund	2013	€37m
Lewandowski	Dortmund	2014	Free

 President Uli Hoeness, who made his fortune in the meat trade, has taken to butchering his side's rivals.

They may have a fantastic history of breeding players of their own; Franz Beckenbauer, Gerd Muller, Paul Breitner and more recently Bastian Schweinsteiger and Philipp Lahm all emerging through the ranks in Munich and into the annals of German football history. But, the Bavarians have been massively supplemented by players and coaches poached from domestic competition. The likes of Lothar Matthaus, Michael Ballack, Lucio, Ze Roberto, and of course Mario Gotze, who have been captured from their nearest rivals. Even sporting director Sammer himself.

The teams left reeling from their aggressive transfer policy are numerous: Werder Bremen, Bayer Leverkusen and even Karlsruhe built fine teams, but their best players - the Miroslav Kloses, Ballacks and Oliver Kahns - were plundered by Bayern. 

Eintracht Frankfurt will lose one of their key players, Sebastian Rode, to the German champions in the summer and club president Heribert Bruchhagen is in no doubt as to what attracts them to the Allianz Arena. 

“Why does Sebastian want to go to Bayern? My God, these are young people. They can earn four times as much money at Bayern as they can here. End of story.” 

And now they are taking their old policy to new levels. Robert Lewandowski is set to join Gotze at the Allianz Arena in the summer from Borussia Dortmund, effectively hammering the final nail into the coffin of the team who stole Bayern’s German hegemony between 2010 and 2012. 

But while Gotze was to an extent required to ease the creative burden on Franck Ribery and Arjen Robben, and Lewandowski will be an upgrade on Mario Mandzukic, it is hard to find any on-field reason to move for Draxler. 

The Gladbeck native’s performances this year show that he still has a lot to learn and would struggle to challenge more experienced campaigners for a regular spot in the team. He deserves a club that would treat him with patience if he chooses to leave the Veltins Arena. Gotze, Ribery, Robben, Thomas Muller and Toni Kroos would all be ahead of him in the pecking order. What’s more, if Bayern were to make another big-name signing this summer, they would be far better off bolstering their defence than their attack.

Moving to Bayern is far from a guarantee of success, too. Manuel Neuer has blossomed into one of the world’s best, and most decorated, goalkeepers since switching to Munich, but Lukas Podolski - though his medal collection grew - found himself desperate enough to return to struggling hometown club Koln.

Until recently, the Bundesliga boasted something La Liga, the Premier League and Serie A could not: genuine unpredictability which could see a minnow stun everyone and claim the title. But this has now ended and it has become the most predictable league in Europe.

And football needs competition to thrive. In the business world, companies who try to introduce a monopoly on a product are duly punished, just as Microsoft were by the US government in 1998. 

The Bundesliga has grown into one of the most popular leagues in the world in recent years, but Bayern - while breaking no rules - are going a long way to destroying the product they were instrumental in creating by eliminating all of their rivals. 

Signing Draxler, a player they hardly need for sporting reasons, would see them descend into self-parody and represent another nail in the coffin of what was once a brilliant league.

Miniature Messi: Introducing new Barcelona wonderkid Alen Halilovic

The Dinamo Zagreb wonderkid has announced that he will be signing for the Catalans on a five-year contract. But just how good can the teenager become?

PROFILEBy Luke Matthews

It was a winter of discontent for Barcelona in the transfer market. Not only did they not sign anyone, but the chaos surrounding Neymar's transfer last summer saw their president resign and the club accused of tax fraud allegations that they continue to deny.

However, a month on from the madness of the January window, the Catalans have got back into the swing of poaching the best talent on the planet by swooping for Croatian wonderkid Alen Halilovic in a deal worth an estimated €10 million from Dinamo Zagreb.

Although the move is yet to be officially confirmed by either club, the 17-year-old took to social media to share his joy with the world that he has signed for Gerardo Martino's men.

"Thanks Dinamo Zagreb for everything!!" the three-times capped Croatia international wrote on his Instagram account. "My first club and biggest love!! Now is time to move on to Barcelona."

Halilovic has undeniable talent and, considering Dinamo's modest financial status, it was no surprise that the likes of Real Madrid and Manchester United have been scouting him since he emerged as a star-in-making 17 months ago.

His debut off the bench in September 2012 in a 3-1 win over bitter rivals Hajduk Split made him the youngest ever debutant in the Croatian top flight at 16 years and 102 days. Ten days later the attacking midfielder broke another record - this time becoming the league's youngest ever goalscorer after netting with a superb Lionel Messi-esque chip.

Despite the clamour of interest, it was Barca who convinced him to part with Dinamo in June - when his first professional contract ends - to give him the chance to link up with the likes of Lionel Messi in the distant future.


Miniature Messi | Halilovic has been likened to the four-time Ballon d'Or winner and future team-mate
Far from concidentally, the left-footed youngster's pace, dribbling ability, deadly finishing and deceptive strength considering his small frame have earned him comparisons to Barca's Argentine superstar - perhaps prematurely.

Barca are certainly getting a player with huge potential, a player who could develop into a world class attacker, but the fee of €10m is in danger of immediately piling the pressure on the teenager's shoulders.

Since he first shone at Dinamo early last season, there have been further flashes of brilliance but Halilovic has struggled to maintain consistency in a team where, in recent years, the likes of Mateo Kovacic and Milan Badelj dazzled at a similar age.
 
Still, Halilovic has an ability that only the top attacking players in world football possess: to ghost past players with ease in the final third. It’s this talent which undoubtedly persuaded Barca to fork out such a sum for a teenager despite already having what appears to be a conveyor belt of talented attackers emerging from their B team.

If Halilovic is to be a success at Camp Nou, Barca must keep the pressure off the young Croatian. This points to immediately putting the player to the B team to continue his development, alongside players of a similar age and talent.
 
Dinamo could never offer Halilovic a similar alternative - he embarrassed opponents at times representing Dinamo’s youth teams but the pressure, at times, has proven a little too much in front of the roar of the Maksimir Stadium. With that in mind, B team football could prove to be the perfect tonic for Croatia’s biggest talent.

Upon his emergence from the Dinamo youth ranks, there was genuine belief within the club that Halilovic was the best player in a generation to emerge from a club which has produced the likes of Luka Modric and Niko Kranjcar. Now he begins his road to leaving those names in the dust and living up his miniature Messi moniker.