National Council of ICMAP Journal Focuses on 2008-09 Federal Budget

Monthly
Estd. 1951
Jul-Aug, 2008
National Council of ICMAP
Volume : 17.4
President
The only Professional Journal in Pakistan with a circulation of over 15,000 copies per issue
Sher Afgan Malik
Vice President
Mutee-ur-Rehman Mirza
Honorary Secretary
Mohammad Arif Nara
Honorary Treasurer
Mohammad Azam Khan Shad
Members
Muhammad Abdullah Yusuf
M.H. Asif
M. Ayub Khan Tarin
Muhammad Rafi
Kashif Mateen Ansari
Hasan A. Bilgrami
Mirza Munawar Hussain
Karachi - Head Office
ST-18/C, Block-6, Gulshan-e-Iqbal,
Karachi-75300.
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Contents
Divine Wisdom : Translation from the Holy Qur-an and Commentary
From the Desk of President
From the Chief Editor
Focus: Federal Budget 2008-09
2
3
4
Budget Highlights by Tariq Mustafa Ramzan & Co., Cost & Management Accountants
Federal Budget, 2008-09 - A Critical Review by Wasful Hassan Siddiqi, FCMA
A New Direction or Compulsive Action Federal Budget 2008-2009
by Syed Shabbar Zaidi, FCA, President, South Asian Federation of Accountants (SAFA)
20
Pakistan Budget 2008-2009 by Shahzad Ahmed Malik, FCMA
Agricultural & Live Stock Sector
23
26
Agricultural Sector in Pakistan by Engr. Javed H. Siddiqi

Corporate Agriculture Farming A Step Towards Prosperous Pakistan
by Rao Anees-Ur-Rehman, ACMA
Chucking out Livestocks Problem: Some Policies Implications
by Muhammad Ramzan Sheikh
30
Livestock Sector in Pakistan, Extract from Economic Survey 2007-08
32
36
40
41
45
47
53
54
55
Article of Merit: Pushing the Art of Management Accounting by Alexander Mersereau, FCMA
Article: Credit Crunch for SMEs Compiled by Mohammad Arif Nara, FCMA
Sukuk A New Dawn of Islamic Finance EraII by Intisar Muhammad Usmani FCMA
From More Specific to More Generic Framework by Muhammad Asif Jaffer, ACMA
Economic Horizons: Highlights of Economic Survey 2007-08

Research & Technical Update : IFAC, IFRIC, IAASB and FBR News
Students Section: Notice for the Students of 1998 Syllabus Switchover to 2005 Syllabus
Spring (Summer) - 2008 Examination Result
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5
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I s s u e
ManagementAccountant
Sep-Oct 2008
Special Issue on 11th Management Accountants International Conference

Journal and Publications Committee would welcome articles on the
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Divine Wisdom
From the Holy Qur-'n

In the Name of ALLAH,
the most Magnificent, the most Merciful
O you who believe!

Eat not up your property
Among yourselves in vanities;
But let there be amongst you
Traffic and Trade
By mutual good-will:
Nor kill (or destroy)
Yourselves; for verily
Allah has been to you most Merciful.
Surah: An-Nisaa' (Women), Verse 29
Commentary :
Let me paraphrase this verse, for there is profound meaning in it.
(1)
All your property you hold is trust, whether it is in your name, or belongs to the community, or to people
over whom you have control. To waste is wrong.
(2)
In II-188 the same phrase occurred, to caution us against greed. Here, it occurs to encourage us to
increase property by economic use (traffic and trade), recalling Christs parable of the Talents (Matt xxv.
14-30), where the servants, who had increased their masters wealth, were promoted and the servant who
had hoarded, was cast into darkness.
(3)
We are warned that our waste may mean our own destruction (nor kill nor destroy yourselves), But there
is a more general meaning also: we must be careful of our own and other peoples lives. We must commit
no violence. This is the opposite of trade and traffic by mutual good-will.
(4)
Our violence to our own brethren is particularly preposterous, seeing that Allah has loved and showered
His mercies on us and on all His creatures
Translation and Commentary by: Abdullah Yusuf Ali
Management Accountant, Jul-Aug, 2008
From the Desk of the President
he fiscal year 2007-08 has come to an end. Institute did its best to facilitate
members and students while keeping vigilance about the changes taking place in
the profession globally. Throughout the year, various programs were organized for the
professional development of members and students. To benefit the members, the
Institute actively participated in different professional forums around the globe which
has strengthened its image at International level. Participation in professional activities
of different accounting bodies enhanced acceptance of ICMAP qualification.
During the last two months, Budget has remained a hot issue in the country. A lot of
debates and discussions at different forums have generated a need for taking solid steps
to alleviate poverty and to ensure trickle down effect, of the macroeconomic reforms,
on the common man. Institute did organize several pre-budget and post-budget
seminars and discussions at its centers.
The budget, as is well known, is the principal instrument for the implementation of economic and social policies of the
government. It is more than a mere balancing of public revenues and expenditures. It is indicative of the resource
mobilization effort of the government, while on the expenditure side it reflects the priorities, aims and objectives of the
state. It is also a vehicle whereby medium and long-term plans are implemented in the public sector. It is an intricate
process of matching national vision with practical possibilities.
Facing daunting political challenges and an economic slowdown, Syed Naveed Qamar Minister of Finance and
Economic Affairs, presented a Rs.2.01 trillion national budget that at once offers relief measures to the poor and the
salaried class, imposes new taxes and slashes food, fuel and power subsidies. The budget, seeks to meet a budgetary
deficit of Rs.82 billion by rationalizing taxes, mainly by increasing indirect General Sales Tax (GST) from 15 per cent to
16 per cent a move likely to push already surging inflation further up.
It is said by economic experts that a drastic cut announced in the budget on food, fuel, electricity, and fertilizer subsidies
from Rs.407.48 billion to Rs.295.20 billion would hurt the common man, already reeling from price-hikes, inflation and
food shortages. So in one way it is called a pro-poor budget but in also increases the cost of living. Analysts are of the
view that the revenue target is too optimistic and, like the outgoing fiscal, it may have to be revised downwards later
during the year.
Keeping in view long-term perspective, the government has assumed macroeconomic conditions such as GDP growth at
5.5%; containing inflation at 12%; gross investment to GDP ratio would be maintained at 25%; restricting fiscal deficit
to 4.7%; reducing current account deficit to 6% of GDP; increasing foreign exchange reserves to $ 12 billion. All these
measures would affect the budget 2008-09.
As a result of healthy economic growth achieved in the recent past, per capita income has also increased. As people
become more affluent, they have not only been consuming more food but better quality food items such as meat and
dairy products. Accordingly the demand for high quality food such as meat and dairy products is rising and putting
pressure on the prices of these commodities. In a changed environment, there is an ample scope to provide boost to the
livestock and dairy sector. Unfortunately, these sectors have received little or no attention by the successive
governments in the past. It is important to note that livestock accounts for 52.2 percent of agricultural value addition,
contributes 11 percent to GDP and affects the lives of 30 35 million people in rural areas. It is highly labour intensive and
if proper attention is given to this sector, it will not only absorb more rural workforce but also help alleviate rural poverty
in Pakistan. In order to achieve higher sustained growth in agriculture, it is absolutely necessary for the government to
give more attention to livestock and dairy sector. Realizing its importance Institute has decided to give exclusive
coverage to this sector to apprise members and students about its role in the society and impact on business, trade and
industry.
Sher Afgan Malik, FCMA
President
Editorial
From the Chief Editor
he Country's budget for the year 2008-09 was announced at a time when destiny and hopes
of the people are immersed in complete darkness. The aspiration of the country to emerge,
as 'Asian Tiger', is shattering due to prevailing weak economic conditions and uncertain
security issues. Economic progress made in last 4 to 5 years has not yet proved to be
sustainable. The delicate foundation of growth was exposed to various internal and external
challenges, which unfortunately could not be converted into opportunity.
Despite adverse internal and external developments of an extraordinary nature, Pakistan's
economy has shown great resilience against shocks of very high intensity. Domestic factors
like heightened political tensions, an unstable law and order situation, supply shocks, coupled
with external factors like a worsening of international financial crisis, and an unprecedented
rise in global food and energy prices tested the strength of economic fundamentals but
Pakistan's economy grew robustly at 5.8 percent in 2007-08, as against 6.8 percent last year and
this year's target of 7.2 percent.
Looking into world GDP growth rate of 4.9% and country's macroeconomic stability as well as
reinvigorating the growth momentum at an average of more than 6% in last few years through a
combination of adjustments and reforms provide optimism for the future.
With hopes and promises, the Government has announced budget 2008-09 with total outlay of Rs 2.01 trillion. This size is 29.7 %
higher than the size of budget estimates 2007-08. The resource availability during 2008-09 has been estimated at Rs 1.836 trillion
against Rs 1.394 trillion in the budget estimates of 2007-08 and net revenue receipts for 2008-09 have been estimated at Rs 1.111
trillion indicating an increase of 23.1% over the budget estimates of 2007-08. There are other optimistic measures for which we
wish the government and their functionaries all the best. This issue of the journal carries highlights and comments on Budget
2008-09, which will serve as a reference document for our members and professionals to refer throughout the fiscal year.
Agriculture and livestock continue to be the largest sector of the economy. The share of agriculture in GDP has been falling
persistently. It accounted for 24.1 percent in 2001-02 but subsequently has declined to 20.9 percent in 2007-08. The agriculture
sector consists of crops, livestock, fishing and forestry sub-sectors. Apart from being a major source of foreign exchange earnings,
the agriculture sector also provides employment to the 44 percent of the country's labour force. The country's overwhelming
majority of the population depends directly or indirectly on income streams generated by the agriculture sector. In this issue we
have also covered this sector for which I am sure, would be of readers' interest. Enjoy reading
Mohammad Arif Nara, FCMA
Journal & Publications Committee

Members
Chairman
Abid M. Anwer, FCMA

Attaullah A. Rasheed, FCMA
Akhtar Ali, FCMA
Asif Ansari, ACMA
Correspondence Address
Institute of Cost and Management
Accountants of Pakistan
ST-18/C, Block-6, Gulshan-e-Iqbal, Karachi-75300.
Ph : (92-21) 9243900-01-02 & 04, Direct: 9243551
Fax : (92-21) 9243342
E-Mail : jps@icmap.com.pk
Website : http://www.icmap.com.pk
Joining of Mr. Mushtaq Ahmad Madraswala as Executive Director

Mr. Mushtaq Ahmed Madraswala, FCMA has joined the Institute of Cost and Management Accountants of
Pakistan as Executive Director. He is in his mid 40s.
Mr. Madraswala has 27 years of diversified experience in managing, reporting and system development for
control functions of banking and finance with leading financial institutions in the capacity of Consultant /
Director of world renowned consulting firms. Mr. Madraswala is a Fellow member of ICMAP, ICSP and
PIPFA. He is also a Diplomaed Associate of Institute of Bankers in Pakistan and Law graduate. He is also
Vice President (Education and Examination) of Institute of Corporate Secretaries of Pakistan (ICSP).
Mr. Madraswala has long association with ICMAP in different capacities. He has been Chairman, and
Member of Karachi Branch Council for 15 years. He has been an active participant in non-standing committees of the National Council.
Prior to joining ICMAP, Mr. Madraswala has been a consultant with National Bank of Pakistan from July 1998.
Federal Budget 2008-09
Budget Highlights
By Tariq Mustafa Ramzan & Co.,
Cost & Management Accountants
INCOME TAX
1.
2.
3.
The basic limit of exemption from income tax in respect of salaried person has been increased from
Rs.150,000 to Rs.180,000 in case of male employees
and from Rs.200,000 to Rs.240,000 in case of female
employees.
To cater for the negative impact of taxation under the
previous flat tax rate system for salaried persons, the
concept of marginal tax relief has been introduced,
whereby the marginal increase in salary income will
now be taxed at the rates not exceeding 20% to 60%.
The limit for payment of salary to be paid by an employer through cheque or transfer to employees account has been increased from Rs.10,000 to Rs.15,000.
4.
Minimum tax payable by resident companies on the declared turnover @ 0.5% has been withdrawn.
5.
The small companies and certain AOPs/Individual

would now be required to withhold tax under section
153 of the Ordinance against payments relating to sale
of goods, services rendered and execution of contracts.
6.
In the case of a small company, if turnover exceeds

Rs.250 million, the income attributable to the turnover
exceeding the said limit, has been charged to tax at progressive slab rate of 25%, 30% and 35%.
7.
Previously, gross rental income from property was

chargeable to tax at a flat rate of 5%. Now, it has been
decided to tax it on progressive rates of 5, 10 and 15%.
8.
Previously, withholding tax rate of 5% and 1% was applicable in respect of commercial and manufacturer,
importers respectively. The Finance Act, 2008 has
made it uniform at the rate of 2% for both the categories
of importers.
9.
Withholding tax on cash withdrawal from banks presently collected @ 0.2% has been enhanced to @ 0.3%
on cash withdrawal without altering the maximum
daily limit.
10. Withholding tax collected on electricity bills has been

rationalized to collect the same @ 10% on bill amount
exceeding Rs.20,000 per month, which would be adjustable in the income of taxpayer. Withholding Tax on
bill amount of Rs.20, 000 and below would be collected
at the previous rates.
11. Exemption available to capital gain on shares of listed

companies up to the tax year ending 30th June, 2008
has been extended to 30th June, 2010 without any
change in the withholding tax and CVT regime.
12. Industrial undertakings established in the specified rural and undeveloped areas would be allowed First Year
Allowance in the shape of accelerated depreciation @
90%.
13. In order to promote investment in the business and industries, scheme of investment tax has been introduced,
allowing immunity on undisclosed income from probe,
in respect of investment in any moveable and immoveable assets on the value of which, tax @ 2% is paid.
14. The rates of advance tax, collected at the time of renewal of registration of private motor cars, have been
rationalized by making about 30% to 40% Increase in
WHT rates.
15. WHT on purchase of motor car or jeep will be collected
by a motor vehicle registration authority at fixed rates
depending on the engine capacity.
16. Withholding tax on monthly telephone bills exceeding
Rs.1000 will now be collected @ 10% instead of fixed
amount of tax.
17. The limit of charitable donations eligible for tax credit
in case of individual/association of persons and companies presently admissible @ 30% and 15% respectively
has been reduced to 10% of the income.
18. Now profit transferred by a branch of foreign company
out of Pakistan will be treated as dividend and chargeable to tax @ 10% as final tax.
19. A person making payment to a non-resident would not
be required to give a notice to the CIT under section
152(5) of the Income Tax Ordinance, 2001, if no withholding or withholding of tax at a lesser rate is provided
under the avoidance of double taxation treaty.
20. In order to encourage amalgamation of banking companies, modarabas and insurance companies, the facility
of carry forward of accumulated loss is proposed to
be allowed for a period of six years in the case of amalgamation.
21. Rice Exporters Association of Pakistan (REAP) has
been allowed the facility of reduced withholding tax

rate of 1% in respect of payments payable for supply of
rice to Utility Stores Corporation.
22. Income derived by a project approved by Designated
National Authority (DNA) from transfer/sale of CDM
emissions credit i.e. Certified Emissions Reduction
(CER) etc has been exempted from income tax.
23. In the case of bank, no CVT will be charged on General
Power of Attorney unless it is used into force the mortgage of property offered as collateral against a loan.
24. Income shown as unrealized gains in the case of non
life insurance companies would be excluded from the
taxable income and not charged to tax.
25. Proportionate relief will be allowed in the amount of
penalty imposed in tax evasion cases, where the appellate authorities reduce the quantum of concealed income and tax charged thereon.
26. A scheme for waiver of additional tax and penalty etc.
has been introduced where the taxpayer is able to pay
the principal amount of tax within a certain period.
27. Exemption from income tax available to Pakistan
Cricket Board has been withdrawn.
28. All redundant and unjustified exemptions under the
Second Schedule have been deleted.
29. Reinsurance premium paid to overseas insurance companies will be subjected to withholding tax @ 5%,
which would be a final tax.
30. The facility of reduced tax rate to a cooperative society
or a finance society has been withdrawn and now it
would be treated at par with the company for the purpose of taxation.
31. Exemptions from income tax available under the other
statutes have been withdrawn unless provided specifically in the Income Tax Ordinance, 2001.
32. Payments to media person outside Pakistan will be subjected to WHT @10%, to be treated as final tax.
33. Any payment made through a foreign currency account
and exchange companies has been included in the payments requiring deduction of WHT unless the CIT has
allowed otherwise as provided under section 152 of Income Tax Ordinance, 2001.
34. Thin capitalization rule has been made applicable also
to the branches of foreign companies operating in Pakistan.
35. The tax collected from the members of stock exchange
on sale and purchase of shares in lieu of commission income and trading of share will now be treated as minimum tax on income of such members/ brokers.
36. The provisions of section 115 of the Income Tax Ordinance, 2001 have been amended to ensure filing of
wealth statement by a salaried taxpayer whose income
is more than Rs.500,000 even if he is not required to file
a return of income.
37. Sub-section (6A) of section 153 has been amended to
treat tax deducted in the case of non-corporate taxpayers on supply of manufactured goods as a final tax.
38. To ensure correct recording of sale, Electronic Tax
Register (ETR) will be installed at selected wholesale
and retail outlets with known high volume of business.
39. In order to ensure quick disposal of cases remanded
back by the ITAT to the CIT (A) for making a fresh order, a time limitation of six months has been provided
in the law.
40. A time limit of 90 days has been provided under the Income Tax Rules, 2002 for making an order by the FBR
on receipt of recommendations from the Alternate Dispute Resolution Committee (ADRC).
41. In case of withdrawals from superannuation fund liable
to WHT, the deduction of tax has been made at the rate
applicable to the year of withdrawal instead of average
rate of the preceding three years.
42. In order to create linkages between voluntary and occupational savings schemes, the subscriber of a Recognized Provident Fund will,now, be allowed to transfer
funds to a voluntary pension fund scheme.
43. The provisions of 7th Schedule allowing deduction on
account of non- performing loans as per prudential
regulation issued by the SBP have been deleted. From
the next financial year, such deductions would be allowed under sections 29 and 29A of the Income Tax
Ordinance, 2001.
44. Enabling powers have been granted to the FBR to allow
exemption from Withholding taxes required under different provisions of the Ordinance.
SALES TAX & FEDERAL EXCISE

1.
The rate of sales tax has been increased from 15% to

16%.
2.
Filing of sales tax returns by Commercial Importers has

been changed from Quarterly to Monthly basis effective from July 2008.
3.
FED on telecommunication services is being enhanced

to 21% effective from 1st July, 2008.
4.
Federal Excise duty on cement has been enhanced

from Rs. 750/- per tonne to Rs. 900/- per tonne from 1st
July, 2008.

5.
The Sales Tax chargeable in respect of Steel Meltors ,

Steel Re-rollers, Ship Breakers etc has been enhanced.
been made to charge duty from the recipient of services.
6.
FED @ 5% has been levied on imported as well as locally manufactured cars having engine capacity exceeding 850cc effective from 1st July, 2008.
7.
The rate of FED on banking, insurance and franchise

services has been increased from 5% to 10% effective
from 1st July, 2008.
20. Supplies, falling under respective headings of Customs, made to hospitals of 50 beds or more being run by
Federal or Provincial Government or Charitable Institutions have been exempted.
8.
9.
Section 10 of the Sales Tax Act, regulates the excess input tax over the output tax but there was no provision
relating to carry forward of excess input tax. Section 10
has been amended to incorporate the carry forward
amount for excess input tax effective from 1st July,
2008.
21. If unregistered persons liable for registration under the

Sales Tax Act, opts for voluntary registration, he may
be granted amnesty from payment of past dues.
22. The definition of franchise services has been enlarged by including royalty and technical fee in it.
Moreover, the definition of franchise has been shifted
from Federal Excise Rules, 2005 to Federal Excise Act,
2005.
In order to keep the rate of default surcharge higher

than the interest rates of banks to avoid short-filing by
the taxpayers, it has been enhanced from 1% to 1.5%
per month effective from 1st July, 2008.
23. To enable AJK Government to pay refunds to their registered persons on purchase of taxable goods from
Pakistan, a provision has been introduced in Sales Tax
to pay sales tax refunds to persons registered in AJK.
10. Time to adjudicate the cases under Sales Tax Act, 1990
and Federal Excise Act, 2005 has been increased from
90 to 120 days effective from 1st July, 2008.
24. Supplies to Non-resident entrepreneurs/traders visiting

Pakistan on business tours have been exempted and
Pakistani counterparts will also benefit while visiting
abroad on reciprocal basis from 1st July, 2008.
11. In order to clear pendency at the tribunal level and to

make it a more effective forum, the monetary limit for
single member bench has been increased from Rs. 1.5
million to Rs.10 million from 1st July, 2008.
CUSTOMS
1.
12. Import and local supply of fertilizers and pesticides has

been exempted.
Cosmetics
Electric ovens/cooking ranges
Betel leaves
Sulphonic acid
CKD/SKD of sewing machines
13. Energy saver lamps have been exempted from sales

tax.
14. FED on insurance premium paid by farmers to insure
their crops, has been exempted from 1st July,2008.
Duty rates on following items have been increased:

from 20-25% to 35%
from 20% to 30%
Rs.150 to Rs.200/kg
from 10% to 15%.
from 5% to 20%
2.
15. Raw materials, including molasses, for acetic acid have

been zero rated from 11th June, 2008 as acetic acid is
already zero rated.
Customs duty @ Rs. 500/ per set has been levied on import of mobile phone.
3.
A uniform rate of 30% has been specified for import of

special purpose motor vehicles.
16. Caustic soda flakes/solid, cotton linter and sequins

have been zero-rated from 11th June, 2008.
4.
Duty rates on import of cars/jeeps above 1800cc have

been increased from 90% to 100%.
17. Biscuits, confectionary and snacks have been excluded

from the Third Schedule to the Sales Tax Act, 1990 effective from 1st July, 2008. The 3rd schedule relates to
the items on which the sales tax is charges on retail
price.
5.
Fixed duty/ tax rates on old and used cars/jeeps have

been increased by 10%.
6.
The local industry producing water dispensers, hooks

& eyes, aluminum alloy, electric irons, mini choppers,
vacuum cleaners, central heating gas boilers, mini ovens, gas heaters, gas stoves/cooking ranges with ovens,
air handling equipments, central heating equipments,
UPS, Chlorinated paraffin, chrysotile cement pipes,
sheets & fittings and perforated steel products have
been provided inputs at 0%, 5% and 10% rates of duty.
7.
Fully dedicated CNG buses have been exempted from

duty.
18. FED has been levied on the services of real estate developers and promoters, whereby the builder would be
required to pay duty @ Rs.50 per sq. ft. of the covered
area of a unit. The developer of open plots would be
subject to duty @ Rs.100 per sq. yard of the plot.
19. To charge duty on the services originating from abroad
and terminating in Pakistan, an enabling provision has

8.
Eighteen medicines used for cancer/heart treatment etc.

have been exempted from customs duty.
9.
Bitumen, JP4 and JP8 have been exempted from duty.

Duty rate on base oil for lubricating oils has been reduced from 20% to 10%.
10. Rice seeds, energy saving lamps, dredgers, specified

solar energy equipments have been exempted from customs duty.
21. Section 194C has been amended for enhancing the limit
of single bench of the Appellate Tribunal from five to
ten million rupees
COMPANIES ORDINANCE, 1984

1.
The time period for holding of AGM has been changed

from 3 months to 4 months after close of financial year.
2.
The maximum fine for not holding AGM & related non
compliances by listed companies within the prescribed
time period has been proposed to increase from
Rs.50,000 to Rs.500,000.
3.
The maximum fine for not holding AGM & related non
compliances by other companies within the prescribed
time period has been proposed to increase from
Rs.10,000 to Rs.100,000.
SECP has been empowered to specify the time limits
for payments of dividends.
11. Power plants imported by WAPDA on temporary basis

will be exempt from customs duty.
12. Reduction of duty on:
Calcium carbide
from 15% to 5%,
PTA
from 15% TO 7.5%,
PSF
from 6.5% to 4.5%,
4.
Caustic soda
from Rs.5000/MT to
Rs.4000/MT,
OTHER SIGNIFICANT AMENDMENTS
Printing screens
from 15% to 10%,
1.
Nickel not alloyed
from 5% to 0%,
The scope of Workers Welfare Fund has been extended

to all establishments on which West Pakistan Shop and
Establishment Ordinance, 1969, applies.
Textile buckram
from 25% to 10%.

2.
The minimum wages for unskilled workers have been

increased from Rs.4600 to Rs.6000 per month under
the Minimum Wages for unskilled Workers Ordinance,
1969.
3.
Employees Old-age Benefits Act, 1976 will be applicable on every industry or establishment, where five or
more persons are employed
4.
The rate of monthly contribution has been reduced

from 6 percent to 5 percent of the employees wages
under Employees Old-age Benefits Act, 1976.
5.
The minimum pension under Employees Old-age

Benefits Act, 1976 has been enhanced from Rs.1500 to
Rs.2000 per month.
16. Specified industries/projects have been de-linked from

the local manufacturing condition for import of required machinery, equipments and raw materials etc.
6.
The wage limit for application of Social Security Ordinance, 1965, has been enhanced to Rs. 10,000 per
month from Rs.5000 per month.
17. Tariff based system (TBS) for auto sector has further
been improved.
7.
The rate of contribution under Social Security Ordinance has been decreased to 6 percent.
8.
The rate of social security contribution has been increased to Rs. 360 per month under self assessment
schemen
13. Seized/confiscated vehicles as on 31st May, 2008 may

be released against payment of leviable duty/taxes and
30% redemption fine.
14. Duty rates on non-essential & luxury items have been
increased. Hence, duty rate on dairy products, fruits,
chewing gum, chocolate, processed food, fruit juices,
aerated waters, ceramic products, air- conditioners/refrigerators, electric fans, toasters, micro wave ovens,
televisions, furniture and lighting equipment etc. have
also been increased from 25% to 35%.
15. Manufacturers and particularly soap manufacturers
based in AJ&K have been extended concessionary duty
regime in line with SRO 565(I)/2006, as available to
Pakistan based manufacturers.
18. Release of held up indemnity bonds has been eased out.

19. A new section 3DD has been introduced in the Customs
Act, 1969 for constituting a Directorate General of Post
Clearance Audit (PCA)
20. Section 179 of the Customs Act has been amended for
allowing adjudicating officers to decide cases within
120 days.
Mr. Ghulam Mustafa Qazi, Director TMR & Co. delivered presentation in Post-Budget Seminar at Lahore based on his companys
Budget Highlights.
Federal Budget, 2008-09

A Critical Review
By Wasful Hassan Siddiqi, FCMA
The Budget
Finance Minister Syed Naveed Qamar, on Wednesday the
June 11, 2008 unveiled a Rs. 2.01 trillion taxes-laden federal
budget for 2008-09.
Subsidies are cut on wheat, oil and electricity. 20pc raise is
allowed in govt. employees salary. Poor are promised to get
Rs. 1,000 per month as if it is a big amount to bear the burden of high inflation.
Salient Features of the Budget

The immediate impact of the budget shall be as under:
i)
ii)
iii)
iv)
v)
vi)
vii)
Additional tax impact of Rs. 84 bn

3% FED on motor cars
FED in VAT mode 16%
Excise on telecom services raised to 21%
FED on cement up by Rs. 150/tonne
10% custom duty hike on non-essential imports
Income Tax exemption limit raised from Rs. 150,000 to
180,000 for salaried men. For women exemption raised
to Rs. 240,000
viii) 0.5% minimum tax on turnover withdrawn
ix) No change in tax regime on listed shares
x) 20% rise in pay & pension
xi) 2% hike in NSS rates
xii) 10% advance tax on electricity bills
xiii) CNG buses exempted from duty;
xiv) 18 drugs for cancer/heart treatment made duty-free
Public Remarks on the Budget
achieving the revenue target of Rs 1.25 trillion for fiscal

year 2008-09 resort is made to regressive taxation: increasing the burden of indirect taxes and introducing new presumptive taxes under the income tax laws.
ii. One of the writers in letter to the editor columns of
Daily Business Recorder quotes the chairman federal
budget revenue (FBR) saying that the tax proposed in the
2008-09 federal budget would not affect the common man;
and that one percent increase in sales tax (GST) rate would
not result in increase in prices of essential commodities.
He further writes that since Chairman FBR is a noble person, let us all believe in what he says. How is it believable
that the volume of subsidies on POL products has been reduced but this would have no negative impact on prices.
Electricity and gas charges have gone up but this would not
affect the poor and lower middle class. Federal excise duty
on a number of products, such as dairy products, and services, like telecom and banking, have increased but this
would not burden the common man.
The masses shall be rest assured that the government would
not allow increase in prices of any item as a consequence of
new taxes imposed. If a spiral increase in prices of essential
commodities is witnessed this would be without the governments permission, of course. (Business Recorder June 24, 2008).
Roti, Kapra aur Makan Negated in the Budget

It is intriguing to note that roti, kapra aur makan is negated in
the budget by cutting down subsidies on food, oil and electricity. Other factors that effect the poor families budget are
as shown below:
i)
i. Even a cursory reading of Finance Bill 2008 shows that

it is the handiwork of some old tax baboos of the Federal
Board of Revenue, who have only one concern i.e. how to
rob the poor and protect the wealthier sections of society,
write renowned tax consultants Huzaima Bukhari and Dr.
Ikramul Haq in their comments on Finance Bill 2008. (Business Recorder, June 24, 2008)
They further argue that the tax proposals confirm criminal

culpability between the ruling elite and tax collectors as unprecedented burden of taxes is imposed on the poor,
whereas no progressive taxes are introduced to tax the rich
and the mighty. It is tragic that the new elected government
has placed total reliance of tax bureaucrats, who are responsible for our existing pathetic politico-economic situation.
In their opinion tax policy of the new government shows no
concern whatsoever for redistributive social justice. For
Roti: Food inflation has eroded the value of money.

Kitchen items of daily use like flour, edible oil, meat, sugar
and milk are out reach of common men. Budget offers no
plan to overcome inflation which could bring down the
prices of these items to an affordable level.
ii) Kapra: Continued power crises, long hours load shedding, inflationary pressure caused by budgetary taxes and
increase in the prices of electricity, CNG Gas, POL products
and other consumables will increase the cost of industrial
production to which textile is no exception. This will make
kapra (cloth) much costlier which will not be affordable by
the common men.
iii) Makan: Increase in GST and similar increase in federal excide duty on cement and other construction items in
addition to levy of FED Rs. 100 per sq. yrds. on the plot and
Rs. 50 per sq. yrds. on the covered area of the built up house

will push up the prices of houses as such common man will
be left without a house.
Budget, 2008-09 does not offer any meaningful measures to
overcome the above mentioned situation.
On the contrary, the budget makers have taken full care to
provide incentives to the affluent class by the following
budgetary measures:
i)
ii)
iii)
iv)
FED of 5% is reduced to 3% on motor cars

Capital gained on shares is deferred till June 2010.
Agricultural landlords are still out of tax net.
Stamp duty on share transfers is abolished at
provincial level.
The above mentioned examples are the manifestation of

contradiction in government monitory policies viz-a-viz its
partys manifesto of Roti, Kapra aur Makan.
State of the Economy 2007-08

This year's budget is unique because of a number of factors.
First, there are high expectations from the democratic government which has acquired the reigns of government after a
gap of eight years. Second, it comes at a time when the economy is in the midst of an unprecedented level of stress following a period of apparent buoyancy.
Till last year there was little realisation or acceptance of how
vulnerable the foundations of that so called ''buoyancy'' was
and how gradually the economy was heading towards difficult times. The unravelling started last year. By the time the
new government took power, the economy had already been
through electricity power and atta (flour) crises and the price
hike had assumed alarming proportions.
How grave is the current macroeconomic situation? Pakistan is facing serious economic challenges in terms of high
inflation and unsustainable fiscal and current account deficits.
This unsustainable fiscal deficit is putting pressure on
monetary policy, resulting in higher growth in monetary aggregates. This monetary expansion together with higher international oil and food prices has already translated into
high double-digit inflation.
An important question which arises is whether the current
state of economy is a result of recent external shocks or
whether the economy was moving in this direction and corrective policy measures were not taken timely to reverse the
deterioration in trends or at least limit them? It appears that
our present economic predicament is a result of a combination of factors, both of a short and long term nature. Furthermore, the factors are both domestic and exogenous in character.
Growth
The GDP growth rate peaked in 2004-05 at 9 percent. Since
then there has been a gradual decline in the growth rate,
most pronounced in the manufacturing sector. Also, there
has been considerable volatility in agricultural growth and
10
the average growth rate is down in the current decade to 2.5

percent as compared to over 4 percent in the 90s. Much of
the buoyancy has been concentrated in the services sector.
Fiscal Deficit
Deficit started increasing after 2003-04 as public expenditure was built up once again with rising PSDP and higher
non-interest current expenditure. By 2006-07, public expenditure had exceeded the 1999-2000 level by 0.5 percent of
the GDP.
Balance of Payments
Pakistan experienced a strong balance of payments position
in earlier years of the new millennium. After 9/11, the jump
in private transfers led to current account surpluses from
2001-02 to 2003-04. Thereafter, there has been a steady deterioration.
Inflation in 2007-08
Inflation has been threatening the economy since 2004-05.
Cumulative inflation from 2004-05 to 2006-07 has been 27
percent in the overall CPI and 33 percent in food prices. As
per the recent press conference of the Governor of the State
Bank, food inflation at present is 25 percent on a year-toyear basis.
Inflation has acquired a galloping character and during
the last two months of March and April 2008 the
monthly rate of inflation has crossed 3 percent. Inflationary expectations have become embedded in the behaviour of economic agents and imparted a strong dynamic to inflation in the country.
There is a strong monetary 'overhang', due especially to
the high rate of government borrowing from the Central
Bank, which has substantially added to the stock of reserve money.
There has been incomplete adjustment yet to the rising
oil prices internationally and if the government opts to
raise domestic POL prices accordingly in 2008-09, to reduce the large oil subsidy bill (see Section IV), then this
could impact significantly on the overall price level.
The rupee has depreciated rapidly in recent months by
over 10 percent and, as highlighted by the Governor of
SBP, this will imply more imported inflation in coming
months.
Sales Tax
Sales tax is levied at two stages in Pakistan- at the stage of
import and domestic production respectively. During the
decade of the 90s, it acquired the characteristics of a value
added tax. Therefore, the tax base for the tax is the value of
dutiable imports plus revenue from import duty plus value
added in large-scale manufacturing.
In recent years, there has been a major broad basing of the
tax, which has increasingly substituted for customs duty, excise duty and the petroleum development surcharge. The
size of the tax base has, therefore, been accordingly extended.

salaried women the limit is being enhanced from Rs.
200,000 to Rs. 240,000.
Tax Measures
Income Tax
Marginal Relief for Salaried Taxpayers
First Schedule Tax Rates for individual

and association of persons
Rate of tax for individuals and association of persons have
remained unchanged; and the same are applicable to the tax
year: 2008-09.
Taxable Income
Upto Rs. 100,000
Rs. 100,000 to Rs. 110,000
Rs. 110,001 to Rs. 125,000
Rs. 125,001 to Rs. 150,000
Rs. 150,001 to Rs. 175,000
Rs. 175,001 to Rs. 200,000
Rs. 200,001 to Rs. 300,000
Rs. 300,000 to Rs. 400,000
Rs. 400,001 to Rs. 500,000
Rs. 500,001 to Rs. 600,000
Rs. 600,001 to Rs. 800,000
Rs. 800,001 to Rs. 1,000,000
Rs. 1,000,001 to Rs. 1,300,000
Above Rs. 1,300,001
Tax Rate
NIL
0.5%
1%
2%
3%
4%
5%
7.5%
10%
12.5%
15%
17.5%
21%
25%
Tax Rates for Salaried Individuals

Tax rates for salaried individuals have been revised as under:
S. #
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Taxable Income
Upto Rs. 180,000
Rs. 180,001 to Rs. 250,000
Rs. 250,001 to Rs. 350,000
Rs. 350,001 to Rs. 400,000
Rs. 400,001 to Rs. 450,000
Rs. 450,001 to Rs. 550,000
Rs. 550,001 to Rs. 650,000
Rs. 650,001 to Rs. 750,000
Rs. 750,001 to Rs. 900,000
Rs. 900,001 to Rs. 1,050,000
Rs. 1,050,001 to Rs. 1,200,000
Rs. 1,200,001 to Rs. 1,450,000
Rs. 1,450,001 to Rs. 1,700,000
Rs. 1,700,001 to Rs. 1,950,000
Rs. 1,950,001 to Rs. 2,250,000
Rs. 2,250,001 to Rs. 2,850,000
Rs. 2,850,001 to Rs. 3,550,000
Rs. 3,550,001 to Rs. 4,550,000
Rs. 4,550,001 to Rs. 8,650,000
Rs. 8,650,001 and above
Tax Rate %
Nil
0.50
0.75
1.50
2.50
3.50
4.50
6.00
7.50
9.00
10.00
11.00
12.50
14.00
15.00
16.00
17.50
18.50
19.00
20.00
The limit of basic exemption for salaried individuals is being enhanced from Rs. 150,000 to Rs. 180,000 and in case of
Where the total income of a salaried taxpayer marginally exceeds the maximum limit of a slab in the table, the income
tax payable shall be the tax payable on the maximum of that
slab plus tax on:
i)
20% of the amount by which the total income exceeds

the said limit where the total income does not exceed
Rs. 500,000.
ii)

in each slab but total income does not exceed Rs.
1,050,000.
iii) 40% of the amount by which the total income exceeds

2,000,000.
iv) 50% of the amount by which the total income exceeds
4,450,000.
v)

in each slab but the total income exceeds Rs. 4,450,000.
Marginal relief is not available to persons other than salaried

taxpayers.
Marginal Relief Computations

Computation of tax payable using marginal relief is explained below:
S.
#.
Taxable Income
Tax
Rate
Tax
Chargeable
Rs.
Total Tax
Chargeable
after
Marginal
Relief
Rs.
1. Taxable income assumed at Rs.

475,000 Tax rate upto Rs. 450,000
2.5%
11,250
11,425
Marginal amount exceeding last

slab Rs. 25,000 x 20% = Rs. 5,000
3.5%
175
2. Where taxable income Rs. 950,000

Tax rate upto Rs. 900,000
7.5%
67,500

slab Rs. 50,000 x 30% = Rs. 15,000
9%
1,350
3. Where taxable income Rs. 1,975,000

Tax rate upto Rs. 1,950,000
14%
273,000

slab Rs. 25,000 x 40% = Rs. 10,000
15%
1,500

17.5%
621,250
Marginal amount exceeding last slab

Rs. 450,000 x 50% = Rs. 225,000
18.5%
41,625

18.5%
841,750
19%
51,300
Marginal amount exceeding last slab

Rs. 450,000 x 60% = Rs. 270,000
11
68,850
274,500
662,875
893,050
Rates of Tax for

Companies
Part 1, Division II
(b) The rate of tax to be paid under section 15, in the case of
company, shall be.
S. No.
Public company, private

company and a banking company
35%
Small Company
20%
In case of small company where the turnover exceeds the

prescribed limit of Rs. 250 million, tax shall be payable at
the following rates:
S.No.
Turnover
i. Income attributable to turnover exceeding Rs. 250 million but does not exceed
Rs. 350 million
ii Income attributable to turnover exceeding Rs. 350 million but does not exceed
Rs. 500 million
iii On the income attributable to turnover
exceeding Rs. 500 million.
Rates of Dividend Tax
Rate
25% plus
30% plus
35% plus
Part 1, Division III

(Section 5)
Rate of tax
Where the gross amount of rent 5 per cent of the gross amount of
does not exceed Rs. 400,000
rent
2)
Where the gross amount of rent Rs. 20,000 plus 10 percent of the
exceeds Rs. 400,000 but does
gross amount of rent exceeding
not exceed Rs. 1,000,000
Rs. 400,000.
3)
Where the gross amount of rent Rs. 80,000 plus 15 per cent of the
exceeds Rs. 1,000,000.
gross amount of rent exceeding
Rs. 1,000,000.
Advance tax on Imports
Part II, (Section 148)
2% of the gross amount of the value of goods.
Rate of Tax on Payment of

insurance and reinsurance Division II Part III
premium to non Residents Section 152 (1AA)
5% of the amount paid
Payments to non Resident

Division IIIA
Media Person
Part III (Section 153A)
10% of the amount paid.
10% of the gross amount of dividend.
Withholding tax rates on

Certain Payments to
Non-Residents
Gross amount of rent
1)
Part 1, Division IV
(Section 6)
Tax deduction from

Profit on Debt
Part III, Division I

(Section 151)
10% of the yield or profit paid.
15% of the gross amount of the royalty or fee for technical services.
Tax deduction on payments

to non-residents
Rates of Tax on Shipping

or Air Transport
6% from payment on execution of construction contract

including supervisory activities & related services.
Part 1, Division V
(Section 7)
Part III, Division II

(Section 152)
Income of a Non-Resident Person
In other cases, 30% of the gross amount paid.
In case of Shipping Income, 8% of the gross amount received or receivable.
Tax deduction at source tax

on payments for
Part III, Division III
goods and services
(Section 153)
In case of air transport income, 3% of the gross amount

received or receivable.
Rates of Tax on Property Income

(a) The rate of tax to be paid under section 15, in the case of
individual and association of persons, shall be:
S. No.
In case of sale of any other goods, 3.5% of the gross

amount payable.
In the case of transport services, 2% of the gross amount
payable.
Rate of tax
1)
Where the gross amount of rent NIL

does not exceed Rs. 150,000
2)
Where the gross amount of rent 5 per cent of the gross amount
exceeding Rs. 150,000
not exceed Rs. 400,000
3)
Where the gross amount of rent Rs. 12,500 plus 10 per cent of the
gross amount exceeding Rs. 400,000.
not exceed Rs. 1,000,000.
4)
Where the gross amount of rent Rs. 72,500 plus 15 per cent of
the gross amount exceeding
Rs. 1,000,000.
12
In case of sale of rice, cotton seed or edible oil, 1.5% of

the gross amount payable.
In case of other services and contract, 6% per cent of the

gross amount payable.
Deduction of tax on Exports
Part III, Division IV

(Section 154)
1% of the proceeds of the export
Withholding tax on payments of property

rentals
Rate of tax on Cash

Withdrawal from Bank
(a) The rate of tax to be deducted under section 155, in the

case of an individual and association of persons, shall
be:
0.3% of the aggregate amount of cash withdrawal from a

bank account exceeding Rs. 25,000 in a day.
S. No.
Rate of tax
1)
Where the gross amount of rent does

not exceed Rs. 150,000.
NIL
2)
Where the gross amount of rent

exceeds Rs. 150,000 but does not
exceed Rs. 500,000.
5 per cent of the gross

amount exceeding
Rs. 150,000.
3)

exceed Rs. 1,300,000.
Rs. 17,500 plus 10 per cent

of the gross amount
exceeding Rs. 500,000.
4)

exceeds
Rs. 1,300,000.

of the gross amount
exceeding
Rs. 1,300,000.
(b) The rate of tax to be deducted under section 155, in the

case of a company, shall be:
S. No.
Rate of tax
1)
Where the gross amount of rent does

not exceed Rs. 400,000.
5 per cent of the gross

amount
2)

exceed Rs. 1,000,000.

of the gross amount of rent
exceeding Rs. 400,000


of the gross amount of rent
exceeding Rs. 1,000,000.
3)
Withholding tax on Prizes

and Winnings
Part III, Division VI

(Section 156)
Division VI Part IV
(Section 231A)
Miscellaneous
The Provincial Employees Social
Security Ordinance, 1965
Wage limit enhanced to Rs. 10,000 for applicability of
Provincial Employees Social Security Ordinance,
1965.
Employers Social Security contributions caped at 6percent .
Monthly contribution per employee enhanced to Rs. 360
per month under Social Security self assessment
scheme.
West Pakistan Industrial and Commercial

Employment (Standing Orders) Ordinance, 1968
Workman to get normal monthly wages even during
suspension period for misconduct enquiry.
The Minimum Wages for Unskilled Workers

Ordinance, 1969
Legal cover provided to minimum wages of Rs. 6,000.
On prize bond, 10% of the gross amount paid.
Employees Old-age Benefits Act, 1976
On winnings from a raffle, lottery, prize on quiz, prizes

against sale promotion by companies etc., 20% of the
gross amount paid.
Establishment with five employees brought under the

scope of Employees Old-age Benefits Act, 1976.
Withholding tax on
Petroleum Products
Part III, Division VI A

(Section 156A)
Minimum pension benefit under Employees Old-age

Benefits Act, 1976 increased to Rs, 2,000.
10% of the amount of payment.
Collection of tax from

CNG Station
Exception removed to bring bank or banking company

under the ambit of Employees Old-age Benefits Act,
1976.
Part III, Division VI B

(Section 234A)
Existing pension benefit enhanced by 15 percent.
4% of the gas consumption charges of CNG Station.
Foreign Exchange Regulation Act, 1947
Withholding tax on
Brokerage and Commission
State Bank of Pakistan empowered to impose substantial

penalties on any defaulting persons under the FE Regulations.
Part IV, Division II

(Section 233)
10% of the amount of payment.
Rate for Collection of Tax

by a Stock Exchange
Registered in Pakistan
Overriding effect of Economic Reforms Act, 1992 on

the FE Regulations removed.
Part IV, Division IIA
(Section 233A)
Securities and Exchange Ordinance, 1969
0.01% of the share purchase value
More elaborative provisions introduced to deal with insider trading.
In case of financing of Carry Over Trades (COT or

Badla), 10% of the carry over charge.
Strict penal provision introduced to curb insider transactions.
13
Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980
No more involvement of Finance Minister, or Advisor to

Prime Minister on Finance ensuring Commissions independence.
Registrar empowered to issue binding directions to any

modaraba company.
Khushhali Bank Ordinance, 2000
Companies Ordinance, 1984
Khushhali Bank Ordinance repealed so as to regulate all

microfinance banks under one legal framework.
Period of four months for holding of AGM reinstated.

Prescribed period for payment of dividend after declaration removed and Commission empowered to specify
such period.
Economic Reforms Act, 1992

Foreign Exchange Regulation no more subservient to
Economic Reforms Act.
Securities and Exchange Commission of Pakistan Act, 1997

The number of members on the Securities and Exchange
Policy Board reinstated to nine.
The Insurance Ordinance, 2000

Minimum supervision fee increased from Rs. 100,000 to
Rs. 500,000.
Rules made under section 66(4) provided protection
from expiry.
Listed Companies (Substantial Acquisition of

Voting Shares and Take-overs) Ordinance, 2002
Right to decide percentage of the voting shares to be acquired transferred from acquirer to the Commission.
Penalty for non-compliance / contravention enhanced substantiallyn
Budget at a Glance
Budget
Revised
Budget
Estimate
Estimate
Estimate
2007-08
2007-08
2008-09
......................................... (Rupees in billion) .........................................
Tax Revenue - CBR
Direct Taxes
Income tax
Others
Indirect Taxes
Customs
Sales tax
Federal excise
Others
Non Tax Revenue

Less Provincial Share
Net Capital Receipts
External Receipts
Self Financing of PSDP by Provinces
Change in Provincial cash balance
Privatisation Proceeds
Bank Borrowings
Expenditure
Current Expenditure
General Public Services
Debt Servicing
Others
Defence Affairs & Services
Economic Affairs
Others
Developmental Expenditure
PSDP
Others
Total Expenditure
14
388.0
20.3
408.3
367.3
21.0
388.3
477.0
19.0
496.0
154.0
375.0
91.0
2.3
622.3
1,030.6
337.6
1,368.2
466.0
902.2
58.5
258.5
122.7
51.8
75.0
80.9
1,549.6
148.0
375.0
92.0
2.3
617.3
1,005.6
393.3
1,398,9
457.2
941.7
142.8
275.4
129.7
32.6
1.7
424.1
1,948.0
170.0
472.0
112.0
1.4
755.4
1,251.4
427.8
1,679.2
568.3
1,110.9
221.3
300.2
124.4
78.9
25.1
149.0
2,009.8
437.4
204.5
641.9
275.0
78.9
60.5
1,056.3
564.2
317.5
881.7
277.2
293.4
63.9
1,516.2
619.4
310.1
929.5
296.1
201.1
66.5
1,493.2
470.0
23.3
493.3
1,549.6
395.1
36.7
431.8
1,948.0
472.7
43.9
516.6
2,009.8
A New Direction or Compulsive Action

By Syed Shabbar Zaidi, FCA
President, South Asian Federation of Accountants (SAFA)
Continuity of Thought - Presentations

in 2005, 2006 and 2007
The following slides represent what I said during the
post budget seminars in 2005, 2006 and 2007:
Pakistans economy and its size can not sustain a
constant trade deficit of 13.4 bn US$.

The interest rate of around 10 per cent seriously af-
fects the investment strategies. Only the countries

like Brazil, Russia, Turkey and Venezuela have such
high interest rates. Rest of the world is around 5 percent.
Increase in consumer prices is a natural phenomenon
what is recommended is somewhat out of box. But staying

within the box has brought poverty, ignorance, hopelessness, violence, and dictatorship.. [to far too many
Muslims around the world. Staying within the box has set
Islam and West on dangerous and unnecessary collusion
course.] It is time for new ideas. It is time for creativity. It
is time for bold commitment. And it is time for honesty,
both among people and between people[That is what I
have tried to do in these pages]. There has been enough
pain. It is time for reconciliation.
(Page 318Islam, Democracy and the West)
(Shaheed Mohtarma Benazir Bhutto)
in this situation. Monetary and fiscal policy can only

provide a temporary relief. With these indicators inflation is bound to increase.
There are those who look at things the way they are and
ask whyI dream of things that never were and
ask why not?
now there is no time and space left as a nation to
(Robert F Kennedy)
make mistakes and wait for a messiah. There has to be

stabilization and national consensus.
The conclusion made at that time was very sim-
ple.We can not live on this trade based economy.Trade in shares, trade in goods .trade
in properties.The solutions are manufacturing
and agriculture and proper allocation of resources.
The time ahead is difficult..But do we have
choice..Who will bring change? Change will
come if we really believe in ourselves
My theme for this year is whether it is New Direction
or Compulsive Action ?
Economic Justice in an Unfair World

Economics without ethics is a mutilated science
(Washington Gladden)
This is true amongst the nation and people within the nation Ethics and Level Playing field. Do we have the
same ?
Why Pakistan cannot be a good country to live for our

generations?
Taxes and Under Developed Countries

In the words of Sabyasachi Mukharji, the Chief Jus-
tice of India:
One would wish that one could get the enthusiasm of
Justice Holmes that taxes are the price of civilization and
one would like to pay that price to buy civilization. But
the question which many ordinary taxpayers very often,
in a country of shortages, with ostentatious consumption, and deprivation for the large masses, ask is, does
he with taxes buy civilization or does he facilitate the
waste and ostentation of the few. Unless waste and ostentation in government spending are avoided or eschewed, no amount of moral sermons would change peoples attitude to tax avoidance (CWT v Arvind 173 ITR
479, 487).
(Nani Palkhivala; We, the Nation)
The Change ..Out of Box

I make these recommendations because the times require something more than business as usual. Much of
This is a psychological problem and we have to over-
come that
15
REVENUES
Pakistans Economic Ills

Rupees in Billion
Immediate issues
Trade Deficit . You cannot live with over

US$ 15 trade deficit
High Interest Rate . Against a low rate over

the last decade
Honeymoon for trading . Goods, shares,

properties, US$ and morals
Public Sector Development Programme - Unproductive and not properly governed
Overpoliticised media . No real debate on

economy
Increase in Consumer Price Index .

Around 30 percent over the year
Increase in input prices for industries
Unemployment . over 50 percent in real

terms
Can we achieve that estimate ? Yes, provided we do

not disturb the system
Continuity of structural reforms FBR,

SECP, SBP, NADRA etc .
Expenditure
10 Shortage of Power
Revenues
Revised
Budget
Estimate Estimate
2007-2008 2008-2009
Tax Revenue FBR

Direct Taxes
Income Tax
367
477
Others
21
19
388
496
Customs
148
170
Sales
375
472
Federal Excise
92
112
Others
617
755
1,005
1,251
Indirect Taxes
Rupees in Billion
Expenditure
Revised
Budget
Estimate Estimate
2007-2008 2008-2009
Security State or an Economic reality.. What

is Pakistan?
Inappropriate Investment on Education, Health

and General Administration
Lack of Consensus on economic issues .. Water Management, Royalty to Provinces, etc
NFC Award Allocation to Provinces
Current Expenditure
General Public Services
Debt Servicing
564
619
Others
317
310
881
929
Defence Affairs & Services
277
296
Economic Affairs
293
201
Others
63
66
1,516
1,493
PSDP
395
472
Others
36
43
431
516
1,948
2,009
Development Expenditure
16
Medium & Long Term
Does 2008 budget give any direction towards a change

.. yes and no . If yes then how ?
What do the Donors Want

We are constantly short of US$. We need support.
When you sit in Q Block at Islamabad you have to

balance the books. From where you will get US$:
l Donors
l World Bank / ADB
l Petroleum Support

These people will review our balance sheet and profit
& loss account. At the moment both are not presentable. Thus they suggest:
There should be equal opportunities to reap the

benefits by all
Pakistan Economic Survey 2008-2009

Do we read and understand it ?
l Reduce current account deficit;

l Remove subsidies;
Overview, Page VI
l Apply WTO; and

l Expand Tax to GDP ratio.
Subsidies Direct & Indirect Support

We provide subsidies to:
l Electricity
l Fertilizer
l Petroleum
Major contributors to this years services growth include: wholesale and retail trade, banking and insurance, public administration, and defence and social services. All these sectors have posted strong growth in 20072008. As stated at the outset, this years growth is not
broad-based. Infact, three fourth contribution to this
years growth alone come from the services sector while
the remaining one fourth contribution owed to the
commodity-producing sector.
Is it not a blessing in disguise? Can defence be a service sector ?
l Food item (Indirect)
l Because we cannot apply market based economy.
If we have a growth of around 4 per cent with Agriculture and Manufacturing contributing substantially
we will achieve the objectives.
l Who benefits from it ? People below the poverty
You Cannot Print US$
Why do we provide subsidies
line. We cannot afford to dispense with t immediately.
Pakistan as a country is continuously short of US$. At
The answer is No. Do not remove subsidies for the time

being.
times we rely on US AID (Ayub Khan Age) then Afghan War Support (Zia ul Haq) and then War on Terror Support (Musharraf).
This years budget provides subsidy of RS 170 billion
We do not want Generals to rule, however, we want
for Petroleum and Rs 130 billion for Electricity. This

is a colossal figure. Furthermore, a direct subsidy of
around of Rs 50 billion is also provided. This is the
result of past structural imbalances. It will take time
to resolve this issue.
Please ensure that stoves remain alive otherwise
we can lead to drastic results
Poverty & Governance will to improve

Lee Kuan Yew delivered a message on 1st May 1986
There is no law of nature which provides that the life

will get better for Singapore next year. We have to
work to make it better
The public has to be trained. Only the tone and tenor
can be set by the state.
US$ to support our economy. This contradiction cannot live long.

In terms of US$ availability, the country is not sus-
tainable. We are too fragile.

The immediate problem of the country is continuous
trade deficit.
This problem has further been aggravated by our Du-
bai philosophy. The definition of service sector is

fundamentally wrong. How can short term trade in
stock exchange be termed as investors ?
Federal Budget 2008-2009 has identified the prob-
lem. However, it is yet to be seen whether it is a Directional Change [I desire it be so] or a Compulsive
ActionLet us hope for the better.
Can We Afford it Import of Biscuits &

Children Clothing
The prerequisites are:

l getting accurate data on poverty;
The most important directional change is increase in
l giving up the statistical artifacts;

l abandoning the political rhetoric; and
Duty upto 35 per cent on 300 Luxury Items. We

cannot afford to:
l leaving short term election oriented project.
17

l Pay US$ for import of Biscuits and Children
Seventh Schedule
clothing etc. etc. etc.; and
Regressive Amendment;
l Our local industry suffers due to this consumer-
ism.
Taxation on Real Estate
Step in right direction; Rate too low;
Duty imposed on:

l Dairy products, fruits, chewing gum, chocolate,
l
l
l
l
l
l
l
l
l
processed food, fruit juices and aerated waters

Ceramic products
Air conditioners / refrigerators & electric fans
Toasters, microwave ovens and cooking range
Televisions
Furniture and lighting equipment
Cosmetics
Sulphonic acid
CKD / SKD of sewing machines
Cars / jeeps above 1800 cc
AOP & Individuals being withholding agent
Step in right direction; avoids discrimination.
Sales Tax
1.
Regressive in nature;
Not required; A compulsion.
Federal Excise Duty

1.
We Call it Business . Under-Invoicing

Trade Cycle
Increase in rate from 15 to 16 per cent on Excisable Services

A compulsion;
2.
Effects
Increase in rate from 15 to 16 per cent
l US$ 3 does not form part of economy.
FED brought in line with sale value

The most important change brought in law
l Taxes are deducted and collected at US$ 2 or Rs
126 only
l Hard earned Foreign Exchange remittance from
exports and services are used for financing undocumented economy.
New Direction Emphasis on

Manufacturing & Agriculture
72 to 75 percent of our population is employed di-
rectly or indirectly in manufacturing or agriculture.

The contribution of Agriculture and Manufacturing
as a percentage of GDP is continuously droppingThis means average per capita in these
sectors is decreasing.
l This policy crime has been identified. Relevant
amendments made in the respective laws. Now

the issue is governance and management. If we
can achieve positive results this will be a blessing
for the economy.
Service Sector [incorrectly defined as above] contrib-
utes to GDP, however, it provides employment to

only 20 to 25 percent of people.
Initiatives and New Taxation Measures

(Direct Taxes)
The problems in agriculture are:
Branch Profit Tax
Support prices for products
Complete reliance on nature (rains/ storage,

etc)
Shortage of water
Expensive Inputs..Fertilzers/Electricity/Pesticides
Lack of infrastructure..Storage/Transport/Roads
Lack of credit.[Finance CFS not agriculturist]
Removal of discrimination. Is it required? International practices;

Whitening Scheme
Is it for the past? Do we need anything for the past undisclosed income? ; This will fail conceptually if future whitening is not stopped. We do not see any action against that [Section 111(4) survives];
Non-Residents payment
Exchange companies & Foreign Currency Accounts;
18

7
Tertiary industries to agricultureCattle

breeding/ fishing/ forestry, etc.
Please
understand
it.
agriculture.Do
not
spoil
Federal Budget has taken some steps in right direc-
tion in this regard, however, this policy has to continue forever.
Interest Rate escalation from 10.50 to 12 per cent at
the initial stage is counter productive for industry. We

would have to think out of box to provide funds to
industry at around 8 to 9 per cent; If this lower rate is
available for Trading, CFS and Property, then the objective will be lost - This is a major job for the future
monetary policy.
Manufacturing
Future of Pakistans Economy

The Bitter Side
Manufacturing in Pakistan is faced with the problems:
The current economic trend is leading to:

End of honey moon for Banking Sector Pressure
Lack of Support versus Trade on Policy Side (Fiscal Regimes)
Expensive inputs (Cost of Raw Materials)
Under-invoiced imports
Pressure on Consumer Prices for Food items due
Availability of financing at cheaper rate [Subsidized rate or market mechanism]
Increase in electricity rates;
Availability of skilled labour
Continued availability of power
on spreads and probability of bad debts;

Pressure on consumerism expensive cars, mobile;
electrical equipments, etc.;

to the increase in prices for flour, rice, etc .;
Increase in charges for other utilities; and
Decrease in demand for exports due to pressure of
US and European Economies.
tions are:
Result: This will lead to inflation and move towards

Recession [Stagflation]. This should not happen.
l Industrial
Future of Pakistans Economy Positive Side
In the budget we dont find concrete action. The solu-
Development Fund (Electricity &

Infrastructure) of around Rs 50 billion
l Financing at a lower rate [Not above 8 to 9 per
cent]
l Immediate withdrawal of WWF and WPPF
Value Added Tax & Federation of Pakistan

NFC Award
No country in the world with a VAT system can ar-
range the same on Provincial Basis. The fundamental

error of taxes on VAT basis and the concurrent list as
per Constitution of Pakistan needs to be adjusted.
Emphasis on agriculture and manufacturing will im-
prove Employment levels and bring a larger segment of people above the poverty line. We do not
have any other choice.
Realisation of ill effects of trading shares, plots,
goods etc.
The real value addition in agriculture and manufac-
turing will arise, when there is investment in Human

Capital on long term basis.
Are we ready for it ? Do we have choices . No.
.. A heavy stone to handle ..
The distribution between Federation and Provinces is
the issue. Not within the provinces.
But hope should not die . There is hope in eyes
Sustainable Manufacturing Base &

Manageable Interest Rate
The manufacturing base is eroding seriously due to
high input pricing; no protection against imports, including under invoicing; and improper cascading.
All these aspects have been identified as an issue in
the Budget Documents, however, the question is the
availability of the infrastructure for correction.
Conclusion
Budget for 2008-2009 has made some positive direc-
tional changes, however, this country can only prosper if we realize that Pakistan is an economic reality
not a security state
This presentation was delivered at Post Budget Seminar, organized by
Karachi Branch Council of ICMAP at Karachi on June 18, 2008.
19
Pakistan Budget 2008-2009

By Shehzad Ahmed Malik, FCMA
Shehzad Malik & Co., Management Accountants, Auditors and Tax Consultants
Brief on Pakistan Budget 2008-09

Total targeted receipts of Rs. 1.679 trillion
FBR revenues from taxes amounting to Rs. 1.251 trillion and expenditures amounting to Rs. 2.300 trillion.
Federal budget expenditures of Rs. 2.010 trillions
Almost 30% higher than the estimates of last year
Results the budget deficit at 4.7% of GDP
Total Tax Collection

Direct Tax
Sales Tax
Customs
Federal Excise
Rs 496 billion
Rs 472 billion
Rs 171 billion
Rs 112 billion
TOTAL
Rs 1,251 billion
Pakistans fiscal crises has deepen day by day

Two fold strategy instead of present emphasis of the
FBR on collection of taxes
Strategy must be developed for expanding the tax base
Bringing new individuals and companies into Tax Net
Withdrawing exemptions and immunities given from
tax to privileged class
Equitable distribution of tax on each segment
Focus should be on an important but neglected aspect of
spending tax payers money
There is need to match the tax revenue with the expenditure
Low level of tax collection and high government expenditures has jeopardized National Goal of Poverty Alleviation and improvement in public services like healthcare and education
Vision of the Board is to be modern, progressive, effective and credible organization for optimizing revenue
the mission statement emphasis on enhancement of the
capability of the tax system to collect the due taxes
through application of modern techniques
Reduce the rate of growth of the economy without reducing Inflation

Monopolies and cartels have played a major role in restricting out put and escalating prices in Pakistan
Competition commission and to enforce its policies effectively
Budget includes Rs 62 billion for water and power sector and Rs 54 billion for construction of small dams as its
development
Domestic consumption of electricity can also be
Brought Down by educating the public
Supply should be through developing alternative
sources of generating power like wind, nuclear and solar
etc
This will not only be environmentally friendly, but will
also restore balance in the external account
Debt burden of Pakistan is over Rs. 21 trillion
The outstanding foreign debt of Pakistan is around US $
41 billion
Govt needs to develop its vision for drastic improve ments and special attention in Agriculture sector.
Amendments in Other Laws: Provincial Employees Social Securities Ordinance,

1965 Section 2:
l
Monthly wages up to Rs. 10,000 will be included in

the scheme of social security
Section 20 (1):
l
Rate of contribution has been reduced from 7% to

6% of the wages
Securities and Exchange Ordinance, 1969

Section 15A. Prohibition of insider trading
15B. Inside information.
15C. Insiders
Insiders shall include
In practice it has mostly placed its reliance for tax collection through the oldest withholding tax agents system
sponsors, Executive Officers and directors of an issuer
Inflation should be curtailed down
sponsors, executive officers, directors and partners

of a legal person or unincorporated business association
It needs to determine whether prices are rising as a result

of hoarding, demand pull factors or cost push factors
Excessive use of monitory policy to fix up every problem in the economy is hurting the economy
15D. Listed companies responsibilities to disclose inside information
20

15E. Liability for contravention
Amendment in:
The insider person shall be liable to fine, to be imposed

by the Commission, which may extend to rupees thirty
million
Finance Act, 1989
Minimum Wages for Unskilled Workers

Ordinance, 1969
Clause 10:
l
This clause has reduced the minimum No. of worker

for contribution from 20 to 05 in the pension
scheme.
The rate of contribution has been reduced from 6%
to 5%
Clause 12(3)
This clause has also included the employees of
banks and banking companies.
Clause 12(4)
l
By this minimum pension has been increased from

Rs. 1,500 to Rs. 2,000.
This clause seeks to give 15% increase to all existing
pensioners.
Section 158 (1)

Commission has increased the time of Annual General Meeting from three months to four months.
Section 187
This section has extended the ineligibility criteria for becoming a director of listed co. to the sponsors, directors
or officers of corporate brokerage houses and shall not
apply where co. is a stock exchange.
Section 233 (1)
l
The time of filing of annual accounts and balance

sheet has been increased from 03 months to 04
months.
Section 233 (4)

l
It increased the time period for submission of revised returns from 90 days to 120 days.
Clause 26(12)
l
It has increased time for rectify the mistakes from 03

years to 05 years.
Clause 26(16)
l
Some Services exempted
Duty on telecommunication services increased from

15% to 21%
CNG buses exempted of from duty.

Life saving drugs has been exempted from duty.
exempted from customs duty

Duty rate on base oil for lubricating oils reduced from
20% to 10%..
Power plants imported by WAPDA on temporary basis
exempted from customs duty.
The local industry producing water dispensers, vacuum
cleaners, gas heaters, gas
stoves/cooking ranges with ovens, air handling equipments, central heating equipments, UPS, etc have been
provided inputs at 0%, 5% and 10% rates of duty
Highlights
Income Tax
This section has given powers to commission to

specify the form & manner in which a co. should
send the accounts and balances sheet.
Section 251
l
Clause 26 (3) a
Rice seeds, energy saving lamps, dredgers, specified solar energy equipments are
Companies Ordinance, 1984

l
It seeks to extend the levy of duty on services from

abroad also.
Custom
Clause 12(5)
l
This section has added the definition of Franchise in

the Act also.
Clause 26 (2) a
Clause 12 (2)
This seeks to defer the levy of CVT on power of attorney in the case of bank till the said property is
transferred to the bank.
Clause 26 (1) b
l
Clause 12 (1)
Federal Excise Act, 2005
Minimum wages of the worker has been enhanced

from Rs. 4,600 to Rs. 6,000 per month
Employees Old Age Benefit Institution

Act, 1976
l
Clause 15 (1)
This section has given the powers to the commission

to specify the time for the payment of the dividend.
21
The basic limit of exemption in respect of salaried person has been increased from Rs.150,000 to Rs.180,000
and from Rs. 200,000 to Rs. 240,000 for women taxpayer.
Marginal tax relief for the salaried persons has been
given

Minimum tax payable on turnover @ 0.5% has been
withdrawn
First year allowance of depreciation @ 90% has been
proposed.
Value of accommodation provided to salary person in
small cities will be taxed @ 30% instead of @ 45%.
The amount of turnover exceeding Rs.250 million in
case of small companies will be taxed at progressive
slab rate of 25%, 30% and 35%.
Additional tax and penalty etc will be waived off, where
the taxpayer able to pay the principal amount of tax
within a certain period.
Tax on rental income will be charged at progressive
rates of 5%, 10% and 15%. Basic exemption of
Rs.150,000 in case of companies has been withdrawn.
The rate of withholding tax has been revised at uniform
rate of 2% for both commercial and manufacturer importers.
Withholding tax on electricity bills exceeding Rs.20,000
per month will be @ 10% which would be adjustable.
Exemption from income tax available to Pakistan
Cricket Board is proposed to be withdrawn.
The rates of advance tax, collected on renewal of registration of private motor cars have been increased about
30% to 40% in WHT rates.
Withholding tax on monthly telephone bills exceeding
Rs.1000 is proposed to be collected @ 10%.
AOP having annual turnover of Rs.50 million will be
withholding tax agents for the purpose of tax deduction
on payments.
Special rate of 5% on textile has been omitted

Retail tax and filing has been omitted
Period of input tax has been reduced from 12 tax period
to 6 tax period
Concept of carry forward as per section 10 has been reintroduced
Limit of assessment has been provided in section 11
which is 5 year
Period of assessment has been enhanced from 90 day to
120 days.
Second audit after the audit of DRRA has been provided.
Period of revised return has been extended from 90 days
to 120 days.
Period of stay of demand has been enhance from 6
month to 8 months
Repayment of tax paid in AJK and Pakistan has been
provided.
Federal Excise Duty

Proposal to increase rate of excise duty on telecommunication services to 21%
Excise duty on cement has been enhanced from @ Rs.
750/- per tone to Rs. 900/- per tone.
Levy of 5% FED on the import and local supply of motorcars import as well as locally manufactured cars having engine capacity exceeding 850cc.
Enhancement of rate of FED from 5% to 10% on banking, insurance and franchise services
Withholding tax on cash withdrawal has been enhanced

from 0.2% to @ 0.3% .
Enhancement of sales tax from 15% to 16% on Provincial services
Builders and developers will pay tax @ Rs.50 per sq. ft.
on constructed covered area and tax @ Rs.100 per sq.
yard on open plots .
Collection of fixed tax @ 0.75% at import and manufacturing stage in lieu of tax payable by dealers of electric
goods
The facility of reduced tax rate to a cooperative society

or a finance society is proposed to be withdrawn and
would be treated at par with the company for the purpose
of taxation.
Section 10 is being amended to incorporate the carry

forward amount for excess input tax.
Payments made to media companies out side Pakistan

are proposed to be subjected to WHT @ 10%, to be
treated as final tax.
CNG buses exempted of from duty.
The discrimination in tax rates applicable to exporters is

being removed by withdrawal of provisions allowing
deduction of tax at a rate lesser than 1%.
The limit for payment of salary to be paid by an employer through cheque or transfer to employees account
is being increased from Rs.10,000 to Rs.15,000
Amnesty scheme for declaration of undeclared income
/assets has been introduced @ 2%.
Sales Tax
Sales tax rate has been increase from 15% to 16 %
Custom Duty
Life saving drugs has been exempted from duty.
Rice seeds, energy saving lamps, dredgers, specified solar energy equipments exempted from customs duty
Duty rate on base oil for lubricating oils reduced from
20% to 10%.
Power plants imported by WAPDA on temporary basis
exempted from customs duty.
The local industry producing water dispensers, vacuum
cleaners, gas heaters, gas stoves/cooking ranges with
ovens, air handling equipments, central heating equipments, UPS, etc have been provided inputs at 0%, 5%
and 10% rates of duty
The presentation was delivered in National Budget Seminar on
June 16, 2008 at Islamabad.
22
Agricultural & Livestock Sector
Agricultural Sector in Pakistan

Compiled by Engr. Javed H. Siddiqi
Background
Pakistan has a rich and vast natural resource base, covering various ecological and climatic zones; hence the
country has great potential for producing all types of food
commodities. Agriculture has an important direct and indirect role in generating economic growth. The importance of agriculture to the economy is seen in three ways:
first, it provides food to consumers and fibres for domestic industry; second, it is a source of scarce foreign exchange earnings; and third, it provides a market for industrial goods.
About 27 percent of Pakistan's total land area is
considered arable. Agriculture and related activities
engage abnout half of the work force and provide nearly
one-fourth of the GDP. By the late 1970s an intensive
land-reform effort had resulted in the expropriation of
some 1.2 million hectares (some 3 million acrea) from
landlords, the distribution of almost half of this to enants,
and the limitation of individual holdings to 40 hectares
(100 acres) of irrigated or 81 hectares (200 acres) of
nonirrigated land. Formerly an importer of wheat,
Pakistan achieved self-sufficiency in the grain by the
min-1970s. Principal crops in the late 1980s (with output
in metric tons) included sugarcane, 35 million; wheat, 14
million; rice, 4.6 million; cotton lint, 1.5 million; and
corn, 1.2 million. The livestock population included
about 17.2 million cattle, 27.5 million sheep, 33 million
goats 14 million buffalo, 3 million asses, and 150 million
chickens.
In the early 1990s, irrigation from the Indus River and its
tributaries constituted the world's largest contiguous irrigation system, capable of watering over 16 million hectares. The system includes three major storage reservoirs
and numerous barrages, headworks, canals, and distribution channels. The total length of the canal system exceeds 58,000 kilometers; there are an additional 1.6 million kilometers of farm and field ditches.
Partition placed portions of the Indus River and its tributaries under India's control, leading to prolonged disputes
between India and Pakistan over the use of Indus waters.
After nine years of negotiations and technical studies, the
issue was resolved by the Indus Waters Treaty of 1960.
After a ten-year transitional period, the treaty awarded
India use of the waters of the main eastern tributaries in
its territorythe Ravi, Beas, and Sutlej rivers. Pakistan
23
received use of the waters of the Indus River and its western tributaries, the Jhelum and Chenab rivers.
After the treaty was signed, Pakistan began an extensive
and rapid irrigation construction program, partly financed by the Indus Basin Development Fund of
US$800 million contributed by various nations, including the United States, and administered by the World
Bank. Several immense link canals were built to transfer
water from western rivers to eastern Punjab to replace
flows in eastern tributaries that India began to divert in
accordance with the terms of the treaty.
The Mangla Dam, on the Jhelum River, was completed in
1967. The dam provided the first significant water storage for the Indus irrigation system. The dam also contributes to flood control, to regulation of flows for some of
the link canals, and to the country's energy supply. At the
same time, additional construction was undertaken on
barrages and canals.
A second phase of irrigation expansion began in 1968,
when a US$1.2 billion fund, also administered by the
World Bank, was established. The key to this phase was
the Tarbela Dam on the Indus River, which is the world's
largest earth-filled dam. The dam, completed in the
1970s, reduced the destruction of periodic floods and in
1994 was a major hydroelectric generating source.
Most important for agriculture, the dam increases water
availability, particularly during low water, which usually
comes at critical growing periods. Despite massive expansion in the irrigation system, many problems remain.
The Indus irrigation system was designed to fit the availability of water in the rivers, to supply the largest area
with minimum water needs, and to achieve these objectives at low operating costs with limited technical staff.
This system design has resulted in low yields and low
cropping intensity in the Indus River plain, averaging
about one crop a year, whereas the climate and soils
could reasonably permit an average of almost 1.5 crops a
year if a more sophisticated irrigation network were in
place. The urgent need in the 1960s and 1970s to increase
crop production for domestic and export markets led to
water flows well above designed capacities. Completion
of the Mangla and Tarbela reservoirs, as well as improvements in other parts of the system, made larger water
flows possible.

In addition, the government began installing public tube
wells that usually discharge into upper levels of the system to add to the available water. The higher water flows
in parts of the system considerably exceed design capacities, creating stresses and risks of breaches. Nonetheless,
many farmers, particularly those with smallholdings and
those toward the end of watercourses, suffer ecause the
supply of water is unreliable.The irrigation system represents a significant Engineering achievement and provides water to the fields that account for 90 percent of agricultural production. Nonetheless, serious problems in
the design of the irrigation system prevent achieving the
highest potential agricultural output.
Water management is based largely on objectives and
operational procedures dating back many decades and is
often inflexible and unresponsive to current needs for
greater water use efficiency and high crop yields.
Charges for water use do not meet operational and maintenance costs, even though rates more than doubled in the
1970s and were again increased in the 1980s. Partly because of its low cost, water is often wasted by farmers.
Good water management is not practiced by government
officials, who often assume that investments in physical
aspects of the system will automatically yield higher crop
production. Government management of the system does
not extend beyond the main distribution channels. After
passing through these channels, water is directed onto the
fields of individual farmers whose water rights are based
on long-established social and legal codes. Groups of
farmers voluntarily manage the watercourses between
main distribution channels and their fields. In effect, the
efficiency and effectiveness of water management relies
on the way farmers use the system. The exact amounts of
water wasted have not been determined, but studies suggest that losses are considerable and perhaps amount to
one-half of the water entering the system. Part of the
waste results from seepages in the delivery system. Even
greater amounts are probably lost because farmers use
water whenever their turn comes even if the water application is detrimental to their crops.
The attitude among almost all farmers is that they should
use water when available because it may not be available
at the next scheduled turn. Moreover, farmers have little
understanding of the most productive applications of water during crop-growing cycles because of the lack of research and extension services. As a result, improvements
in the irrigation system have not raised yields and output
as expected. Some experts believe that drastic changes
are needed in government policies and the legal and institutional framework of water management if water use is
to improve and that effective changes can result in very
large gains in agricultural output.
Land use, Farming Systems

and Institutions
The total geographical area of Pakistan is 79.6 million
hectares. About 27 percent of the area is currently under
cultivation. Of this area, 80 percent is irrigated. In this regard, Pakistan has one of the highest proportions of irrigated cropped area in the world. The cultivable waste
lands offering good possibilities of crop production
amount to 8.9 million hectares. Growth in cropped area is
very impressive: from 11.6 million hectares in 1947 to
22.6 million hectares in 1997.
Most of Pakistan is classified as arid to semi-arid because
rainfall is not sufficient to grow agricultural crops, forest
and fruit plants and pastures. About 68 percent of the
geographical area has annual rainfall of 250 mm,
whereas about 24 percent has annual rainfall of 251 to
500 mm. Only 8 percent of the geographical area has annual rainfall exceeding 500 mm. Thus supplemental water is required for profitable agricultural production, either from irrigation or through water harvesting.
Agriculture is largely dependent on artificial means of irrigation. Of the total cultivated area, about 82 percent or
around 17.58 million hectares is irrigated, while crop
production in the remaining 3.96 million hectares depends mainly upon rainfall. The Irrigation Canal Command Area (CCA) has been grouped into classes on the
basis of the nature and severity of its limitations water
logging, salinity, sodicity and texture. At present about
one-fifth of the cultivated land in CCA is affected by water logging and salinity to varying degrees. An additional
area of 2.8 million hectares suffers from sodicity. Notwithstanding huge investments, the water table was 0 to
1.5 m under 2.2 million hectares of irrigated land, 1.5 to 3
m under 6 million hectares and 0to 3 m under 8 million
hectares. Thus Pakistan needs to overhaul its entire drainage and reclamation strategy reduce its cost and make it
efficient.
Significance of the Agricultural Sector

in the Economy
Agriculture is an important sector, providing food to the
fast-growing population of the country. According the
1998 census, the total population of Pakistan is 130 million. With a population growth rate of 2.6 percent there is
a net addition of 3.4 million people each year. In 1947 the
population of Pakistan was 32.5 million; in 50 years it
has increased fourfold. During this period the production
of wheat, the major food crop, has increased only 2.9
fold. During 1970/71 the amount of wheat imported was
0.3 million tonnes; it has increased to 4.1 million tonnes
in last year. Tremendous efforts have been carried out to
narrow the gap between population growth and food production.
24

Agriculture contributes about 24 percent of the gross domestic product (GDP) and employs 47 percent of the national employed labour force. Agriculture still remains
the major sector of the GDP composition. A major part of
the economy depends on farming through production,
processing and distribution of major agricultural commodities.
In foreign trade agriculture again dominates, through exports of raw products such as rice and cotton and semiprocessed and processed products such as cotton yarn,
cloth, carpets and leather production .Agriculture is essential for sustainable improvements in internal and external balances. Of the total export earnings, the share of
primary commodities and processed and semi-processed
products constituted almost 60 percent of the total exports. There have been some structural changes over
time, but the contribution of agro-based products has
more or less sustained its position.
The average annual growth rates in the agricultural sector
during the 1960s, 1970s and 1980s were 5.07, 2.37 and
5.4 percent, respectively.
More specifically; the agricultural sector plays an important part in Pakistan's economy by:
contributing 24 percent towards GDP;
providing food to about 130 million people;
earning about 60 percent of the country's total export
earnings;
providing employment to 47 percent of the total work
force;
providing the main source of livelihood for the rural
population of Pakistan;
providing raw materials for many industries and a
market for many locally produced industrial products.
Overview of Agricultural Sector

Development
Significant progress has been made in development of
the agricultural sector in Pakistan since the time of independence in 1947. At that time, the Indus Basin was irrigated with an extensive system of canal irrigation, sown
with low-yielding traditional seed varieties, fertilized
mainly with animal manure and cultivated by means of
animal draught power and by hand.
In the early 1960s, conditions that favoured more rapid
growth were put in place: the Indus Wate Agreement was
signed under the chairing of the World Bank; the Indus
Basin Development Fund wline established with multidonor support; government improved the terms of agricultural trade; and tubewe were installed as a viable in-
25
vestment. That decade witnessed a green revolution in

Pakistan, and crc production accelerated during the first
part of the decade, primarily because of the increased use
of inputs.
Pakistan's agriculture has made a long and difficult journey. Its performance is marked by a mixed trend. There
have been some years of dismal growth and some years
of cruising growth. Since 1980, agricultural GDP at constant factor cost has more than doubled, increasing from
Rs 76 billion in 1980 to more than Rs 141 billion in
1996/97, with a steady growth rate of 3.91 percent annually. Agriculture's share of total GDP however, declined
from about 31 percent to just 24 percent over the same
period. Crop production contributed the largest share of
agricultural GDP (62 percent in 1996). with livestock
contributing 34 percent and fisheries and forestry the remaining 4 percent.
During the past 50 years a significant increase in production of the major crops has been achieved. Wheat production rose from 3.3 million tonnes to 18.6 million tonnes.
Similarly during this period rice production rose from
0.86 million tonnes to 4.32 million tonnes. There was
also a records increase in cereal production. The production of cotton reached 9.4 million bales during. Sugarcane production reached 5.3 million tonnes.
Policy measures in the last four years, were positive for
the agricultural sector. Undue benefits provided to the industrial sector over the years were reviewed and modified. The agricultural sector as a result responded with
new buoyancy. Export taxes on agricultural commodities
were reduced or eliminated, which benefited the agricultural sector. In the policy reforms package, better support
prices, better tillage and soil preparation practices and
adequate and timely availability of fertilizer and certified
seed have added to the positive response from the farming community. The production of wheat reached a level
of 16.7 million tonnes, and there was also a 13.7 percent
increase in the production of Basmati rice. The overall
production of rice registered an increase of 8.5 percent the total production of rice during the year was 4.3 million tonnes, compared with 3.97 million tonnes in the
previous year.
Over the past 20 years some important structural changes
have taken place in the sector. In particular, livestock has
emerged as an important subsector, today contributing
more than one-third of agricultural GDP, compared with
about 28 percent 20 years ago. Similarly, fisheries and
forestry, while still minor contributors to agricultural
GDP, have grown rapidly. Structural changes have also
taken place within the crop sector. Cotton is now as important as wheat in terms of value added with a one-fifth
share of total earningsn
About the Author: Engr. Javed H. Siddiqi, M.Sc., L.LB, DAE (Mech),
AMI(Mech)E is Chief Executive of Reliance Engineering Corporation.
Agriculture & Livestock Sector
Corporate Agriculture Farming

A Step Towards Prosperous Pakistan
By Rao Anees-Ur-Rehman, ACMA
griculture sector is the sustenance of our countrys

economy. It contributes around 21% to the GDP, employees 44% of labor force and contributes to 68% of foreign exchange earning through export of raw material, semi
processed and processed agriculture products.
Corporate agriculture farming encompasses the production
of all crops as well as all other allied activities i.e. processing of seeds, business of pesticides / fertilizers, business of
agriculture machinery / equipment used and related research
activities. We may classify production area as under:
1
production of major crops (wheat, cotton, sugar cane,

rice, maize)
Production of minor crops (oil seed, pulses etc.)
horticulture (fruits, vegetables, flowers, medicinal

herbs)
dairy and poultry
forestry
fisheries
The average growth rate in this sector over last forty years
was 4.3%, which reflects good performance. Population
growth rate average over the last forty years remains around
3.00% which is slightly below the growth rate of agriculture
sector. Further with advancement in technology and awareness in emerging new global world, trend of food consumption is changing and increasing towards high nutrition and
hygienic foods. That phenomenon is also widening gap between demand and supply. Food crisis is being observed
now-a-days and it is forecasted globally in future. In this
scenario we need a higher growth rate of agriculture sector
which can fulfill our domestic requirements and surplus
could be exported to other countries to set off the increasing
demands of our imports and reduce the foreign bills deficit.
Scope of horizontal expansion in agriculture production has
become limited as after construction of Mangla and Tarbela
dams no remarkable reservoir constructed and initiated. To
secure this nature gift is likely to save our future generations. To have our right from neighbors and settle this crucial matter is the demand of this era. That matter has prime
importance and it should be planned and settled on priority.
It is equally beneficial for agriculture growth and economical power generation.
HIGHLIGHTS
1
Contributing 21% to GDP.
Providing employment 44%.
Contributing to foreign exchange 68%.
Having horizontal and vertical space.
And capable to increase 100% production with in ten years.
Govt. Neglecting this sector by

Providing insufficient financing
Not giving industrial status to corporate farming
SBP has not exercise its role for development of this sector and managing investment portfolio of financial
institution.
Agriculture ministry failed in managing agriculture field and research staff and their activities.
26

There is space for horizontal growth in agriculture but is
limited due to scarcity of irrigation water. The major scope
is now in vertical expansion through improving farm productivity levels. This can be accelerated through implementation of idea about the Corporate Farming.
Below table of productivity / yield levels is prepared from
data of year 2006, given on UNO website FAO (Food Agriculture Organization) and web site of Federal Ministry of
Agriculture Of Pakistan.
Availability of quality seeds
II
Availability of fertilizers on competitive cost
III Pest / weed management

IV Transfer of agriculture related technology in Pakistan
V
Technical knowledge to farmers
VI Requisite funds availability for farmers

VII Well planned marketing mechanism
TABLE-1
Product
Wheat
National
Peogressive
Average
Growers yield
Yield pakistan
Pakistan
(Tons/Hector) (Tons/Hector)
2.51
5.5
National
Average yield
Developed
Countries
(Tons/Hector)
7.20 (Germany)
4.00 (Australia)
2.82 (USA)
4.45 (China)
Cotton Lint
0.704
1.45
1.86 Australia)
1.24 (China)
0.80 (USA)
Sugar
49.22
110
91.97 (Australia)
73.82 (USA)
82.52 (China)
Rice Paddy
3.16
7.30
6.30 (Australia)
7.70 (USA)
6.26 (China)
Potatoes
13.34
25.00
34.41 (Australia)
43.66 (USA)
14.35 (China)
Onion Dry
13.82
26.00
42.88 (Australia)
51.18 (USA)
20.61 (China)
Apples
3.12
7.00
13.82 (Australia)
29.80 (USA)
13.71 (China)
It depicts that our country have great potential to increase its

productivity / yield as our progressive grower is obtaining
almost more than double production than our national average yield. Whereas the average national yield /production of
developed countries is also more than double to our national
average yield. It reveals that by applying the requisite resources/ taking appropriate measures as mentioned in this
article, we can double our agriculture production in coming
ten years.
If it happen, then we really be enter in to new age of prosperity and be able to place our nation and country on an upright
status in this escalating global world.
THAT mile stone can be achieve through adaptation of futuristic / innovative policies, and revolutionary / proactive
measures in followings important areas, which can improve
productivity levels significantly.
27
VIII Ensure water and other utility availability to farmers

All above arrangements are not possible to be made and
sources gathered by our subsistent farmers under their
prevalent financial conditions, technical awareness and
marketing mechanism.
In addition to continuation and improvement of facilitation
to small growers, our govt. should formulate policies for initiation of corporate farming in our country on persuasive basis. For this purposes following steps require to be taken by
the respective govt. authorities:
1
Legislation requires giving status to corporate farming

like industrial undertaking.
A task force requires to be established on corporate

farming, comprising of agriculture scientist, economists, farmers, investors, elected representatives and
legal experts. Who will explore its all modalities, legalities and working mechanism along with suggestion
of insertion of necessary clauses in corporate laws i.e.
company law, income tax ordinance, sales tax law and
other corporate statutes, determination of SECP, FBR,
SBP and Ministry of agricultur role in development and
regulation of corporate farming. Task force report be
submitted to national assembly and senate for their review.
Ensure credit / loan facility for desired inputs, tube

wells and modern technologies from all financial institutions on subsidies rates for promotion of agriculture
production and exports.
Ensure availability of electricity for tube wells on subsidies rates.
Availability of metal road up to farms.
Financial assistant in construction of cemented khaals

with in farms.
Policies formulation for foreign investment with inclination to joint venture and transfer of technology.
Income tax exemption for five year period to local and

foreign investor.

9
Amnesty on investment in corporate farming at 0% income tax.
18 There needs to make stringent laws in respect of adulteration of pestiside / fertilizers to enhance our crop
yield and protect our farmers financially.
10 Making arrangement for allied industries in vertical direction i.e. godowns, cold storages, international standard packaging, making of packed foods and drinks as
per international standard and requirement.
19 State bank needs to formulate policies and programs for

all commercial banks, financial institution and NBFI,
in respect of their investment portfolio to industry, agriculture, service sector, construction, general consumer
and capital market. Investment portfolio of Agriculture
sector needs to increases significantly i.e. 100% for
every subsequent year and this practice be continued
till the achievement of desired results. Credits to conventional farmers should also increase and monitored
that it is consumed for the purpose it is obtained. SBP
should ensure that any genuine and legitimate request
in respect to corporate farming be not turned down by
any financial institution.
11 Ensure documentation and accounting of their activity

under prescribed laws like industrial undertaking.
12 Formulation and implementation of crop insurance
policies.
13 Formulation of laws for environmental protections and
socio economic welfare of vicinity area population.
14 Ensure protection of small farmers and farm workers.
15 Formulation of policies for corporate farming workers
like industrial workers i.e. Social security, E.O.B.I.
group insurance etc.
Sector wise credit / loan portfolio of our financial institution

inclusive of SBP is given in Table-2
16 Mandatory induction of technical staff i.e. qualified agriculture experts / scientists for over all planning, monitoring and research work, management accountant for
management of accounts and analysis of cost and incomes along with other documentation.
Above data highlight the fact that the sector which is

contributing around 21% in our GDP is highly neglected by
our financial institutions. There is dire need to make
programs / policies and necessary laws, as stated above, for
development of this sector on war footing basis, that
financial institutions can offer loan to this sector like
industry.
17 Agriculture research and extension department needs

to be revamped and its policies and programs need to
redesign that they may play a vital role in bringing a
revolution through corporate farming.
In the context of implementation of WTO and our achievements in engineering, electronics and other industries,
where we are far behind from developed countries. I think
Table-2
(Million Rupees)
SECTOR
Credit/loan (June 2006)
Credit/loan (June 2007)
Credit/loan (April 2008)
Amount
Amount
Amount
Government
802,949
26.67
898,319
25.54
1,258,001
29.04
Agriculture
136,179
4.52
148,590
4.22
160,005
3.69
Manufacturing
928,183
30.83
1,044,203
29.68
1,238,356
28.59
Construction
42,000
1.39
54,995
1.56
74,301
1.72
Commerce and trade / business
240,928
8.00
275,948
7.84
322,923
7.46
Securities and shares (private)
101,350
3.37
140,118
3.98
176,628
4.08
NBFCs
98,259
3.26
144,224
4.10
140,644
3.25
PSEs
136,209
4.52
164,140
4.67
209,783
4.84
Consumer financing
342,852
11.39
398,858
11.34
422,519
9.75
Trust Funds & NPOs
13,727
0.46
14,325
0.41
14,344
0.33
Natural resources
10,221
0.34
11,183
0.32
16,684
0.39
Elecricity water and gas supply
18,874
0.63
42,391
1.21
94,847
2.19
Real estate /renting business
69,515
2.31
90,336
2.57
102,852
2.37
Education & health
7,189
0.24
9,882
0.28
11,468
0.26
62,490
2.08
80,158
2.28
88,176
2.04
3,010,925
100
3,517,670
100
4,331,531
100.00
Transport Storage & Communications

Total Credit / loan
28

we cannot achieve higher and sustainable economic growth
unless we succeed to double our agriculture production in
coming ten year period as we have vertical and horizontal
space for that target. For this purpose we have to make arrangements as stated in this article along with providing desired share of financing i.e. at least 20% to 25 % from credit /
loan portfolio of all financial institutions. That is suggested
to be achieving gradually with in next five years.
Over all industrial growth will increase and specially

related to agro products.
Per capita income will increase.
GDP growth rate will increase and ultimately it will accelerate economic activities in the country.
Our country credit rating will improve.
SBP needs to introduce such policies and a program for financial institutions, which encourages banks to invests in
productive sectors like agriculture and industry and discourage to non-productive (consumer financing and capital market) loans.Further government borrowing needs to be reduced drastically. Cut from these sectors be utilized for agriculture sector and it needs to be doubled every year till the
attainment of targeted results i.e. 100% increase in agriculture production during 10 year period.
Dependence on foreign and internal borrowing will decrease.
More funds will be available to govt. for education,

health and other infrastructure projects.
Our nation will surely be saved from forthcoming

global food crisis, further we will be in a position to
make market of our agro products through out the
world.
Poverty in Pakistan is largely a rural phenomenon; development of agriculture will be a principal vehicle for
alleviating rural poverty.
It will facilitate Government to have reliable statistics

of agriculture sector.
It will facilitate and promote documented economy and

increases the taxes net extraordinarily with the passage
of time.
20. Above of all we need to have and promote honesty and

justice in our country, where in the concept of implementation, monitoring and accountability will have its
impact, otherwise in this new era it will be difficult for
us to live respectively.
Benefits to be derived through proposed corporate farming
are followings:
A
Higher productivity / yield.
Surplus production of all type of foods, dairy products

and horticulture items.
Increase in export items i.e. foods, dairy products and

horticulture items.
Increase in national reserve on one side through reduction in imports of edible oils, tea and other food items
and on other side through increased export of surplus
foods, dairy products and other horticulture items.
It will increase employment in ruler area.
It will train vicinity farmers and enhance awareness

about advanced technology.
Its payback is more than its flaws. Therefore our Govt.

should take drastic steps for development of corporate agriculture farming.
Mass production will reduce cost of production.
Higher production will entail lowering of price in domestic market.
It will improve living standard of our ruler area peoples.
Investor will prefer to establish allied industry in ruler

area.
It will retard significantly the shifting of peoples from

villages to cities.
It will reduce and ultimately convert foreign trade deficit to foreign trade surplus.
29
It has its flaws and limitations, narrated here under:

1
Small farmers fears of monopolistic environment.
Many farm workers may be relieved of their jobs on account of use of modern technologies.
Sense of insecurity due to small farm and scarcity of resources.
Since the independence in 1947, we are quoting that agriculture is the back bone of our economy. Infect, it remains just a
saying and no solemn efforts and plan made for development of this sector. Presently, whole world is anxious about
the attainment of self sufficiency in foods and other eatables. We have potential of horizontal as well as vertical
growth in our agriculture sector. We must exert our all abilities and available sources for the development of our agriculture. It will in return, really save the future of our next
generation. No doubt corporate farming will be a step forward for prosperous Pakistan
About the Author: The author is Dy. General Manager Finance &
Accounts at Dewan Salman Fibre Limited, a leading Fibre
Manufacturing Company of Pakistan.
Chucking out Livestocks Problems:

Some Policies Implications
By Muhammad Ramzan Sheikh
ivestock is the sub-sector of agriculture. It provides
milk, beef, mutton, poultry meat, wool, hair, bones,
fat, blood, eggs, hides, skin and other raw materials for
industries within and outside the country. Livestock sector contributes almost 50 percent to the agriculture sector, and almost 11 percent to Pakistan's GDP, which is
higher than the contribution made by the crop sector
(47.4% in agriculture and 10.3% in GDP). Livestock is
defined as large animals such as cattle, horses, sheep,
swine goats, mules, donkeys, game animals, lamas and
alpacas. This definition also includes live fish, shellfish
and poultry such as chickens, chicks, geese (birds) and
turkeys and large quantities of rabbits. The definition of
livestock does not include household pets such as cats,
dogs, parrots, birds, mice, rats, gerbils, rabbits etc.
Livestock population in Pakistan is cattle, buffalo, sheep,

bulls, goat, camel, horses, asses and mules while livestock products are milk, beef, mutton, poultry meat,
wool, hair, bones, fat, blood, eggs, fish, hides and skin.
The quantity and quality of livestock is not so good. This
sector has many problems which are stated as under:
The animals' owners provide poor quality feeds to the
animals so the quality of animals is inferior. They are

financially weak and cannot provide balanced feeds
to their animals. Due to weak animals, production of
meat and milk is very low. The draft animals are also
weak and the farmers face problems in ploughing the

land
Disorganized breeding system is one of the important
problems of livestock. The animals' owners live in urban areas where animals of improveo breeds are not
available. They do not make any arrangement for the
mating of their animals with superior breeds' animals.
So, the disorganized breeding system 1 ads to falling
of the quality of animals.
Mortality rate in livestock is high. Majority of our
animals are subjected to various diseases every year.

The newly born calves and lambs are the worst victims of the diseases. The owners are financially weak
so they cannot arrange the treatment of animals. The
veterinary hospitals are inadequate to fulfill the needs
o f animal wealth.
The quantity of animals has been decreased due to in-
discriminate slaughter of animals. The slaughtering

rate of animals is shocking in big cities. Due to increase in the demand for meat, the price of meat has
risen up. The Muslims eat meat in different varieties
like karahi, shami kababs, tikka, mutton legs and
champ. The well off section of the society consumes a
major part of their income on mutton, beef and poultry products.
Comparative Status of Animals Slaughtered Between 1986-1996 & 1996-2006

Type of
Animal
Number of Animals Slaughtered (in Million)
% Change Between
1986
1996
2006
1986 &1996
2006
Cattle
1.67
2.18
3.56
30.5
63.3
Buffaloes
1.42
2.18
3.34
53.5
53.2
Sheep
4.35
4.44
4.73
2.1
6.5
Goats
6.50
7.84
11.00
20.6
40.3
Camels
0.02
0.05
0.02
150.0
60.0
Total Animals
13.06
16.69
22.65
19.6
36.7
Source: Pakistan EconomicSurvey (Various Issues)
30

The total number of animals slaughtered in 1996 was
16.69 million while in 2006 it rose to 22.65 million, (an
increase of 35.7 percent). Numbers of slaughtering cattle
increased from 2.18 to 3.56 million (63.3%), buffaloes
from 2.18 to 3.34 million (53.2%), sheep from 4.44 to
4.73 million (6.5%), goats from 7.84 to 11.0 million
(40.3%), and camel from 0.05 to 0.02 million (-60%). It
indicates that demand for beef and mutton has gone up
substantially in the country.
To make up the shortage of grazing fields, the gov-
ernment should separate state land in rural areas as

grazing fields for the benefit of cattle owners. The
owners will be encouraged to keep more milk animals. This would increase the milk production.
The process of artificial insemination has been sug-
gested by the experts to improve the quality of animals. There would be increase in animal wealth due
to better breeding of the animals in these centers.
The owners are financially weak so they cannot ar-
range proper sheds for the animals. The animals are

uncovered in the extreme cold and hot weather. Extreme climate affects the milk giving animals. Shortage of milk exists and the milk sellers sell the adulterated milk in cities and towns.
There are inadequate medical facilities for the treat-
ment of animals in rural areas. Veterinary hospitals

are limited to cover the entire rural areas. These limited hospitals are working without qualified doctors
and medicines.
Grazing fields has reduced due to the extension in ag-
riculture. To meet the food requirements of the increasing population, more land has been brought under cultivation. Grazing fields are economical for animals' owners. They cannot breed large group of animals in their houses on feed and fodder.
There is absence of commercial approach to animal
husbandry in our country. Mostly people keep milk

animals to meet their domestic requirements. Livestock farms are owned by landlords and they do not
have any interest in agriculture. Farmers are mostly
engaged in farming while animal husbandry has been
neglected.
The markets of milk, cream, ghee are unorganized
and imperfect. Milk and ghee sellers get low prices in

villages. The owners of milk producing animals are at
the mercy of milk sellers because markets are not at
the convenient distances. Villages are very far from
the markets and cities. From villages to cities, mostly
roads are in bad conditions.
Following polices should be adopted to improve this core
sector of the economy so that this sector may contribute
effectively in the development of Pakistan.
The government should organize the Animal Hus-
bandry department properly. The department should

provide sufficient facilities for the cattle owners in
rural areas. The department should motivate the land
owners to set up dairy farms and poultry farms.
Medical facilities should be provided to meet the
needs of the rural people. Veterinary hospitals should

be established in villages. Qualified doctors and regular supply of medicines should be ensured.
The disorganized slaughter of animals should be con-
trolled effectively. The government should impose

ban on the 'tikka' shops, 'karahi gosht' shops for a specific period every year. The plentiful consumption of
meat on the marriage ceremonies should be controlled.
Dairy Development and livestock department should
provide information about the preparation of less expensive feed and fodder for milk animals. It will improve the quality of animal products.
Commercial approach to animal husbandry and dairy
farming should be popularized among the farmers

and landlords. The government should supply better
quality cows, calves and buffaloes to the private owners.
Graduates from Agricultural Universities and Col-
leges of animal husbandry should be motivated to

adopt the profession of animal husbandry. State land
should be provided to them for this purpose. ZTBL
should supply long term credit for the purchase of
animals.
Because of the importance of livestock for rural econ-
omy, government has made an independent Livestock Development Policy, to increase the development of livestock. This policy is the need of the small
livestock farmers for whom livestock is a supplementary income source. The policy includes measures to
develop small and medium livestock enterprises and
incentives forgetting up large livestock farmsn
About the Author:
Mr. Muhammad Ramzan Sheikh is Lecturer
in Economics at Bahauddin Zakariya University, Multan and he is also

a Visiting Faculty Member, ICMAP Multan Centre.
31
Livestock Sector in Pakistan

Extract from Government of Pakistans Economic Survey 2007-08
a) Livestock
As a result of strong economic growth achieved in recent
year, the per capita income of the people have also increased. As people become more affluent, they have not
only been consuming more food but shifting their diet towards higher quality food product such as meat and dairy
products. Accordingly the demand for high quality food
such as meat and dairy products are rising and putting pressure on the prices of these commodities. In a changed environment, there is an ample scope to provide boost to the livestock and dairy sector. Unfortunately, these sectors have received little or no attention by the successive governments
in the past. It is important to note that livestock accounts for
52.2 percent of agricultural value added, contributes 11 percent to GDP and affects the lives of 30 35 million people in
rural areas. It is highly labour intensive and if proper attention is given to this sector, it will not only absorb more rural
workforce but also help alleviate rural poverty in Pakistan.
In order to achieve higher sustained growth in agriculture, it
is absolutely necessary for the government to give more attention to livestock and dairy sector because it is not immune to the mother nature.
Realizing its importance to rural poverty reduction, the government has started giving some attention only during the
last two years. It is in this perspective that livestock development policy and poultry development policy have been put
in place. Both policies are aimed at developing livestock and
dairy sector by the private sector, the job of the government

is to provide enabling environment. Accordingly, a full
autonomous private sector led Livestock and Dairy Development Board and Pakistan Dairy Development Company
have been established. These companies are serving as a
platform for investment in this sector. Apart from provincial
Government programs, the federal government has substantially increased public sector investment in livestock sector
and has initiated projects to the tune of Rs 7.1 billion for
strengthening livestock services for improving disease control; milk and meat production; breed animal husbandry and
management practices; in the county. The livestock population for the last three years is given below:
Table 1: Livestock Production (Million No)
Species
2005-06*
2006-07#
2007-08#
Cattle
29.6
30.7
31.8
Buffaloes
27.3
28.2
29.0
Sheep
26.5
26.8
27.1
Goat
53.8
55.2
56.7
Camels
0.9
0.9
1.0
Horses
0.3
0.3
0.3
Asses
4.3
4.3
4.4
Mules
0.2
0.2
0.2
Source: MINFAL (Livestock Wing)
Notes: * Actual Figures of Livestock Census 2006
# Estimated Figure based on inter census growth rate
of Livestock Census 1996 & 2006
Table - 2: Milk and Meat Production

Species
Milk (Gross Production)
Cow
Buffalo
Sheep#
Goat
Camel#
Milk (Human Consumption)@
Cow
Buffalo
Sheep
Goat
Camel
Meat &
Beef
Mutton
Poultry meat
Note:
*
**
#
@
&
Units
000 tons
000 tons
000 tons
2005-06*
39,596
13,407
24,723
34
664
767
31,970
10,726
19,779
34
664
767
2,515
1,449
554
512
2006-07**
40,872
13,913
25,465
35
682
77
32,996
11,130
20,372
35
682
777
2,618
1,498
566
554
2007-08**
42,199
14,437
26,239
35
700
787
34,064
11,550
20,991
35
700
787
2,727
1,549
578
601
The figures for milk and meat production for the year 2005-06 were calculated using the livestock population reported in livestock census 2006 and
then by applying production parameters.
The figures for milk and meat production for the year 2006-07 and 2007-08 were calculated by applying production parameters to the projected
population of 2006-07 and 2007-08 based on the inter census growth rate of livestock census 1996-2006
The figures for the milk production for the year 2005-06, 2006-07 and 2007-08 were calculated after adding the production of milk from camel and
sheep to the figures reported in the livestock census 2006.
Milk for human consumption is derived by subtracting 20% (15% wastage in transportation and 5% in calving) on the gross milk production of cows
and Buffalo.
The figures for meat production are of red meat and do not include the edible offals.
32
Table 3: Livestock Products Production

Species
Eggs
Hides
Cattle
Buffalo
Camels
Skins
Sheep skin
Goat skin
Fancy skin
Lamb skin
Kid skin
Wood
Hair
Edible Offals
Blood
Guts
Casings
Horns & Hooves
Bones
Fats
Dung
Urine
Head & Trotters
Ducks, Drakes & Ducklings
Note:
*
**
Units
MillionNos
000 Nos
000 Nos
000 tons
000 Nos
000 tons
2005-06*
9,712
11,418
5,602
5,723
94
43,353
10,016
20,722
12,616
2,975
9,641
40.10
20.31
300
51.45
43,795
12,160
42.81
633.48
203.28
894
277
186.49
0.70
2006-07**
10,197
11,803
5,813
5,895
95
44,325
10,131
21,283
12,910
3,009
9,901
40.57
20.85
308
52.74
44,777
12,568
44.06
652.51
209.18
921
285
191.66
0.67
2007-08**
10,712
12,202
6,032
6,074
96
45,325
10,251
21,860
13,215
3,045
10,170
41.05
21.41
317
54.07
45,788
12,992
45.36
672.24
215.30
949
293
197.02
0.67
The figures for livestock products for the year 2005-06 were calculated using the livestock population reported in livestock census 2006 and by applying production parameters.
The figures for livestock product for the years 2006-07 and 2007-08 were calculated by applying production parameters to the projected population
of 2006-07 and 2007-08
The major products of livestock is milk and meat, the production of which for last three years is shown in Table-2.
The production of other livestock products for the last three
years is shown in Table - 3.
b) Poultry
Poultry sector is one of the most vibrant segments of agriculture sector of Pakistan. This sector generates employment (direct/indirect) and income for about 1.5 million people. Poultry meat contributes 19 percent of the total meat
production in the country. The current investment in Poultry
Industry is about Rs 200 billion. Poultry sector has shown a
growth of 8-10 percent annually.
This sector has faced a tough challenge on account of Avian
Influenza (AI) outbreak in the country. The re-occurrence of
Avian Influenza was reported on 3rd February 2007 in backyard poultry/zoo and commercial poultry in Rawalpindi/Islamabad, Peshawar, Abbottabad, Mansehra, Kamalia, Summundari and Karachi areas. There have been 72 (27 commercials flocks and 45 backyard poultry and game birds) recorded cases of H5NI till March 2008, involving approximately 176.1 thousand commercial poultry (broiler/layer)
apart from game birds and backyard poultry. Zero tolerance
policy was adopted and flocks were destroyed under the supervision of state veterinarians and district administration.
Apart from projects already under implementation regard-
33
ing Avian Influenza, Ministry, Food, Agriculture & Livestock has intimated a project titled National Programs for
the Control and Preservation of Avian Influenza at a total
cost of Rs 1180.142 million. The project is of three years duration and will be implemented through out Pakistan including AJK, FATA and FANA. The proposed project objectives include improving and scaling up avian influenza surveillance, reporting and diagnostic at federal and provincial
district levels. Strengthening disease control, outbreak containment and eradication of highly pathogenic avian influenza (HPAI), compensation to farmers, increase awareness
among the farmers, consumers, veterinarians and other
stake holders regarding AI, vaccine development, improving veterinary services to enforce national animal disease
control measures.
The production of domestic/rural & commercial and rural
poultry and products for last three years is given below:
c. Incentives to Promote Livestock

Government has provided following incentives to increase
livestock and poultry production in the country:
Regulatory measures include allowing import of high
yielding animals, semen and embryos for crossbreeding,
expansion/improvement and modernization of laboratory facilities to diagnose and treat livestock diseases;
introduction of mobile animal health service to provide
Table 4: Domestic/Rural & Commercial Poultry

Type
Domestic Poultry
Cocks
Hens
Chicken
Eggs
Meat
Duck, Drake & Ducking
Eggs
Meat
Commercial Poultry
Layers
Broilers
Breeding Stock
Day old chicks
Eggs
Meat
Total Poultry
Day old chicks
Poultry Birds
Eggs
Poultry Meat
Units
Million No s
000 Tons
Million No s
000 Tons
2005-06*
72.95
8.61
34.23
30.12
3423
94.67
0.70
31.14
0.95
2006-07**
74.02
8.84
34.84
30.34
3484
96.54
0.67
29.85
0.91
2007-08**
75.11
9.08
35.47
30.57
3547
98.45
0.67
29.85
0.91
Million Nos
000 Tons
23.20
337.00
6.90
352.00
6258
416.55
24.82
370.70
7.25
387.20
6682
456.95
26.56
407.77
7.61
425.92
7136
501.30
Million Nos
000 Tons
352.00
441
9712
512
387.20
477
10197
554
425.92
518
10712
601

Notes:
* The figures for the year 2005-06 are the actual livestock census 2006 figure except for the Layers (Farming) and Breeding Stock (Farming)
which were calculated using the census and provincial figures to reflect the most upto date information.
** The figure for the year 2006-07 and 2007-08 were statistically calculated using the figures of 2005-06
diagnostic services at the door steps of farmers, duty free

import of veterinary dairy and livestock machinery/equipment, not manufactured in the country.
Government has allowed import of Incubators, Brooders, Evaporation cooling pads, cooling system, Grain
storage silos for poultry, poultry equipments, milk and
meat processing machinery/equipment (not manufactured locally), at zero percent custom duty. Private sector has imported milk and meat processing machinery/equipment worth of Rs 285 million during JulyMarch, 2007-08.
In order to reduce input costs in poultry production,
poultry vaccines, feed additives, coccidiostats, Growth
promoters premixes, Vitamin premixes, Fish feed, Zinc
sulphate, Copper sulphate used in poultry feed has been
zero-rated. Sales tax exemption has been allowed to uncooked poultry meat; processed milk, yogurt, cheese flavored milk, and butter cream. In addition, poultry, vaccines, feed additives and coccidiostats used in poultry
feed manufacturing have been allowed at zero percent
custom duty.
Following new development projects have been launched in
the country during 2005-06 to 2007-08.
Livestock Production and Development project is of
five years duration (2005 2010) and has total allocation of Rs 1520 million. It is assisting in the establishment of 2590 fattening farms (1040 beef and 1550 mut-
ton), 08 Slaughterhouses and 20 butcheries in private

sector.
Milk Collection Processing and Dairy Production and
Development Program Project is of five years duration
(2005 2010) with a total cost of Rs 1588 million. More
than 10,000 rural subsistence dairy farmers are likely to
enter into the milk marketing chain due to project interventions, 15000 to 20000 additional breeding animals of
better genetic potential for milk production will become
available in the project area.
Livestock Project is of 05 years duration (2005-2010)
and initiated at a total cost of Rs 1992 million. It is aimed
at enhancing the livestock productivity through the provision of livestock production and extension services at
farmers doorsteps, targeting 13 million rural poor in
1963 union councils in 80 districts of the country.
Improving reproductive efficiency of cattle and buffaloes in stallholders production system Project is of five
years duration (2007-2012) and has total cost Rs 495.15
million. The project aimed at establishment of Embryo
Transfer Technology Centre, Semen Production and
Processing center, Strengthening of Provincial Semen
Production Units and Support of semen Production in
private sector. The center will produce 5000 embryo per
year for farm use and supply to others.
Construction of Animal Quarantine Facilities at various
places including Northern Area, Wahga Border, Lahore
and Khokrapar project has total coat of Rs 300 million. It
34

is of five years duration (2006-2011). The project is
aimed at improving quarantine facilities and establishing new entry exit points to facilitate trade of animal and
animal products.
ii)
v. Fisheries
The share of fisheries in GDP, though small, but it does contribute to the foreign exchange earnings through export besides providing proteins to the populace. The nutritional
value of fish is very high, with a protein content, low cholesterol content and many useful dietary supplements. Government of Pakistan is taking a number of steps to improve fisheries sector. A number of initiatives are being taken by federal and provincial fisheries departments which include inter alia strengthening of extension services, introduction of
new fishing methodologies, development of value added
products, enhancement of per capita consumption of fish,
upgradaion of socio-economic conditions of the fishermens
community.
Marine Fisheries Department is executing following development projects
i)
Reduction in Seafood Post Harvest Losses by Improvement of Fish Holds of Local Fishing Boats
which is aimed at to start a programme of post harvest
losses through modification of the fish holds of the local fishing boats to enhance the export earnings. Due to
improvement in the fish holds, post harvest losses will
be reduced substantially making available additional
quality raw material for the processing plants.
The project Stock Assessment survey programme

through chartering of research vessel for Marine Fisheries Department is aimed at chartering a suitable vessel for conducting stock assessment resource surveys in
the coastal and offshore waters of Pakistan to
strengthen Marine Fisheries Department by capacity
building to conduct resource survey, stock assessment
on regular basis and to develop management strategy
for the fish exploitation and utilization.
iii) Two other projects i.e. Accreditation of quality control laboratories of Marine Fisheries Department and
Establishment of an Integrated National Animal and
Plant Health Inspection Service (NAPHIS) are also
being implemented to provide improved quality control
services to the seafood export industry. These two projects are aimed to get the laboratories of the Marine
Fisheries Department accredited with international
bodies and meet the requirements of ISO.
During the period July-March 2007-08, the total marine and
inland fish production was estimated to be 640,000 M. tons.
Out of which share of marine fish is 390,000 M. tons and inland contributed is 250,000 M. tons. The production for the
year 2006-07 was estimated to be 578,000 M. tons in which
353,000 M. tons was from marine and the remaining was
225,000 M. tons was produced by inland fishery sector.
Main buyers of fish and fish preparations are Japan, USA
Middle East, Sri Lanka, and China etc. Pakistan earned US$
188.5 million during July-March (2007-08) and over
100,000 M. tons of fish and fishery products were ex portedn
Table 5
Livestock Products
(000 tonnes)
Fiscal
Year
Milk #
Beef
Mutton
Poultry
Meat
Bones
Fat
Blood
1990-91
15,481
765
665
151
48.1
7.9
259.0
1991-92
16,280
803
713
169
49.3
8.3
265.0
1992-93
17,120
844
763
265
50.5
8.1
271.0
1993-94
18,006
887
817
296
51.7
9.0
277.0
1994-95
18,986
931
875
308
53.1
9.4
283.0
1995-96
22,970
898
587
355
38.1
15.6
295.7
1996-97
23,580
919
602
387
38.3
16.2
302.3
1997-98
24,215
940
617
284
38.5
16.7
309.2
1998-99
24,876
963
633
310
38.7
17.3
316.3
1999-00
25,566
986
649
322
38.9
17.9
324.0
2000-01
26,284
1,010
666
339
39.2
18.6
331.4
2001-02
27,031
1,034
683
355
39.4
19.3
339.4
2002-03
27,811
1,060
702
370
39.7
19.9
347.6
2003-04
28,624
1,087
720
378
39.9
20.7
356.2
2004-05
29,438
1,115
739
384
40.0
20.7
365.1
2005-06 *
31,970
1,449
554
512
40.1
20.3
633.5
2006-07 @
32,996
1,498
566
554
40.6
20.8
652.5
2007-08 @
34,064
1,549
554
601
41.0
21.4
672.2
Source: Livestock Division
* Population figures are actual figures of Livestock Census 2006.
# Human Consumption
@ Estimated figures based on Inter census growth rate of livestock census 1996 & 2006
101.8
104.5
107.2
110.0
113.0
110.1
112.6
115.2
117.8
120.6
123.5
126.5
129.7
132.9
136.3
203.3
209.2
215.3
40.1
42.5
45.1
47.3
50.7
32.0
32.8
33.6
34.4
40.9
41.8
42.9
44.0
45
45.2
51.4
52.7
54.1
35
Wool
Hair
Eggs Hides
(Mln. (Mln.
Nos.) Nos.)
4,490
5.9
4,914
6.0
5,164
6.1
5,740
6.2
5,927
6.3
5,757
7.0
6,015
7.1
5,737
7.3
8,261
7.5
7,321
7.6
7,505
7.8
7,679
7.9
7,860
8.2
2 8,102
8.4
8,529
8.4
9,712
11.4
10,197
11.8
10,712
12.2
Skins
(Mln.
Nos.)
32.7
33.9
36.0
37.8
39.3
32.7
34.5
35.3
36.3
37.2
38.2
39.2
40.3
42.4
42.6
43.3
44.3
45.3
Article of Merit
Board Processes and the

Quality of Board Decision Making
Sometimes good boards of directors make bad decisions, but it's difficult to understand why. By considering some
theories in group decision making, it's possible to glean a few solutions to the problem
By Anthony Atkinson, CMA, FCMA, and Michael Atkinson
This is one of the Articles of Merit, judged as such under Professional Accountants in Business - Articles of
Merit Programme 2007, for distinguished contributions to Management Accounting, established by the
Professional Accountants in Business Committee (PAIB), (under its former name of FMAC) of IFAC.
tudents of group decision making have written extensively about what determines the quality of group decision making. Of particular interest are articles that explore the general theme of how or why a group of smart
people can make terrible decisions and, when confronted with overwhelming evidence that the decisions
are bad, remain committed to such decisions.
This article considers how or why boards of directors

sometimes make terrible decisions. Some commentators
rely on variations of an incompetence argument to explain ineffectual board decision making; we will rule
those out since there is considerable evidence to suggest
that most board members are thoughtful, intelligent, and
successful people. Instead, we look for other explanations for what are arguably bad board decisions.
Inattentive or Compromised Boards

Frauds and alleged frauds such as Enron, WorldCom,
Global Crossing, Livent, Hollinger International, Adelphia Communications, and Parmalat have attracted immense attention in the financial press, which in turn have
called into question the effectiveness of corporate
boards. A common explanation for these failures has
been executive greed, combined with a lack of board independence or board inattentiveness. Regulators appear
to have accepted these explanations and have promoted
requirements for more independent boards, and that senior management accept personal responsibility for their
organizations' financial statements and systems of internal control.
We believe that prescriptions that focus on inputs to,
rather than outputs from, the governance process are demonstrably ineffective because they fundamentally ignore that governance is conducted as a social process of
group interchange and influence.
In this article, we consider the sources of weak board

oversight resulting in failures to question bad executive
decisions. While the fiduciary rather than the strategic/social focus of the current approach to improved corporate governance has merit, there is considerable evidence to suggest that boards that fail to challenge and advise management effectively destroy more stockowner
wealth than management fraud or corruption.
Weak Board Oversight

Most responses to governance failures have concentrated
on specifying better structural inputs such as the composition and characteristics of boards of directors (the
number, type, skills, number of meetings, director independence). In addition, they have promoted increased attention to systems of internal control in general and financial reporting in particular.
Shaping good conduct, by Atkinson and Salterio (CMA
Management, February 2002, pp. 19-23), concluded that
the preoccupation of regulators and lawmakers with
specifying inputs to the corporate governance process
the socially interactive ways in which governance practices and objectives are undertaken is an incomplete
and potentially less effective approach than one focusing
on corporate governance objectives, designing Board social systems to achieve those objectives, and measuring
performance on those objectives.
A stinging article in The Toronto Star (Directors missing in action, December 9, 2001) argued that while
Nortel's board met most of the extant suggestions for the
composition of a board, the board was, by any standard,
ineffective.
Ostensibly, Nortel's board was a model of good corporate governance. It was small just 10 directors and,
therefore, efficient. It was not stacked with insiders
non-executive, or independent, directors filled eight of
36
Article of Merit
the seats. And the positions of CEO and board chairman
were not held by the same person.
dividuals to suspend better judgment to maintain group

cohesion and conformity.
The article went on to suggest that there was no evidence

of independent thinking taking place on the board. Air
Canada has attracted similar commentary. As Terence
Corcoran noted in the Financial Post (May 22, 2003):
Social psychologists and psychologists have identified

ways that group processes can inhibit each of the four
elements Surowiecki has argued are essential for effective group decision making.
Air Canada 's board is a model of independence. But

guess what? It is now conventional wisdom that the air line's board, in bed with CEO Robert Milton, jointly and
dubiously ran the airline into insolvency. Even the judge
who's presiding over the airline 's reorganization has
raised doubts about the board.
Diverse Opinion
While some may attribute these observations to spurious

ex post facto reasoning, we believe that they, at the very
least, suggest that while inputs to the board process such
as skill, knowledge, and independence may be necessary
they aren't sufficient to assure, let alone promote, an effective board. What is missing, we believe, is consideration of the structure and nature of board processes.
Gloria Stromber, a former commissioner of the Ontario
Securities Commission, in her submission to the
CICA/TSX Joint Committee on Corporate Governance,
observed: I suggest that the Joint Committee take a
closer look at the whole subject of behavioural dynamics
... and on techniques and approaches to encourage more
effective involvement.
We agree with Stromber, who has been further quoted as
saying that there has been too much emphasis placed on
defining the logistical structure of corporate governance
and not enough emphasis on evaluating either the process
or results of Board activities.
Group Processes and Decision Making
The requirement isn't only that boards be populated with

people who are likely to have diverse opinions but that
board processes actively promote the expression of diverse opinions. Common inhibitors to the expression of
diverse opinions are statements like: I am sure we are all
on the same page, We all need to be onside on this issue, or Any thinking person will agree with this point
of view. These statements are a form of social pressure
to conform to group norms and beliefs and are often expressed to force convergence to a conventional point of
view when an organization is under stress a time when
diverse opinions are potentially the most valuable.
Group members who legitimately question a group's direction are often labelled disruptive and are silenced by
one institutional means or another. As a result, experts
embedded in larger groups may have difficulty finding a
common language to communicate their insights and
skills, negating the potential contribution of expert
knowledge. Studies of groups have observed that members undergo a process of socialization by which they
learn group norms and expected behaviours communicated by central figures (such as board Chairs) in the collective. Certain leadership styles lead to socialization
processes that, instead of promoting a thorough debate of
issues, breed acquiescence by group members.
James Surowiecki, author of The Wisdom of Crowds

(Random House, 2004), outlines a number of conditions
necessary to establish a wise group. These conditions include: diverse opinion, independent opinion, the ability
of group members to develop and use task-specific individual knowledge in contributing to decision making,
and the ability of the group to aggregate individual
knowledge and judgment into a group decision.
Social loafing is a motivational/cognitive state in which

an individual sees little merit in working within a group
despite being one of its members. Research suggests that
loafing results when group members are relative strangers, meet infrequently, and share few social bonds. Contemporary boards of directors, by their design intended to
ensure a diverse group with diverse opinions, are prime
social contexts for loafing. Indeed, the movement toward
independence may only exacerbate loafing conditions on
boards.
One of the major focus areas for social psychologists is

the way in which groups collectively decide on particular
courses of joint action, and how in the process, individual
judgment regarding effective or ethical action may be altered. Stated differently, social psychologists concern
themselves with how a group may convince particular in-
When social loafing is left unchecked and becomes standard operational procedure in a Board culture, it may lead
to a social psychological condition called herding. Herding involves the coalescing of group ideologies and practices around those of one central figure or small cluster of
charismatic figures. Social groups beset with herding in-
37
Article of Merit
clude members best described as sheeple; those who accept dominant lines of thinking without criticism or reflection, and view more utility in maintaining the status
quo than upsetting the proverbial apple cart. Although
extensive loafing in a group isn't a prerequisite of herding
behaviour, excessive loafing is indeed a strong predictor
of the development of sheeple cognitive states and social
practices within a group. The sheeple phenomenon may
be one characteristic of boards that observers characterize as inattentive or failing to challenge important management strategies or decisions.
members envision their roles as contributing to the completion of a worthy task, then they are more likely to attribute their work efforts to their sense of self and participate with more frequency and quality. Choice provides
group members with an opportunity to choose the task
they wish to fulfill; in other words, it allows for individual agency within the group. Arbitrarily assigning roles
in a group often causes complaints, disinterest, resistance, and frustration. Permitting members to choose
their role stimulates team-building and co-operative
work.
Independent Opinion
Psychologists have studied extensively the bases of the

tendency of people to conform to a conventional wisdom
when under stress. They have coined terms such as irrational escalation of commitment (by some accounts, recently exhibited by the exuberant bidding for Dofasco)
and the sunk cost phenomenon1 to describe widespread
human behaviour. These behavioural tendencies along
with the self-esteem issue of not wanting to be proven
wrong tend to promote the suspension of individual opinion and choosing an existing course of action long after a
more dispassionate observer would have called for
change.
While regulators and commentators have commented on

the importance of board members being independent of
senior management, there has been little discussion of the
importance of board members acting independently
which, as we have just argued, the practice of constructing diverse boards without regard to appropriately managing board processes may work against.
Students of board decision-making behaviour appear to
have documented two major obstacles to the exercise of
independent opinion. The first is the failure to develop
and use board processes that effectively exploit board
members' diverse opinions and skills, and the behaviour
of individuals in general when under stress.
Behavioural theories in social psychology suggest that
unless properly managed, groups of experts may encounter serious impediments in exercising their skills in
evaluating and advising management.
The antithesis of independent group thinking is a phenomenon known as groupthink a situation in which
group members adjust their individual opinions to what
they perceive as the group consensus. This often results
in a situation in which the group ultimately agrees on an
action that each member might individually
consider unwarranted, irresponsible, unethical, or irrational. Indeed, there is more than ample evidence to suggest that boards of directors, at least historically, have
been rife with groupthink tendencies. When groupthink
manifests into board of directors culture, there is a
marked reluctance to change, innovation, and selfexamination among directors.
Collaboration is a way to get everyone involved by assigning each member unique tasks and responsibilities. It
is a way for group members to share diverse knowledge,
and assess the tasks to be fulfilled unfailingly. Content
recognizes the centrality of the individuals' specific tasks
within the group decision-making process. If group
This board tendency may be exacerbated by the common

phenomenon of executive over exuberance which Dan
Lovallo and Daniel Kahneman, in a July 2003 Harvard
usiness Review article (Delusions of success: how op timism undermines executives' decisions), attributed to
widespread human traits such as a tendency of individuals to: overestimate their talents, underestimate the risk
associated with their decisions, and subconsciously bias
processing information to support their current point of
view.
Some observers have argued that an effective way of promoting the independent expression of opinion is to formalize the devil's advocate role in board considerations
of proposed major management initiatives. The role of
devil's advocate depersonalizes the expression of a contradictory point of view, institutionalizes consideration
of alternative points of view, and may encourage people
who are otherwise hesitant to speak against a proposal
that seems widely accepted.
Developing and using

Individual Knowledge
It is important that individual board members are given
the information they need to enhance the intellectual
capital they bring to the board, while sustaining their individual perspective and opinion. The common practice
of providing all group members with the same informa-
38
Article of Merit
tion package usually centred on financial or
accounting-based reports doesn't necessarily support
this idea. Board members should be able to solicit and
evaluate the type of information that they want, not what
is dictated and directed by senior management. What remains a challenge, however, is developing an effective
means to promote collaboration and solicitation of the
views of the various experts that constitute the board.
Aggregating Individual Knowledge

and Beliefs
Perhaps the most difficult challenge in organizing and
managing board processes is developing an effective
means to solicit and discuss the knowledge, skills, and
beliefs of individual board members. This is perhaps the
most challenging role of the board Chair, since it means
developing a common platform that promotes individual
contributions to the group discussion and decision.
Forcing board members to evaluate a proposed course of
action by focusing on aggregate financial returns and risk
may be the least effective way of soliciting board participation because it centres the discussion on an abstract
language (accounting) that may be neither accessible to
individual board members, nor possess the requisite variety of information to solicit contributions from individual board members. What may be more effective is a
strategy map approach that lays out the logic of a proposed course of action so that board members can contribute their specialized skills and insights in a cause and
effect model that is based on functions.
Conclusions
While the manipulation of board inputs through independence structures continues to receive considerable
support in governance circles, sociologists and psychologists both agree that decisions are made interactively and
interpretively as a process and not merely via a structure
of inputs. Therefore, if governance experts continue to
focus on the form of decision making over the content of
the process, there is reason to believe that governance
'meltdowns' will continue.
To move toward a more process-sensitive culture of governance, three immediate considerations might be explored. First, Chairs could attempt to engender both task
and relationoriented atmospheres in the boardroom. In
short, most groups look to one or several leaders to set the
tone for group interaction. By creating contexts wherein
individual members understand that they are responsible
for contributing to group discussions and proposing
amendments to management's strategic directions (the
task) and in which diverse knowledge bases are openly
39
sought out and supported as part of the team perspective

(relationship building), greater critical deliberation in
boards should result.
Second, speaking rituals must be created in the boardroom to create dialogue and interchange as habitual behaviour. Groups tend to fall into interaction habits, and
unless these are recognized and disrupted they will continue. The literature on groupthink, herding, and the escalation of commitment teaches us this plainly. Careful attention, then, must be given to hearing from all board
members at every meeting. This might be done by simply
asking members to contribute a report or analysis at each
meeting, offer a critical evaluation of other board members' inputs, or suggest five reasons why management's
decision/direction might fail from their perspective as an
expert.
Third, and perhaps most consequentially, for members of
groups to care about providing insight and performing
with a high level of interest, their efforts must be socially
and institutionally recognized. The analysis of loafing illustrates how, when members of a group feel ineffectual
or without agency, they stop producing. To discourage
loafing and encourage careful analytical work within the
boardroom, members' insights must be routinely inserted
into strategic decisions and be presented with reaffirmation of their efforts by management. Stated differently,
board members must be told they are actually doing a
good job if we want them to continue performing the associated roles. We feel that while good governance tends
to be a veritable black box within the extant literature, a
series of very basic group tendencies and processes teach
us how to cultivate better corporate governance in Canada and elsewhere.
1 The sunk cost phenomenon, also known as the Concorde fallacy, is the act of treating costs resulting from
past decisions as relevant in a current decision. Some researchers believe that the sunk cost phenomenon is
deeply ingrained in human behaviour and is rooted in
evolution reflecting the need to conserve scarce resources by seeing a course of action through to its end.
Some researchers believe they have seen the sunk cost
phenomenon exhibited by birds. Kacelnik, A. and Marsh,
B. (2002). Cost can increase preference in starlings,
Animal Behaviour, 63, 245-250 and Anton D. Navarro
and Edmund Fantino. (2005) The Sunk Cost Effect in
Pigeons and Humans, Journal of the Experimental
Analysis of Behavior. 83, 1-13.
Anthony Atkinson, CMA, FCMA, is a professor in the School of Accountancy at the University of Waterloo and the Management Accounting Area Head. Michael Atkinson is an assistant professor and undergraduate chair of the department of sociology at McMaster University.
Source: http://www. ifac.org
Article
Credit Crunch SMEs

Compiled by Mohammad Arif Nara, FCMA
Member IFACs PAIB Committee
Honorary Secretary, ICMAP
n the current global economic climate, SMEs (small and

medium sized enterprises) will probably be concerned
about the consequences for their business. Confident plan ning is necessary more now than ever.
SMEs Need to keep a tight rein on cash flow, make sure they
can pay, and be paid on time while it is tempting to worry
sensible approach needed during the turbulent times.
Advice and guidance points for SMEs:

Good financial planning is crucial- dont be scared of
facing and making difficult business decision.
Start questioning early your credit facilities.
Maintain a meaningful dialogue with the concerned.
Review your bank charges. Watch out for hidden
charges and factor those into financial planning. Review
all your direct debit arrangements.
Try to clear credit card debt. But if you use them, try to
pay without incurring interest and pay off balances before charges are incurred.
Chase your cash flow and if you cant make payments,
then let you creditors know why and when they can expect a payment.
Pay special attention to cash flow forecast and to monitoring cash flow. Ensure management accounts are up to
date, and that all key financial reconciliations are done,
reviewed, and outstanding items cleared.
Tighten up credit control, cash collection procedures,
and treasury management.
Look carefully at your forward order book, and the timing of future orders.
Consider carefully current and future customers and

their ability to pay-do not simply rely on credit ratings.
Pay particular attention to investments and major capital
expenditure. Appraise rigorously and consider the extent to which such items can be rescheduled.
For those businesses which import/export, consider foreign exchange hedging and where this could be relevant
to your business.
For year-ends be clear about Stock and Work in Progress valuations get early audit agreement to valuation
principles.
Look critically at staff requirements/recruiting strategy:
Consider, where relevant, temporary or fixed term assignments but make sure you have weighted up the pros
and cons against full time recruitment.
Be cautious in awarding pay rises and in setting up staff
incentive schemes. Ensure such schemes relate as much
to profitability and cash generation as much as to
growth. Be alert for performance distortions related to
incentivisation schemes.
Critically evaluate your own financial drawings from
the business. Are they appropriate in the light of current
and future profitability and cash generation?
Revisit the risk register as a matter of priority. Are all
risks included, particularly financial/liquidity? Are risk
mitigation measures still valid? Are mitigation owners
being proactive in their responsibilities?
This may seem an exhausting list, but its important to address them because they are all interlinked and fundamental
to business successn
How much Resources Pakistan possess....

Estimated Thar Coal reserves are around 850 Trillion Cubic Feet (TCF) which are equal to 400 Billion Barrel of oil
equal to the Oil reserves of SAUDI ARABIA and IRAN put together.
Total investment required $ 4 Billion. By using only 2% of existing Thar Coal reserves Pakistan could generate around
20,000 megawatts of electricity for almost 40 years.
Source- Daily DAWN, Dated 28-04-2008
40
Article
Sukuk A New Dawn

of Islamic Finance Era...II
by Intisar Muhammad Usmani FCMA, PGD (Islamic Banking & Finance)
Head of Credit & Risk, First Habib Modaraba.
Types of Sukuk
I have discussed the basic structure of the Sukuk an Islamic
Bond in the previous issue. Now it will discuss it slightly in
detail.
There are different kinds of Sukuk of different maturities
that can be issued in a Sharia complaint manner. Issuance
of Sukuk is quite popular these days for raising long term finance and majority of the Sukuk that have been issued to
date are based on the concept of Ijarah. However, there is a
great potential still untapped in utilizing different Islamic
modes for the issuance of Sukuk.
Some of the most commonly used types of Sukuk are discussed below:
1. Sukuk-al-Ijara
head lease - sublease structure rather than a sale lease structure.

The critical issue from a shari'a perspective is that the SPV
should have ownership rights prior to granting the lease (or
sub-lease); a sufficiently long head lease will be deemed,
from a shari'a perspective, as akin to ownership. Each investor would therefore own a proportionate interest in the underlying asset and any revenue being generated by that asset. An example of a classic (See Fig-1)
Given the relative simplicity of the Sukuk-al-Ijara structure
this has been used on a number of the earlier Sukuk issues
including the sovereign Sukuk issues by Malaysia and Bahrain in 2002 and Pakistan in early 2005.
a) Sukuk of ownership in leased assets

These are certificates issued either by the owner of a leased
asset or a tangible asset to be
The Ijara is a shari'a compliant lease. It is a hybrid between

an operational lease and a finance/capital lease with certain
leased by promise, or they are issued by a financial intermeownership' risks, such as the obligation to undertake capital
diary acting on behalf of the owner with the aim of selling
maintenance of the leased asset and the obligation to insure
the asset and recovering its value through subscription so
the asset, remaining with the lessor. The lessor may appoint
that the holders of the Sukuk become owners of the assets.
an agent, usually the lessee itself, to carry out these duties on
its behalf under a servicing agreement. In a simple SukukThe certificate holders jointly own the assets through an undivided ownership sharing the profits and losses on the basis
al-Ijara the originator will sell certain physical assets to a
of the partnership that exists between them. Such Sukuk are
special purpose vehicle (SPV) or appoint a trustee. The SPV
tradable and redeemable at the market price or at a rate
will finance this acquisition by cash raised by the issue of
agreed upon between the certificate holder and the issuer.
sukuk notes. The SPV will then lease the same physical asset to a third party, often the originator itself or a third party conFigure-1: SUKUK-AL-IJARA STRUCTURE
nected to the originator. The lease
rental payments will 'mirror' the
coupon payments under the suPur chase Undertaking
kuk and the cash flow from the
lease rentals will be used to service the coupon payments under
Sells Sukuk Assets
the sukuk. This structure, given
Payment for
its relative simplicity and ease of
Investment
understanding, has been used in a
SPV/
number of earlier sovereign su- Originator Pays for Sukuk Assets
Investors
Trustee
kuk issues. As there may be legal
Sukuk Certificates
Leases Sukuk Assets
and public policy considerations
involved in a sovereign or quasisovereign disposing of public asPays Rentals for
Payment of Rental
Sukuk Assets
sets there has been a preference
for sovereigns and quasisovereigns to use an underlying
Servicing/Management Agreement
Declaration of Trust over Sukuk Assets
41
Article
b) Sukuk of ownership of usufructs

of assets
2. Sukuk-al-Musharaka/
Diminishing Musharka
These are Sukuk issued by the owner of an existing asset (or

owner of the usufruct of an existing asset (lessee)) with the
aim of leasing the asset (or subleasing the usufruct) and receiving the rental from the revenue of subscription so that
the usufruct of the assets passes into the ownership of the
holders of the Sukuk.
Given the lack of flexibility inherent in the Sukuk-al-Iajra,

another sukuk product known as the Sukuk-al-Musharaka
has been developed. This sukuk variant permits greater
flexibility in the asset transfer to cash to be raised ratio as the
amount of cash to be raised does not need to correspond to
the value of the assets available for transfer into the
musharaka.
The Sukuk holders become joint owners of the usufruct

sharing its benefits and risks. It is permissible to trade in securities of ownership of usufructs of tangible assets prior to
a contract for sub-leasing the assets. When the assets are
sub-leased, the Sukuk represents rent receivables, which
makes it a debt owed by the second lessor and thus becomes
non-tradable.
c) Sukuk of ownership of Services

These are Sukuk issued for the purpose of providing services through a specified provider (such as educational benefits in a nominated university) and obtaining the service
charges in the form of subscription income so that the holders of the Sukuk become owners of these services.
It is permissible to trade in securities of ownership of services to be provided by a specified party prior to sub-leasing
such services. When the services are sub-leased, the certificate represents rent receivables to be collected from the second lessee. In this case, the certificate represents a debt and
is, therefore, subject to the rules and regulations of disposal
of debts.
A Musharaka constitutes a form of a joint venture and may,

depending on its precise terms, also be a partnership.
Although the Shari 'a perceives the Musharaka as an independent entity it is not a legal entity in its own right under
English law and would simply be construed as an agreement
between two parties. In a Musharaka two partners/sponsors
will agree to combine their resources for a joint enterprise,
often with one party contributing the cash and the other contributing the expertise or some other contribution-in-kind.
In a simple Sukuk-al-Musharaka the two partners would be
the originator and a SPV. The originator will contribute assets to the Musharaka and the SPV will contribute cash
raised from the issue of Sukuk notes. As the Musharaka is
not a legal entity, the partners will appoint a managing agent
to act on behalf of the Musharaka and this managing agent
will often be the originator itself. The contributed assets,
also known as the Musharaka assets, are then employed by
the managing agent to generate a cash return to service the
coupon payments. The originator upon maturity of the Sukuk may retain any cash generated in excess of the coupon
payments.
Figure-2: Sukuk-al-Musharaka
This Sukuk-al-Musharaka structure has been used on a number of recent transactions.
Pur chase Undertaking
Payment for Investment
Beneficiary/
Originator
Contribution in
Kind/Expertise
Investors
SPV /Trustee
Cash
Contribution
Sukuk Certificate
Musharka
(divided into units)
Declaration of Trust over Sukuk
Musharka Joint Venter
42
Article
Figure-3: Mudaraba Sukuk

Sukuk Holder
Raab Ul-Mall
Sukuk
Al-Mudarib
Construction
Term
Construction
Arrangement
Project
Transfer
Agreement
Funding Company
Mudarib
Project
Company
Construction
Term
General
Contractor
Classical example of a Sukuk-al-Musharaka would be as

shown in Figure-2,
entitled to an agreed ratio of profit whereas the loss is solely

borne by the subscribers of the Sukuk.
a) Participation certificates
4. Salam Sukuk
These are certificates representing projects or activities

managed on the basis of Musharaka by appointing one of the
partners or another person to manage the operation.
Salam is a sale whereby the seller undertakes to supply some

specific goods to the buyer at a future date in exchange of an
advanced price fully paid at spot. Here the price is cash, but
the supply of the purchased goods is deferred. The permissibility of Salam was an exception to the general rule that prohibits the forward sales.
b) Investment agency Sukuk

These are certificates that represent projects or activities
managed on the basis of an investment agency by appointing
an agent to manage the operation on behalf of the Sukuk
holders.
3. Mudaraba Sukuk
The issuer of these certificates is the investment agent, the
subscribers are the principals and the realized funds are the
entrusted capital of the investment. The Sukuk holders own
the assets represented by the certificates with its benefits and
risks, and they are entitled to the profits, if any. The investment agent is entitled to an agency fee irrespective of the
profit or loss of the business.
These are certificates that represent projects or activities
managed on the basis of Mudaraba by appointing one of the
partners or another person as the mudarib for the management of the operation.
Salam has become a liquidity management tool for Islamic

banks by providing short term investment opportunities in
Salam Sukuk. It has provided an alternative to the conventional Treasury Bills in few Islamic countries.
The issuer of the Salam Sukuk is a seller of the goods of Salam, the subscribers are the buyers of the goods, while the
funds realized from subscription are the purchase price (Salam Capital) of the goods. The holders of Salam Sukuk are
the owners of the Salam goods and are entitled to the sale
price of the certificates or the sale price of the Salam goods
sold, if any.
It is not permissible to trade in Salam Sukuk during the term
of the Sukuk since the underlying asset is a debt created
through advance payment of the sale price. Such debt will
only be converted into a tangible asset at the end of the maturity when the Salam subject matter is delivered.
5. Murabaha Sukuk
The issuer of these certificates is the Mudarib, the subscribers are the owners of capital, and the realized funds are the
Mudaraba capital. The certificate holders own the assets of
Murabaha is a specific kind of sale where the commodities are sold on a cost-plus basis.
Mudaraba in proportion to the financial value of the certificates they own. The certificate holders and the Mudarib are
This kind of sale has been adopted by the contemporary Islamic Financial Institutions as a mode of financing.
43
Article
Figure - 4
Sukuk-Holder
Sukuk
Proceeds
Deferred
Payment
Basis
Company
Murabaha
Proceeds
SPV/Trustee
Purchase of
Assets
Delivery of Assets
Vendor
Murabaha involves purchase of a commodity by a bank on

behalf of a client and its resale to the latter on deferred payment basis. Under this arrangement the financier discloses
its cost and profit margin to the client.
Murabaha Sukuk is certificates of equal value issued for
the purpose of financing the purchase of goods through
Murabaha so that the certificate holders become the
owners of the Murabaha commodity. The issuer of the
certificates is the seller of the Murabaha commodity, the
subscribers are the buyers of that commodity and the re alized funds are the purchasing cost of the commodity.
The Sukuk holders own the Murabaha commodity and
are entitled to its sale price.
Murabaha is a transaction, which cannot be securitized for
creating a negotiable instrument to be sold and purchased in
the secondary market. The reason is that in case of Murabaha, as undertaken by present financial institutions, the
commodities are sold to the clients immediately after their
purchase from the original supplier, while the price being on
deferred payment basis becomes a debt payable by the client. So, Murabaha Sukuk/certificate only represents a
monetary debt receivable from the client in the form of Murabaha price which is non-negotiable as per the rules of
Sharia. Because, transfer of the Sukuk to a third party will
mean transfer of money and money can only be exchanged
against money at par value. This restricts the possibility of
creating a secondary market for Murabaha Sukuk. However,
trading of Murabaha certificates is permissible after purchasing the Murabaha commodity and before selling it to the
buyer.
6. Istisna Sukuk
Istisna is the second kind of sale where a commodity is
transacted before it comes into existence. It means to order a
manufacturer to manufacture a specific commodity for the
purchaser. The manufacturer uses his own material to manufacture the required goods. It is necessary for the validity of
Istisna, that, the price is fixed and that necessary specification of the subject matter is fully settled between the parties.
It is not necessary in Istisna that the price is paid in advance; rather it may be deferred to any time according to the
agreement of the parties.
Istisna Sukuk are issued with the aim of mobilizing funds to
be employed for the production of goods so that the goods
produced comes to be owned by the certificate holders. The
issuer of Istisna Sukuk is the manufacturer (supplier/seller), the subscribers are the buyers of the intended
product, while the funds realized from subscription are the
cost of the product. The Sukuk holders own the product and
are entitled to the sale price of the certificates or the sale
price of the product sold on the basis of a parallel Istisna', if
any.
It is permissible to trade in or redeem Istisna' certificates if
the funds have been converted, into assets owned by certificate holders. If the realised funds are immediately paid as a
price in a parallel Istisna'a contract or the manufactured item
is submitted to the ultimate purchaser, then trading in Istisna' certificates is subject to rules of disposal of debts.
The instrument of Istisna may be used for project financing
or building a bridge or a highway. The modern BOT (Buy,
Operate and Transfer) agreements may also be formalized
on the basis of Istisna. Istisna Sukuk may be issued to raise
finance for the construction of highways, motorways, airports etc
44
Article
From More Specific to More Generic Framework

By Muhammad Asif Jaffer, ACMA
Faculty Member IBA
n May 2008, IASB issued an exposure draft (ED)

comprising chapter 1 and chapter 2 of its proposed, An
Improved Conceptual Framework for Financial Reporting. The ED deals with two aspects of the proposed
new Conceptual Framework
1.
The Objective Of Financial Reporting (Chapter 1);

and
2.
Qualitative Characteristics and Constraints of

Decision-useful Financial Reporting Information
(Chapter 2)
The existing Framework, The Framework for the

Preparation and Presentation of Financial Statements
was approved by then IASC in April 1989 and is since
then being used as the basis for all subsequent standards
that are developed so far by IASB (formerly IASC). The
ED is a result of a discussion paper (DP) published earlier
in July 2006. The proposed Framework is first of the
IASBs projects that are being worked on jointly with
Federal Accounting Standards Board (FASB) of United
States.
Why the new Framework? Whats wrong with the old
one thats being used so long as around 19 years as the
conceptual basis for around fifty accounting standards
and supporting Application Guidelines? IASB itself explains it in its Preface to the ED,
The goals for the project include updating and refining the existing concepts to reflect changes in markets,
business practices and the economic environment that
occurred in the two or more decades since the concepts
were developed (Para P7 / ED)
This was the brief introduction of how and why IASB
considers having a new and improved framework. In the
following sections of this article, an evaluation of chapter
one of the proposed framework is presented which extensively deals with the objective of Financial reporting, as
aforesaid.
45
The Objective Of Financial Reporting

(Chapter 1)
Chapter One of the proposed Framework deals with Objective of Financial Reporting . To have an idea of how it
is different from the Objective under the existing Framework, the relevant sections of the two frameworks are reproduced below:
The IASCs (now IASBs) existing Framework
The objective of financial statements is to provide information about the financial position, performance and
changes in financial position of an enterprise that is useful to a wide range of users in making economic decisions (Para 12 / The Framework)
The IASBs proposed Framework
The objective of general purpose financial reporting is
to provide financial information about the reporting entity that is useful to present and potential equity investors, lenders and other creditors in making decisions in
their capacity as capital providers (Para S2 / ED)
The two objectives are fundamentally different as to their
scope:
The former framework talks about the objective of fi-
nancial statements whereas the later one speaks of

that of financial reporting. This is a fundamental
shift of approach. Though majority of the portion(s)
of the standards developed so far deals with financial
reporting other than core financial statements, the
IASB has now felt the need to accommodate this in its
very conceptual framework by extending the scope of
the framework itself. Financial Reporting, not merely
Financial Statements, are now to be dealt with in the
new framework.
Consequent upon the shift of approach, the objective
itself now is set to encompass wider perspective, i.e.
Article
to provide financial information, than to provide information about the financial position, performance and changes in financial position. Readers
would appreciate that there are some IFRS like IAS
24, IAS 30, IAS 32 and IAS 37 that mostly deals with
disclosure requirements. Strictly speaking, the
former framework can be labeled to suffer form limitation of scope so as to support the very development
of these standards. Their very existence can be argued
as to be out of scope to be considered for adoption by
IASB. Majority of the disclosure requirements under
the IFRS(s) (that include IAS by its very definition)
now will get support from the new framework as to
their existence that were otherwise somehow supplementary to the subject matter of the former framework.
Thirdly, the subject matter of the former framework
is an enterprise while that of the proposed framework

is a reporting entity. IASB itself felt that the concept
of reporting entity which is important one to set the
dimensions and boundaries of financial reporting
need to be addressed first, which was not taken care
of under the existing framework. In its Discussion
Paper (say DP2) on the reporting entity published in
same May 2008, the IASB states the IASBs (existing) Framework for the Preparation and Presentation of Financial Statements defines the reporting
entity in one sentence with no further explanation (Para 1 / DP2). It further attempts to describe a reporting entity as a circumscribed area
of business activity of interest to present and potential equity investors, lenders and other capital providers (Para 24 / DP2). Though the definition of reporting entity is not objective enough to mark a clear
line of distinction, the IASB itself admits that the
framework needs to describe the reporting entity concept, only generally, saying that, the boards preliminary view is that developing a precise definition
of a reporting entity is unnecessary (Para 14 /
DP2); and that its practicalities and specifications can
be more particularly dealt with in the standards concerned. (Readers interested in the details of the reporting entity concept can download IASBs discussion paper form IASBs website).
Last but not the least, the users perspective has been
narrowed down under the proposed framework.

Compare the phrases a wide range of users in making economic decisions under the existing framework with the present and potential equity inves-
tors, lenders and other creditors in making decisions in their capacity as capital providers under
the proposed one. This is perhaps the only aspect of
the Exposure Draft which relatively restricts the existing version of the Objective. IASB admits this
specification of focus in its Para OB7 OB8 of the
ED, saying that these claimants are basically primary
stakeholders and all other users are those who can
benefit from financial reporting but for whom financial reporting is not primarily directed. As for internal
management, IASB maintains that they are rather
providers of financial information to the intended users; they do not constitute its primary users. As a consequence of specification of user groups under the
new framework, the term economic decisions has
also been done away with and replaced by rather
more specific decisions in their capacity as capital
providers.
It is worth mentioning here that the proposed version of
Objective is not the original version which was issued
under the Discussion Paper in July 2006. After having received almost 170 feedbacks on the discussion paper, the
IASB reconsidered that version and the proposed version
under the ED is a result of appropriate adjustments being
made in the light of comments received on that DP from
various stakeholders. Among others, the most prominent
of the stakeholders that disagreed with the initial version
of the Objective was Accounting Standards Board (ASB)
of United Kingdom.
The utility of the framework should be understood. Unlike constitution of an estate, which remains the supreme
document for all the estate by-laws, the framework (existing or proposed) is not supposed to be exhaustive and
conclusive. It is more theoretical in nature, and there is
nothing like ultra wires in standards as may he in estate
laws. As IASB itself maintains that the framework serves
merely as a guide to the Board in developing accounting
standards and resolving accounting issues that are not
addressed directly in an IAS or IFRS. However, its utility must not be downplayed as most frequently the tailoring of the standards is based on the debate of its consistency with the framework. See for example the corridor
approach allowed by IAS19 subsequent to its 2002
amendment which was inconsistent with the definition of
asset in the framework. One of the members of the Board,
Ms OMalley dissented with the rest of the Board members on this amendment (Appendix E to IAS 19, 2002
amendment); and IAS19 is now among the forthcoming
projects list of IASB
46
Economic Horizons
Highlights of Economic Survey 2007-08

01. GROWTH AND INVESTMENT
Real GDP grew by 5.8 percent in 2007-08 as against 6.8 percent last year and growth target of 7.2%. The economy has
shown great resilience against internal and external shocks of
extraordinary nature during the out going fiscal year. Pakistan's
economy has grown at an average rate of almost 6.6 percent per
annum during the last five years.
Fixed investment grew, on average, by 16.5 percent in real

terms and 30.3 percent in nominal terms per annum during the
last three years (2004-07) preceding to current year. However,
the loss of momentum during 2007-08 was visible from the real
growth of just 3.4 percent and nominal growth of 12.5 percent.
Agriculture sector showed dismal performance and grew by

1.5 percent as against 3.7 percent last year and target of 4.8 percent. The poor show was mainly because of growth performance Major crops which registered negative growth of 3.0 percent as against an impressive positive growth of 8.3 percent last
year and target for the year at 4.5 percent. Livestock a major
component of agriculture exhibited some improvement in
growth from 2.8 percent last year to 3.8 percent in 2007-08.
Private investment grew by 16.3 percent per annum in real

terms and 30.7 percent per annum in nominal terms during the
period (2004-07). However, it declined substantially to marginal 0.9 percent in real terms and 9.7 percent in nominal terms
in 2007-08. The composition of investment between private
and public sector has changed considerably during the last
seven years. The share of private sector investment in domestic
fixed investment has increased from less than two-third
(64.2%) to almost three-fourth (73.2%) in the last seven years
clearly reflecting the growing confidence of private sector in
the current and future prospects of the economy.
Overall manufacturing, accounting for 18.9 percent of GDP

registered a modest growth of 5.4 percent against 8.2 percent
last year. This is really disappointing performance because the
manufacturing sector was growing on average by 9.7 percent
since 2002-03.
Private sector investment grew by 9.7 percent this year as

against 13.3 percent increase in last year in nominal terms.
Public sector investment has also increased by 30.0 percent
per annum during the last three years and 20.2 percent during
the current fiscal year in nominal terms.
Large-scale manufacturing registered a growth of 4.8 percent in 2007-08 against the target of 10.9% and last year's
achievement of 8.6%., exhibiting signs of moderation on account of saturation in capacity utilization on the one hand and
power shortages along with several other factors on the other
hand.
Major nominal growth in private sector investment is witnessed in, mining & quarrying (15.3%), electricity & gas
(11.0%), financial business (11.4%), and wholesale and retail
trade (18.4%). National Savings at 13.9 percent of GDP has financed 65 percent of fixed investment in 2007-08 as against
77.7 percent last year. National savings as percentage of GDP
stood at 13.9 percent in 2007-08 far lower than last year's level
of 17.8 percent. Domestic savings has declined to 11.7 percent
of GDP from 16.0 percent of GDP.
Construction continued its strong showing, partly helped by

activity in private housing market, spending on physical infrastructure, and reconstruction activities in earthquake affected
areas. The construction sector is estimated to grow by 15.2 percent in 2007-08 as against extraordinary growth of 17.9 percent
last year.
Pakistan's per capita real GDP has risen at a faster pace in real
terms during the last six years (4.5% per annum on average in
rupee terms) leading to a rise in average income of the people.
Such increases in real per capita income have led to a sharp increase in consumer spending during the last three years. The
per capita income in dollar term has grown at an average rate
of 13.5 percent per annum during the last six years rising from
$ 586 in 2002-03 to $ 1085 in 2007-08. The main factor responsible for the sharp rise in per capita income include acceleration in real GDP growth, stable exchange rate and four fold increase in the inflows of workers' remittances.
As opposed to an average annual increase of 1.4 percent during
2000-03, real private consumption expenditure grew by
12.9 percent in 2004-05 but declined in the subsequent two
years. Real private consumption expenditure bounced back
and grew by 8.5 percent in 2007-08.
Overall Foreign Investment during the first ten months (JulyApril) of the current fiscal year has declined by 32.2 percent
and stood at $ 3.6 billion as against $5.3 billion in the comparable period of last year.
Foreign direct investment (private) stood at $3481.6 million
during the first ten months (July-April) of the current fiscal
year as against $4180.8 million in the same period last year
thereby showing a decline of 16.7 percent. Almost 57 percent
of FDI has come from three countries, namely, the UAE, US,
and UK. US investors with 33.4 percent investment are on the
top during the first ten months (July-April) of 2007-08. Norway (4.4% or $154.8 million), Switzerland (4.1% or $141.3
million), Hong Kong (3.5% or $121.3 million), Netherlands
(2.9% or $101.0 million) and Japan (2.9% or $100.3 million)
were other contributors to FDI inflows. Three groups namely;
communication, financial business and oil & gas exploration
accounted for almost 67 percent of FDI inflows in the country.
Private portfolio investment witnessed massive decline of 91
percent by recording inflow of $98.9 million as against
$1097.3 million during the comparable period of last year.
Total investment could not sustain its record level of 22.9 percent of GDP of the last fiscal year and declined to 21.6 percent
of GDP in 2007-08. However, total investment has increased
from 16.9 percent of GDP in 2002-03 to 21.6 percent of GDP in
2007-08 showing an increase of 5.7 percent of GDP in five
years.
02. AGRICULTURE
Fixed investment has declined to 20.0 percent of GDP from

21.3 percent last year.
The agriculture growth this year is estimated at 1.5 percent as

compared with 3.7 percent during 2006-07.
Public foreign investment depicted modest inflow of only

$20.5 million as against outflow of $66.6 million in the comparable period of last year.
47
Economic Horizons
Cotton production at 11.7 million bales in 2007-08 has decreased by 9.3 percent in comparison to 12.9 million bales of
last year.
Wheat production is estimated at 21.7 million tons in 2007-08
as against 23.3 million tons last year, showing a decrease of 6.6
percent.
Rice production has increased from 5.4 million tons in 2006-07
to 5.6 million tons in 2007-08, showing an increase of 2.3 percent.
Sugarcane production has increased by 16.8 percent in 200708 from 54.7 million tons in last year to 63.9 million tons in
2007-08.
As regards the minor crops, the production of mung, mosoor
and mash increased by 28.4 percent, 13.8 percent and 8.8 percent, respectively. The production of chillies and onion increased by 96.1 percent, 13.8 percent respectively. The production of potato crop declined by 3.8 percent.
Agriculture credit disbursement of Rs 138.6 billion during
July-March 2007-08 is higher by 24.6 percent, as compared to
Rs 111.2 billion over last year.
Total off-take of fertilizer remained flat (0.5 percent) mainly
because offtake pattern of nutrients also changed as nitrogen
offtake increased by 11.4 percent while that of phosphate and
potash decreased by 25.3 and 33.3 percent, respectively during
July - March 2007-08. Increased international prices of 2 phosphatic and potash fertilizers overshadowed the subsidy effect
and eventually offtake could not increase and remained at almost last year's level.
03. MANUFACTURING & MINING

Overall manufacturing posted a growth of 5.4 percent during
the first nine months of the current fiscal year against the target
of 10.9 percent and 8.1 percent of last year.
Large-scale manufacturing, accounting for 70.0 percent of
overall manufacturing registered a growth of 4.8 percent in the
current fiscal year 2007-08 against the target of 12.5 percent
and last year's achievement of 8.6 percent.
Heightened political tension, deteriorating law and order situation, growing power shortages, cumulative impact of monetary
tightening and rising cost of doing business are responsible for
poor showing of manufacturing in 2007-08. Taking a longer
term view, the manufacturing growth exhibits a moderating
trend.
The main contributors to the 4.8 percent growth during JulyMarch 2007-08 were beverages (30.5%), sugar (34.0%), tea
blended (10.4%) , beverages (30.5%), cigarettes (5.1%) , cotton yarn (3.3%) & cotton cloth (4.9%), upper leather (13.5%),
petroleum products (6.0%) , cement (17.9%), pig iron (2.3%) ,
refrigerators (10.7%) , electric fans (18.3%), TV sets (19.3%),
diesel engines (46.0%), trucks (1.6%) & buses (32.1%), motor
cycles (28.1%), paints & varnishes (8.7%) and LCV'S (60.5%).
The major receding items include: vegetable ghee (2.8%), cotton ginned (10.1%), sole leather (25%), paper & board (5.6%),
phosphatic fertilizer (24.0%), motor tyres (12.8%) and tubes
(7.6%), coke (13.9%), billets (17.1%), wheat thrasher (13.1%),
deep freezers (11.2%), electric motors (16.0%), tractors
(5.2%), vegetable ghee (2.8%) and jeeps and cars (3.9%).
The mining and quarrying sector has registered a growth rate
of 4.9 percent as against a target of 4.5 percent and actual
achievement of 3.0 percent last year.
The increased growth was propelled by strong growths in magnetite (20.5%), lime stone (17.8%) and Baryte (15.6%).
With effect from January 1991 to February 2007, GoP has privatized around 166 units at Rs. 475.08 billion (approx US$ 8.9
billion).
48
04. FISCAL DEVELOPMENTS

Total revenues collected during the current year stood at Rs
1545.5 billion, higher than the targeted level of Rs 1476 billion. This increase of Rs 69.5 billion from the budgeted revenues was mainly due to higher than targeted non-tax collections. There are expectations that the FBR may fall short of its
targeted level, and the year is most likely to end with total tax
collections amounting to Rs 1.0 trillionRs. 25 billion less
than the original target.
Pakistan's tax revenue-to-GDP ratio stood at only 10 percent of
GDP during 2007/08 as compared to an average of 18 percent
for the developing countries indicating that substantial tax policy reforms are still needed to broaden the tax base. The indirect tax-to-GDP ratio stood at around 6 percent, while the direct tax-to-GDP ratio was calculated to be 4 percent.
Gross and Net tax collection has increased by 12.3% and
16.3% respectively. In absolute terms, these collections have
gone up by Rs. 89.9 billion and 107.1 billion, respectively.
Among the four federal taxes, the highest growth of 28.9% was
recorded in the case of federal excise receipts, followed by
sales tax (19.5%), direct taxes (12.5%) and customs (11.4%).
The collection of direct taxes has suffered a substantial shortfall during July-April FY 07-08.
The total expenditure for 2007-08 was budgeted at Rs. 1875
billion 11.9 percent higher than last year. According to revised estimates this figure stood at Rs 2228.9 billion. Two factors had a significant impact on the budgetary outlook. Firstly
oil prices continued to rise at a greater pace, reaching as high as
$ 115 per barrel in May 2008 an increase of over 116 percent
during the fiscal year. Secondly, the lack of action on the part
of the government aggravated the fiscal situation as the high international price of oil was not passed on to the domestic consumers. Consequently, the oil subsidy is projected to rise to Rs
175 billion over shooting the targeted level by Rs 160 billion. Hoarding, smuggling and mismanagement of wheat operations forced the government to import 1.7 million tons of
wheat at all time high prices.
Interest payments surpassed their targeted level by a significant margin. A sum of Rs. 375 billion was budgeted for interest
payments in 2007-08. The year is likely to end with interest
payments of Rs. 503.2 billion surpassing the targeted level
by Rs 128.2 billion mainly due to two reasons. Firstly there was
a slippage on account of the National Savings Scheme (NSS)
particularly with respect to Defence Savings Certificates
(DSCs), amounting to Rs 54 billion. There was a massive maturity of DSCs that were issued in 1997-98 which were due for
payment in 2007-08 (this is a ten year paper). Secondly there
was a slippage on account of floating debt and permanent debt
mainly due to the substantial rise in the volume of borrowing as
well as the rising interest rates.
The adverse developments on the revenue and expenditure
sides resulted in massive slippages in the overall fiscal deficit
for the year 2007-08. Against the target of Rs 398 billion or 4
percent of GDP the overall fiscal deficit is likely to be Rs 683.4
billion or 6.5 percent of GDP the highest in the last ten years.
In order to counter massive gaps between budgeted and estimated targets in current expenditure, the government made efforts to mobilize more resources on the one hand, and postpone
development spending on the other. An adjustment of Rs 100
billion was made in development expenditure.
The domestic and external shocks not only increased the size of
the fiscal deficit but they also changed the composition of financing. The borrowing requirements increased from Rs 324
billion (the net of privatization proceeds) to Rs 683.4 billion
(with no privatization proceeds)an increase of111 percent.
External resource inflows were adversely affected by these
shocks and against the budgeted level of Rs 193 billion, only
Economic Horizons
Rs 119.4 billion is likely to materialize. In addition to this,
Pakistan could not complete the transaction of Global Depository Receipts (GDRs) of the National Bank of Pakistan and
could not launch sovereign and exchangeable bonds. Furthermore, some of the lending expected from multilateral banks
was not given.
The brunt of adjustments on the financing side fell on domestic
sources. Against the budgeted financing of Rs 131 billion from
domestic sources, it increased to Rs 564 billion. Within domestic sources the bulk (82.2 percent) of financing came from
banks while the remaining Rs 100 billion or 17.8 percent came
from non-bank sources. Most importantly, the borrowings
from the State Bank of Pakistan (SBP) reached an alarming
level consequently; the money supply growth for the year
2007-08 is expected to breach the target of 13.7 percent.
Public debt as a percentage of GDP (a critical indicator of the
country's debt burden), stood at 85 percent in end-June 2000,
has declined to 55.2 percent by end-June 2007 - a reduction of
almost 30 percentage points of GDP in seven years. The declining trend in public debt is likely to be reversed in 2007-08,
mainly on account of yawning fiscal and current account deficits and a sharp depreciation of the rupee vis-a-vis the US dollar. By end-March 2008 the public debt as percentage of full
year GDP stood at 53.5 percent.
By end-June 2007 total domestic debt stood at Rs. 2610.2 billion which was estimated at 30 percent of GDP. The outstanding stock of domestic debt rose by Rs 409.9 billion and stood at
Rs. 3020.1 billion by end-March 2008 or 30.3 percent of GDP.
The domestic debt has increased by 15.7 percent by end-March
2008 over end-June 2007. The increase in domestic debt
mainly emanates from floating debt (27.1%) while the other
two components, unfunded and permanent, witnessed a modest growth of 6.1 percent and 9.4 percent, respectively.
05. MONEY AND CREDIT

Overall developments in the money and credit sector during
the fiscal year 2007-08 have been satisfactory.
During July-May 10, 2007-08, money supply (M2) grew by 9
percent against the annual target of 13.7 percent and last year
expansion of 14 percent for the same period.
Net domestic assets have increased to Rs.656.7 billion as compared to increase of Rs.395.5 billion in the same period of last
year.
Net foreign assets have recorded a contraction of Rs.289 billion against the increase of Rs.84.6 billion in the same period of
last year.
Government borrowing for budgetary support has recorded an
increase of Rs.362 billion as compared to Rs.212 billion in the
same period of last year.
Credit to private sector amounted to Rs.369.8 billion during
July-May 10,2007-08 as compared to Rs.263.4 billion in the
same period last year.
06. CAPITAL MARKETS

During the outgoing fiscal year 2007-08, the benchmarked
stock exchange KSE-100 index demonstrated acute volatility
owing to fluctuating outlook on political, macroeconomic and
global grounds. The index closed at 12,130.5 points on May
30, 2008, down by 1,642 points (or 11.9 percent) from the end
June position of the last year.
Nevertheless, the year 2007-2008 can be fairly termed as a record breaking epoch for the local equity market as the index
managed to broke the psychological barrier of 15,500 points
for the first time in the history of Pakistan. The premier index
reached its all-time high of 15,676 points on April 18, 2008
while punctuating to a low of 11,955 points on August 27,
2008.
Aggregate Market Capitalization declined abruptly by Rs 273
billion, from Rs 4,019 billion in June 2007 to Rs 3,746 billion
in May 2008.
Key takeovers in banking, financial and telecommunication
sectors together with a successful GDR offering by Lucky Cement, assisted in retaining the ongoing growth momentum for
the past few years in the local bourses.
Foreign portfolio investment showed a net outflow of US$45
million during first nine months of the
fiscal year 2007-08.
Satisfactory performance by some major sectors of the economy (fuel & energy, banks and other financial institutions,
chemicals and pharmaceuticals, and engineering) during 200708 kept the positive sentiments of investors alive in the stock
market.
The government carried out six government securities auction
in the outgoing fiscal year and managed to issue Rs. 68.8 billion of PIBs with 3&5 years due maturities amounting to Rs.
14.5 billion, resulting in a surplus issuance of Rs. 54.3 billion.
The cut-off yields on all tenors exhibited a rise in the range of
90-128 bps over July yields.
The National Savings Schemes (NSS) attracted Rs. 67.4 billion
in July-March 2007-08. Huge accruals were noticed in the case
of Bahbood Savings Certificates, Pensioners' Benefit Accounts
and Special Savings Certificates.
The deposit rates on all schemes offered under the NSS umbrella have been revised in view of the rising interest rate scenario of the country.
Five new floatation (corporate TFCs), all linked to 6-months
KIBOR, were listed on KSE during the period under review.
The Non Banking Finance Companies (NBFCs) sector has revealed striking growth in recent years especially the boom in
mutual funds industry with net assets at Rs. 389 billion.
Over the years, the Securities & Exchange Commission of
Pakistan (SECP) has been proactive in instigating noteworthy
capital market measures in the fields of risk management, surveillance and investor protection to refurbish confidence of
both foreign and domestic investors.
Credit to manufacturing sector recorded to be Rs.193 billion

compared with Rs.119 billion in the same period of last year.
During July-March, 2007-08, there was a substantial decrease
in personal loans amounting Rs.21.2 billion as compared to
Rs.38.8 billion during the same period last year.
07. INFLATION
Weighted average lending and deposit rates increased to 10.9

percent and 4.2 percent in March 2008 while weighted average
yields on 6 months T-bill increased to 9.4 percent in March
2008.
The inflation rate as measured by the changes in Consumer

Price Index (CPI) stood at 10.3 percent during the first ten
months (July-April) of the current fiscal year, 2007-08, as
against 7.9 percent in the comparable period of last year.
The Islamic Financial Industry has grown substantially and its

assets has reached to a level of Rs.200 billion.
The food inflation is estimated at 15.0 percent and non-food

6.8 percent, against 10.2 percent and 6.2 percent in the corresponding period of last year.
49
Economic Horizons
The Wholesale Price Index (WPI) during July-April, 2007-08
have increased by 13.7 percent, as against 6.9 percent of last
year.
The Sensitive Price Indicator (SPI) has recorded an increase of
14.1 percent during July-April, 200708, as against 11.1 percent
of last year.
The increase in inflation rate during the current year 2007-08 is
attributable to the increase in food price inflation which has
been due to increase in prices of wheat, edible oil, rice, pulses,
milk, poultry, meat, fresh vegetables and fruits.
08. TARDE & PAYMENTS

Exports were targeted at $ 19.2 billion or 12.9 percent higher
than last year. Exports during the first ten months (July-April)
of the current fiscal year are up by 10.2 percent - rising from $
13847.3 million to $ 15255.5 million in the same period last
year. Pakistan's export performance has been impressive in recent years (2002-03 to 2005-06) with exports registering an average growth of 16 percent per annum on the back of strong
macroeconomic policies pursued at home and international
trading environment remaining hospitable. Pakistan's export
performance was dismal in 2006-07 as it witnessed abrupt and
sharp deceleration to less than 4 percent. However, when
viewed in the back of last year's performance, exports managed
to recover somewhat this year but its performance has remained far short of the average growth of 16 percent achieved
during 2002-03 to 2005-06
Imports were targeted to increase by 5.9 percent in 2007-08 to
$ 32.3 billion from last year's level of $ 30.5 billion. Imports
are up by 28.3 percent during July-April 2007-08 - rising from
$ 25.0 billion to $ 32.0 billion, showing an increase of almost $
7.0 billion. The growth in imports increased substantially owing to unprecedented rise in oil and food prices. After growing
at an average rate of 29 percent per annum during 2003-04,
Pakistan's import growth slowed to a moderate level of 6.9 percent in the last fiscal year (2006-07). Import's growth exhibited
a sharp pick up in 2007-08 in the back of extra ordinary surge in
the imports of petroleum products as well as imports of food
group and raw material. Non-oil imports were up by 22.5 percent and non-oil and non food imports surged by 18.8 percent
during the first ten months (July-April) of the current fiscal
year.
Major contributions to this year's additional import bill have
come from petroleum groups (40%). raw material (21%) and
food groups (16.3). Almost three-fourth contribution came
from three categories (petroleum, raw material and food group)
to this year's rise in imports. Interestingly, consumer durables'
contribution was negative (-0.4%) mainly on account of a decline in the import of road motor vehicles which registered a
decline of 8.6 percent.
amount. However, the strong growth in current transfers on the

back of impressive growth in remittances almost entirely offset
the deficit in services and increase amount, thereby leaving
trade deficit as fundamental source of expansion in current account deficit.
Pakistan's total foreign exchange reserves stood at $ 12,344
million at the end of April 2008 significantly lower than end
June 2007 level of $ 15,646 million. During July-October
2007, reserves improved by 5.1 percent due to relatively lower
current account deficit and substantial inflows in financial account. However, October onward, net outflows from portfolio
investment and steep rise in the current account deficit led to a
sharp decline in foreign exchange reserves of country.
Pakistan rupee after remaining stable for more than 4 years,
lost significant value against the US dollar, depreciating by
6.4% during July - April 2008.
09. EXTERNAL DEBT AND LIABILITIES

External debt and liabilities (EDL) at the end of March FY08
were US$ 45.9 billion. The net addition of $ 5.4 billion represents a 13.3 percent increase over the stock at the end of FY07.
Pakistan contracts loans in various currencies and but for reporting purpose, EDL is expressed in dollar terms. The effect
of new disbursements in external debt is only $1.2 billion while
$4.2 billion are added to the stock of external debt because of
translation effect. The US dollar has depreciated at a brisk pace
against major currencies of the world, hence, the debt outstanding in Euro, Japanese Yen and SDR witnessed increase in dollar terms without contracting fresh loans.
EDL were 236.8 percent of foreign exchange earnings (FEE)
but declined to 127.1 percent in the same period. The EDL
were nearly 5.8 times foreign exchange reserves (FER) at the
end of FY02 but have decline to 3.4 percent by end-March
2008.
Interest payments on external debt were 7.8 percent of current
account receipts but declined to 2.5 percent during the same period.
Given the negative sentiment surrounding capital markets,
Pakistan has not issued any new instruments in FY08. However, the country is still pursuing a comprehensive external
borrowing strategy.
10. EDUCATION
Education is essential for the maintenance and development of
the quality of human life as well as for economic activities;
therefore, the government has adopted this sector as one of the
pillars for poverty reduction and benefit to masses.
The merchandise trade deficit widened to $ 17 billion in the

first ten months (July-April) of the current fiscal year as against
$ 11 billion in the same period last year. On the basis of existing trend, trade deficit is likely to touch $ 20.5 billion or 12.3
percent of GDP during 2007-08.
The government has decided to double the education budget

(as percentage of GDP) as visualized in Fiscal Responsibility
and Debt Limitation (FRDL) Act, 2005. This means an extra
spending of 1.8 percent of GDP over and above the existing
funding will be on hand during the next five years.
Workers' remittances totaled $ 5.31 billion in the first ten

months (July-April) of the fiscal year as against $ 4.45 billion
in the same period last year, depicting an increase of 19.5 percent. If this trend is maintained workers' remittances are likely
to touch $ 5.8 billion for the year - the highest ever in country's
history.
The overall literacy rate (10 years & above) was 45 percent in
2001 which has increased to 55 percent in 2006-07, indicating
a 10 percentage points increase over period of only six years.
Pakistan's current account deficit further widen to $ 11.6 billion (6.8% of GDP) in the first ten months (July-April) of the
current fiscal year from 6.6 billion (4.6% of GDP) in the same
period last year. The deterioration in current account deficit
mainly emanated from the sharply widening trade deficit along
with increase in net outflows from services and income
50
Male literacy rate (10 years & above) increased from 58 percent in 2001 to 67 percent in 2006-07 while it increased from
32 to 42 percent for female during the same period. Literacy remains higher in urban areas (72%) than in rural areas (45%)
during 2006-07.
Province wise literacy data for PSLM (2006-07) shows Punjab
to be on the top (58 percent) followed by Sindh (55 percent),
NWFP (47 percent) and Balochistan (42 percent).
Economic Horizons
According to the PSLM Survey data 2006-07, the overall
school attendance (age 10 years and above)
07, with manufacturing (13.54%) and trade(14.43%) & services(14.41%) absorbing a growing share of the work force.
is 57% (69% for male and 44% for female) in 2006-07 compared to 55% (68% for male and 42% for female) in 2004-05.
To generate employment, the government has not only started

President's Rozgar Scheme under which an average loan size
of Rs.100,000 is given for a maximum period of five years with
a grace period of three months but has also set up two banks (1)
SME Bank, which has created 47,213 employment opportunities in the country and (2) Khushali Bank, which has so far created 1118,502 job opportunities.
According to the Ministry of Education, there are currently

231,289 institutions in the country. The over all enrolment is
recorded at 34.84 millions with teaching staff of 1.37 million.
National Textbook and Learning Materials Policy (2007) has
been prepared to prop up the quality of education at all levels
through better quality textbooks at affordable prices and other
learning materials for promoting Pakistan as a knowledge
based society.
In view of spreading higher education to every area of Pakistan, over the past three years, 17 new universities have been
granted Charters, with the majority opened in areas where
higher education opportunities were previously unavailable.
To promote research and development (R&D) activities,
Higher Education Commission (HEC) has awarded 5,837 PhD
scholarships (3,237 indigenous, 2,600 foreign) over the past
three years.
11. HEALTH AND NUTRITION

At Present there are 945 hospitals, 4755 dispensaries, 5349 basic health units & sub health centers and 903 maternity and
child health centers in Pakistan.
With the existing number of 127859 doctors, 8195 dentists
,62651 nurses and 103285 hospital beds ,the population and
health facilities ratio turnout to be 1225 persons per doctor,19121 person per dentist, 2501 persons per nurse and 1517
persons per bed which shows an improvement over the last
year.
During the fiscal year 2007-08, 43 basic health units and 13 rural health centers have been constructed. While 65 rural health
centers and 950 basic health units have been upgraded.
Some 4500 new doctors, 400 dentists, 3350 nurses and 4900
paramedics have completed their academic courses.
80000 Lady Health Workers (LHWs) have been trained and
deployed mostly in the rural areas. Moreover, some 7.5 million
children have been immunized and 22 million packets of ORS
distributed.
Various health programs with a special focus on major public
health problems have been carried out. These include the national programs for the prevention and control of tuberculosis,
malaria, HIV/AIDS, hepatitis, blindness and program on maternal, neonatal and child health etc.
The total outlay on health sector is budgeted at Rs.60 billion
(Rs.27.3 billion development and Rs. 32.7 billion current expenditure) which is equivalent to 0.6 % of GNP.
12. POPULATION, LABOUR FORCE

AND EMPLOYMENT
Pakistan's current population is 160.9 million with a growth
rate of 1.80 percent. The overall vision of the population policy
is to achieve population stabilization by 2020.
The life expectancy in Pakistan for males is 64 years and for females is 66 years.
About 2.6 million labour force is estimated as un-employed in
2006-07 and unemployment rate is 5.3 percent.
Agriculture remains the dominant source of employment in
Pakistan. The share of agriculture in employment has increased
from 43 percent in 2003-04 to 43.61 percent by the year 2006-
13. POVERTY
The latest estimates for poverty available are for the year 200506 when economic conditions were altogether different as of
today. For 2005-06 inflation-adjusted poverty line used is
Rs.944.47 per adult equivalent per month, up from Rs.878.64
in 2004-05.
Headcount ratio, i.e., percentage of population below the poverty line has fallen marginally from 23.94 percent in 2004-05 to
22.32 percent in 2005-06, an improvement of 1.62 percentage
points. Poverty in rural areas declined from 28.13 percent to
27.0 percent, showing an improvement of 1.13 percentage
points between 2004-05 and 2005-06.
Poverty in Urban areas also registered a decline from 14.94
percent to 13.1 percent during 2004-05 and 2005-06, thereby,
depicting an improvement of 1.84 percentage points in the period.
The poverty estimates of 2005-06 are consistent with ground
realities of that particular year and it is yet to be seen how far
the recent upsurge in food prices has impacted the poverty profile in the country.
Government's commitment to follow a sustained poverty reduction strategy and adhere to Fiscal Responsibility and Debt
Limitation Act stipulation of allocating a minimum of 4.5 of
GDP to social and poverty related expenditures is clearly reflected in the allocations for 2007-08. Expenditures on propoor sectors in 2006-07 at 5.7 percent of GDP were well above
the requirement under the Law. These expenditures are projected to grow in nominal terms by roughly 20 percent over the
2006-07 levels and be 6.0 percent of GDP in 2007-08. If the entire subsidy on imported wheat during the current year is considered as pro-poor expenditure, and off-setting cuts are not
made in education and health, the final figure is expected to be
even higher than the projected one.
14. TRANSPORT AND COMMUNICATION

The total road network is about 260,000 km of which around
60% is paved. Road density is 0.32 km/km2 which is low and
compares unfavorably with other South Asian countries
(Bangladesh-1.7 km/km2, Sri Lanka-1.5 km/km2 and India-1.0
km/km2). The Government intends to generate/ mobilize all
possible resources to double road density to 0.64 km/km2. Total roads, which were 229,595 KM in 1996-97, increased to
264,853 KM by 2007-08 an increase of 15.4 percent. During
the out-going fiscal year, the length of the high typed road network increased by 3.2 percent but the length of the low type
road network declined by 2.8 percent
During the first six months of FY 2007-08, Karachi Port had
handled a total of 20.5 million tonnes of cargo. From July to
March of the current financial year, 2007-08, Port Qasim handled 19.76 million tonnes of cargo depicting a growth rate of
10% over the same period last year.
Pakistan Railways (PR) suffered heavy losses and damage to
property owing to violence and rioting around the country this
year. The network carried 59.74 million passengers and 5.2
million tons of freight during July-March of the outgoing fiscal
year. Pakistan Railway's earnings stood at 13,954 million during the first nine months of FY 2007-08.
51
Economic Horizons
PIA carried 5.415 million passengers in 2007 as against 5.732
million in 2006 showing a decrease of 5.5 percent. While having to deal with challenges of rising fuel costs and imposition
of a ban placed by the European Union, the Airline suffered
losses of 13.4 billion in the outgoing fiscal year. Along with
PIA, there are three private sector airlines operating in Pakistan.
Telecom sector continued to show a stellar growth in last few
years. Tele-density in the country has jumped from a mere 6%
to 57% (Mar- 08) in few years. On average, more than 2 million
subscribers are being added on cellular mobile networks per
month which is an exemplary growth in the region. Pakistan
has become one of the fastest growing mobile markets among
the emerging telecom markets. This year the sector grew by
80% whereas average growth rate in last 4 years is more than
100%. Today total subscriber base stands at 82.5 million (Mar
2008) whereas it was 34.5 million in 2006. Pakistan's broadband market has been slow despite the fact that services have
been available since almost five years.
Currently there are a total of almost 12,689 Broadband subscribers. According to estimates by the Internet Service Providers Association of Pakistan (ISPAK), currently there are
about 3.5 million internet subscribers all across in Pakistan
where total users crossed 17 million marks. Currently around
3,008 cities are connected to internet cities.
15. ENERGY Crude Oil

Production of crude oil per day has increased to 70,166 barrels
during July-March 2007-08 from 66,485 barrels per day during
the same period last year, showing an increase of 5.54 percent.
The overall production of crude oil has increased to 19.3 million barrels during July-March 2007-08 from 18.2 million barrels during corresponding period last year, showing an increase
of 5.9 percent.
On average, the transport sector consumes 50.9 percent of the
petroleum products, followed by power sector (32.8 percent),
industry (11.0 percent), household (1.9 percent), other government (2.2 percent), and agriculture (1.2 percent) during last 10
years i.e. 1997-98 to 2006-07.
Natural Gas
The average production of natural gas per day stood at 3,966
million cubic feet during July-March, 2007-08, as compared to
3,876 million cubic feet over the same period last year, showing an increase of 2.3 percent. The overall production of gas
has increased to 1,090,620 million cubic feet during JulyMarch 2007-08 as compared to 10,62,124 million cubic feet in
On average, the power sector consumer 36.8 percent of gas,
followed by fertilizer (20.7 percent), industrial sector (19.8
percent), household (17.4 percent), commercial sector (2.7 percent) and cement (1.1 percent) during last 10 years i.e. 1997-98
to 2006-07.
Electricity
The total installed generation capacity has increased to 19,566
MW during July-March 2007-08 from 19,440 MW during the
same period last year, showing a marginal increase (0.65 percent).
Total installed capacity of WAPDA stood at 11,654 MW during July-March 2007-08 of which, hydel accounts for 55.6 percent or 6,474 MW, thermal accounts for 44.4 percent or 5,180
MW. During first three quarters of current fiscal year 74,032
GWh electricity has been generated as against 71,033 GWh in
The number of villages electrified increased to 126,296 by
March 2007 from 113,605 upto 2005-06, showing an increase
of 11.2 percent.
52
CNG
Presently, some 2,068 CNG stations are operating in the country. By March 2008 about 1.7 million vehicles were converted
to CNG as compared to 1.35 million vehicles during the same
period last year, showing an increase of 26 percent. With these
developments Pakistan has become the leading country in Asia
and the third largest user of CNG in the world.
16. ENVIRONMENT
According to a recent assessment made by the World Bank
(WB)1, the cost of environmental neglect and degradation to
Pakistan's economy has amounted to Rs. 365 billion during the
current year.
The latest red-list of endangered species in Pakistan, released
by the World Conservation Union (IUCN), includes the Blue
Whale, Fin Whale, Hotson's Mouse-like Hamster, Indus River
Dolphin, Markhor, Urial, Snow Leopard, Woolly Flying
Squirrel, Brown Grizzly Bear, Western tragopan, Hobara Bustard, Siberian White Crane, Olive ridly turtle, Green turtle,
Marmot, Blackbuck and Sand Cat.
In order to address environmental concerns at the national level
a multifaceted programme, National Environment Action Plan
(NEAP) was launched by the government in 2001. In March
2007, NEAP-SP programme entered its second phase. Pakistan
has also shown its commitment to numerous non-legally binding instruments and Multilateral Environmental Agreements
(MEAs), at the international level.
Pakistan is likely to achieve many of the Medium Term Development Framework (MTDF) 2009-10 and Millennium Development Goals (MDGs) 2015 Targets in advance. For instance,
the protected area for conservation of wildlife (%age of total
area) was estimated at 11.3% during 2007-08 while according
to MTFD and MDG targets the targeted levels were 11.6% and
12.0%, respectively.
Pakistan is the largest user of CNG in Asia and has become the
third-leading country in the world to use CNG to fuel vehicles
after Argentina and Brazil. The number of petrol & diesel vehicles using CNG fuel stood at 1,700,000 for 2007-08, whereas
the targeted levels were estimated at 800,000 in case of MTDF
and 920,000 in case of MDGs.
To promote sustainable conservation of natural resources the
government has launched numerous projects during the recent
years, in collaboration with international agencies, targeting
major areas of environment i.e. Air, Water, Land, Forests and
Biodiversity. These initiatives mainly include, Pakistan Wetlands Programme (PWP), Self Monitoring and Reporting tool
(SMART), Sustainable Land Management (SLM) and 'Mainstreaming biodiversity in Juniper forest ecosystem'.
The Government in collaboration with various concerned organizations has recently initiated the Technical Advisory Panel
(TAP) on Climate Change. The official launch of the TAP was
held on February 15, 2008. Funded by the Royal Norwegian
Embassy and the Department for International Development,
U.K., and TAP is a joint initiative of the Ministry of Environment, Government of Pakistan, and The World Conservation
Union (IUCN).
The Kyoto Protocol was adopted by Pakistan, under the United
Nations Framework Convention on Climate Change
(UNFCCC) at the 3rd Meeting of the Parties held in Kyoto, Japan, which entered into force on 16th February 2005. Under
the Protocol, developed countries, agreed to reduce their combined Greenhouse Gas emissions by 5.2% below the 1990 level
during the period 2008-2012n
Source: Website of Ministry of Finance www.finance.gov.pk
Research & Technical Update

Research & Technical Update
News from IFAC

IFAC's PA1B Committee output 2006-08
he IFACs PAlB Committee has made significant progress in the development of accounting profession during the period 2006-2008. Mr. Mohammad Arif Nara,
FCMA represents ICMAP on the PAIB Committee. Salient
achievements of the Committee are as under:
PAIB Committee actual/planned Outputs 2006 to 2008
The Financial Reporting Supply Chain report (IFAC Board
commissioned project but supported by Committee Technical Managers).
1. Final publication of the Preface (and accompanying
due process) to International Good Practice Guidance
(IGPG). The scope of International Good Practice
Guidance covers management accounting and financial
management, as well as broader topics with which professional accountants in business are likely to engage
alongside colleagues from other disciplines. IFAC's
purpose in issuing guidance in these areas is to foster a
common and consistent approach to those aspects of
the work of professional accountants in business not already covered by published international standards.
2. The Committee released its first principles-based guidance, Defining and Developing an Effective Code of
Conduct for Organizations. This guidance assists professional accountants and their organizations in developing and implementing a code of conduct within a
values-based culture. We have received good feedback
on its usefulness to the development and review of an
organization's ethics program (in both responses to the
ED and subsequently).
3. Final publication of the IGPG on Project Appraisal Using DCF to supoort and encourage (a) disciplined financial management in organizations, and (b) generation of long-term value.
4. Exposure drafts of proposed IGPGs on Costing to
Drive Organizational Performance and Evaluating
and Improving Governance in Organizations.
5. At the end of August 2007 published an internal control
information caper with interviews of senior professional accountants in business titled Internal Control
from a Risk-Based Perspective. This investigated their
key lessons and experiences in implementing a risk-
based approach to internal control, which will form a

basis for the more authoritative principles we are now
developing. The publication generated some good
press coverage most notably an article in the Financial
Times as well as comments from PAIBs. It received
over 5,000 downloads within its first two months of release.
Internal control: A Review of Current Developments
(information paper) described current developments
and thinking on internal control frameworks and practice. It identified the importance of a principles and
market-based approach, and leadership and organization culture in facilitating the implementation of effective internal control systems.
6. Produced in collaboration with the Malaysian Institute
of Accountants (MIA), the information paper titled
Business Planning Guide: Practical Application for
SMEs provided guidance on developing a business
plan, and how it serves as a performance tool and supports an SME in obtaining external funding. This project was under development for many years.
7. To help professional accountants in business understand the importance of sustainability and related issues
and to provide good practice examples and role models
to encourage a more active participation, the Committee produced two information papers: Why Sustainability Counts For Professional Accountants in Business, and Professional Accountants in Business -At
the Heart of Sustainability.
8. The Roles and Domain of the Professional Accountant in Business (information paper) highlighted the diverse roles, competencies and value of the professional
accountant in business. This evolving and changing
role of the PAIB forms the basis for the forward worK
program of the committee and specifically defines the
domain of the PAIB. It replaced IMAPs1.
10. Articles of Merit 2007: This report is published annually and accounts for around 20 per cent of the downloaded PAIB publications.
The above information can also be downloaded from following link: http://www.ifac.org/store/Category.tmpl?
Category=Professional%20Accountants%20in%20Busines
s&Cart=1214817689451712
53
Students' Section
INSTITUTE OF COST AND MANAGEMENT ACCOUNTANTS OF PAKISTAN

EXAMINATION DEPARTMENT
Ref # Cir.Note/S-08/20/07/08
July 14, 2008
NOTICE
For the Students of 1998 Syllabus Switchover to 2005 Syllabus
Dear Student,
The Council of the Institute had decided that Summer 2008 Examinations would be the last attempt for the remaining students
of 1998 Syllabus and thereafter, all students would be required to complete the 2005 Syllabus to qualify the ICMAP program.
Those who have not been able to pass all the subjects of 1998 Syllabus will have to switch to 2005 Syllabus in accordance with
the equivalency schedule, which is attached for ready reference.
Please note in particular that such students will have to qualify the following subjects in addition to remaining equivalent
subjects:
1. Integrated Management of Stage-4.
2. Management Accounting-Business Strategy of Stage-6.
3. Comprehensive Examination (after qualifying all Stages 1 to 6 under 2005 Syllabus).
Please contact your nearest ICMAP coaching centre for admission in 2005 Syllabus and further information, if any required.
DIRECTOR EXAMINATIONS
EQUIVALENCY SCHEDULE
Stage
F-I
F-I
F-I
F-I
F-II
F-II
F-II
P-I
P-I
P-I
P-I
P-II
P-II
P-II
P-II
P-III
P-III
P-III
P-III
P-IV
P-IV
P-IV
P-IV
Syllabus - 1998
Subjects
Principles of Accounting
Computer Systems
Business English
Economics & Business Environment
Financial Accounting
Management Information Systems-II
Industrial & Commercial Laws
Cost Accounting
Business Communication & Report Writing
Quantitative Methods
Management Science Applications
Advanced Financial Accounting
Operational Cost Accounting
Business Taxation
Corporate Laws & Secretarial Practices
Financial Reporting
Strategic Management Accounting
Organisational Behaviour & Strategic Management
Auditing
Strategic Financial Management
Corporate Performance Audit & Evaluation
Marketing Management
Information Management & Auditing
Code
S-101
S-204
S-104
S-102
S-301
S-204
S-103
S-201
S-304
S-203
S-401
S-303
Stage
Stage-1
Stage-2
Stage-1
Stage-1
Stage-3
Stage-2
Stage-1
Stage-2
Stage-3
Stage-2
Stage-4
Stage-3
S-302
S-403
S-501
S-502
S-202
Stage-3
Stage-4
Stage-5
Stage-5
Stage-2
S-503 Stage-5
S-601 Stage-6
S-503 Stage-5
S-202 Stage-2
S-602 Stage-6
New Subjects:
Syllabus - 2005
Subjects
Fundamentals of Financial Accounting
Introduction to Information Technology
Business English
Business Economics
Financial Accounting
Introduction to Information Technology
Business Laws
Fundamentals of Cost and Management Accounting
Presentation & Communication Skills
Business Mathematics & Statistics
Advanced Financial Accounting & Analysis

Cost and Management AccountingPerformance Appraisal
Business Taxation
Corporate Laws & Secretarial Practices
Financial Reporting
Management Accounting-Decision Making
Management and Marketing
Risk Management and Audit
Strategic Financial Management
Risk Management and Audit
Management and Marketing
Information Systems & I .T. Audit
S-402
Stage-4 Integrated Management
S-603
Stage-6 Management Accounting - Business Strategy
54
Students' Section
Institute of Cost and Management Accountants of Pakistan

Spring (Summer) - 2008 Examination Result
The Institute of Cost and Management Accountants of Pakistan has announced ICMAP Spring (Summer) - 2008 session result. The examinations were held at
Karachi, Islamabad, Lahore, Peshawar, Quetta, Faisalabad, Hyderabad, Abbottabad, Multan and Sargodha. The overseas ICMAP examinations were held in Dubai, UAE.
Summary of the result is as follows:
S#
Reg. #
Roll #
Name
Centre
S#
Reg. #
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98
99
100
101
102
103
104
105
106
107
108
109
110
111
112
113
114
115
116
117
118
119
120
121
122
123
124
125
126
127
128
129
130
131
132
133
134
135
136
137
138
139
140
141
142
143
144
145
146
147
148
149
150
151
152
00972275
00972652
00972656
00972658
00980020
00980065
00980099
00980106
00980133
00980182
00980628
00980636
00981060
00981480
00981499
00981620
00981622
00981684
00981776
00982368
00990046
00990047
00990519
00990539
00990540
00990612
00990617
00990660
00991679
00991682
00991702
00991847
00991862
00991864
00991891
00992276
00992323
00992326
00992337
20000022
20000121
20000324
20000344
20000447
20000780
20000964
20001024
20001040
20001099
20001111
20001195
20010049
20010191
20010195
20010304
20010442
20010782
20011300
20011499
20011661
20011689
20011725
20011731
20011764
20011807
20020174
20031430
20031630
00891881
00901341
00910483
00911715
00912084
00921970
00922520
00922596
00922706
Final Completed Under 1998 Syllabus

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
00021037
00025633
00025865
00831292
00832048
00840154
00840214
00860117
00870003
00870045
00870646
00872121
00880435
00882025
00890602
00901160
00901589
00901607
00901657
00902041
00902448
00910086
00911099
00911118
00911966
00912532
00913127
00921458
00924140
00924889
00925121
00930014
00930197
00930369
00931615
00931645
00932424
00932641
00934495
00940013
00940069
00940146
00940241
00940438
00940739
00941358
00950012
00950042
00950181
00950208
00950216
00950824
00960060
00960131
00960183
00960251
00960494
00961334
00961404
00961412
00961453
00961541
00961961
00962522
00962562
00962694
00962820
00962965
00971175
00971768
00971787
00971796
00971844
00972147
00972210
7601
7604
7606
7610
7611
7612
7613
7616
7618
7619
7622
7624
7626
7630
7635
7641
7642
7643
7644
7649
7651
7652
7655
7656
7659
7662
7663
7670
7680
7688
7690
7691
7694
7696
7697
7698
7701
7703
7706
7707
7709
7711
7713
7714
7715
7719
7722
7724
7727
7728
7729
7738
7744
7747
7750
7751
7758
7763
7765
7766
7767
7770
7772
7779
7781
7782
7788
7789
7799
7803
7804
7805
7806
7811
7812
Zafar Mumtaz Ahmed Burney

Muhammad Shahid Haider
Muhammad Ejaz Ud Din
Muhammad Munaf
Muhammad Umer Farooqi
Sikander Hayat
Muhammad Idrees
Muhammad Amin Nagaria
Farhat Amiri
Muhammad Ahmed
Aizaz Haider
Murtaza Ali
Nadeem Ahmed Khan
Shoaib Hassan
Mansoor Mohibali Halai
Muhammad Ahmad
Ghulam Hussain
Ather Ali Khan
Mujeeb-Ur-Rehman
Muhammad Yasin
Riaz Ahmed
Muhammad Aleem Azimi
Zakir Hussain
Hameed Mumtaz
Muhammad Amir Shamsuddin
Muhammad Ameen
Syed Salman Haider
Shahid Hussain
Asim Muhammad Khan
Muhammad Amir Farooqui
Muhammad Sulleman
Syed Hassan Ahmed Al Ahdel
Jafar Ali
Syed Hasnain Haider Rizvi
Mughisul Wara Fasihi
Salman Ahmad
Masroor Raza
Zulfiqar Ali
Sajjad Akhtar
Suhail Arif Hussain
Kashif Majeed
Shabih Ul Hasan
Syed Kamran Ali
Muhammad Imran
Farhan Baber Usmani
Syed Ali Raza Rizvi
Muhammad Arshad
Khan Asim Kamal Afridi
Muhammad Sabir Amin
Muhammad Shahid
Asma Zafar
Rizwan Ahmed
Syed Mohsin Abrar
Atif Iqbal
Syed Abid Raza Zaidi
Roofi Abdul Razzak
Sarfaraz Nawaz
Usman Ali Khan
Mirza Murtaza Ali Khan
Syed Shahzad Raza
Javed Ahmed
Imran Haque
Salman Ahmed Yammani
Shadab Ahmed
Nusrat Riffatullah Khan
Kamran Ghani
Syed Muhammad Imran
Noor Uddin
Iqbal Shah
Syed Adnan Hussain Shah
Muhammad Imtiaz Uddin
Faisal Khurshied
Sayed Wajid Hussain
Majid Iqbal Mallick
Syed Sami Ullah Quadri
Roll #
7814
7817
7818
7819
7826
7827
7829
7830
7831
7834
7836
7837
7839
7843
7845
7855
7856
7860
7864
7871
7875
7876
7879
7880
7881
7882
7883
7884
7886
7887
7890
7899
7900
7901
7904
7907
7910
7911
7912
7914
7915
7920
7921
7922
7924
7925
7928
7931
7933
7934
7940
7944
7945
7946
7948
7949
7952
7953
7955
7960
7962
7965
7966
7968
7970
7979
7983
7984
8005
8007
8009
8012
8015
8018
8019
8020
8021
55
Name
Sheikh Zaheer Ul Hasan
Zulfiqar Ali
Muhammad Farooq
Asif
Zeeshan Mumtaz
Savera Sardar Zaidi
Abid Ur Rehman
Rehan
Farhan Baig
Muhammad Kamran
Sumera Maqbool Ellahi
Aleem Kifayat
Nazeer Muhammad
Muhammad Atif Salman
Muhammad Owais
Khurram Imtiaz
Azfar Aziz Khan
Muhammad Ahmer Noman
Karim Rajab Ali
Farhan
Faisal Malik
Usama Wahid
Mehjabeen Alvi
Asad Mahmood Usmani
Muhammad Asad
Amreen
Asif Javaid
Soobia Saleem Khan
Adnan Ahmed
Zia Ul Haque
Shagufta Naseem
Mahnaz
Shirin Yousuf Ali
Syed Sayid Ali
Shariq Hussain
Sadia Jamil
Zehra Zafar
Rehan
Akber Zaker Ali
Mallick Kamran
Raheel
Muhammad Majid Khan
Muhammad Amir
Muhammad Imran
Hasnain Imam
Shujah Jadoon
Saad Raza Khan
Shabbir Ahmed
Junaid Munir
Muhammad Nasir Khan
Mazhar Hussain
Wali Ullah Hassan
Muhammad Imran
Kamran Ahmed Hashmi
Saimah Hafeez
Akber Ali
Sadia Muzafar
Muhammad Haziq
Muhammad Iftikhar Alam
Syed Jehan Zeb
Muhammad Wasif Uddin
Azhar Mehmood Ghori
Syed Ali Raza Zaidi
Muhammad Rafiq
Waqar Ahmed
Reeta Feroz
Sajed Riaz Siddiqui
Shakeel Ahmed
Muhammad Khurshid Alam
Ghulam Dastgeer Siddiqi
Arshid Rasheed
Jamil Ahmad
Tahir Sabir
Abdul Kareem
Parvez Iqbal
Zia Ullah Khan
Imran Alam
Centre
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Students' Section
S#
Reg. #
153
154
155
156
157
158
159
160
161
162
163
164
165
166
167
168
169
170
171
172
173
174
175
176
177
178
179
180
181
182
183
184
185
186
187
188
189
190
191
192
193
194
195
196
197
198
199
200
201
202
203
204
205
206
207
208
209
210
211
212
213
214
215
216
217
218
219
220
221
222
223
224
225
226
227
228
229
230
231
232
233
234
235
236
237
00931367
00934790
00941078
00941386
00950279
00950305
00950637
00951040
00951469
00961124
00961737
00961827
00961936
00961955
00962126
00963120
00963264
00963409
00970432
00971063
00971186
00971285
00971530
00971601
00971791
00972458
00972858
00973054
00973076
00980334
00980566
00990961
00991061
00991094
00991218
00992051
00992087
20000676
20000740
20010505
20012014
20012261
20020534
20021046
20032019
00911016
00933814
00962071
00971663
00971685
00991488
20000883
20000891
20001218
20022075
00962952
00971100
00971103
00981065
00981164
00981172
00991375
20000137
20000155
00900835
00910660
00910664
00912152
00922088
00922938
00933794
00935345
00935780
00940940
00950629
00951033
00951053
00951173
00951293
00960520
00960839
00961156
00962064
00962120
00971483
Roll #
8032
8041
8044
8045
8049
8052
8062
8070
8072
8079
8084
8087
8088
8089
8090
8095
8101
8107
8116
8122
8124
8131
8134
8137
8140
8142
8153
8159
8160
8165
8167
8193
8195
8197
8200
8206
8207
8218
8223
8233
8245
8246
8251
8256
8259
8284
8291
8296
8300
8301
8307
8308
8309
8310
8314
8345
8348
8349
8352
8354
8355
8362
8364
8365
8393
8398
8399
8400
8406
8414
8430
8437
8440
8445
8457
8458
8459
8461
8469
8471
8478
8483
8486
8487
8515
Name
Mazhar Ali
Gohar Aman Khan
Zubair Murtaza
Adil Ameen
Nasar Mahmood
Zahid Waseem Ramay
Hummayun Sheikh
Shan Muhammad
Muhammad Asif Manzoor
Muhammad Irfan
Sakit Saleem
Syed Muhammad Ali Naqvi
Muhammad Asif
Muhammad Nadeem Zuberi
Sheeraz Ahmad Khan
Muhammad Ramzan Khalid
Amir Wazir
Amir Ikram
Nazim Raza
Ali Raza
Sohail Iqbal
Nafees Ur Rehman
Shahnaz Akhtar
Syed Muhammad Yasir Shah
Tariq Mustafa
Asif Mushtaq
Aamer Raees
Abid Majeed
Muhammad Khuram Aziz
Muhammad Zubair
Muhammad Amir Jawad
Muhammad Usman Bashir
Muhammad Nasir
Marryum Pervaiz
Mudassar Shahzad
Muhammad Zahid
Ubaid Tayyab
Khalid Mahmood
Mohsin Abbas
Syed Najam Ul Hassan Naqvi
Afeefa Irshad
Naeem Akhter
Faisal Munir
Muhammad Khalid Noor
Muhammad Munir
Muhammad Rafiq
Mubashar Ali
Muhammad Ayyaz Ur Rehman
Sadiq Hussain
Muhammad Yasir Ali Khan
Asim Majeed
Muhammad Ansar
Babar Zahoor
Muhammad Younas
Muhammad Yaseen
Irfan Hussain
Waseem Aslam Naroo
Nasir Ahmad
Ali Muhammad Khuram Shahzad
Shahzad Ali
Muhammad Shafiq
Waqar Khalid
Manzoor Hussain
Rizwan Ahmed
Muhammad Aslam
Ansar Ali Noor
Muhammad Iqbal Qasim
Kashif Amin
Ahsan Ullah
Munir Ahmed
Nazar Farid Khan
Zahid Mahmood
Tanveer Ahmad
Muhammad Irshad
Shahid Ijaz Rajput
Syed Raza Haider
Khurram Nazir
Muhammad Jehangir Farooq
Muhammad Farooq
Akhter Mustafa
Imran Javed
Muhammad Mubeen
Amir Mahmood
Inam Ul Haque
Muhammad Abdul Rehman
56
Centre
S#
Reg. #
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Islamabad
Multan
Multan
Multan
Multan
Multan
Multan
Multan
Multan
Multan
Multan
Faisalabad
Faisalabad
Faisalabad
Faisalabad
Faisalabad
Faisalabad
Faisalabad
Faisalabad
Faisalabad
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
238
239
240
241
242
243
244
245
246
247
248
249
250
251
252
253
254
255
256
257
258
259
260
261
262
263
264
265
266
267
268
269
270
271
272
273
274
275
276
277
278
279
280
281
282
283
284
285
286
287
288
289
00971505
00971887
00971954
00972038
00972377
00972407
00973171
00973282
00980386
00980908
00980916
00981099
00981375
00982064
00982073
00982165
00990207
00990971
00991006
00991229
00991279
00991541
20000406
20000410
20000418
20010198
20010979
20011018
20011059
20011186
20012170
20020276
20021354
20021414
20021483
20021815
20030987
20031357
00933871
00910947
00991608
00962517
00961648
00961661
00981395
00882309
00880211
00923868
00980234
00990849
20000384
00940923
Roll #
8516
8523
8528
8533
8539
8541
8549
8556
8566
8570
8572
8579
8582
8586
8587
8593
8603
8613
8614
8619
8622
8628
8640
8641
8642
8649
8653
8655
8658
8659
8662
8663
8664
8665
8667
8668
8670
8671
8851
8701
8705
8707
8721
8741
8745
8761
8801
8807
8813
8816
8818
8842
Name
Muhammad Faisal Nasim
Khalid Asghar Bhatti
Naveed Khalid
Muhammad Azeem
Faisal Waheed
Urfan Rafique
Furrukh Adeel
Syed Ashar Hussain
Asad Husain
Abrar Ashraf
Muhammad Khurshid
Muhammad Imran Samra
Noman Nasir
Muhammad Kamran
Samia Ashraf Bhatti
Hamid Zahoor
Muhammad Mansoor Afzal
Irfan Siddique
Muhammad Adnan
Ayesha Anwer
Munir Abbas
Muhammad Ashfaq
Mansoor Suleman
Muhammad Arshad
Saba Shahid Ali
Tahir Iqbal
Muhammad Imran
Ali Usman
Badar Munir
Muneeb Hasan
Syeda Asma Khalid
Adnan Zia
Qaiser Mehmood
Muhammad Adnan Arshad
Saman Sami
Faisal Salman
Muhammad Nadeem
Yasir Jilani
Waqas Aslam
Zulfiqar Ali
Sheraz Khan
Faiz Rahmat
Muhammad Zahid
Din Muhammad
Muhammad Rashid
Faisal Zaman
Syed Ali Raza
Omar Anwar
Sajad Ahmad
Muhammad Amin
Mudassar Zubair
Khurram Ikram
Centre
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Peshawar
Peshawar
Peshawar
Quetta
Hyderabad
Hyderabad
Abbottabad
Dubai (U.A.E)
Dubai (U.A.E)
Dubai (U.A.E)
Dubai (U.A.E)
Dubai (U.A.E)
Riyadh (S.A)
Final Completed Under 2005 Syllabus (Comprehensive Passed)

1
2
3
4
5
6
7
8
9
10
20020631
20040223
20041254
20031830
20040631
20000467
20032209
20032525
20041200
20040511
1
4
5
6
7
9
12
13
14
15
Muhammad Kashif Ahmed

Zeeshan Ali Khan
Irfan Iqbal
Fatima Younus
Muhammad Abid
Qasim Mahmood
Shahzad Aslam
Iffat Chughtai
Waqas Ahmad
Haseebullah
Karachi
Karachi
Karachi
Islamabad
Multan
Lahore
Lahore
Lahore
Lahore
Peshawar
Upto Stage - 6 Completed (2005 Syllabus)

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
20030121
20040038
20040049
20040152
20040450
20050538
00971247
20010502
20040625
20031793
20021334
20042599
00971927
00972028
20021629
20031176
20032613
20032952
1559
1756
1762
1798
1831
2063
3384
3496
3726
4683
5007
5038
5251
5253
5506
5604
5723
5766
Asif Baig
Muhammad Azam
Muhammad Javed Iqbal
Fahad Mir
Zaheer Mehmood
Naeem
Wajahat Qamar Butt
Sadaf Tabassum
Muhammad Arshad
Farhana Rasheed
Aamir Rashid
Syed Farhan Safdar
Khalid Mahmood
Hammid Ur Rehman
Anayat Hussain
Muhammad Arshad
Muhammad Usman
Muhammad Ali
Karachi
Karachi
Karachi
Karachi
Karachi
Karachi
Islamabad
Islamabad
Islamabad
Multan
Faisalabad
Faisalabad
Lahore
Lahore
Lahore
Lahore
Lahore
Lahore
Institute News
Amendment in Regulation 99 of the Cost and Management Accountants Regulations, 1990

The Council of the Institute of Cost and Management Accountants of Pakistan, vide minute 3461 of its 241st meeting, has decided to introduce new entry stream of Intermediate or equivalent level in addition to exiting graduation or equivalent level by
bringing change in the regulation 99 of Cost and Management Accountants Regulations, 1990 based on following justifications:
1. Weak background of existing graduates resulted their to inability to cope-up with rigorous study requirements of ICMAP professional certifications which results in more failures, uncertainty about completion of qualification, and spreading negative word-of-mouth;
2. General perception that all career-oriented students select career at Intermediate or equivalent level;
3. All undergraduate professional / academic qualifications take 4 to 6 years to complete after Intermediate or high school or
equivalent level (grade 12) leading to further 1 to 2 years for post-graduate professional certifications / academic qualifications;
4. Almost all national and international professional institutions induct students at Intermediate or equivalent level;
5. Based on the fact that after 4-year graduation (which is now mandatory for all academic institutions by HEC), interest for 3year post-graduate professional certification will drastically decrease;
6. There will be no impact on ICMAP professional certification equivalency to Masters degree for the purpose of employment
and education given by HEC as equivalency criteria specify 7 years after Matriculation, 5 years after Intermediate and 3
years after graduation;
It has been decided by National Councils Committee on Strategic Plan Implementation that students inducted at undergraduate
level (after Intermediate) will be required to undergo two years of rigorous studies to strength their foundation. During this period, they will be required to complete specified courses (to be decided) in English Language , Literature , Accounting , Economics , Mathematics , Quantitative Techniques , Business Studies , and Information Technology . Such students will be considered for exemptions in the all / few courses of existing stage 1 & 2.
With reference to sub-section (4) of section 34 of Cost and Management Accountants Act, 1966, it is notified to all members of
the Institute that clause (a) and (b) of regulation 99 of Cost and Management Accountants Regulations, 1990 will be amended as
follows:
Regulations
Existing Text
99 (a)
is not less than eighteen years of age on the date of his application;
99 (b)
Proposed Amendments
The words eighteen years be
replaced with sixteen years
has passed the degree examination of any University or an examination recog- Add the word intermediate or
nized by the Federal Government as equivalent thereto, provided that the Coun- before wherever the word decil may relax the requirement of the degree in the case of student, who is not a gree is written
national of Pakistan.
It is, hereby, informed that students inducted at undergraduate level (after Intermediate or high school or equivalent) will be required to undergo two years of rigorous studies to strength their foundation by studying specified courses (to be decided) in English Language, Literature, Accounting, Economics, Mathematics, Quantitative Techniques, Business Studies, and Information
Technology.
The comment(s) if any with regard to above-mentioned proposed amendments may directly be sent to Secretary, Council of Institute of Cost and Management Accountants of Pakistan within 15 days from the date of publication on the following address in
a sealed envelope either by hand or through courier or through email citing subject as Feedback on Amendments in Regulation
99 of CMA Regulations, 1990:
Honorary Secretary
Institute of Cost and Management Accountants of Pakistan
ST-18/C, Block 6, Gulshan-e-Iqbal, Karachi 75300.
Email: secretary@icmap.com.pk
Mr. Muhammad Rafi, FCMA, Member National Council is

being presented a plaque by the organizers after presentation
of his paper at CMA Global Summit at New Delhi, India.
Feedback
Dear Management Accountant Journal reader,

We hope that Management Accountant (MA) Journal continues to be of use and interest to you. As you can
imagine, a lot of time and resources goes in to keeping MA Journal published. To improve its quality and to
make it a strong image building tool for the Institute, the Journal & Publications (J&P) Committee in its recent
meeting decided to get first-ever feedback of members / students. It would be very helpful to MA Journal if you
to kindly fill-in the questionnaire and send it to: Muhammad Kamran Jamil, In-charge J&P Section, ICMAP
Head Office, ST-18/C,Block 6, Gulshan-e-Iqbal, Karachi 75300 or email us on jps@icmap.com.pk.
Thank you for your time and interest in MA Journal.
Sincerely,
Chairman, Journal & Publications Committee
SURVEY QUESTIONNAIRE

National Council of ICMAP Journal Focuses on 2008-09 Federal Budget

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Monthly

National Council of ICMAP

Sher Afgan Malik

Pakistan Budget 2008-2009 by Shahzad Ahmed Malik, FCMA

Agricultural & Live Stock Sector

Agricultural Sector in Pakistan by Engr. Javed H. Siddiqi

Livestock Sector in Pakistan, Extract from Economic Survey 2007-08

Economic Horizons: Highlights of Economic Survey 2007-08

Overseas Examination Centre

The Management Accountant is the official journal of the

To be the Preference in Value Optimization for Business.

To develop strategic leaders through imparting quality

Special Issue on 11th Management Accountants International Conference

Journal is also available on ICMAP Website : www.icmap.com.pk

From the Holy Qur-'n

O you who believe!

Surah: An-Nisaa' (Women), Verse 29

Management Accountant, Jul-Aug, 2008

From the Desk of the President

Management Accountant, Jul-Aug, 2008

From the Chief Editor

Mohammad Arif Nara, FCMA

Journal & Publications Committee

Abid M. Anwer, FCMA

Joining of Mr. Mushtaq Ahmad Madraswala as Executive Director

Management Accountant, Jul-Aug, 2008

Federal Budget 2008-09

The small companies and certain AOPs/Individual

In the case of a small company, if turnover exceeds

Previously, gross rental income from property was

10. Withholding tax collected on electricity bills has been

11. Exemption available to capital gain on shares of listed

Management Accountant, Jul-Aug, 2008

Federal Budget 2008-09

SALES TAX & FEDERAL EXCISE

The rate of sales tax has been increased from 15% to

Filing of sales tax returns by Commercial Importers has

FED on telecommunication services is being enhanced

Federal Excise duty on cement has been enhanced

Management Accountant, Jul-Aug, 2008

Federal Budget 2008-09

The Sales Tax chargeable in respect of Steel Meltors ,

been made to charge duty from the recipient of services.

The rate of FED on banking, insurance and franchise

21. If unregistered persons liable for registration under the

In order to keep the rate of default surcharge higher

24. Supplies to Non-resident entrepreneurs/traders visiting

11. In order to clear pendency at the tribunal level and to

12. Import and local supply of fertilizers and pesticides has

13. Energy saver lamps have been exempted from sales

Duty rates on following items have been increased:

15. Raw materials, including molasses, for acetic acid have

A uniform rate of 30% has been specified for import of

16. Caustic soda flakes/solid, cotton linter and sequins

Duty rates on import of cars/jeeps above 1800cc have

17. Biscuits, confectionary and snacks have been excluded

Fixed duty/ tax rates on old and used cars/jeeps have

The local industry producing water dispensers, hooks

Fully dedicated CNG buses have been exempted from

Management Accountant, Jul-Aug, 2008

Federal Budget 2008-09

Eighteen medicines used for cancer/heart treatment etc.

Bitumen, JP4 and JP8 have been exempted from duty.