01

BUSINESS

BMonday, 13 May, 2013

Business, more than any other occupation, is a continual

dealing with the future; it is a continual calculation, an

instinctive exercise in foresight. — Henry R. Luce

Facebook Phonenow costs $1

NeWs DesK

Ouch. The “Facebook phone”—aka the

HTC First phone running Facebook

Home—is now selling for just 99 cents.

AT&T was offering the phone for $99 on a

two-year contract, but has now reduced

the price to under a buck, Mashable

reports. That’s an absurd-sounding

99.72% discount on the phone’s original

price of $350.99. “Promotional pricing is

common in the mobile industry,” argues

HTC, which is true, but as Mashable

points out, 99% discounts are not. For its

part, Facebook is keeping its head held

high, even promoting the deal on its own,

er, Facebook page. In other struggling

smart phone news, the once-mighty

Nokia has just released its $99 Asha

phone, made for Indian and other

“emerging” markets, in an effort to

reclaim some of its former market share,

the Wall Street Journal reports. The

company says the phone is targeted at

“young, socially inspired” people,

whatever that means, and offers limited

smart phone functionality like social

media apps and a touch screen. India is

the second-largest phone market in the

world, but Nokia has been losing ground

to local competitors, say sources—from a

50% share three years ago to 23% today.

KArACHI

ISMAIL DILAWAR

THe pundits at Karachi Stocks Ex-change (KSE) foresee the equitymarket to shoot up by 400 to 500points on Monday in reaction tothe dominant position the Pak-

istan Muslim League-Nawaz (PML-N) hasachieved in Saturday’s general elections.

The unofficial election results so farreported by the media clearly put PML-Nin the driving seat with 125 seats possiblyto form a coalition government in center.The PPP and PTI are fighting each otherfor the runner-up position having so farbegged 32 and 31 National Assemblyseats, respectively.

Saturday’s political positive, stocksanalysts and brokers believe, would havea skyrocketing affect on the country’slargest bourse on Monday, the first day oftrading after polls.

“The stocks market would react verypositively to the formation of a business-friendly government in the country,”viewed Mohammad Yasin Lakhani, a sen-ior broker and director of KSE board.

Led by the sentiments of risk-averseinvestors, the equity market, Lakhani said,would remain in a positive mode in thepost-election scenario. He, however, de-sisted from quoting numbers in terms ofincrease the KSE 100-share index wouldbe witnessing today (Monday).

“By quoting figures I don’t want togive a lead to the investors,” the chief ex-ecutive of Lakhani Securities said.

While the KSE director did not give afigure, other market observers offeredtheir estimates for Monday’s hike. “Theindex (on Monday) is likely to rise by 2.5to 3 percent,” said an analyst, requestinganonymity. This percentage, the analystsaid, would translate into a gain of 400 to500 points for the benchmark index.

Mohammad Sohail, chief executiveofficer of Topline Securities, also fore-casted Monday to be a bullish day on theback of one party, PML-N, getting closerto win a simple majority in the lowerhouse. “With one party getting closer tomajority in election, the stocks marketwould rally on Monday,” the senior equityanalyst viewed.

Lakhani, however, insisted that in-vestors’ sentiment would remain positiveeven if the PML-N failed to win a major-ity and had to form a coalition govern-ment. “In that case the party would easilyform government with likeminded partiesand even a coalition government wouldbenefit the stocks market,” the formerKSE chairman opined.

Asked what makes him believe thatNawaz Sharif, the country’s would-beprime minister, would be businessfriendly in his policy approach, the seniorbroker replied: “The past”.

“The past experience tells us that hewould be pro-business. Frankly,Nawaz is a human and not a catwhich has nine lives. He must haverealized now that the Almighty isnot going to bless him with op-portunities again and

again,” argued Lakhani. “The marketwould boom assoon as itopens,” he saidrecalling thatmany of the in-quisitive investorsstarted ringinghim up as soon asthe unofficialelection resultsstarted pouringin.

The trend atKSE, on the eve ofgeneral election, al-ready has been bullishwith Friday, lastweek’s trading day,seeing the index peak-ing to an all time highof 19,916.27 points,gaining 254.81points on the backof investors’hope for theformat ionof a‘pro-

business’ government.The country’s equity market, analysts

said, had neared the $ 50 billion markwith the market capital on Friday standingabove Rs 4.889 trillion compared to Rs

4.836 trillion of the previoustrading session. “Pakistanmarket is now worth ap-proximately $ 50 bil-lion,” rejoiced Sohail.

Coutesy BloomBerg

The Chinese military has targeted US government com-puters with intrusions that seek sensitive data, accordingto a report in which the Pentagon for the first time di-rectly accuses China of a cyber espionage campaign.

The incursions “appear to be attributable directlyto the Chinese government and military,” the Pentagonsaid yesterday in a report to US lawmakers on securityissues involving China. The information targeted couldbe used to bolster China’s defense and technology in-dustries and to support military planning, the DefenseDepartment report said. “China is using its computernetwork exploitation capability to support intelligencecollection against the US diplomatic, economic, anddefense industrial base sectors that support US nationaldefense programs,” according to the report.

The Pentagon attribution of hacker attacks toChina highlights an issue that has emerged as a sourceof friction in relations between the two countries. Itwas part of a broader annual report to Congress cov-ering security challenges arising from China.

China filed a protest with the US over the reportand rejects “groundless accusations and hype,” ForeignMinistry spokeswoman Hua Chunying told a briefingin Beijing today. The report’s assertions are irrespon-sible and harmful to trust between the U.S. and China,Wang Xinjun, a researcher with the Academy of Mili-tary Sciences at the People’s Liberation Army, told theofficial Xinhua News Agency.

QinetiQ intrusions

“Although it is common sense that you cannot deter-mine sources of cyber attacks only through IP ad-dresses, some people in the Pentagon still preferbelieving they are from China as they always bear asense of rivalry,” Wang was quoted as saying. “It is anallegation based on presupposition.”

The Defense Department said it is investigating in-trusions by Chinese cyberspies into the computer sys-tems of defense contractor QinetiQ North America(QQ). For three years, hackers linked to China’s mili-tary infiltrated QinetiQ’s computers and compromised

most if not all of the company’s research, which in-cludes work on secret satellites, drones and softwareused by U.S. special forces in Afghanistanand the Mid-dle East, Bloomberg News reported May 2.

“We are working very closely with QinetiQ to de-termine exactly the scope and breadth of this incident,”Pentagon spokesman Army Colonel Steve Warren toldreporters on May 3. Jennifer Pickett, a spokeswomanfor McLean, Virginia-based QinetiQ North America,didn’t immediately respond to e-mail and phone mes-sages seeking comment about the Pentagon’s probe.

Beyond taiwan

In its annual report, the Defense Department also said thatChina is looking beyond its decades-old territorial disputewith Taiwan as it modernizes its military, according to thereport titled “Military and Security Developments Involv-ing the People’s Republic of China 2013.” While prepar-ing for a potential conflict in the Taiwan Strait appears toremain China’s principal focus, China is seeking to ex-pand its influence to conduct counter-piracy and human-itarian assistance missions as well as regional militaryoperations, the Pentagon found.

‘Greater influence’

“As China’s interests have grown and as it hasgained greater influence in the international sys-tem, its military modernization has also become in-creasingly focused on investments in militarycapabilities to conduct a wider range of missionsbeyond its immediate territorial concerns,” thePentagon report said.

The PLA’s engagement with the militaries of othernations “continues to grow significantly,” the Pentagonsaid. Such interaction helps China share and gain in-sight into doctrines, strategies, tactics and techniques,according to the report.

The Defense Department’s report comes as Presi-dent Barack Obama’s administration pursues a strate-gic “pivot” to the Asia-Pacific, bolstering U.S. navaland other resources in the region. The administrationhas said China shouldn’t view the change as an effortto contain its growing presence and assertiveness.

Among the developments singled out in the Pen-tagon report was China’s fielding of “a limited butgrowing number of conventionally armed, medium-range ballistic missiles.”

larGe ships

One of those is the DF-21D anti-ship missile, describedin the report as having a range of 1,500 kilometers (932miles) and being capable of attacking “large ships, in-cluding aircraft carriers, in the western Pacific Ocean.”It’s not clear how many missiles China has deployed orwhere they are located, said David Helvey, the U.S.deputy assistant secretary of defense for East Asia. “Weare concerned about the ability of China to develop mis-siles that can project its military power with precisionat great distances from China,” Helvey said at a Penta-gon news conference yesterday on the report. In com-bination with other weapons systems, China is gainingthe capability to deny the U.S. a military presence inthe western Pacific, he said. China is carrying out a“moderate and necessary defense buildup” to protectits independence and sovereignty, Hua said at the brief-ing today. While China will boost its defense spend-ing 10.7 percent this year, military outlays are stillabout six times more in the US.

cyBer espionaGe

The Pentagon report’s findings on cyber espionageecho remarks made two months ago by US NationalSecurity Adviser Tom Donilon, who said China wasengaged in a “large scale” cybercampaign to steal tradesecrets and intellectual property. The Chinese armymay be behind the hacking of at least 141 companiesworldwide since 2006, according to a Feb. 19 reportfrom Alexandria, Virginia-based Mandiant Corp.

Donilon, who helps shape US foreign policy, saidin a March 11 speech that China needs to recognize thescope of the hacking issue, take steps to halt computerespionage and start a “constructive dialogue” with theUS on the matter.

Hua, China’s Foreign Ministry spokeswoman, saidChina is also concerned about cybersecurity and iswilling to work with the US on the issue.

The Obama administration, as part of its fiscal2014 budget request, is seeking to increase total USgovernment spending on cybersecurity to $13 billion,about $1 billion more than current levels.

Pentagon accuses China of cyberspying on US government

Stock market to clinchhundreds today onelection positives

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BUSINESSMonday, 13 May, 2013

02

B

In the business world, everyone is paid in two coins:

cash and experience. Take the experience first; the

cash will come later. — Harold S. Geneen

Hugo DIXoN

The neW YoRk TIMeS

QUITTINg the EuropeanUnion would be bad forBritain. Membership in evenan unreformed Union wouldbe better than a “Brexit.”

Quitting would mean either not having ac-cess to the common market — at a hugecost to the economy — or second-tiermembership.

The debate over quitting has movedinto high gear in the past 10 days, after theU.K. Independence Party, or UKIP —which wants Britain to pull out of theUnion — performed well in local elec-tions. The Conservative Party, which gov-erns in coalition with the pro-EuropeanLiberal Democrats, has been thrown intoturmoil because UKIP has been winningvotes from the Tories.

What is more, many Conservativeswould like Britain to quit the Union, too.Last week, Nigel Lawson, one of Mar-garet Thatcher’s finance ministers, arguedthe case for getting out. Boris Johnson,the mayor of London and the Conserva-tives’ most popular politician, also shuf-fled a little further in a euro-skepticaldirection — although he stopped short ofcalling for a departure.

David Cameron himself has notshifted his position. He wants to hold areferendum in 2017, after he has had achance to renegotiate Britain’s relation-ship with the Union in so far unspecifiedways. But he may be tempted to give tacitsupport to legislation to call a plebiscitein an attempt to embarrass the oppositionLabour Party, which has so far refused toback such a vote.

Despite the increasingly anti-Europeantone of the debate, the overall likelihood ofBritain’s quitting the Union has not reallychanged since the local elections. True, theprobability that the British people wouldvote in a referendum in favor of staying inthe Union has fallen. But the chance thatsuch a plebiscite might take place has alsoprobably dropped, because UKIP’s risemakes it less likely that Mr. Cameron willbe re-elected in 2015.

It is, of course, possible that the pro-European Labour Party will match Mr.Cameron’s promise to hold a referendum.But that would probably be against its in-

terests. A future Labour government wouldfind it hard to win in a referendum — as theConservative Party, unconstrained by beingin government, and its allies in the mediawould mount a vociferous anti-Europeancampaign. After such a defeat, Labourwould be left reeling.

If Labour felt the only way to win thenext election was to promise a referendumnow, it might still take the risk. But its

chances of winning have risen in the past10 days. And any attempt by the Tories toembarrass Labour for not backing aplebiscite is more likely to backfire by fur-ther exposing the divisions in its own ranks.

Pro-Europeans, though, cannot just cal-culate the political probabilities. They needto make the case for staying in the Union.

Anti-Europeans often fudge the ques-tion of whether they would like Britain to

quit the common market as well as theUnion. They should be invited to clarifyprecisely what they mean.

Quitting the common market would beextremely bad for the economy, becauseabout half of Britain’s trade is with theUnion. That would not all vanish. But allsorts of barriers would make it much harderfor companies to do business across fron-tiers, leading to a big rise in unemployment.

Britain has the world’s third-largeststock of foreign direct investment afterthe United States and China. But multina-tional companies, which have usedBritain as a hub in part because it has ac-cess to the common market, would curtailtheir investment if that were no longer so.The financial sector in the City of Lon-don, Britain’s most successful industry,would also suffer if it were cut off fromits European hinterland.

Not surprisingly, many euro-skepticsdo not want to quit the common market.They think they can have unfettered accessto that market without the rules and regu-lations that irritate them.

The idea that Britain can have its cakeand eat it too is naïve. The rest of the Unionmight well allow it access to the commonmarket — and even then not on an unfet-tered basis — but only if Britain abided byE.U. rules. What is more, it would not thenhave a vote on those rules, putting its busi-nesses at a disadvantage.

That is the position Norway, which isnot in the Union, finds itself in. It also hasto pay almost as much on a per capita basisas Britain does for the privilege of such sec-ond-class status.

The anti-Europeans are fond of lam-basting the bureaucracy in Brussels. Theyalso point to misguided policies like theCommon Fisheries Policy, which results inthe throwing of dead fish back into the sea,or the planned Tobin tax, a levy on financialtransactions that will gum up financial mar-kets. These attacks are fair, even if they donot snuff out the case for staying in. ButBritain has a golden opportunity to helpoverhaul the European Union. This is be-cause the main solution to the euro zone’scrisis is to make it more competitive. It is amisconception to suppose that the eurozone is charging toward political, fiscal andbanking union, as germany is just not will-ing to pay for it.

Instead, the common market needs tobe properly extended to services. Free tradeneeds to be promoted with other blocs, likethe one in North America. And capital mar-kets should be bolstered as a solution to Eu-rope’s banking malaise.

Mr. Cameron needs to start pushing thisagenda now. Achieving it would not just begood for Britain. It would increase thechance of persuading the electorate to voteyes in a referendum.

For Britain, better to stay put in EU

RAWALPINDI: A vendor boy busy

with his cell at his roadside setup. Inp

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