Auto sector’s argument: Govt is uncompetitive, not the industry

Industrialists associated with the automobile sector fear that the industry will be paralysed in the absence of infrastructure and because of disparity between implementation of standards in different sectors of the two countries. PHOTO: FILE

LAHORE: The resistance to the grant of most-favoured nation (MFN) or more digestible non-discriminatory market access (NDMA) status to India carries logic as the industry says it is not uncompetitive but it is the government which lacks a proper regulatory environment that could benefit local manufacturers.

Industrialists associated with the automobile sector fear that the industry will be paralysed in the absence of infrastructure and because of disparity between implementation of standards in different sectors of the two countries. This makes it impossible for the industry, which is not incompetent, to overcome the challenges of goods export to India, they say.

“The auto industry is ready for trade but a lot of homework on part of the government has yet to be done,” said Nabeel Hashmi, former chairman of Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam), told The Express Tribune.

“This is not a case where we cannot compete with our Indian counterparts, we are competing by manufacturing quality components for Suzuki and other car manufacturers,” he said.

According to Hashmi, India has agreed to accept emission and quality certificates issued by Pakistan Standards and Quality Control Authority (PSQCA) for vehicle export, but Delhi is following Bharat-IV emission standards, equivalent to Euro-IV, that entails that the vehicles should be designed especially for the Indian market.

Unfortunately, he said, Pakistan had not a single testing facility that could certify Euro emission standards while India had world-class facilities.

Hashmi pointed out that India had executed a well-planned and prudent policy, setting growth direction for the auto sector and addressing most of its concerns. A long-term consistent auto policy has been in place since 1995. The industrial policy in general and auto policy in particular are not tied to policies of sitting governments and continue without any major change decade after decade.

Indian automotive industry data for April-March 2011-12 shows production growth of 13.83% over previous year. In the year, the industry produced 20.36 million vehicles, of which two wheelers, passenger vehicles, three wheelers and commercial vehicles had a share of 76%, 15%, 4% and 4% respectively.

In contrast, he said, the Auto Industry Development Policy in Pakistan, formulated in 2007 to facilitate the industry, had been tinkered with so many times that it had lost its originality. It also led to 24% decline in sales of the industry during the period covered by the policy.

“All meetings of auto industry representatives with the Engineering Development Board and its parent – Ministry of Industries – on the new auto policy for 2012-17 have failed to reach consensus,” said Ishtiaq Siddiqi, Chief Executive Officer of AM Engineering.

The government continued to stick to its anti-industry proposal of a massive reduction in tariffs and was supporting trading over manufacturing despite the industries minister’s clear directives, he added.

Legacy: BRR Guardian Modaraba a ‘long-term player’

Unlike conventional financial institutions, Shariah-compliant institutions like Modarabas get a fee equal to 10% of the profit earned only if profit is earned. PHOTO: FILE

KARACHI: 

It is hard to miss the recently-built BRR Tower on the edge of Pakistan’s Wall Street in the business hub of Karachi.

The 19-storey structure with arches typically associated with Muslim architecture stands at the confluence of II Chundrigar Road, Dr Ziauddin Road and MR Kayani Road in the city’s financial district.

The building is constructed and rented by BRR Investments, an Islamic financial institution that manages the BRR Guardian Modaraba, Pakistan’s oldest Modaraba.

“We moved into this building after its completion in December last year,” BRR Guardian Modaraba CEO Ayaz Dawood told The Express Tribune in a recent interview. “I expect it to be rented by July, or maybe December. There has already been a respectable increase in its valuation, although the building has yet to be occupied.”

A Modaraba operates like a close-end mutual fund that can invest in a range of Shariah-compliant avenues, like leasing of assets, properties, and equity and debt securities.

However, unlike a mutual fund where the asset management company gets a percentage of total assets under management regardless of profit or loss, a Modaraba management company gets a fee equal to 10% of the profit earned. In other words, the management company does not make any profit if the Modaraba fails to post a profit in a given year.

Out of the 24 Modarabas operating in Pakistan by the end of last fiscal year, BRR Guardian Modaraba is the only one that has gone into real assets i.e. properties. By virtue of their memoranda, Modarabas cannot trade – which means buy and sell – in property. However, they are allowed to construct/buy a property for renting purposes only.

According to the company’s financial accounts for 2012-13, the value of BRR Tower has been ‘conservatively assessed’ at Rs960.3 million.

“We are a long-term player. We haven’t re-valued properties. In our books, investment properties are valued at Rs1.2 billion. But their fair value as on June 30 as per the independent valuation report is Rs1.7 billion,” Dawood said.

BRR Tower has 120,000 square feet of office space along with 80,000 square feet of parking space spread over six floors. According to Dawood, no other building in Pakistan offers such a large parking space.

If the per-square foot rent is around Rs100, he said the Modaraba will make Rs144 million a year. Given that its paid-up capital consists of a little over 78 million certificates with a face value of Rs10 each, Dawood said the building will generate an income of Rs2 per certificate per annum.

“Our Modaraba is still making money even though there is zero income from this building,” he said, adding that shareholders of the Modaraba will continue receiving a dividend generated through the rental stream of the tower.

“There is at least 7.5% increase in the rent every year. So it’s a hedge against inflation,” he noted.

BRR Guardian Modaraba announced its half yearly results last week, according to which its net profit for the period remained Rs15.1 million, down 33.1% from the corresponding six-month period in the preceding fiscal year.

Italian football retains co-ownership

The widely-used practice will be continued in the peninsula, despite expectation that transfer laws would be brought in line with the rest of Europe

The Lega Calcio has agreed to retain co-ownership arrangements in Italian football, despite expectations that it might give the practice the boot.

WHAT IS CO-OWNERSHIP?

Club B buys 50% of player's rights from Club A, with player spending a season at agreed club (loan to a third club is also an option) At end of agreement, clubs reconvene to thrash out deal. If no deal is agreed, a blind auction takes place with the club showing the highest bid buying out the remaining 50% of contract A club can sell its 50% of the player's economic rights, but only when the player is registered to play with the alternate owner

Co-ownership allows more than one club to have the rights to a single player and has proved to be popular in the peninsula and also in parts of South America.

However, the difficulties in policing transfers and the delinearity with policy in the rest of Europe had put the continued use of the system in doubt.

But Sky Sport reports that the Lega Calcio decided at a meeting on Monday to retain the ability to co-own players in its transfer market statutes.

The meeting had been called in the expectation that the league committee would look for alternative solutions after agreeing with the Inland Revenue to seek an answer to complications in the rule's governance.

Co-ownership allows clubs to share a player's economic rights for a short-term period - usually 12 months - after which there is a blind auction to decide which of the parties will buy out their counterparts for the remaining 50 per cent of the player's contract.

While co-ownership has become common practice in Italy, with Adriano's spell under the control of Inter and Parma among the most famous deals, it has had its critics elsewhere and has occasionally led to confusion in administration.

In one famous episode in 2011, Bologna missed out on securing the entire rights to Emiliano Viviano's registration after director general Stefano Pedrelli mistakenly wrote down the wrong figure on his club's bid slip at the blind auction, resulting in the goalkeeper joining co-owners Inter on a full-time basis.

Barcelona rumours ridiculous, says Vidal

The Chilean insists that his only focus is shining for Juventus and Chile and is looking forward to facing Germany on Wednesday with his country

Juventus midfielder Arturo Vidal has dismissed rumours that he is set to join either Barcelona or Real Madrid.

The Chilean has been with the Italian champions since 2011 and was instrumental as Antonio Conte's men won back-to-back Scudetti in his two full seasons at the club.

Vidal has been linked with a variety of clubs, but has branded reports of an impending move to La Liga "ridiculous", insisting that his focus is on winning the league with the Bianconeri.

"Me to Real Madrid or Barcelona? It's ridiculous," he told reporters. "It's a non-story. All I want to do is win the league with Juventus and have a good World Cup."

The 26-year-old joined Juve from Bayer Leverkusen and is looking forward to reconnecting with some familiar rivals when his country play Germany on Wednesday.

"I know most of Germany's players," he said. "I have played against virtually all of them. But we are a young team with pace. We are attacking, we run a lot and we like playing good football.

"Our game is similar to Borussia Dortmund's in last season's Champions League."

Vidal has scored 11 goals in 25 Serie A games as Juve sit 11 points clear of Roma in the title race.

Islamabad incident: Senate seeks report from govt on court attack

Senate Chairman Syed Nayyar Hussain Bokhari. PHOTO: FILE

ISLAMABAD: 

The upper house of parliament on Monday directed government to submit today (Tuesday) a detailed report identifying lapses on part of the authorities that enabled terrorists to carry out the attack in a district court complex in the capital city.

During the session, Senate Chairman Syed Nayyar Hussain Bokhari quizzed the government over failing to present the national security policy in Senate and sought an explanation from the leader of the house.

The uproar in Senate comes after Monday’s blatant terrorist attack inside a court compound that left dozens dead, including a judge.

Questioning the security lapse that led to the attack, Bokhari sought names of those who failed in providing security within court premises.

The lawmakers from opposition benches criticised the government for pursuing talks with militant groups, saying the ruling PML-N is hell-bent on holding talks at the cost of bloodshed in the country.

Enraged by attacks in recent weeks, senators stressed the need to identify the third force behind the attacks and launch a full-scale military assault to end the mayhem as the country could not afford any more turmoil.

“When the government fails, it is bound to call the army in aid of civil administration…the attack on Islamabad is an attack on the whole nation. You have the best army in the world; seek and destroy these enemies of liberal, tolerant and progressive Pakistan of Quaid-i-Azam”, said Muttahida Qaumi Movement (MQM) Senator Col (retd) Syed Tahir Hussain Mashhadi.

Similarly, Hafiz Hamdullah of Jamiat Ulema-e-Islam-Fazl (JUI-F) blamed the government for breeding terrorists.

Wading into the debate, Senator Saeed Ghani of PPP claimed that Taliban agreed to the ceasefire after the government agreed to release their prisoners besides withdrawing the armed forces from some areas of North Waziristan Agency. Ghani also demanded that the interior minister must inform the house about the conditions put forth by Taliban before the ceasefire.

Singapore named world’s costliest city, Karachi the second least expensive

AGENCIES-

The soaring cost of cars and utilities as well as a strong currency have made Singapore the world’s most expensive city, toppling Tokyo from the top spot, according to a survey Tuesday.

Tokyo’s weakening yen saw it slide to sixth place, the position previously occupied by Singapore, in the 2014 Worldwide Cost of Living survey by the Economist Intelligence Unit (EIU).

“Singapore’s rising price prominence has been steady rather than spectacular,” said a report accompanying the survey by the research firm.

It said a 40 percent rise in the Singapore dollar along with “solid price inflation” pushed the country to the top of the twice-yearly survey from 18th a decade ago.

The survey, which examines prices across 160 products and services in 140 cities, is aimed at helping companies calculate allowances for executives being sent overseas.

The report said Singapore’s curbs on car ownership, which include a quota system and high taxes, made it “significantly more expensive than any other location when it comes to running a car”.

A new Toyota Corolla Altis costs $110,000 in Singapore compared to around $35,000 in neighbouring Malaysia.

Overall transport costs in Singapore are almost three times higher than those in New York, it said.

“In addition, as a city-state with very few natural resources to speak of, Singapore is reliant on other countries for energy and water supplies, making it the third most expensive destination for utility costs,” the report said.

It also noted that Singapore is the priciest place in the world to buy clothes, as malls and boutiques in its popular Orchard Road retail hub import luxury European brands to “satisfy a wealthy and fashion-conscious consumer base”.

Singapore has one of the world’s highest concentrations of millionaires relative to its 5.4 million population. Its per capita income of more than $51,000 in 2012 masks a widening income gap between the richest and poorest.

In Europe, Paris rose six places to become the world’s second most expensive city, a trend the EIU said was indicative of recovering European prices and currencies.

“Improving sentiment in structurally expensive European cities combined with the continued rise of Asian hubs means that these two regions continue to supply most of the world’s most expensive cities,” Jon Copestake, the editor of the report, said in a statement.

The report said European cities were among the priciest in the recreation and entertainment categories, reflecting “a greater premium on discretionary income”.

New York, which serves as the base city for the survey, was ranked 26th, while Sydney and Melbourne came in at fifth and sixth respectively owing to a strong Australian dollar.

Caracas was tied at sixth with Melbourne, Geneva and Tokyo, but the EIU said the Venezuelan capital’s position was largely due to the imposition of an artificially high official exchange rate.

“If alternative black market rates were applied Caracas would comfortably become the world’s cheapest city in which to live,” it said.

India’s financial centre Mumbai was ranked the world’s least expensive city, joining other South Asian cities including Karachi, New Delhi and Kathmandu in the bottom of the pile.

The five most expensive cities were judged to be Singapore, Paris, Oslo, Zurich and Sydney in descending order. Caracas, Geneva, Melbourne and Tokyo were tied at sixth place while Copenhagen was tenth.

Sahara boss gets ink on his face, assailant calls him thief

A man threw ink at Sahara chief Subrata Roy on Tuesday as he was brought to the Supreme Court days after he was arrested for failing to appear in connection with a case in which his company was directed to return Rs. 20,000 crore to investors.

Ink was thrown on Sahara chairman Subrata Roy by a protestor when he arrived at the Supreme Court in New Delhi. (Photo by Arun Sharma/Hindustan Times)

Reports said that the protester was detained and taken away by the police. Roy's face with ink was visible as he was being taken inside the court.

"Yeh gareebon ka chor hai," said the man outside the Supreme Court.

He said his name is Manoj Sharma and claimed that he is a lawyer from Gwalior, reports said.

Roy was arrested on Friday after failing to appear at a Supreme Court hearing which he says he missed to attend to his ailing mother.

Roy and unlisted Sahara have long been subjects of mystery. Roy is prone to public shows of patriotism and full-page newspaper ads defending Sahara against the authorities, and is often photographed with Bollywood stars and cricketers.

Sahara itself is best known as the former main sponsor of the national cricket team, as well as owner of New York's Plaza Hotel and London's Grosvenor House. It has a net worth of $11 billion and more than 36,000 acres of real estate, according to its website.

The Securities and Exchange Board of India (Sebi) says Sahara failed to comply with a 2012 court order to repay billions of dollars to investors. Sahara says it repaid most investors and that its remaining liability was less than the Rs. 51.2 billion it deposited with Sebi.

"The question is money. Where is the money and when will it be paid," said Dushyant Dave, a Supreme Court lawyer who has represented Sahara in the past.

The Supreme Court, which has expressed frustration at Sahara's conduct, had ordered Sahara to disclose the details and source of funds from which it said it repaid investors, but a lawyer for the regulator told the court in late January that Sahara had not given the details.

Sahara had offered to give Sebi title deeds of properties it said were worth Rs. 200 billion as security, but the regulator said the properties were far over-valued. The court also ordered that Sahara not sell any of its property.

Read: Sahara likely to suffer if Roy remains out of action for long

Sebi declined to comment on the case on Monday and a Sahara spokesman did not reply to calls and emails seeking comment.

Sahara's core business includes selling financial products, largely to small investors in towns and rural areas. It was two such products, later ruled illegal, that drew SEBI's attention.

Critics, including activist groups, argue Sahara's investment products are designed to evade regulatory oversight and that the company lacks transparency on the source and use of funds.

Police went looking for Roy on Thursday at his sprawling Sahara Shaher estate in Lucknow.

Roy turned himself in on Friday and denied he had been "absconding," saying he was meeting doctors over the condition of his 92-year-old mother, as well as a lawyer, and was taken to a government guest house in a forested area on the outskirts of Lucknow.

Man of Mystery

Roy started out from Gorakhpur in the hardscrabble east of Uttar Pradesh and styles himself a man of the people, though he also makes a show of opulent living and is often photographed with celebrities.

Like many Indian business leaders, he is perceived to be close to politicians.

He is often described in the media as a billionaire, but last year said his assets were less than $1 million.

Read: Sahara chief taken by road for SC appearance

His titles at Sahara are chairman and managing worker, and he refers to himself as "guardian of the world's largest family" of more than one million employees and agents.

In interview with Reuters last May, he seemed relaxed, asking a visitor about his family and whether he's had lunch.

"I'm a very happy person. I am never in tension," he said.

Roy, who often wears a white shirt, black waistcoat and black tie bearing a Sahara logo, last May dismissed the suggestion that he was relishing his headline-making dispute with Sebi.

"Nobody relishes battle," he said in May.

"But I have learned one thing from my father right from childhood: that if somebody's good this much to you, be good double to him. If somebody's bad this much, be bad to them double. And he has very clearly taught us, don't accept injustice."