The more prohibitions there are, the poorer the people will be.
-Lao Tzu (Chinese philosopher, flourished 6th century B. C.)
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CONTENTS:
0 Arresting the Competition in Telecom Sector
By Shahzada Irfan Ahmed
0 Public Sector Priorities in Pakistan
By Andleeb Abbas
0 Apologists for Poverty
By Tibor R. Machan
0 Letters to FreePakistan
0 Letters from the Press
0 FreePakistan News Briefs
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ALTERNATE SOLUTIONS INSTITUTE’S FIRST BOOK OF TRANSLATION
Alternate Solutions Institute, Lahore, Pakistan, has published its first book of translation, Ken Schoolland's "The Adventures of Jonathan Gullible: A Free Market Odyssey," in Urdu which is understood not only in Pakistan but throughout South Asia. Ken's modern fable has so far been published in 29 languages of the world Urdu being the 30th. This book explains the principles of market economy in a simple manner and helps promote the concepts of open market and property rights. The book has been translated into Urdu by Khalil Ahmad. A. S. Institute is indebted to Irshad Ameen for his tireless efforts in getting the book out of the press.
It is hoped that the book will give a new direction to the discussion of welfare state in Pakistan.
If you want to purchase the book, contact at email addresses above ============================================================================
HOW TO END ALL WARS FOREVER
Aslam Effendi, an old and unsung Libertarian of Pakistan, has written three books on free market philosophy: HOW TO END ALL WARS FOREVER, HARD FACTS OF HISTORY, and, ECONOMICS FOR THE CONFUSED. When no publisher agreed to invest in the project, he spent out of his own pocket to get HOW TO END ALL WARS FOREVER printed. But, for want of a distributor, this book which has been praised as a classic remained dumped and could not find its way to the market. For details, read ‘Aslam Effendi: A Free Marketeer in Pakistan’
or visit http://asinstitute.org/articles.php. Alternate Solutions Institute, Lahore, Pakistan, has purchase all the copies of the book from Aslam Effendi to make it available to the right persons and to compensate the author as well.
If you want to purchase the book, contact at email addresses above
A. S. Institute intends to publish all of his books; if you are interested in this project, please contact at the above-given email addresses.
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ARRESTING THE COMPETITION IN TELECOM SECTOR
By Shahzada Irfan Ahmed
[PTA has barred cell phone firms from reducing tariffs unilaterally, something totally contrary to consumers' expectations.]
Over the last few years, deregulation of Pakistan's telecom sector and opening up of cellular phone market has seen more and more players entering the field and promoting competition in a previously monopolised environment. It is owing to this very competition that the market has seen immense drop in connection and service charges besides simplification of procedures required to get a cell phone connection.
Thanks to these price cuts and other positive developments, the cell phone market that had been growing slowly got a boost in the last couple of years and swelled considerably. The prevailing situation is that the number of cell phone subscribers has gone well above 5 million, a number higher than that subscribing to fixed line phone service. The story does not end here. Telecommunication experts believe that there is a huge market of potential cell phone subscribers yet to be targeted.
The mad run on the part of cell phone companies to take lead over competitors in terms of number of subscribers has been a blessing for consumers. It has led to fall in connection charges, packages like free calls during night time, removal of long distance and roaming charges, downward revision in tariff structures, provision of free connections on specific days and so on.
In this scenario of competition tightening day by day, subscribers were expecting more such lucrative offers but their excitement subsided one fine day. It was when they heard Pakistan Telecommunication Authority (PTA), the official regulator of Pak telecom market, announce that in future cell phone companies would not be allowed to reduce their tariffs etc indiscriminately without bringing the fact to its prior notice for approval. The announcement was disapproved by the general public and market experts who thought this step would discourage fair competition and hurt interests of ordinary subscribers. On the other hand, PTA officials claim that they are not discouraging free competition but stopping the over-influential players from playing foul and disturbing new entrants.
A senior executive working with Pakistan's leading cell phone operator thinks that PTA has taken this step to facilitate the two new entrants who are scheduled to launch their operations by early next year. Talking to The News on Sunday, he says that it is hard to believe that a company can agree to buy a license to run cell phone operations worth $291 million without getting assurances from Pak government. "And one of these assurances seems to be that the regulators would see that service charges don't dip to the extent that they become non-viable for new entrants. Besides, the proposed plan to introduce Mobile Number Portability (MNP) by April next year, the time by when these newcomers plan to become operational, also hints at the favours the government is extending to them. Under MNP, cell phone subscribers will have the option to switch their service provider. I am sure this step is being taken to give new entrants an opportunity to attract other companies' subscribers," he says.
When asked whether his company was offering lucrative packages just to expand consumer base before new entrants arrive, he says this is a mere misconception. "We have been here for more than a decade and controlled major market share. Our emphasis has been on quality and not on cheap publicity. I don't think people can be lured into traps anymore, they very well know what is better for them. Therefore, the allegation that we are exploiting the market due to our overwhelming presence is false," he adds.
Zaheer Ahmed, a cell phone dealer and subscriber, thinks that presently the market has been gripped by utter confusion and speculations. He says potential subscribers are in a total fix as to buy which company's connection and at what cost. There are even those who are waiting for the launch of new companies or announcement of some exclusive packages offered by particular companies. Regarding the PTA announcement on tariff announcements, Zaheer thinks that it has disturbed the general subscriber who was hoping for more and more benefits of free competition. "On one hand PTA passes this discouraging statement and on the other its chief says that mobile call charges will hopefully decrease by 50 per cent in a year. Doesn't this seem strange?" he questions.
Speaking on behalf of the regulators, Col Nayyar Hassan, Regional Director PTA tells TNS that the authority is in no way against the benefits of the subscribers. "In fact, it is in the interest of the general public that we have passed on directions to cell phone companies to reduce tariffs after getting approval from PTA," he says. Explaining his point, Col Nayyar states that the main target of the said order is the company that enjoys 63 per cent of the market share of cell phone subscribers. The other three companies, according to him, are not as influential as their market shares stand at 15 per cent, 13 per cent and 9 per cent.
He says under international practices of deregulation and section 17 of Pakistan Telecommunication Rules 2000 an operator shall be presumed to have significant market power (SMP) when it has a share of more than twenty-five per cent of a particular telecommunication market. Under the same practices, strategic decisions taken by SMPs are monitored by regulators to ensure that they are not aimed at offsetting or wiping out smaller players so that absolute monopoly is attained.
"As the party in questions enjoys market share much larger than the minimum required to be declared SMP, it was issued notice. The same company had refused many times to reduce charges in the past on grounds as it claimed that its very survival depended on these charges. However, now it has removed these roaming charges as well as long distance charges -- a fact hard to understand. It was even on the edge of waiving off airtime charges when we intervened. Our question is that such offers are acceptable only if they are based on proper calculations, feasibilities and proper infrastructural backing but not when aimed at making life tough for competitors," he adds.
Col Nayyar adds that PTA has also admonished PTCL for offering free connections at a time when 16,000 ordinary applications for paid connection are pending with it and another cell phone company for offering free connections without increasing number of switches. [Courtesy The News]
PUBLIC SECTOR PRIORITIES IN PAKISTAN
By Andleeb Abbas
[Perhaps the Privatisation Commission itself needs to be privatised to escape the curse of politics and corruption to enable it to make lumbering and slumbering organisations like PIA (Pakistan International Airlines) and Pakistan Steel Mills wake up to the reality of a competitive world.]
Public sector is distinguished by the three Ms Myopia, Mismanagement and Mixed-up priorities. The term public sector is a misnomer. It is ironic that a sector, which by name and definition, is sponsored by public money, and thus made specifically for the public good, be doing exactly the contrary.
Public sector organisations all over the world, and Pakistan in particular, draw out mocking remarks, abuses and sad shakes of head from people of all walks of life. Public sector organisations have a clear and focused image of being corrupt, bureaucratic and incompetent, thus being burdens on the public and the economy. Pakistan has been a prime victim of these public sector white elephants, which by their sheer size have been a grave burden on the economy and despite efforts by successive governments have failed to be privatised. These organisations, despite being monopolies, are constantly in financial distress and always on the verge of bankruptcy. Pakistan Steel Mills, Wapda, Pak Railways and PIA have gone through many such phases where the government had to use more of the public money to bail them out of trouble. Despite these narrow escapes, many of these organisations have not learned their lesson. What are the reasons for this refusal to learn from their mistakes and a "couldn't care" attitude, are worth debating:
INDIVIDUAL VS ORGANISATION
The public sector organisation is full of a large number of people who are there not for any purpose but politics. These individuals have entered the organisation not on merit but on connections. They have taken the back-door entry route on the basis of some reference in the government of that time, and thus are pretty secure with this knowledge that whether they work or not, nobody dare complain against them. Such individuals not only are a burden on the organisation but have a demoralising impact on those who are on merit and want to work honestly.
As these individuals see these free-riders get away with murder, and themselves toiling futilely to make an honest impression, they decide to go on a professional strike and do only as much as is necessary to sustain them in their position. Thus the incompetence infection soon catches everybody who breathes the public sector air. That is why many of these organisations having thousands of employees who saunter in around 10 o'clock, spend most of the day nosing on other people's whereabouts, and shoot out of the organisation as soon as it is time to leave. In many nationalised banks, you would not find a soul at 5'o clock in the evening. UBL, after it was given to professional hands to be made presentable for privatisation, made headlines in newspaper when it was reported that the staff had come at exactly 9 o'clock and was found working "late" till 5.30pm.
Thus you have these army of individuals who are totally focused on short-term gains, lest the government changed and they were deprived of their 'no questions asked' status, are working at maximising their own benefits with scant regard for the negative impact this behaviour has on the organisational performance. With everybody in pursuit of their selfish interests and obsessed with short-term gains, the organisation plunges into a series of performance hazards in the form of low productivity, nepotism and corruption making it unsustainable at all levels.
PERSONALITY VS PERFORMANCE CULTURE
Due to the prevalence of individualism, the concept of a systematic growth and professional approach towards managing the organisation never takes place. Personality power dominates at every level. Rank and designation become the all important symbols of power. Hierarchies are created and decision-making is hoarded. The art of not doing becomes the envious skill. People who can pull strings at the right level become role models and develop these macho personality cultures where you are not answerable and accountable to anybody. Usman/Salman Farooqi of Pakistan Steel Mills and General Tauqir Zia of PCB are prime examples of that. Such personalities encourage bending the rules, and become so obsessed with their ability to command obedience that they start playing God, and sooner or later push their luck a bit too far. Their departure, unfortunately, is not the end of the story. They leave behind them a legacy of cronyism and power-play, which bewitches every successor and very soon we find history repeating itself.
POLITICS AND PRIORITIES
The public sector organisation is a highly politicised entity. Politics precedes economics in most of the decision-making situations. Hiring and procurement are two areas, which are done entirely on the basis of "larger interests" of the people who matter. Government procurement is done on the basis of open tenders and the basis of selection is bidding for the lowest price along with the required quality and delivery specified in the tender documents. However, it becomes a game of who can manipulate them around to serve their interests best. Such manipulations are not small amounts, which can be accommodated without making a difference to the bottom line, rather, are many times in billions of rupees, which severely affect the financial health of the organisation. A recent example of this issue is the purchase of the 777 planes by PIA from the American company Boeing. The Planning Commission has raised serious objections over PIA's decision to purchase eight new Boeing 777 Family aircraft at a cost of Rs105.95bn.
An official document said that no proper feasibility was carried out to purchase the new eight aircrafts. In the absence of a proper and independent feasibility study, it could not be ascertained whether the proposed procurement of aircraft was the optimal option. The selection of the aircraft preceded all other developments. It appeared that no bids were invited.
The option of the Airbus was foreclosed in the initial stage, which left only two options of old versus new Boeing aircraft. Four A340 Airbus could have been purchased at the cost of three Boeing 777. The cost of Boeing aircraft was $1.5bn as against $1.3bn for an Airbus that would have meant a saving of $196.19m per aircraft. Also revenue projections were based on traffic projections, which might no necessarily materialise. Any decline in traffic would result in diminishing of the revenues. The calculation of cost was based on an exchange rate of Rs60 to a dollar. The cost would need to be corrected on the basis of prevalent exchange rate.
PIA's projected cash flows were based on provision of equity, which would be difficult to provide and that there was a discrepancy in the figures of duties, which would require to be reconciled. Likewise, exact cost of the project has yet not been known.
The Planning Commission said that PIAC eliminated Airbus A340 aircraft in the very initial stage despite being a cheaper option. Operators of only one type of aircraft were contracted wherefrom no serious offer was received. PIA should have explored the possibility of used A340 aircraft, which they may have inducted, even at much cheaper price.
Such a serious breach of government procedures is itself a matter of concern. However, the main question is whether the PIA management seriously thinks that by buying new planes they would be able to increase their revenues and solve their problems. Airline business all over the world is not done on the basis of who has better planes but on who has better service. PIA has had, in the last few decades, suffered serious financial damage not because they did not have a better fleet of planes but because they did not have a better fleet of people, especially those with whom the customers have service encounters, be it the air hostesses or the staff at the inquiry, reservation and check-in counters. The Airline industry comes in the hospitality industry category, which really means that superior service is the key to dealing with customers.
While top airlines, like Singapore Airlines, have created a whole experience in traveling based on the Singapore Girl smiling in their advertisement, most of the successful airlines have discovered that the way to the customer's heart is not through bigger and more comfortable seats, but through a warm and welcoming smile. Thai Airlines is a prime example of an airline, which has seats which are narrower and planes which are more cramped than PIA, but their courtesy and hospitality make the customer not even notice the seat discomfort. Thus the priorities of PIA are politicised with the result that they have purchased eight 777 planes to upgrade their fleet, while even if they had purchased one less plane and used one third of the $1.5bn to upgrade their fleet of customer service people by training them and grooming them in the modern customer care concepts, perhaps the results would be more dramatic in improving the bottom line revenue.
But then we are talking about a rational and systematic approach in laying down the priorities, which is anathema to a typical public sector organisation. Their priorities are totally based on the whims and fancies of the then political power brokers in control. PIA is another overstaffed political entity, which has stubbornly refused to be privatised due to its rock iron labour union and its political appointees at the decision-making echelons.
CONCLUSION
The public sector organisation model has failed nearly all over the world. So is the answer the capitalistic model of America where even the power sector and other main utilities are in the private sector hands? Unfortunately, that may not be the solution for an underdeveloped economy. This model can only succeed if the market forces are really let to govern, and competition is open and fair. The state plays a regulatory role and helps to facilitate a fair playing field for the big and small business.
For this model to work, the economy should consist of a mature set of entrepreneurs who are fully aware of the rules of the game and are proactively out thinking the market trends. In an underdeveloped economy, the immaturity of the market and skewed distribution of wealth creates a huge gap between those who are educated, aware and capable of thinking ahead and those who are not blessed with these faculties and opportunities. In an underdeveloped economy, since there is a small cadre of mature and developed players there is a danger of them exploiting the masses and becoming monopolies. It is this fear, which gave rise to the participatory model of the government. However, the abject failure of this model has proven that in an underdeveloped country neither extreme would work.
Thus it is a combination, which is required, ie, the public/private partnership, which is the answer to this problem. Perhaps the Privatisation Commission itself needs to be privatised to escape the curse of politics and corruption to enable it to make these lumbering and slumbering organisations like PIA and Pakistan Steel Mill wake up to the reality of a world, which is increasingly moving towards not only open national competition but global competition; where they will find it impossible to survive no matter how much political protection they receive. [Courtesy The News]
APOLOGISTS FOR POVERTY
By Tibor R. Machan
[Tibor Machan is R. C. Hoiles Professor of Business Ethics & Free Enterprise at the Argyros School of Business & Economics, Chapman University, Orange, CA, a research fellow at the Hoover Institution, Stanford University, and advisor on public policy matters for Freedom Communications, Inc., and author of "Putting Humans First" (Rowman & Littlefield). We are grateful to him for allowing us to reproduce this article here.]
People, poor, rich, tall, short, American or South African—you choose the variety, it will still be true—are all capable of making better or worse choices in their lives. There are a few totally incapacitated ones of whom this is not the case but the bulk of us are moral agents and to deny it of us is to impugn our dignity.
But that is exactly what many on the political Left do, attack the dignity of the poor by declaring them helpless, inept, in constant need of meddlesome intruders and the paternalist state. One of the most vociferous of these is Barbara Ehrenreich who in a recent Op Ed piece for The New
York Times—just consider the source—writes: “If marriage were a cure for poverty, I’d be the first to demand that H. H. S. [Health and Human Services] spring for the Champaign and bridesmaids’ dresses.” This because Bush & Co. are cooking up some scheme to encourage marriage for poor people instead of doling out money to them endlessly.
Neither Ehrenreich’s nor Bush’s idea is worth much, in my view, since both amount to social engineering (a label Ehrenreich actually applies to herself—“silly old social-engineering-type liberal that I am,” she says) that is ultimately based on the denial of the personal agency of the poor or anyone else that’s its target. The notion that poverty is an illness, something one catches in the winter or from a mosquito or virus, is the convenient myth by which these folks manage to create for themselves the justification that their doctoring is necessary, whether the “patients” actually need or ask for it or not.
Is poverty an illness that can be cured? Perhaps by a very broad poetic license one might speak this way, metaphorically, that is, but at the risk of serious misunderstanding. Even alcoholism and other “addictions” are in dispute as diseases, let alone an economic condition such as poverty.
Just to get this out of the way, poverty in America is calculated entirely relatively. No one poor by American government standards would be poor in, say, India or even Holland. As my friend Tom Palmer at the Cato Institute put it, “If you define [poverty] statistically in terms of the median income (the level of income reached or surpassed by 50 percent of households), then poverty is typically defined (e.g., by the UN), as having a household income less than half of the median. So measured, the
U.S. has high poverty. But it's really a measure of difference, not of poverty as most people understand it.”
In any case, poverty is categorically different from illness, since illnesses, unless caused by self-neglect or assault from others, are something one acquires from impersonal forces. Poverty, however, is often a condition that comes about either because governments make it nearly impossible to acquire wealth (by favoring a select group, restricting trade, refusing to honor property rights and out and out extortion via taxation and regulation), or because people do not work hard enough to earn wealth.
Thomas Sowell has estimated that most of the poor in America remain poor a maximum of 5 years, then they get to be better off, although others often replace them, so the averages remain roughly the same.
I recall when I was on the brink of ruin, back when I ran away from my parents, on my 18th birthday, in Cleveland—I couldn’t speak English well enough—first I went to the Salvation Army but then managed to get a friend to put me up for a night and lend me $75 to begin renting a tiny room. I went to work as a bus boy but lost the job because I wasn’t of age to work at a liquor-serving establishment. Then on to being a short order cook. I lived in a ghetto, as they were called back then, surrounded by filth and dejection.
Now this lasted about a year, until I found a job as a draftsman because I liked to draw and got pretty good with practice. Slowly but surely I got ahead a bit, often very slowly, so I really couldn’t even think of having children until I was 40 because I didn’t want to impose my own poverty on them.
OK, this is only to give an example of how poverty isn’t an affliction but a condition over which one has quite a lot of control even if one’s family leave one in that state, especially in a country where one isn’t kept down by ancient social stratification or other sorts of oppression. Most can climb out of poverty, if they are reasonably prudent and cautious and willing to work hard.
But, of course, liberals wouldn’t have a cause if they grant this about the poor. Instead, they prefer keeping them in the category of the helpless, inept, thereby patting themselves on the back for their compassion and good heart. It’s a ruse—or, at most, a self-delusion.
Letters to FreePakistan
Thanks for forwarding the subject file.
In my view the following analysis of Peter Bauer with regard to foreign aid to developing countries came true. Today the economic results would have been different, had the policy makers in the developing countries listened to him earlier. In the ultimate analysis, the historical (evidence) has brought to the fore the pitfalls of foreign aid's doze to poor countries.
"Unfortunately, when countries were getting free from the colonial system after World War II, their
Western-trained autocratic leaders listened to Myrdal and Galbraith. The result was a decline in material well-being and decades of miserable poverty. Meanwhile, guilt-ridden Western leaders sent billions of dollars in foreign "aid" to those countries, achieving little besides the fattening of the bureaucratic class and the politicization of society, which only aggravated their condition and even provoked civil wars".
One of my letters (given below) published in the daily The News November 5, 1998 does highlight some of these issues. I do hope you would like it.
Regards
Javed Iqbal
The News International, November 5, 1998
BAILING OURSELVES OUT
Javed Iqbal
When the bickering among the people of third world countries, their governments and donors starts over the 'bailout' issue, one is tempted to ask the difference between the bail of an accused person and bail of a country. The logical answer could be that the former is charged with the immoral, anti-social crimes, while the latter is indicted with financial mismanagement. As the common practice suggests, the arbitrator grants bailout to the concerned party only if it fulfills some basic wee-defined guarantees or conditions.
Whenever the bailout matter is brought under discussion between any underdeveloped country and the donor (s), the latter have their own story to tell.
The lending agencies remain quite unhappy with low revenue collection and higher non-development expenditure or with anything that distorts agreed upon conditions. And the governments sketch their own miseries and limitations. The usual explanation they come up with often states that due to unfavorable circumstances the agreed upon targets could not be met. However, serious efforts are under way to turn the impossible into possible.
But the most poignant and moving side of the situation is where the people live. They are hit by miseries and have many gloomy stories. They think that their ruling elite siphons off the borrowed money and they have no prescription to heal the injustices inflicted by them. Usually, citizens demand improved law and order to justify payment of taxes. History is witness to the fact that such conflicting ideas bring drastic changes at a very heavy socio-economic cost. Zaire (now Congo) and Indonesia are recent examples.
[Javed Iqbal]
Excellent newsletter, as always.
Ken Schoolland
Could you please post my published letter "Risk of Over planning" in the forthcoming edition of your newsletter with its publication date.
Regards
Javed Iqbal
The News International August 19, 1998
RISK OF OVER PLANNING
Javed Iqbal
The real danger to the creditability of a government is over planning. Plans and policies are worthy of respect when they can be implemented. In the last couple of decades, we have accumulated plenty of ambitious plans, policies, strategies and rules by restoring to over planning, thus wasting time, money and effort. These documents on the other hand, mismatch the implementation capacity of the government and the society, and no longer offer a viable solution to arrest the socio-economic problems.
A major chunk of this paperwork comprises of the hefty volumes compiled by the consultants who by thriving on the taxpayers' money suggest a mix of unpractical solutions. Most of these studies are gathering dust on the bookshelves and have become past stories. The people have lost hope in such hollow plans. The mushrooming of unrealistic plans are not only posing a challenge to the creditability of the government but are also causing a serious setback to the national economy and generating frustration among people.
With the government caught up in the severest financial crunch of its history, some serious thoughts are needed at this crucial juncture to do away with the business of over planning once for all.
Date: Thu, 23 Sep 2004 18:01:24 +0100
From: "Paul Staines"
Reply-to:
To:
Subject: We support your "Free Trade is Fair Trade" campaign All headers
All attachments
We added this to story to our blog and linked to your website.
Good work!
Pakistan's Alternate Solutions Institute says "Free Trade is Fair Trade" Pakistan's Alternate Solutions Institute says "Free Trade is Fair Trade"
In a campaign that pre-dates GGO's own, the Lahore based Alternate Solutions Institute, Pakistan’s first free-market think tank is campaigning for free trade with the slogan "Free Trade is Fair Trade". ASI (motto is "Welfare of the People by the People") has also translated Ken Schoolland's free market fable "The Adventures of Johnathan Gullible" into Urdu for distribution throughout South Asia.
GGO's campaign has produced T-shirts perfect for putting the message about on campus (or Lahore) - see our main website for availability.
Paul Staines
Office: +44 (0)70 9284 0531 Fax: +44 (0) 70 9201 2337
paul.staines@global-growth.org
Visit our news and comment blog: http://global-growth.blogspot.com
Visit our website: www.global-growth.org
Global Growth Org is a non-governmental organisation devoted to raising living standards and reducing poverty in the developing world. Our work focuses on the advocacy of lasting solutions to the structural economic, political and cultural causes of poverty.
Postal Address: #154, 1 Albert Embankment, London SE1 7XQ, United Kingdom.
Letters from the Press
LOSING OUR LOVED ONES
[Abdul Qadir Imani, Karachi]
On August 13, when the county was in jubilant mood on its 57th anniversary of independence, a couple suffered serious trauma when their young son was shot dead in Karachi.
Returning to Clifton from Liaquatabad with his family, Murtaza's car was approached by a motorcyclist who requested him to open a window of his car. On doing so, the man ordered him to hand over his mobile. As he was about to hand over the phone, the motorcyclist shot him in the eyes and sped away.
His terrified and shocked parents could do nothing but ask for help. Two people took him to the Civil Hospital, but the hospital staff refused to touch him without an FIR. Murtaza was then taken to the Liaquatabad Hospital where he was treated at once. Family and friends gathered outside the operating room, praying for him. After an hour or so, he was taken to an ICU room.
On hearing the news about my friend being shot, I was in a deep shock and visited the hospital. As I climbed up the stairs, I saw Murtaza's family and friends all worried and tense.
After a few minutes' wait, I was allowed inside the ICU room where he lay all wrapped up in white bandages, plastic pipes running inside his mouth, and drips of glucose injected into his veins. At that moment all I could do was to pray for his life. But after 18 hours he died.
Four days later another misfortune befell the family. A sum of Rs125,000 was stolen from his father's shop. As I write this, Murtaza's father is in deep shock. What happened to my friend is not a unique case; it happens all over the country.
Who is responsible for this sorry state of affairs? Why are the government and police officials doing nothing to stop killing of innocent citizens and robberies? Are we going to live under the shadow of terror and do nothing? [Dawn]
GROTESQUE
[Asif Mahmood, Attock]
Through the columns of this esteemed newspaper I intend to draw the attention of high-ups towards the mysterious and shocking murder of a little girl. On the September 13, a 12-year-old girl left the house at daytime and the next day her body was found in many pieces wrapped in plastic bags, lying on a dunghill of G-block. One long dagger was also recovered from a plastic bag. This horrific incident has panicked the residents of Attock city. However, it was strange that no newspaper even carried a single news item, let alone a headline. SP office also is not willing to give easy access to a copy of the FIR. In less than a week of that incident another 4th class student has also disappeared from his house.
The dead girl’s father is a poor chowkidar; therefore nobody gave this incident importance. Law enforcement agencies should also protect the lives of poor people. [The News]
PTA AND TARIFF CUTS
[Khurram Khan, Karachi]
This refers to the news item "PTA warns against tariff reduction" (September 3).
The prohibition imposed by the Pakistan Telecommunications Authority (PTA) restricting telecom operators in further cutting tariffs has led to a sharp reaction by people throughout the country, especially in the fast-growing cellular market.
The PTA has accorded the status of significant market power (SMP) to the Pakistan Telecommunications Company Limited (PTCL), the Special Communication Organization, Mobilink and the Pakistan Mobile Communications Ltd on the basis of their dominant roles, but at the same time it has cautioned the companies against tariff reductions.
The common man, who is eagerly awaiting further tariff reductions and expects better services with the sanction of two additional cellular licences, will be a victim of this disparity.
The telecom industry, while expanding and growing technologically, has subsidized its tariffs globally, and there is no reason for the industry in Pakistan to go back to square one and put at stake the rights and privileges of the common man. The PTA must seriously review its decision in the light of the above and ensure that the consumer is not denied its right to lower tariffs and better services.
PTA — A SPINELESS BODY
[Haroon Ahmed, Karachi]
I believe that the policies of the Pakistan Telecommunications Authority (PTA) are blurred, confusing and discriminative in nature. They seem designed to hurt both the confidence of investors in the telecom sector as well as the general public.
On one the one hand, Pakistan is in desperate need of attracting foreign direct investment. Yet on the other, regulatory bodies like the PTA are backtracking the initiative. Is this what Shaukat Aziz would like to see — the rerouting of precious dollars to neighbouring countries?
And this might just happen. The telecom sector, especially the mobile phone industry is growing by leaps and bounds worldwide. Yet one wrong move by our regulators could put Pakistan on the backburner of investor-friendly countries.
But back to the PTA. Two issues are currently at stake. Firstly, existing telecom firms, with millions of dollars of investment, have been barred from reducing tariffs and of late, the soft-approach of reducing the license fee from US$38.8 million to US$11.1 million of Paktel.
In the first instance, the PTA is contradicting its own policy. Let us remember that PTA previously demanded that Paktel increase investment up to US$150 million and also demanded that tariffs be set at least 20 per cent below prevailing rates. And now it is restricting Mobilink from reducing its tariffs further, much to the chagrin of consumers.
Secondly, the out-of-court settlement between Paktel and PTA has confirmed the fact that PTA is a spineless body — its decisions lack vision and proper planning. The telecom sector is growing and it should be allowed to do so, barring considerations that ‘the level playing field’ is indeed ‘level’ and not a ‘head start’ for newcomers. [Daily Times]
WHOSE INTERESTS?
[Shakila Khan]
Regulatory bodies set up by the Government are supposed to safeguard national and public interests. They come into action when companies doing business in Pakistan act in violation of public interests. Recently the issue of tariff reduction hit headlines in newspapers to which Pakistan Telecommunication Authority (PTA) reacted in a way sharply incompatible with its status and function.
Personally I feel we need rate cuts in telecommunication services. But instead of appreciating the companies going for reduction in tariffs to benefit the masses, PTA barred them from bringing down tariffs. This is unbecoming on the part of PTA.
I think the organisation should revert its decision so that the people of Pakistan can enjoy their rights to phone and cellular connections at affordable rates, as promised by none other than the Government itself, it seems here that the PTA contradicts itself as first it promises to bring affordable services and then takes steps absolutely opposite to it. Maybe there should be a body regulating the PTA on its decisions?
[The News]
PTA
[Nosheen Haider, Islamabad]
The world’s over mobile telecom operators are lowering tariffs to boost growth and expansion in the telecom industry. We in Pakistan were heading towards the same direction and then the almighty PTA stepped in and all the Government’s promises and even PTA’s promises of ensuring telecom availability for the common man went down the drain.
It is disheartening that Pakistan Telecommunication Authority (PTA) the state-owned regulatory body has voiced its opposition to reduction in telecom tariffs. The PTA is supposed to act in accordance with what is feasible for the public and not what is against their interests.
I think it is high time for PTA to make a choice between serving the public interests as it is its duty rather than support money-minting companies unwilling to reduce tariffs. It is PTA’s duty to encourage companies to facilitate the public, not the other way around. This will not create "fair competitive environment" as professed but will only help line the pockets of a concerned few. [The News]
CONSUMER RIGHTS
[Syed Waseem Baig, Lahore]
The Pakistan Telecommunication Authority (PTA) is trying to restrict mobile companies from reducing tariff. But is there someone out there who can protect the rights of hapless consumers likely to be affected by this decision?
As a mobile phone user I don't care who the service provider is as long as I get uninterrupted service, and I am always looking for price benefits that suit my pocket.
Users of cellular phone services are growing by the thousands. Both phone sets and service standards have improved and consumers feel comfortable using this mode of communication.
To make phone services affordable and accessible to the common man is a welcome move. So why should the PTA infringe upon the rights of consumers when it comes to tariff reduction? [Dawn]
PTCL OVER-BILLING
[Mohammad Fayyaz, Charsadda]
Once again I have been sent an excessively exorbitant telephone bill, consisting of 429 local calls, for the month of Aug 2004. A similar excessive bill for the month of July 2004 is lying pending with the PTCL Charsadda. That bill consisted of 402 local calls. PTCL has been earning revenue for the corporation by robbing the poor subscribers of the phones by sending them concocted inflated bills. My local calls have ranged from 170 to about 200 local calls. The record of the PTCL Charsadda can testify this. How is it that the increase in the local calls has been more than two-fold? Since my over-billing case of July 2004 is pending with the corporation for decision, my bill should also be corrected as soon as possible. I request the concerned General Manger to take to task the officials of PTCL Charsadda. I request him too to take a favourable decision on this excessively wrong over-billing. [The News]
ATTRACTING INVESTORS
[S. T. Hussain, Lahore]
President General Pervez Musharraf is urging foreign investors to invest in Pakistan. Although a friendly environment exists in the country, General Musharraf should know that Pakistan has an image problem. That is why multinational investors are not willing to come here.
Investment flows to a country which has political stability, a real functioning democracy, an independent judiciary, where there is rule of law, not rule by one man.
A country seeking foreign investment should have an honest police and bureaucracy and should be relatively free from corruption. It should have the right man for the right job, freedom of expression and a trained and disciplined labour force. Does Pakistan meet any of the above criteria? [Dawn]
LEGISLATORS’ DEVELOPMENT FUNDS
[S. M. F. Hasan, Lahore]
It goes to the eternal infamy of the first dictator of Pakistan that to appease his supporters and to tame his opponents, he introduced the vicious system of transfer of huge state funds to his MNAs and basic democrats in the name of public development but actually for their own development. Stark corruption received a stamp of approval creating a new political culture. Money and manipulation became the dominant part of politics.
The abiding tragedy is that every succeeding regime, while condemning corruption and maladministration of the dictator, have retained his system of allocation of large amounts of state money to control MNAs and MPAs.
In no other country of the world, members of the legislature are encumbered with the responsibility of executing or supervising development projects. Their sole function is to frame laws for good governance. Being free of monetary temptations, they jealously guard their independence against the executive authority.
In Pakistan, every MNA, MPA or another public-spirited person should be authorised to submit his scheme of development to the Planning Division for central subjects and to Provincial Planning Boards for provincial subjects to be thoroughly scrutinized. If found suitable, it should be implemented by the normal executing agencies of the government without the intervention of the proposing body or person.
Unless this is done, development funds will continue to be wasted, politicians will continue to be corrupt and the legislators will continue to be subservient to the executive, whether the head of government is a dictator or not or provinces are autonomous or controlled. [The News]
'WHITE ELEPHANTS'
[M. Afzaal Khan, Islamabad]
With reference to a report (Dawn, August 26) about the Karachi shipyard being "a white elephant", it is a sad fact that all state-owned enterprises are in a similar predicament. Sheer incompetence and systematic corruption are the order of the day in most such organizations.
The country would be better off if these were closed and the money allocated to poverty alleviation and education where millions will benefit. [Dawn]
FAULTY BRIDGE CONSTRUCTION
[Shah Affan, Toronto, Canada]
Most of Karachi’s newly built roads and bridges are already sporting visible cracks. This is due to poor construction practices and nothing else.
During my recent trip to Pakistan, I passed by Liaquatabad and Karimabad bridges. I was shocked to see that construction materials were still lying nearby, even though construction of the bridges was complete.
In western countries, construction companies must clear away all work materials as well as repair any damage that may have been done to roads during the construction process. If they do not, they do not receive final payment for their work.
However, in Pakistan, no such contract appears to exist. Moreover, construction companies would surely not dare to use cheap materials and carry out shoddy workmanship unless they were sure that city government officials would turn a blind eye to such practices. Indeed, it is common knowledge that contractors bribe government monitoring officials. Yet no action is taken against either the contractors or the officials in question.
I once worked on a bridge construction site in Pakistan as a junior engineer. While working one evening, the contractor used cement bags which had become wet due to exposure to rain water. Our senior site engineer objected to the use of damp cement. Work was halted and city government officials were called in. After much discussion, the officials permitted the contractor to use wet cement bags.
Not only was I surprised by the complicity of the city government, I was also appalled at the officials’ comment that since the bridge would not be built for 50 years, the use of wet cement bags would hardly damage the strength of the concrete blocks.
But we now know why mysterious cracks frequently appear on the city’s bridges and roads and why government officials seem unsurprised by this.
Unfortunately, it seems that unless a bridge actually collapses, the government will take no action against such shoddy practices. And even then, we cannot be sure that those responsible will be held accountable or have their licenses revoked. For perhaps an inquiry into such a disaster will never be made public and those responsible will simply be given yet another construction contract. [Daily Times]
JOB INSECURITY AND LESS PRODUCTIVITY
[Air Cdre (r.) Azfar A Khan, Rawalpindi]
With reference to an article under the above caption written by Mr Asghar Javed in The News of 19th September 2004. He has stated that job insecurity results, among other things, in non-standard work environment and poor productivity.
I think that it doesn’t apply to the work environment prevailing in our country. Just take the example of the public sector industrial units in Pakistan where you will hardly find anybody working. Why? Because, the employees are fully satisfied with the security of their jobs. They are well aware of the fact that they can draw their full salary on first of every month, whether they complete the job assigned to them or not! Had it not been the case, then these white elephants which are eating into the vitals of our economy would not have been going in loss for decades and provided oxygen through pumping billions of rupees to keep them going and auctioned every now and then through another organisation created for the purpose.
I think that it’s the insecurity of job and the hire and fire process that keeps all the workers/staff of any grade and cadre on toes. The working of organisations in the private sector is a case in point. May be I’m wrong but the fact is that I have yet to see anybody being fired from a government department for his inefficiency or dereliction of his duties. If at all, a government servant is that unlucky and found inefficient, he is only suspended (the meanings of suspension are not easy to comprehend by everybody) and remains in that syndrome for months together and becomes a part of the inquiry that moves at a snail’s speed and takes its own time to complete. [The News]
GOVERNMENT WEBSITE
[Hadi Zaidi, Kuwait]
The government website www.pak.gov.pk is awful. It is supposed to be a very basic source of information - the mirror of our country - and hence it should be most informative and updated, but it isn't. I have noted down many shortcomings in the website, such as inoperative emails and fax and telephone numbers.
Email addresses are given for five ministers only. There are no telephone and fax numbers or email addresses mentioned against any of the ministers of state. Resumes have been posted of only four ministers. The names of some ministers are not written in full. [Dawn]
PUBLIC HEALTH SECTOR
[Dr. Rafique Ahmed Mirza, Karachi]
The government health sector caters for only 20 per cent of our population. Its work force is competent and well-qualified, but its resources are scant and insufficient. The private health sector caters for about 80 per cent of the population, both in the rural and urban areas.
There are many types of health centres - from a small dispensary to a large well-equipped hospital - but unfortunately few people can afford treatment. Although philanthropists and social workers have come forward and are running charitable hospitals, they cannot provide free treatment to a large number of poor patients.
The health ministry is requested to establish more hospitals and rural health centres, keeping in view the population ratio of every town/tehsil and city. For this, the prime minister should allocate more funds for the health sector. [Dawn]
TAXES ON STOCK EXCHANGE TRANSACTIONS
[Muhammad Yasin Lakhani, Karachi]
The budget for 2004-2005 has imposed the following taxes on stock exchange transactions:
1. CVT at 0.01 per cent on purchase.
2. Withholding tax on sale of shares at 0.005 per cent.
3. Withholding tax on commission income purchase of shares at 0.005 per cent; sale of shares at 0.005 per cent.
4. Withholding tax on carry-over trades mark-up at 10 per cent.
While the withholding tax of 0.005 per cent on purchase and sale each is the responsibility of members of all stock exchanges and is a full and final tax liability, the remaining taxes, namely, CVT at 0.01 per cent and the tax on sale of shares at 0.005 per cent, are to be passed on to investors.
The assumption of a daily turnover of 400 million shares at an average price of Rs40 per share for 240 working days was taken to estimate collection of taxes. However, ever since the imposition of new taxes, the volume has come down to an average of 120 million shares per day and is likely to go down further.
Therefore, the entire estimate of tax collection will see a shortfall of about 70 per cent and government efforts will not only be defeated but will have a negative impact on its plans to privatize public sector organizations.
This will also upset budgeted incomes of stock exchanges and the Securities and Exchange Commission and will therefore retard development plans of both the exchanges and the SECP.
The remedy lies in the government doing away with CVT of 0.01 per cent right away. This will be more than made up in increased volumes and increased income not only for the government but also for the exchanges and the SECP.
The tax on day trading of 0.005 per cent purchase and 0.005 per cent sale totalling 0.01 per cent is also to be made full and final liability of the investor so that the volumes increase; hence a greater income for the government, exchanges and the Securities and Exchange Commission.
Any positive action on the above lines will not only create greater confidence but also prove to be a real boost to attract investment in the most organized, documented sector, i.e., the capital market.
If the government aim is to document other areas of investment and collect massive sums, it should also consider taxing open plots where speculation has reached astronomical proportion.
The price of land is beyond the reach of people belonging to middle or lower middle-income group, and the valuation is such that almost 75 per cent of tax-evaded funds are parked in open plots. This not only provides a great haven to tax evaders but also defeats the government plans of providing housing for all.
[Dawn]
MULTIPLE TAXATION
[S. A. SIDDIKI, Karachi]
I work for a multinational bank. I pay Rs 7,000 per month in income tax payments. This amount is deducted at source.
Any wage earner who pays income tax at source still has to pay multi-fold taxes despite the fact that wage earners are the only ones who pay the correct amount of tax on a regular basis. Indeed, the salaried class generates the largest portion of income tax payment.
However, the authorities concerned do not consider us eligible for any kind of tax relief due to our class. This is most unfair as we are constantly charged taxes in our everyday lives. Consider the following:
* When I leave the office, with my already reduced salary, and put petrol in my car, I have to pay fuel tax;
* When I stop to purchase groceries, I have to pay value added tax on all products;
* When I go to purchase bakery items, I have to pay added tax on all products;
* When I pay my utility bills, I have to pay added tax;
* Many of us also have to pay maintenance and land tax bills charged by our cantonments.
For a salaried person, the constant onslaught of multiple taxation is a hard principle to swallow. However, most of us remain thankful for the available resources and for the fact that we have jobs. The more ambitious among us work hard to enter the professional field.
Nevertheless, I sincerely hope that our legislators and the relevant tax authorities will consider the introduction of tax relief initiatives to ease the burden of salaried taxpayers. They should perhaps also consider stretching the tax canvas to bring more and more individuals and SMEs within the tax net, which in turn will increase tax-generated government revenue. [Daily Times]
INCOME TAX RETURNS
[Karam Illahi, Muzaffargarh]
According to some economists, income tax is like a poison for developing economies because it tends to further drag down the most basic asset that these countries lack in the first place - individual talent and productivity.
It also strangulates the entrepreneurial spirit of potential economy builders, and affects their motivation. Another difficulty for our citizens is the attitude of tax officials, who use their discretionary powers to harass taxpayers for personal gain.
According to a medical study, retirement from service is just like coming off a drug addiction; most retirees who engage in no activity after retirement die within four years. That is why many retired government servants, especially professionals, start their own businesses.
But although their annual income from pension exceeds that from business, income tax officials in Muzaffargarh label them as businessmen and ask them to submit their annual tax returns in the income tax circle for businessmen instead of the salary circle where they had been submitting their returns all their lives.
Unfortunately, the business income tax circle with its vast discretionary powers is like a wild jungle where they get bogged down, becoming miserable at the fag-end of their lives.
The CBR authorities are requested to have pity on retirees and allow them to submit their returns with the salary circles. [Dawn]
FALSE ADVERTISING
[Alvina Khursheed, Lahore]
I would like to take this opportunity to draw attention to the plight of customers wanting to buy or who have already bought split unit air conditioners.
The manufacturers have been offering one year’s free warrantee and servicing with any new purchase.
I recently encountered problems with my air conditioner. I telephoned the manufacturer who pledged to promptly send an engineer to fix the problem. I waited one month for someone to come and fix it. And now that the weather is changing, I shall probably need use it for a few more days only.
It seems to me that the problem lies in the fact that these companies have sub-contracted local dealers who are more interested in selling these products than repairing them under warrantee. They are more interested in maximising their profits by attracting new customers as opposed to keeping their loyal customers happy by providing them with good service. But more than that, these companies are guilty of false advertising. [Daily Times]
AN UNFAIR PRACTICE
[Abdullah, Lahore]
Nowadays many advertisers relegate vital information to the sidelines and print it in extremely fine print. It seems they want this information to go unnoticed.
This is an unfair practice. To safeguard the interests of the readers, advertisers should be asked to be open and transparent and ensure that all relevant information is set out clearly and in bold print. [Dawn]
REGULATING REAL ESTATE BUSINESS
[Rasheed Asghar, Lahore]
The real estate business has shown tremendous growth during the last couple of years. But over the past few months, it has staged such a staggering increase that it has led to fears that we may be heading for another scam.
This state of affairs calls for immediate government attention so that effective steps can be taken to save the situation before it is too late. In this respect the following measures are proposed for necessary consideration at the appropriate level:
A. Formation of new housing societies or extension of the existing ones should be banned for some time.
B. Record of all existing societies should be checked to ascertain:
i. Purchase and possession of the land for which money has been collected from the public.
ii. Grant of NOC by the development authorities.
iii. Deviations from the original plan.
iv. Reasons for delay in completion of the scheme, and
v. utilization of the money received from members. Any irregularity or failure should be severely punished.
There is immediate need to put a ban on office-bearers of a society to hold office for a second consecutive term. This will eliminate the perpetuation of interest, which often leads to corruption.
Repeated sale and transfer of plots and open trading in files should be controlled to protect the interest of genuine buyers. The real estate business should be brought into the tax fold.
This step will serve a dual purpose. On the one hand, it will regulate the real estate business and add to government revenues and, on the other, it will stop the siphoning off of investment from the stock market which has been subjected to CVT and wealth tax.
So, by taxing the real estate business the above anomaly, which is affecting the performance of the stock market, will end and the overall affairs of the property business will be streamlined. [Dawn]
FIXING MANAGEABLE HOUSE RENTS
[Jibran Khalil Malik, Islamabad]
Just like many other exploited classes in our country, tenants of private residential homes too do not have any forum where they can get their grievances redressed, the foremost being the rapidly increasing house rents in major cities.
In Islamabad, house rents are increased by Rs500 on average every now and then. House owners are not the only ones to blame. Estate agents, especially those dealing in rentals, are too to be blamed, more so for their formula of calculating commissions both from the owner and from the prospective tenant. They charge a 15-day settled rent from both parties. Thus, the greater the rent, the greater will be their commission.
This is against the interest of the tenant who pays an equal commission to the agent. A better formula is proposed here in the interest
