DAILY BUSINESS NEWS SUMMARY IN BRIEF: 26.05.2011

Business News

26.05.2011…….
-	Euro firms on China scholar''s investment comment
-	Asian shares up on Wall St rise, bargain buying Gold opened in Hong Kong at $1,525.00-$1,526.00 per ounce, up from Wednesday''s close of $1,523.00-$1,524.00. (AFP)
-	Oil up in Asian trade after rise in US equities
-	KSE surges by 122 points on fresh buying A stock dealer said that prevailing bullish sentiment pushed the KSE-100 index to a 3-month high level while volume rose to 14-day high to 3.3billion rupees. (Reuters)
-	Electricity, gas commercial tariff hike in offing
-	Oil down in Asian trade
-	Euro falls back amid Greece''s debt woes
-	Trust deficit between taxpayers, IT Deptt. to go
-	Oil rebounds in Asia on higher Chinese demand
-	Euro remains weak on sovereign debt woes

Budget fiscal year 2012 to stipulate three-tier sales tax system

The Federal Budget FY12 will stipulate a three-tier sales tax system of zero, five and 17 percent, while maintaining the higher rates for certain specific industries such as telecom and steel melters, it is reliably learnt.

Food, education, medicines and agriculture crops will remain in the exempt sector; while the five major export industry - textile, leather, sports goods, carpets and surgical goods - will be subject to a fixed tax of five percent, until transition to a full value-added mode of sales tax system comes into operation.

The inputs of these five major export sectors will remain zero-rated and the present system of four & six percent sales tax on registered and unregistered units, respectively, will be merged into a fixed tax of five percent. Most of the businesses will continue to have their input and output tax adjustment at the rate of 17 percent.

Reduction of the sales tax rate to unified rate of 15 percent will only be possible after the provinces and the majority in the parliament agree to the imposition of RGST, whereby provinces allow the Federal government to collect sales tax on services on their behalf against a fee and the National Assembly passes the much-awaited RGST Act.

There are no major changes expected in the realm of customs duties other than removal of regulatory duty imposed in 2008 on what was then termed luxury goods. Except for enhanced regulatory duty of 10 percent on large cars of 1800cc and above components whose duties have been fixed by the Engineering Development Board (numbering around 14) all the rest will have the regulatory duties removed now because the balance of payment situation has considerably improved. In 2008, forex reserves had fallen to a dangerously low level due to non-adjustment of POL product prices by both the outgoing PML(Q)-led and the caretaker governments.

FED: Some changes in FED are strongly expected in cement sector. The FED on grey cement is expected to be reduced from Rs 700 to Rs 500 per ton while it will be totally eliminated on white cement. No change in excise duty is expected on cigarettes. However, the manufacturers will be allowed to raise prices of their brands - this step is expected to fetch FBR Rs 9 billion in additional revenue. The duty on filter rod of Rs 2 per rod is expected to be changed to 20 percent of ad valorem price.

US cutting back troops in Pakistan: Pentagon

WASHINGTON: The US military said Wednesday it plans to scale back the number of American troops in Pakistan after Islamabad made a formal request, amid tensions over a US raid against Osama bin Laden.
“We were recently (within past 2 weeks) notified in writing that the government of Pakistan wished for the US to reduce its footprint in Pakistan.
Accordingly, we have begun those reductions,” spokesman Colonel Dave Lapan said in an email to reporters.
There are more than 200 US military personnel in Pakistan serving mostly as trainers as part of a long-running effort to counter Al-Qaeda and religious militants.
But the uneasy relationship between Pakistan and the United States has come under severe strain following a unilateral raid by US commandos that killed bin Laden on May 2 in the Pakistani city of Abbottabad, home to a military academy.
President Barack Obama’s administration has stepped up diplomatic efforts to smooth over the crisis sparked by the raid on the Al-Qaeda leader’s compound, while some lawmakers in Congress have called for cutting aid to Islamabad.
Since the bin Laden operation, the United States has kept up CIA drone strikes on militant targets in Pakistan’s northwest. The bombing raids are deeply unpopular and often draw public criticism from Pakistani officials.

US urged to avoid rash action against Pakistan

WASHINGTON: Any US move to contain Pakistan could cause asymmetric retaliatory reaction, the US Senate was told as it discussed various options for rebuilding its partnership with Islamabad.

In their testimonies to the US Senate Foreign Relations Committee, experts discussed two potentially disastrous scenarios: militants accessing nuclear weapons and groups like Lashkar-e-Taiba igniting a nuclear conflict in South Asia.
Both threats necessitate America`s continued engagement with Pakistan, the experts said.
“Containing Pakistan is not feasible and attempting to do so isn`t desirable. Pakistan simply has too many asymmetric retaliatory options,” said Dr Christian C. Fair, a faculty member at the Georgetown University.
Senator John Kerry, who chairs the Committee and presided over the hearing, noted that another major terrorist attack in India by Lashkar-e-Taiba had the potential to destabilise South Asia.
“Lashkar-e-Taiba and Jaish-e-Mohammad continue to launch attacks that risk sparking war between nuclear-armed India and Pakistan,” he warned, while noting that the LeT was responsible for the 2008 terrorist attack in Mumbai.
“Through its extensive alumni organisation and network of training camps throughout Pakistan, LeT could threaten the United States homeland” as well, he warned.
Senator Richard Lugar, the senior Republican member of the Committee, noted that the threats described by Senator Kerry and the experts further emphasised the need for the US to stay engaged with Pakistan.
“And there`s no question that the threat of these groups, combined with worries about state collapse, a Pakistani war with India, the safety of the Pakistan nuclear arsenal and Pakistan`s intersection with other states in the region, make it a strategically vital country, worth the cost of engagement,” the senator noted.
Senator Lugar noted that after hearing the experts he came to the conclusion that Pakistan being “strategic threat to the United States still is not apparent”.
The experts, he noted had mentioned various scenarios such as “an unstable state or – at least some way in which terrorists gain access – whoever might be their nationality, to fissile material or other aspects of that, could pose a strategic danger to the United States”.
Dr Fair, while discussing these scenarios, said that the US should work to contain the threats of various militant groups, instead of trying to contain the Pakistani state.

 

US trial on Mumbai attacks hears of Pakistan contacts

CHICAGO: An American who scouted targets for the 2008 Pakistani militant raid on Mumbai testified on Wednesday about conversations he had with a Chicago businessman accused of helping the attackers and a retired Pakistani military officer.
David Headley took the stand in the trial of Pakistani-born businessman Tahawwur Rana, 50, who is charged with providing support to Lashkar-e-Taiba, the group blamed in the attacks that killed 160 people.
The trial is being closely watched for revelations that could complicate US-Pakistani relations already tense following the American killing of al Qaeda leader Osama bin Laden in Pakistan.
Headley has said Pakistan’s Inter-Services Intelligence directorate (ISI) and elements in Pakistan’s military coordinated with Lashkar and other Pakistani militants.
Headley, who has admitted he scouted targets for the attacks, told the US District Court jury about secretly recorded telephone conversations he had with Rana and retired Pakistan military officer Abdur Rehman, known as Pasha.
Headley said he and Rana gloated over the success of the Mumbai raids and praised its planners, listening to recordings of cell phone conversations between the attackers and Headley’s main Lashkar contact, Sajid Mir, during the raid.
One of Headley’s conversations with Pasha months after the Mumbai raid turned to Headley’s anger at a man identified as Major Iqbal of Pakistan’s ISI, who had provided guidance during Headley’s surveillance work in Mumbai.
He called Iqbal a “coward” for telling Headley, “Friend, do not have any contact with me any more.”
Pasha and Iqbal are among six Pakistanis charged in the case but not in custody. Several Lashkar members were detained in Pakistan after the Mumbai raids.
Rana is also accused of supporting the militant group in a separate plot, never carried out, to attack the Danish newspaper that published cartoons depicting the Prophet Mohammed that angered many Muslims.
Defense attorneys questioned Headley later in the day. They have portrayed Headley, Rana’s best friend since their youth, as a manipulator who tricked and used Rana. Headley cooperated with US authorities after being caught twice smuggling heroin. He avoided the death penalty and extradition in this case by pleading guilty and testifying.
Defense attorney Charles Swift sought to undermine Headley’s credibility, asking Headley about a heroin-buying trip to Pakistan when he brought Rana along in the belief it would minimize his chances of being caught.
Swift also asked Headley how his Pakistani handlers could know whether he was keeping Rana informed, citing $25,000 Headley received from Iqbal for expenses. Rana was unaware of the money, Swift said, and paid the expenses.
“The only person who knew everything was you, correct?,” he asked. “Yes,” Headley said.

MOHAMMED SALEEM MANSOORI