pak accountanapr sep2012

7/30/2019 Pak Accountanapr Sep2012

1/60

M a g a z i n e o f T h e I n s t i t u t e o f C h a r t e r e d A c c o u n t a n t s o f P a k i s t a n

A

p

r-

S

e

p

2

0

1

2


2/60

The Council

President

Rashid Rehman Mir, FCA

Vice Presidents

Khalid Rehman, FCA

Nazir Ahmad Chaudhri, FCA

Members

Abdul Rahim Suriya, FCA

Adnan Zaman, FCA

Ahmad Saeed, FCA

Hafz Mohammad Yousa, FCA

Mohammad Abdullah Yusu, FCA

Muhammad Ali

Muhammad Ayub Khan Tarin

Nadeem Yousu Adil, FCA

Naeem Akhtar Sheikh, FCA

Pervez Muslim, FCA

Raaqat Ullah Babar, FCA

Salman Siddique

Shaikh Saqib Masood, FCAWaqar Masood Khan

Yacoob Suttar, FCA

Zahid Iqbal Bhatti, FCA

Publications CommitteeChairman and Chie EditorAdnan Zaman, FCA

MembersAbdulwahid, FCAAsad Feroze, ACADanish Ari Patel, ACA

Heena Iran Ahmed, ACAJehan Zeb Amin, FCAM. Amir Azal Rana, ACAM. Fahim A. Rau, FCAMutee-ur-Rehman Mirza, FCAOmar Mustaa Ansari, FCA

Secretary ICAP

Shoaib Ahmed, ACA

Publication Co-ordinatorsAsad [email protected] [email protected]

Editorial Ofce

Chartered Accountants Avenue, Cliton,Karachi-75600 (Pakistan)Phone: 99251636-39 Fax: 99251626Website: www.icap.org.pk

The Rise o Islamic

Banking in Pakistan

Enterprise Risk

Management: Key

Success Factors or an

Efective Rollout

Tax Laws in the Islamic

Republic Favour Rent

Seekers and Interest

Earners

End o Bank

Reconciliation

Statements

EDITORS LETTER2 Adnan Zaman, FCA

PRESIDENTS PAGE

3 Rashid Rehman Mir, FCA

COVER STORY

5 The Rise o Islamic Banking inPakistan: Comparative Study oConventional and Islamic Banking- A Case Study rom PakistanKhawaja Amjad Saeed, FCA

15 Principle to Practice- Islamic Economics GovernanceMohammed Ashra, FCCA

OTHER ARTICLES21 Tax Laws in the Islamic Republic Favour

Rent Seekers and Interest Earners,

Nasim Beg, FCA

23 Non Proit Making Organization- Tax Heavens or Tax EvasionZeeshan Aslam, FCA, FCCA (UK), CIA (USA)

24 Navigating: Risk & Regulation inSupport o the Real EconomyDouglas Flin

29 Enterprise Risk Management:Key Success Factors for an Effective RolloutAbbas Hasn Khizilbash, FCA, CIAand Malik Mirza, FCA, FCCA

31 Recouping Tax LossesHuzaima Bukhari & Dr. Ikramul Haq

35 Business Continuity PlanningAsi Mahmood, FCA, FCIS

38 CFOs Role in Organizational Change,Abdul Aziz Abdul Qadir, ACA

41 Put Options Written onNon-Controlling Interests

Syed Mohammad Nabeel, ACA

43 Proessional Accountant in Business- Investing Overseas?Adnan Ali, ACA

47 Evaluating and Improving InternalControl In OrganizationsVincent Topho

49 ISRS 4410: The Standard or TodaysCompilation EngagementsHighlighting the Value to SMPs andSMEs

51 Corporate Dividends: Policy andPatternAbdul Jabbar Kassim

54 End o Bank ReconciliationStatements!Umair Ashra, ACA

56 Mediation Saves Time and MoneyHina Imtiaz Longi

57 Report o 22nd SAFA Board Meetingat Colombo, Sri LankaAbdul Rahim Suriya, FCA

59 Brand Perception Survey

CONTENTSVolume 46 Issue 2-3Apr-Sep 2012

T h e v i e w s e x p r e s s e d a r e t h o s e o f t h e a u t h o r a n d d o n o t r e f l e c t t h e I n s t i t u t e .

Islamic Banking

Frontier to Socio EconomicDevelopment


3/60

Editors Letter

Awell functioning and efficient banking system is vital for achieving robusteconomic performance. The banking institutions perform the importantfunction of mobilizing funds that are channeled to productive investments

thereby generating economic activity.

In Pakistan a growing trend of movement towards fixed/term deposits compared totraditional savings accounts shows that customers are now entering into long termrelationships with Islamic financial institutions, evidencing the industrys credibilityand reputation. Islamic banks prefer low-risk modes of financing, i.e. those whichusually generate a stable return. Among these, Murabahah (cost plus mutually agreedprofit margin), Ijarah (leasing) and diminishing Musharakah are the most attractiveand popular modes of financing. However, lately the share of Mudarabah, Istisnahand Salam has also shown growth at a satisfactory pace, leading towards diversificationof the Islamic banks financing portfolios.

Islamic finance has the potential to channel wealth through alternative avenues for

savings and investments, as well as offering the financial inclusion of devout Muslims.This argues well for establishing Pakistan as a good destination for belief sensitiveforeign direct investment, especially from countries with significant Islamic financeconscious investors. It has been said that Islamic banking and finance is a mirror ofthe sea for until and unless we have the courage to explore its depth, we would neverbe able to uncover the treasures that reside within. Islamic banking as a new sphere offinance, promises vast opportunities and benefits for all. Its integration into the globalfinancial system will contribute towards achieving our shared aspirations for financialstability to contribute towards balanced growth in the global economy.

To be part of the global Islamic banking industry, and introduce world class regulationsin Pakistan regulators along with Shariah scholars and experienced professionals areconstantly coordinating and moving towards integrating the regulations of Islamicfinance industry across all areas and sectors of this industry: including banks, Takafulcompanies, mutual funds and other Shariah compliant institutions. The Institute alsoaware of its responsibility plays an important role through its committees to promoteeffective risk management practices and Shariah compliance.

Today Islamic banking is emerging as a viable and sound financial intermediationchannel, and to meet the regulatory challenges, it can contribute towards the overallefforts to enhance and strengthen the stability of the international financial system,and increase the prospect for securing the path towards achieving the shared vision forsustainable long term global growth.

Adnan Zaman, FCA

2 The Pakistan Accountant | Jan-Mar 2012

E D I T O R S L E T T E R


4/60

Islamic banking is a system or activity that is consistent with the principles of the Shariah-Islamic rulings and its realistic application through the progress of Islamic economics.Pakistans identity as an explicitly Islamic republic has always made the country more

inclined towards economic reforms geared towards greater Shariah compliance.

Efforts to Islamize the economy of Pakistan started in the mid-1960s. A significant attemptwas made in the mid-1980s to convert the banking system to an Islamic banking system.It was a bold and comprehensive exercise, making Pakistan one of the few countries in theworld to try to implement interest free banking at the national level. However, it was notsuccessful due to certain constitutional and regulatory constraints at that time.

In 2002, policymakers and stakeholders decided to try again to re-launch Islamic bankingin Pakistan. The State Bank of Pakistans drive to promote Islamic banking as a parallelsystem, operating on a level playing field with conventional banking, was aimed at buildinga broad-based financial system in the country to enable all segments of the populationto access financial services and play their due role in the overall economic development.

There have been significant positive developments in Pakistan in recent years, includinggrowth in the number of institutions and market share; expansion of branch networks; anincrease in total assets, deposits and profits; and a decrease in non-performing financing.The growth experience to date has been quite remarkable.

By the Grace of Allah the Institutes Committee on Accounting and Auditing Standardsfor Interest Free Modes of Financing and Investment successfully issued IFAS 1 Murabahaand IFAS 2 Ijarah while Standard on Profit and Loss Sharing on Deposits is in final stages.Further the Committee is in process of developing standards on Diminishing Musharaka,Musharaka, and General Presentation of Financial Statements of Islamic FinancialInstitutions.

I would like to share a couplet of Allama Iqbal with you, which for me describe the realityof the journey called life.

In mans crusade of life, the weapons he has:Conviction - that his cause is just;Resolution - to strive till eternity;

Compassion - that embraces all humanity.

The same can be applied to scenario of the Islamic banking in Pakistan; it is now ata threshold of exciting developments. The tides of Islamic banking are bringing onceagain greater co-operation, collaboration and understanding of the magnificent splendor

of Islam. Deriving strength from the religion, we have ample opportunity to establish afinancial model for the rest of the world to follow.

Rashid Rehman Mir, FCA

Presidents Page

The Pakistan Accountant | Apr-Sep 2012 3

PRESIDENTSPAGE


5/60

Prelude

The Western Economic System is under stress thesedays Occupy Wall Street (OWS) movement is spreadingglobally in North America, Europe, Asia, Oceania etc. Oneo the outcry in USA is death to the Banker. It is generallybelieved that interest being charged by the banks globallyin various shapes-usurious rates, compound rates, penal

rates etc. have added to the cost o doing business andis resulting into high inlation. It has widened the gulbetween rich and poor. The rise o Islamic Banking issteadily taking place globally. In this respect, we havecarried out research rom A-Quran. Seven (07) verseshave been extracted and included in the paper whichclearly include guidance against charging o interest(Riba). Moreover, the Constitution o Pakistan 1973 alsocontains commitment by the Government that Riba willbe eliminated as soon as possible.

The rise o Islamic Banking is a welcome sign. However, at

present, conventional banking and Islamic Banking (IBIs)are operating on a parallel basis in Pakistan.

This piece examines some interesting aspects or analysiso Conventional Banks and IBIs in Pakistan.

Terminology

IBIs - Islamic Banking Institutions

ND - No DateNIB - Non Interest Based Banking

NPFs - Non Performing Finance

P - PagePP - Pages

PTC - Participation Term Certif icate

ROA - Return on Assets

ROE - Return on EquityOWS - Occupy Wall Street

SBP - State Bank of Pakistan (Central Bank of Pakistan)

SME - Small & Medium Enterprises

TFC - Term Finance Certificate

Constituents

This piece consists o the ollowing parts:

Part Focus

I Quranic Guidance and the Constitution oPakistan, 1973

II Historical Rundown and Developments or

IBIs in Pakistan.III Growth, Development & Perormance o IBIs

in Pakistan.IV Conclusion & Recommendations

For uture Growth.

The above aspects are now explained below:

The data were extracted rom Islamic Banking Bulletinreleased by the Islamic Banking Department o SBP inJune 2011. Data relating to economy have been extractedrom Pakistan Economic Survey 2010-11, released by the

Ministry o Finance, Government o Pakistan, Islamabad.

Part I: Quranic Guidance and 1973

Constitution o Pakistan

1. Quran and Elimination o InterestSeven verses have been selected rom Al-Quran in respecto the above mentioned subject. These are quoted belowwith brie comments.

Allah has orbidden taking interest and has guidedeveryone to do business, trade and proession. In this

respect, based on our research, some Quranic Verses arequoted below:

Those who consume interest cannot stand [on the

Day of Resurrection] Except as one stands who is

Presented at:Business & Economics Society International Conference 2012,

Salzburg, Austria on July 6-9, 2012

The Rise of IslamicBanking in Pakistan:Comparative Study of Conventional &

Islamic Banking-A Case Study from Pakistan

Pro. Dr. Khawaja Amjad Saeed* [email protected]

5The Pakistan Accountant | Apr-Sep 2012


6/60

being beaten by Satan into insanity. That is because

they say Trade is [ just] like interest. But Allah

has forbidden interest. So whoever has received

admonition from his Lord and desists may have what

is just, and his affairs rests with Allah. But whoever,

returns [to dealing in interest or usury] Those are

Champions of the Fire they will be abide eventually

therein. [ Al-Quran: 2-275 ]

One o the basic cardinal principles o being a true

Muslim is a irm belie in Hereater and on the Day o

Resurrection. I these thoughts are indoctrinated in ones

mind, no Muslim will ollow Satan and consequently

avoid coming into a state o mind characteristicly

described with insanity. Accordingly, in the above

verses, Allah has guided us as Muslims to stay away

rom taking interest. Those who are living under the

misperception that interest is akin to trade are totally

mistaken. Consequently, Allah has admonished us in this

respect. I those o us do not believe in these thoughts,

they are destined to be the Champions o Fire and will

be delivered to the Hell or ever to eventually live there.

It is, thereore, required on our part that we as stakeholders

must undertake all steps to eliminate interest rom our

economic and social lie at the earliest. Under the 1973

Constitution o Pakistan, it is obligatory on the part o the

Government o Pakistan (Article 38 ()) to eliminate Riba

as soon as possible. The Government must rise to the

occasion and accept this as a challenge and meet their

Constitutional obligation.

Another Quranic Verse is reproduced as under:

Allah destroys interest and gives increase for Charity.

And Allah does not like every sinning disbeliever.

[ Al-Quran: 2-276 ]

According to the above discussed verse, Allah has

encouraged giving charity and destroying interest.

In another Quranic Verse, Allah says to human beings.

O you who believe, fear Allah and give up what

remains [due to you] of interest if you should be

believers. [ Al-Quran: 2-278 ]

Muslims as believers, based on above Quranic Verse,

must give up interest and ollow the orders o Allah.

The above mentioned Quranic Verse describes Muslims

as believers, must give up interest and should ollow

Allahs orders.

And if you do not, then be informed of a war [against

you] from Allah and His Messenger but if you repent,

you may have your principle Thus to no wrong nor

are you wronged. [ Al- Quran: 2-279 ]

Allah in the ollowing Quranic Verse has also ordered that

we should not consume usury in any shape. We must

always ear Allah so that we may succeed in lie. In this

respect, a Quranic Verse is quoted below:

O you who have believed, do not consume usury,

doubled and multiplied, but fear Allah that you may

be successful. [ Al-Quran: 3-130 ]

Usury has been understood to be high or super high rate

o interest charged by inancial and other institutions.

Another Quranic Verse regarding taking usury is quoted

below:

And [ for ] their taking of usury while forbidden from

it and their consuming of the people wealth unjustly

and we have prepared for the disbelievers among

them a painful punishment.[ Al-Quran: 4: 161 ]

The oregoing verse rom Al-Quran contains a strict

warning o painul punishment or those who take usury

which Allah has orbidden. Their act in taking usury

constitutes consuming o the people wealth in an unjust

manner and or them there will be a painul punishment.

In another Quranic Verse, Allah has said:

And whatever you give for interest [ i.e. advantage ] to

increase within the wealth of people will not increase

with Allah. But what you give in Zakat, desiring thecountenance of Allah Those are the multipliers.

[ Al-Quran: 30-39 ]

In the light o above discussed verse Allah has again

guided us to give up interest and has encouraged

giving Zakat as He will, through his ininite wisdom and

blessings, introduce multipliers through giving Zakat.

2. Riba and The Constitution o Pakistan, 1973The present democratic Government is taking pride

in claiming that they have restored the Constitution o

Pakistan, 1973 in its original shape. Accordingly, they

deserve congratulation. However, the crying need o

today the implementation o the Constitution o Pakistan

in letter and spirit. In this respect, an excerpt rom Article

38 () o the above Constitution is quoted below:

The State shall . Eliminate Riba as early as

possible.

There is a need to implement the above spirit o the

Constitution as 40 years have already passed and the

Nation is eagerly awaiting the happy moment when Ribawill be totally eliminated rom our social and economic

lie to usher in an era o Islamic Society where dividends

can be reaped by the common man and all other persons

across the board in our country.

6 The Pakistan Accountant | Apr-Sep 2012


7/60

Part II: Historical Rundown and

Developments or IBIs in Pakistan

1. Historical RundownDuring the 65 years o the history o Pakistan someeorts, at times casual, at times hal hearted, at timeswith speed, have been made to eliminate Riba. In this

respect, the ollowing Table contains salient eatures othe eorts made in the past:

Table: 1

Eorts to Eliminate Riba rom the Socio-Economic

Landscape o Pakistan

Decade Main Eort

1970sSome eorts started with no conspicuous

results.

1980s Bold and comprehensive initiatives wereundertaken. Pakistan was ranked amongstthe three countries o the world orcommencing non-interest based banking.Various legislations (Companies Ordinance,1984, Negotiable Instruments Act, 1882,State Bank Act and Recovery o Loans Lawsetc). were reviewed to bring these in linewith the tenants o Islam. A new interestree Instrument namely; PTC (Participation

Term Certiicate) or Corporate Financingwas introduced and was later replaced withTFC (Term Finance Certiicate). Non-InterestBased Instruments (NIB) Numbering 12were announced. In the ConventionalBanks separate interest ree counterswere opened on January 01, 1981. Formeeting working capital needs o trade andindustry, Musharaka was introduced on July01, 1982. Proit and loss sharing basis wasintroduced in Conventional Banks on April01, 1985.

1990s In November 1991, Federal Shariat Courtwas established. An announcementwas made on December 23, 1991 thattransactions involving interest in bankswould cease to have eect inally by June30, 2001.

21stCentury

Commission or Transormation o FinancialSystem was constituted in State Bank oPakistan. Task Force was set up in SBP tosuggest ways and means to eliminateinterest rom Government inancial

transactions. However, parallel bankingsystem namely; Conventional and IslamicBanking has continued till today.

2. State Bank o Pakistan RoleIslamic Banking Department was established in theCentral Bank o the country namely; State Bank oPakistan (SBP). Clear-cut statements in respect o Visionand Mission were announced. These are reproducedbelow:

Vision and Mission Statements o SBPi. Vision Statement

To transorm SBP into a modern and dynamic CentralBank, highly proessional and eicient, ully equippedto play a meaningul role on sustainable basis in theeconomic and social development o Pakistan. To makeIslamic Banking role, the banking o irst choice or theproviders and users o inancial services.

ii. Mission Statement

To promote monetary and inancial stability and ostera sound and dynamic inancial system, so as to achieve

sustainable and equitable economic growth andprosperity in Pakistan. To promote and develop IslamicBanking industry in line with best international practices,ensuring Shariah compliance and transparency.

Vision and Mission Statements o Islamic Banking

Development o SBPStatement o Islamic Banking Department o SBP aboutvision & mission are given below:

i. Vision Statement

To make Islamic Banking, the Banking oFirst Choice or

the providers and users o inancial services.

ii. Mission Statement

To promote and develop Islamic Banking industrywith the Best Inter-national Practices ensuring Shariahcompliance and transparency.

3. Strategy or Islamic Banking in PakistanGlobally two strategies are recommended. The irst oneis known as Revolutionary strategy which Iran ollowedin respect o introduction o Islamic Banking. The secondone is Evolutionary strategy which Pakistan announced

or introducing Islamic Banking in the country. Similarapproach is being ollowed in Indonesia and Malaysia.

State Bank o Pakistan has developed the ollowingthree point strategies relating to development o IslamicBanking in the country. These include the ollowing:

a) Full-ledged Islamic Banks are encouraged to beestablished in Pakistan on independent ooting.The objective was to help develop Islamic Bankingaway rom the parallel run o Conventional andIslamic Banking.

b) The above category o Islamic Banks established,

at (1) above have been permitted to establishtheir subsidiaries throughout Pakistan.

c) The Conventional Banking set ups in Pakistanwere permitted to establish Stand-Alone IslamicBanking Branches in Pakistan.



8/60

Accordingly, SBP hopes that, through the evolutionaryprocess, while Islamic and Conventional Banks maycontinue on parallel basis, eorts were initiated tointroduce Islamic Banking in the country. However, aswill be shown later in the Statistical Analysis, the paceo converting Conventional Banks to Islamic Banks isslow. A breakthrough eort is the crying need i Allahscommand to eliminate interest rom the society isimplemented with true spirit and with committed anddedicated eorts.

Part III: Perormance o IBIs in Pakistan

1. The Rise o IBIsWe have tabulated the growth o IBIs. Three indicatorsselected include Total Assets, Deposits and Net FinancingInvestment.

Table 2

Growth o Islamic Banks:

Some Important Indicators (December 2003 to June 2011)

Year Total Assets DepositsNet inancing

investment

December TotalRs.b

Share oIBIs %

TotalRs.b

Share oIBIs %

TotalRs.b

Share oIBIs %

2003 13 1 8 1 10 1

2004 44 2 30 1 30 1

2005 71 2 50 2 48 2

2006 119 3 84 3 73 2

2007 206 4 147 4 138 4

2008 276 5 202 5 186 4

2009 366 6 283 6 226 52010 (June) 411 6.1 330 6.4 236 4.6

2011 (June) 560 7.3 452 7.6 420 7.0

Source: Extracted from: Islamic Banking Bulletin, Karachi: State Bank of

Pakistan, June 2011.

The ollowing conclusions emerge rom the above table:

a) IBIs represented 7.3% o banking industry.b) IBIs share o deposit was 7.6% and the share in

net inancing investment was 7.0% o bankingindustry.

c) Shares o all the three indicators have beenregistering a steady rise. This augurs well or theIBIs or the uture.

The ollowing Table has been compiled to presentconcentration analysis o Islamic Banks in Pakistan as onJune 30, 2011:

Table: 3

Concentration Analysis o IBIs Branches by Districts

Name o District Number o Branches %

Karachi 223 28

Lahore 133 17Islamabad 43 05

Bahawalpur 41 05

Faisalabad 35 04

Peshawar 32 04

Multan 27 04

Quetta 25 03

Sub-Total 559 70

Others 240 30

Total 799 100

There are over 100 districts in Pakistan. Unortunately,Islamic Banking Branch Network exists only in 73districts. Thereore, there is need to widen the networko branches in every district, tehsil and union councilo each province o Pakistan, particularly in rural areasso that those who are desirous o opening their bankaccounts and also undertaking their operations in IslamicBanking modes can really beneit out o it.

A detailed analysis has been carried out by us and theollowing Table presents IBIs branch network:

Table 4

Islamic Banking Branch Network in Pakistan

S. # Particulars Number o

Branches

%

A: Islamic Banks

1. Meezan Bank Ltd 232

2. Al Baraka Islamic Bank 87

3. Bank Islami Pakistan 70

4. Dubai Islamic Bank 66

5. Dawood Islamic Bank Ltd 42

Sub-Total 497 62

B: Islamic Branches o

Conventional Banks

1. Bank Alalah Ltd 80

2. Faysal Bank Ltd 37

3. Askari Bank Ltd 29

4. Habib Bank Ltd 22

5. Bank o Khyber 21

6. Others 64*

Sub-Total 253 32

C: Sub-Branches o IBIs

1. Bank Islami Pakistan Ltd 32

2. Dawood Islamic 08

3. Others Banks 09**

Sub-Total 49 6

Total 799 100

*Standard Chartered (15) MCB Bank (14), Bank Al Habib(10), UBL (7), Soneri Bank (6), NBP (8), Habib MetropolitionBank (4).

**The Bank o Khyber (3), AlBaraka Islamic Bank (2), AskariBank (2), MCB Bank (2).

Source: Extracted from: State Bank of Pakistan, Islamic Banking Bulletin,

Karachi, June 2011 Annexure, P. 24.



9/60

By Allahs grace, the growth o IBIs branches has beensteadily increasing as is shown in the ollowing Table:

Table: 5

Growth o Islamic Banks Branches

December 2003 to June 2011

Year(December)

Number Base Index Number o Times

2003 17 100 1

2004 48 300 3

2005 70 412 4

2006 150 882 9

2007 289 1,700 17

2008 515 3,029 30

2009 651 3,829 38

2010 (June) 667 3,924 39

2011 (June) 799 4,582 47


Pakistan, June 2011.

An analysis, based on three categories o IBIs is presentedbelow:

Table 6

Islamic Banking Branches Network

As on June 2011

ParticularsBranches

Number %

A: Full Fledged Islamic Banks 497 62

B: Islamic Branches o

Conventional Banks

253 32

C: Sub-Branches 49 06

Total 799 100


Pakistan, June 2011,Annexure, P.24.

2. Deposits o IBIsAs on June 30, 2011, a sum o Rs. 452 b representeddeposits o IBIs. The ollowing Table sums up the overallposition and sources o deposits:

Table 7

Deposits: Islamic Banking IndustryAs on June 30, 2011

Particulars Rs. b %

A) Customers Rs. b % 423* 94- Fixed Deposit : 163 39- Saving Deposit : 150 33- Current Account : 108 24

Non-Remunerative :- Others : 02 04

_____ ____423* 100

B) Financial Institutions 29 06

Total : 452 100

C) Break UP Currency-Wise %- Local Currency Deposits 433 96- Foreign Currency Deposits 19 04____ ____

Total : 452 100

Customers represents 94% o deposits. However, theother source namely; inancial institutions has yet to beexploited. IBIs coverage rom oreign currency depositsis very low. This also represents an area to be explored totheir advantage in uture.

3. IBIs Financing

A sum o Rs. 199.2 b represented IBIs inancing as onJune 30, 2011. The ollowing table presents break up inrespect o above:

Table 8

IBIs Financing Products, June 30, 2011

S. No. Products Rs.b %

1. Murababa 90 45

2. Diminishing Musharaka 63 32

3. Ijarah 23 12

Sub-Total 176 89

4. Others (Istisna: Salam,Musharaka, Mudarba) 23.2 11

Total 199.2 100


Pakistan, June 2011, Table 4, P 5.

A comparative analysis o IBIs inancing based on sectoralcomposition with banking industry is tabulated below:

Table 9

IBIs Financing: Sectoral Composition (June 2011)

S.No. Sector IBIs% Industry %

1. Textile 20.40 17.70

2. Individuals 15.80 11.30

3. Energy: Production &Transmission

8.50 10.10

4. Chemical &Pharmaceuticals

6.90 3.80

5. Sugar 4.90 3.20

6. Cement 3.40 2.20

Sub-Total 59.90 48.30

7. Other Sectors(Including 34.41% orindustry and 17.29%or industry others)

40.10 51.70

Total 100 100



Five sectors constituted around 60% o IBIs total inancing.Textile industry ( 20.4% ) was the main beneiciary,ollowed by individuals (15.8% ) and remaining mainsectors which beneited included energy (8.5 % ),

chemical and pharmaceuticals ( 6.9 % ), sugar (4.9%) andcement ( 3.4% ).

Due to energy crisis in the country, industries areoperating at lower capacity and thus IBIs are in diicultyto collect the money lent.



10/60

4. Non-Perorming Finances (NPFs) o IBIsIt is generally agreed that NPFs should not ordinarilyexceed 4% o advances. Unortunately, this trend isgrowing and stands un-arrested in conventional andIslamic banks.

The crying need is to keep it to most minimum level. In

this respect, the ollowing Table presents the position ason June 30, 3011:

Table: 10

Break UP o NPFs o IBIs

As on June 30, 2011

S. No. Particulars Rs.b %

1. Doubtul 2.3 15

2. Sub Standard 2.2 15

3. Loss 10.4 70

Total: 14.9 100

The ollowing Table presents time series o NPFs:

Table 11

IBIs NPFs Time Series

PeriodNPFs

Rs.b

December 2008 3.4

December 2009 10.0

December 2010 13.8

June 2011 14.9



It would be apparent rom the above Table that NPFs arerising. Perhaps due to liquidity problems o borrowers,it is becoming diicult to collect the money lent. Due tocritical shortages o energy and uncertain dominatingeconomic policies, NPFs are becoming a headache orbanking industry in general and also or IBIs.

5. IBIs InvestmentsA sum o Rs. 231 b stood invested by IBIs on June 30,

2011. The ollowing table shows the composition oinvestment:

Table 12

IBIs Investments: Composition

As on June 30, 2011

Composition Rs. b %

1. Federal Govt Securities 148 64

2. TFCs, Debentures, Bonds & PTCs 29 13

3. Fully Paid up Ordinary Shares 2 1

Sub-Total 179 78

4. Others 52 22

Total 231 100



It is interesting to note that 64% o investmentsstood invested in Federal Government Securities.This represents risk ree principal with assured andguaranteed rate o return. The remaining amount wasmentioned to have been invested in several productsincluding debentures which is not Shariah complaint.

Only 1% was invested in equity shares. Currentlyvolumes are thin and trading on Stock Exchanges inPakistan is slow. Available loats o blue chips are smalland except or a ew scripts, share prices show decliningtrends. Some steps have been taken by the governmentto increase volume.

Highly specialized and magniicently qualiiedproessionals are needed to guide IBIs to help developtheir investment strategies.

6. IBIs: Earning & Proitability AnalysisFrom three angles, we have analyzed the perormance

o IBIs and banking industry namely; income, expenses,and spread. The ollowing table presents the position ina summarized shape:

Table: 13

IBIs: Earnings and Proitability

As on June 30, 2011

Indicator IBIs %Industry

%

A) Income

Net Income to Total Assets (ROA) 1.60 1.40

Return on Equity (ROE) 16.50 14.40

Net Interest Income to Gross Income 82.60 75.90

Trade & Fx Gains (Losses) to GrossIncome

5.30 7.60

B) Expenses

Operating Expenses to Gross Income 60.90 51.00

Personnel Expenses to Operating

Expenses

36.10 37.20

C) Spread

Spread between Financing andDeposit Rate

8.80 6.90

It is apparent rom the above Table that IBIs haveperormed better than the banking industry based onthe ollowing three indicators:

a) Net income to total assets (ROA).

b) Return on equity (ROE).

c) Net interest income to gross income.

However, income earned rom trade and oreign exchangeto gross income is lower. This potential needs to be tappedand the source o income needs to be expanded.



11/60

Table 14

Selected Perormance Indicators: IBIs & Banking

Industry

As on June 30, 2011

S. No. Particulars IBIs% Industry%

1. Capital

Capital to Total Assets 9.2 9.4

2. Assets Quality Ratio

NPFs to Financing 7.50 15.30

Net NPFs to Net

Financing

3.20 5.50

Provisions to NPFs 60 .00 67.90

Net NPFs to total Capital 14.30 26.60

Part IV: Conclusion & Recommendations or

Future Growth

1. Suggested Investment Portolio Mix or IBIsIn 2010, the then Deputy Governor o State Bank o Pakistan,while presenting a keynote address in an InternationalConerence in Lahore outlined three points strategy orthe guidance o IBIs. In this respect, our suggestions orinvestment portolio mix or IBIs are as under:

a) Agriculture SectorAgriculture sector has yet to be served by IBIsand unortunately represents largely unserved.It constitutes 22% o GDP o Pakistan. However,based on data released by SBP, IBIs inancingconcentration in agri-business as on June 30, 2011was only 2.80% o their total inancing as against6.10% o banking industry, which is also verylow. IBIs need to train and develop a new breedo bankers to swing into action in rural heart oPakistan and invest in agri-business with particularemphasis to small armers so that poverty can be

reduced, agriculture output may attain a quantumjump, expand exports o agri-based products toensure ood autarky and help develop a sense oconidence on sel-suiciency on agricultural ront.It may be noted that agricultural sector has ourcomponents, as stated in the ollowing table:

Table: 15

Agricultural Components In Pakistan

S. No. Component %

1. Llivstock 54

2. Crops-major and minor 433. Fish 02

4. Forestry 01

100

An in-depth study o above can guide the IBIs to develop

a strategy to select the sub-components within the above

ramework. There is also a crying need to develop agro-

based industries i.e. Tomato Paste, Potato Processing,

Cold Storages etc. to which IBIs need to direct their

eorts or inancing.

b) SME Sector

It is estimated that total SMEs in Pakistan arearound 3.1 million. Out o this, it is generallybelieved that 2300 clients are being served interms o inancing by IBIs. There is an urgent needto address SMEs sector and divert their inancingto it so that employment generation takes place,industrial output increases and poverty is tackledand alleviated in the short run and eventuallyeliminated in the long-run.

The outreach to small towns and rural / semi-ruralareas should be tapped or achieving oregoinglaudable objectives.

IBIs need to develop trained manpower to addressthe above issues. They must accept this challenge.

c) Housing Finance

It is believed that six million housing units deicitexists in Pakistan. There is a need to developshelter policy in Pakistan so that untapped marketbe exploited and IBIs may render useul serviceo diverting their unds to this area and thus help

meet one o the basic needs o the common man.This agenda be pursued with speed so that theirtangible support brings some peace o mind tocommon man in meet in one o their basic needs.

2. ForecastIn the next three years, 1200 branches o Islamic Banksare visualized to be opened. The hope is that IBIs will be12% o total banking industry in due course o time.

By 2013, total o Islamic Banking industry is orecasted asover Rs. 1 trillion.

Determined eorts are needed by all o us to pushorward the process o Islamic Banking in Pakistan andtaper o conventional banking and water down itsimpact.

3. ChallengesWe visualize the ollowing uture challenges:

a) Suggestions oered throughout this paper be

given proper attention or implementation to

ensure a sound oundation o IBIs in Pakistan.

b) DierentiatedProducts should be developed.Some Islamic Banks have taken correct initiatives

in this respect. This area needs to be logistically

well cushioned with demonstrated results.



12/60

c) Islamic Banks must show growth with

proitability. The top management must evolve

the process to translate the above challenges.

d) 15,000people are needed in the next ive years to

equip IBIs. In this respect, Universities in Pakistan

must respond to this challenge. Curricula must

be changed in management education. Higher

Education Commission should provide lead and

motivation in this respect or Universities to

positively respond.

e) Shariacompliant inancial services should be

expanded. Awareness should be created in this

respect and logistics be developed as cushion to

achieve the above objective.

) The scope o services or users may be extended

to such areas as micro inance, agriculture and

small & medium enterprises. This will widen the

base o socio-economic development in ourcountry and will address the two vital issues in our

country namely, promotion o sel employment

opportunities and alleviation o poverty.

List o Terms o Islamic Finance used in the

article

IjarahIjarah Economic term or leasing, typically oeredthrough Islamic banks with long-term credit acilitiesor capital equipment purchases. May involve purchase

or an installment sale, where a customer eventuallyacquires ownership o the equipment. Longer-termparticipatory inance may also be provided by theIslamic bank becoming a partner in business, accordingto the principle o mudarabah (proit sharing). The bankmay provide all o the unding, acting as inancier, withan active manager providing entrepreneurial skills andmanagement. Funding may be provided to either a pre-existing company or a new company. One o the mostactive ields o Islamic banking activity. The leasingarrangement circumvents the charging o interest,which, according to many scholars, is orbidden in Islam.

( Page-133: The Oxord Dictionary o ISLAM ).

IstihsanIstihsan Juristic preerence. Reers to the principlethat permits exceptions to strict and / or literal legalreasoning in avor o the public interest (maslahah).Guides decision making in cases where there are severalpotential outcomes. Allows jurists to abandon a strongprecedent or a weaker precedent in the interests ojustice. Prominent in the Hanai school o Islamic law, butrejected by the Shai school Demonstrates the potentialor multiple interpretations o texts and analogies based

on context, revealed texts, necessity, and consensus(Ijma). Particulaly avoured in cases where ollowingqiyas (analogical reasoning) would lead to hardship orthe believer, since the Quran and Sunnah instruct thathardship should be avoided or alleviated. Modiied

version used by modern reormers as a principle orreorming Islamic law.( Page-152 : The Oxord Dictionary o ISLAM ).

MudarabahMudarabah Legal contractual arrangement underIslamic law between two partners or proit sharing one

provides capital and the other provides entrepreneurialor management skills. Islamic banks allow depositors toprovide capital or borrowers to invest. Depositors mayearn a share o either the banks proit or the proit o aspeciied investment. I the investment or bank incurs aloss, no proit is paid to the depositors.( Page-209: The Oxord Dictionary o ISLAM ).

MurabahahMurabahah Islamic banking principle in which a bankpurchases a good on behal o the client and later resellsit to the client at a marked up price. The mark up includesthe banks costs and allows return or risk taken duringthe period it owns the good being traded. The bank doesnot take delivery o the good but has responsibility oownership. See also Banking (Islamic).( Page-215: The Oxord Dictionary o ISLAM ).

Diminishing MusharakahDimishing Musharakah The generic term or businesspartnership or participation inancing, o which thereare a variety o orms. The most popular in modernIslamic banking is inan or limited liability partnership, inwhich partners share agency (not suretyship), contributetheir work and their capital, divide proits in accordance

with their agreement, and share losses in proportionto their contributed capital. The dierent legal schoolstreat the orms variously, aording an unusual degreeo maneuverability to the contracts. See also Banking(Islamic).( Page-217: The Oxord Dictionary o ISLAM ).

QuranThe book o Islamic revelation, scripture. The term meansrecitation. The Quran is believed to be the word o Godtransmitted through the Prophet Muhammad (PBUH).The Quran proclaims Gods existence and will and is the

ultimate source o religious knowledge or Muslims. TheQuran serves as both record and guide or the Muslimcommunity, transcending time and space. Muslims havededicated their best minds and talents to the exegesisand recitation o the Quran. Because the Quran is thecriterion by which everything else is to be judged, allmovements, whether o radical reorm or o moderatechange, whether originating at the center or at theperiphery o the Islamic world, have grounded theirprograms in the Quran and used it as a support.

Revelation o the Quran to Muhammad (PBUH) beganin 610 with the irst ive verses o surah 96. No urtherrevelations ollowed or a period o up to two years, atwhich point Muhammad (PBUH) received reassurancethat the revelation was rom God, not the devil.Thereater, revelation continued without interruption



13/60

until his death in 632, at which time the Quran wasconsidered complete. Partial collections o the Quranwere made during Muhammads (PBUH) lietime by hiswives, companions, and scribes. The inal, authoritativeversion was completed and ixed under the directiono the third caliph, Uthman, within twenty years aterMuhammads (PBUH) death. The Quran consists o 114surahs (chapters), varying in length rom 3 to 286 ayat(verses). Surahs are arranged by length, with the latestand longest surahs at the beginning and the earliestand shortest surahs at the end. Very early commentatorsclassiied these chapters into Meccan surahs (receivedwhile Muhammad (PBUH) lived in Mecca) and Medinansurahs (received ater the hijrah, when Muhammad(PBUH) and his ollowers moved to Medina).

The undamental message o the Quran may besummarized in the terms tawhid, the oneness o God.Both men and women are held to be rational andethically responsible creatures whose duty is to submit

to the divine truth expressed in revelation. This actseparates Islam, surrender and submission to the oneGod, rom kufr, disbelie. Men and women who trustin God and live moral lives in thought, word, and deedbecome Gods stewards, responsible or caring or therest o Gods creatures on earth. The society composedo such witnesses to the truth appears in history as thecommunity created by Muhammad (PBUH) and hisCompanions in Medina in 622 32.

The revelation o the Quran as a book to be reademphasized the importance o literacy and the recording

o scriptural text, leading to the development o theIslamic science. Hadith reports recording the words oMuhammad (PBUH) not contained in the Quran came tobe regarded as authoritative or explication o the Quran.The sciences o the Arabic language, rom lexicographyto grammar and rhetoric, were developed in order togain a precise and accurate understanding o the Quranictext. The need to understand the legislative contento the Quran gave rise to Islamic law and legal theory.Historiography originated with the aim o elaboratingthe Quranic view o religions history, according to whichAdam was the irst bearer o the divine message andMuhammad (PBUH) the last.

The Quran is considered to be the ultimate authority inall matters pertaining to religion. It urnishes the basictenets o the aith, the principles o ethical behaviour,and guidance or social, political, and economic activities.It is used in the ive obligatory daily prayers and orspecial prayers during Ramadan, when it is recited inits entirety. It is a basic vehicle o education, since mostMuslim children learn the Arabic alphaber in order tobe able to read the Quran. The Quran is used to invokeGods blessing, and verses rom it are oten recited at thedeath o a loved one, at the beginning o public political

and social meetings, at conerences, and sometimes atgovernment or oicial unctions. The Quran is the ocuso thythmic chanting and the art o calligraphy themost highly developed artistic skills in Islamic Culture.

Modern Quranic exegesis emphasizes the use o classicalanalytical tools such as ijtihad to reorm both religiouspractice and society as a whole and to achieve socialand intellectual development. Modern exegetes use theQuran to interpret and explain itsel, rather than relyingon external sources. Although the Quran is consideredauthentic only in Arabic, scholars in the twentieth centuryhave produced translations o the Quran into local andregional vernaculars in order to make the text availableto non-Arabic speaking audiences. These translationsalso provide commentary, so as to clariy the meaningo the text. Important contemporary translations o theQuran include those by the Indian modernist AbdullahYusu Ali in English, the Pakistani reormer Sayyid Abu al-Ala Mawdudi in Urdu, and the Indonesian scholar, poet,and independence activist Hamka in Bahasa Indonesia.(Page-256-257: The Oxord Dictionary o ISLAM).

RibaRiba Interest or usurious interest. Quranic verses prohibit

riba, a practice that doubled a debt i the borrowerdeaulted and redoubled it i the borrower deaultedagain. Islamic legal scholars have historically interpretedthis as prohibiting any loan contract that speciies a ixedreturn to the lender, since it provides unearned proitto the lender and imposes an unair obligation on theborrower. In the modern world, most Muslim countriesallow the charging o moderate interest, prohibiting onlyusurious or compound interest, although some reormerscondemn all interest as an impediment to social justice.Prohibition o interest is considered by them as critical toIslamic economic reorm.

( Page-264 &266: The Oxord Dictionary o ISLAM ).

SalaamSalaam The root o the term connotes saety, butthe world generally means peace One o the divinenames o God. The most common Quranic usage is asa salutation; al-salaam (u) alaykum (u) (Peace Be UponYou). Also appears in Quran as salvation, both in thisworld and the next. Although rom an early period thesalaam greeting was considered an Islamic institution,it was a greeting beore Islam, corresponding to theHebrew greeting shalom. In prayer, salaam is conerredupon the prophet prior to the conession o aith (al-salaamu alayka, ayyuha al-nabiyyu).

Salaam (u) Alaykum (u), al Peace be upon you. Usedby Muslims as a greeting Response is wa-alaykum al-salaam (Peace Be Upon You also). Hadith portray use othe greeting as a good work.( Page-274: The Oxord Dictionary o ISLAM ).

ShariahShariah Gods eternal and immutable will or humanity,as expressed in the Quran and Muhammads (PBUH)example (Sunnah), considered binding or all believers;

ideal Islamic law. The Quran contains only about ninetyverses directly and speciically addressing questionso law Islamic legal discourse reers to these verses asGods law and incorporates them into legal codes. The



14/60

remainder o Islamic law is the result o jurisprudence(iqh), human eorts to codiy Islamic norms in practicalterms and legislate or cases not speciically dealt within the Quran and Sunnah. Although human-generatedlegislation is considered allible and open to revision,the term shariah is sometimes applied to all Islamiclegislation. This was supported by ormal structures ojuristic literature and many speciic statements rom thetenth through the nineteenth centuries. Modern scholarshave challenged this claim, distinguishing betweenShariah and Fiqh and calling or reorm o iqh codesin light o modern conditions. See also Renewal andReorm; Usul al-Fiqh.

Shariah Courts In premodern times, the primary judicialinstitution presided over by a judge, called a qadi orhakim, and empowered to adjudicate legal disputes inprivate (e.g. marriage, divorce, inheritance), civil (e.g.,contracts and torts), and public (e.g., criminal activity)matters on the basis o the Islamic legal codes. In the

earliest period, the qadi ruled in accordance with his ownlegal interpretations. But by the eleventh century, judicialdiscretion was essentially limited to choosing appropriateprecedents,. In traditional shariah courts the plainti anddeendant represent themselves, without a jury. The qadipasses judgment on all evidence in accordance withstrict rules o evidence and testimony meticulously laidout in the schools o law. He retains the right, however,to impugn the integrity o any witness and to reuse toadmit that witness testimony.

The nineteenth century witnessed a number o ar-

reaching changes or shariah courts, as Muslim landscame under the direct rule o the European powers andthe inluence o European legal codes and concepts.There was concern over the hostility o Muslim juriststoward the admission o circumstantial evidence(insisting instead on the testimony o eyewitnesses), orexample, and the unequal treatment o non-Muslims.Massive social, economic, demographic, and politicalchanges in the modern era also pressured the traditionallegal system. As a result, under the Ottomans and thenthe colonial powers, many issues were removed rom thejurisdiction o the shariah courts and paced under that ospecial oreign tribunals, so-called mixed courts, and / or

secular national courts. Shariah courts were let presidingonly over cases o personal status (marriage, divorce,custody, and inheritance) and waq (pious endowments).This trend continued in the twentieth century.( Page-287-288: The Oxord Dictionary o ISLAM ).

Selected Bibliography

Al Quran:The Quran (English Meanings), (2004) published by AbulQasim Publishing House 1997, Saudi Al-Muntada Al-Islamic.

BookSaeed, Khawaja Amjad, (2011) Economy o Pakistan,Karachi: Oxord University Press.

Magazines/NewspapersKazmi Shabbir H, Stellar Perormance o Islamic Banking,Pakistan & Gul Economist, Karachi, December 26,2011-January 01, 2012, P 12.

Baig Shujat Ali, Islamic Finance Industry: Past, Present andFuture, Pakistan & Gul Economist, Karachi, November07-20, 2011, PP 37-38.

Saeed, Khawaja Amjad, Islamic Banking Inretrospect:Progress & Review Part-I Business Recorder Karachi,November 17, 2010.

Saeed, Khawaja Amjad, Islamic Banking QuantitativeAnalysis Part II, Business Recorder Karachi, November20, 2010.

PublicationsSBP: Annual Report 2010-11 Karachi, December 2011.

SBP: Islamic Banking Bulletin, Karachi: State Bank oPakistan, June 2011.SBP: Islamic Finance: Opportunities and Challenges,Karachi SBP: A Collection o speeches by Governor SBProm 2006-2008, pp 1-37.

SBP: Strategic Plan or Islamic Banking Industry oPakistan, Karachi: Islamic Banking Department, N.D-pp1-57.

SBP: Risk Management Guidelines or Islamic BankingInstitutions, Karachi: Islamic Banking Department,

January 02, 2008, pp 1-190.

DictionaryEsposito, John L, (E) 2006) The Oxord Dictionary o Islam,Karachi: Oxord University Press, PP. 1-359.

About the Author:

*Proessor Emeritus, Founder

Principal, (2003) Hailey College

o Banking & Finance, University

o the Punjab, Lahore

Pakistan, Member Governin g

Council, InternationalFederation o Accountants

(IFAC) (1997-2000), President,

South Asian Federation o

Accountants (SAFA) (1997), President, Institute o Cost

and Management Accountants o Pakistan (1997-2000),

President, Association o Management Development

Institutions o South Asia (AMDISA) (1993-96), Pro Vice-

Chancellor University o the Punjab, Lahore (1994-1996),

Founder Director, Institute o Business Administration

(IBA), University o the Punjab, Lahore (1973-1996) and

Senior Faculty Member, Hailey College o Commerce,University o the Punjab, Lahore (1965-73). Earlier he had

eight years corporate lie experience (1958-65).



15/60

Allah Subhanahu Wa Taala has provided us principles notrules and the divine principles are never redundant. The

principle and practice o Islamic Economic Governancerests upon the concept that Government and Socialresponsibility run side by side because o its rootsgenerated rom Islamic Sociology.

Islam does not only provide the economic principles butthe earlier Muslim Governments since Islamic Caliphateo Rashideen has also practiced the modern concepts oAccounting, Auditing, Management, Treasury, Budgetsetc that can be assembled under the umbrella term oIslamic Economic Governance. Consequently, this articleis an endeavor to highlight the key aspects o modern

economic governance that are derived rom IslamicEconomics Governance principles.

Bayt al-Mal - Treasury

Bayt al-mal is an Arabic term that is translated as Houseo money or House o Wealth. Historically, it was ainancial institution responsible or the administrationo taxes in Islamic states, particularly in the earlyIslamic Caliphate. It served as a royal treasury orthe caliphs and sultans, managing personal inancesand government expenditures. Further, it administereddistributions o zakah revenues or public works.

As stated earlier, Bayt al-mal was the department thatdealt with the revenues and all other economical matterso the state. In the time o Hazrat Muhammad PBUH tillHazrat Abu Bakr RA, there was no permanent Bait-ul-

Mal or public treasury. Abu Bakr RA earmarked a housewhere all money was kept on receipt. Ater consulting

the Companions, Umar RA decided to establish theCentral Treasury at Madinah.

Modern Islamic economists deem the institutionalramework Bayt al-mal [Treasury] appropriate orcontemporary Islamic societies and as a consequence,ministry o Finance is normally the part and parcel oevery Islamic Countries ministerial portolio. Currently,or better governance, the treasurys two main unctionsare sub-divided and assigned to revenue authority beingresponsible or collection o taxes [FBR] while State Banko Pakistan is responsible or Balance o Payment.

Bayt al-Mal Treasury Accounting

Abdullah bin Arqam RA was appointed as the TreasuryOicer. He was assisted by Abdur Rahman bin Aw RAand Muiqib RA. A separate Accounts Department wasalso set up and it was required to maintain record o allthat was spent.

Currently, the accounting unction is perormed byrespective Government Departments including revenueauthorities, central bank and accountant general. PIFRAis computerizing all the records at the moment including

revenue and expenditure. The accounting or recordingo expenses and revenue is audited by auditor generalo Pakistan. Consequently, good practices o IslamicEconomic Governance are already in place.

Principle to Practice

IslamicEconomicsGovernance

Mohammed Ashra, [email protected]

This is the second and final part of the Principle to Practie, the first part wasin Jan-Mar 2012.



16/60

Provincial and Federal Bayt al-Maal

Later provincial treasuries were set up in the provinces.Ater meeting the local expenditure the provincialtreasuries were required to remit the surplus amount tothe central treasury at Madinah.

Abu Huraira RA who was the Governor o Bahrain sentrevenue o ive hundred thousand dirhams. Umarsummoned a meeting o his Consultative Assembly andsought the opinion o the Companions about the disposalo the money. Syeddana Uthman ibn Aan RA advisedthat the amount should be kept or uture needs. Walidbin Hisham suggested that like the Byzantines separatedepartments o Treasury and Accounts should be set up.

The above instance closely resemble our existing situationwhereby concept o provinces and ederation are presentin the constitution. However, ater 18th amendment amajor deviation has occurred whereby though provinces

are empowered or revenue generation but there is noconcept o repatriation o surplus. This non-repatriationconcept contains two evils non-ailiation concept withederation, no budgetary limits resulting in immensediscretion ending on corruption.

Secondly, according to several Ahadees, the ownershipo revenue generating land like but not limited to mines,oil and gas wells cannot be sold because they ought to beused to or the betterment o all Muslims. Consequently,this need to be kept by the ederation and the interestought not be sold on mere royalty basis. The concept is

practiced in Kingdom o Saudia Arabia also.

Welare Economic State

As stated earlier, principle and practice o IslamicEconomic Governance rests upon the concept thatGovernment and Social responsibility that run sideby side because o its roots generated rom IslamicSociology. However, the Governmental responsibilityis ulilled through a welare economic state which isthe prime goal o Islamic Economic Governance. Theindispensible tools o Islamic Economic Governance toachieve a welare economic state are as ollows thoughpracticed nowadays also but without the spirit!

a. Taxes and UtilizationThe taxes (including Zakat and Jizya) collected in thetreasury o an Islamic government were used to provideincome or the needy, including the poor, elderly,orphans, widows, and the disabled.

Umar RA also made sure that the public treasury was

not wasted on unnecessary luxuries as he believed thatthe money would be better spent i it went towards thewelare o the people rather than towards lieless bricks.

The current purposeless taxation embodying Income,Sales, Excise and Proessional tax has never been popularamong the masses as they can see how the revenue isutilized. Elimination o dierences would raise the trust opeople in the system and introducing a judicious taxationwould make it more meaningul and transparent.

Moreover, there were and are many perceptionsregarding the applicability o Tax being un-Islamic as

people believe that zakat, khiraj, fai and Jazia are theonly prescribed taxes. However, taxes are not limited tothat but one may wonder import tax octroi (chungi)was irst imposed during the period o irst our Caliphsas this is a need o the society. The principles o taxationin Islam are based on purpose and are evident romollowing piece o history:

At times, Syria (Sham) was attacked by Tatars, the

King decided to take judicial decree from the Islamic

Scholars for imposing a tax to meet the expenses.

When the issue came before Imam Noovi [Rahmat

ullah Alah], he opined

The King lives a lavish life and has a lot of wealth, he

also spends a lot of money but his wealth, income

and perquisites are not taxable, let him start first by

donating his wealth and then the treasury has the right

to tax over the common people.

I again reer to the Kingdom o Saudi Arabia modelwhereby Zakat is payable by GCC nationals while IncomeTax is payable by other than GCC nationals. Though I amin a bit disagreement with applicability o Zakat over GCCnationals because it is against the principle laid down byLast Prophet SAW during the Last Sermon whereby noArab is superior to non Arab and vice versa.

An eective model may make zakat applicable on allMuslims while non-Muslims would pay Income Tax.The concept is based on the decision o Umar RA whochanged the name o Jazya when Christians requestedhim to collect it with another name. In implementing theconcept, a problem would arise in corporate, partnershipand other entities comprising o Muslims and Non-Muslims.

In such scenario the ratio o share holding by Muslimsand Non-Muslims should be the ratio decidendi whereby

the Income Tax should be payable on Non-Muslims share

in business entitys proit and on the other hand, business



17/60

entitys Muslims share would eligible or payment o

zakat according to the principles o Quran and Sunnah

deductible rom their personal zakat payable.

Other purposeul taxes should be spent on theinrastructure o their purpose. For instance, motorvehicle tax or inrastructure o transportation including

roads, stamp duty or legal inrastructure, Capital GainTax or legal inrastructure o purchasers and sellers whileIncome and Value Added Tax can be used or spendingon military, police, education, healthcare, welarebeneits etc.

I the development expenditure is inanced by IslamicFinancial Instruments then the revenue generatedrom judicious taxation can eectively be used or verypurpose it was collected or, that is, spending moneyon inrastructure, military, police, education, healthcare,welare beneits etc. This policy would eectively erodethe reliance over bizarre taxation, Seignorage, iscal

deicit, sale o assets and issuing bonds.

b. Ethics or Tax CollectorsA revenue collector has received some gits and thisinstance was brought into the knowledge o LastProphet [PBUH] who immediately ordered him todeposit the same into the Bayt al- maal. When he askedor the reason, the Last Prophet [PBUH] replied that youreceived these gits owing to your position i you werenot on this position then you would not have received it!This is the desired mentality o the tax collectors.

Moreover, the beaurocracy Civil Services [CSS] trainingmust embody the concept o Islamic Proessionalismwhich is based on Taqwa. The concept o IslamicProessionalism has already been implemented inGovernmental Organizations and surprisingly the privateorganizations are voluntarily adopting it.

c. Food StockpileAccording to the Islamic jurist Al-Ghazali (10581111), thegovernment was also expected to stockpile ood suppliesin every region in case a disaster or amine occurred.Umar RA introduced urther reorms, such as the

introduction o ood rationing using coupons, whichwere given to those in needs and could be exchangedor wheat and lour.

On the other hand, we used the concept o ration to copeup shortages, that is, a amilys ration card was used tosell wheat and lour instead o a means to identiy andprovide the ration to poor and needy.

d. Armed Forces SalariesWith the extension in conquests money came in largerquantities, Umar RA also allowed salaries to men ightingin the army.

e. Elimination o Class DistinctionIn his time, equality was extended to all citizens, even tothe caliph himsel, as Umar RA believed that no one, no

matter how important, should live in a way that woulddistinguish him rom the rest o the people. Umar RAhimsel lived a simple lie and detached himsel rom anyo the worldly luxuries, like how he oten wore worn-outshoes and was usually clad in patched-up garments, orhow he would sleep on the bare loor o the mosque.

Limitations on wealth were also set or governors andoicials, who would oten be dismissed i they showedany outward signs o pride or wealth which mightdistinguish them rom the people. This was an earlyattempt at erasing class distinctions.

Umar RA also made sure that the public treasury wasnot wasted on unnecessary luxuries as he believed thatthe money would be better spent i it went towards thewelare o the people rather than towards lieless bricks.

The huge president, prime minister, chie minister andgovernor houses are currently signs o class distinction

where some o the even middle class people come andorget their past. Those who are sitting in such hugecastles and moves with an army in the name o protocolcannot implement the concept o Islamic EconomicGovernance as the concept requires ree movementamong masses except one o the senior minister o KP Siraj Ul Haq having ailiation with Jamat e Islami.

. Social Security and PensionDuring the Khilaat e Rashida, various welareprograms were introduced by Caliph Umar RA. Umarsinnovative welare reorms during the Khilaat e

Rashida included the introduction osocial security.This included unemployment insurance, which did notappear in the Western world until the 19th century.

In the Khilaat e Rashida, whenever citizens wereinjured or lost their ability to work, it became the statesresponsibility to make sure that their minimum needswere met, with the unemployed and their amiliesreceiving an allowance rom the public treasury.

Retirement pensions were provided to elderlypeople, who had retired and could count on receivinga stipend rom the public treasury. The caliphs Al-WalidII and Umar ibn Abdul-Aziz RA supplied money andclothes to the blind and crippled, as well as servants orthe latter.

This continued with the Abbasid caliph Al-Mahdi. Tahiribn Husayn, governor o the Khurasan province othe Abbasid Caliphate, states in a letter to his son thatpensions rom the treasury should be provided to theblind, to look ater the poor and destitute in general, tomake sure not to overlook victims o oppression whoare unable to complain and are ignorant o how to claimtheir rights, and that pensions should be assigned to

victims o calamities and the widows and orphans theyleave behind. The ideal city described by the Islamicphilosophers, Al-Farabi and Avicenna, also assigns undsto the disabled.



18/60

The concept o Employees Social Security, EmployeesOld Age Beneit etc is present in our existing governanceconcept but the dierence arises in its applicabilityand utilization o unds. The laws need to be alignedwith concept in preceding paragraphs. Moreover, theprivate hospitals should subsidize the rates to registeredpersons. This would have many beneits as the revenueo such private hospitals including the rates would besuraced that can also be used or tax collection point oview.

g. Poverty Measurement ThresholdAnother innovative concept that was introduced wasthat o a poverty threshold, with eorts made to ensurea minimum standard o living, making sure that nocitizen across the empire would suer rom hunger.In order to determine the poverty line, Umar orderedan experiment to test how many seers o lour would berequired to eed a person or a month. He ound that 25seers o lour could eed 30 people, and so he concluded

that 50 seers o lour would be suicient to eed a personor a month. As a result, he ordered that the poor eachreceive a ood ration o ity seers o lour per month.

Nowadays, statistics department collects the data andState Bank o Pakistan computes the Sensitive andConsumer Price Index but do not suggest measuresprerequisite or Islamic Economic Governance. Merecollection o data would not serve any purpose unlessand until the data is utilized.

h. Poverty Alleviation Measures

Further reorms later took place under the UmayyadCaliphate. Registered soldiers who were disabled inservice received an invalidity pension, while similarprovisions were made or the disabled and poor ingeneral. Caliph Al-Walid assigned payments and servicesto the needy, which included money or the poor, guidesor the blind, and servants or the crippled, and pensionsor all disabled people so that they would never need tobeg.

We have blinds association and we normally spendsmillions on advertisements o eradicating polio but do

we use the data o blinds or helping them or do weprovide polio aected persons any citizens and IslamicEconomic Governance duly contains this concept whichis absent presently.

i. Anti Poverty Avoidance MeasuresIn addition, the poor and disabled were guaranteed

cash stipends. However, in order to avoid some citizenstaking advantage o government services, begging andlaziness were not tolerated and those who receivedgovernment beneits were expected to be contributingmembers in the community.

Currently, the people who are getting unemploymentallowances sit at home enjoy their laziness and beg romothers. The Islamic Economic Governance model doesnot tolerate this attitude and obliges such persons toserve or the community and implementers must devisea plan according to the capabilities o persons.

j. OrphanageBabies who were abandoned were also taken care o,with one hundred dirhams spent annually on eachorphans development.

k. Waq or Charitable TrustUmar RA also introduced the concept o publictrusteeship and public ownership when he implementedthe Waq, or charitable trust, system, which transerredwealth rom the individual or the ew to a socialcollective ownership, in order to provide services to thecommunity at large. For example, Umar RA, brought land

rom the Banu Harithah and converted it into a charitabletrust, which meant that proit and produce rom the landwent towards beneiting the poor, slaves, and travelers.

When communities were striken by amine, rulers wouldoten support them though measures such as theremission o taxes, importation o ood, and charitablepayments, ensuring that everyone had enough toeat. However, private charity through the Waq trustinstitution oten played a greater role in the alleviationo amines than government measures did. From the 9thcentury, unds rom the treasury were also used towards

the Waq (charitable trusts) or the purpose o buildingand supporting public institutions, oten Madrassaheducational institutions and Bimaristan hospitals.

l. Treatment o conquered peoplesCaliph Umar was the irst Caliph to provide Allowanceto non-Muslims, or Dhimmi, ater they reached old age.The very irst Non-Muslim to receive pension rom theRashidun Administration was a Jew.

Once Caliph Umar RA was in the streets o Madina

when he saw a man begging! He went to him and

asked him; why are you begging? Are you not receivingmaintenance (allowance) rom Bait al-mal. The man

replied; I am a Jew and I am doing this so that I can pay

the Jizya. Hearing this Caliph Omar took him by his hand

to the Bayt al-mal and decreed In the name o Allah you



19/60

pay Jizya all your lie and then you get betrayed when

you reach old age. He ordered to provide that man

pension and rom that day it was so ordered or all Jews

and Christians and others.

It is evident that the concept o Islamic EconomicsGovernance could create an economic welare society

that can only be implemented by the ruler havingear o Allah SWT. The other prime concepts o IslamicEconomics Governance are discussed below.

Price Setting and Subsidies

Narrated Ibn e Abbas [RA], Allahs Messenger [PBUH] said,Do not go to meet the caravans on the way (or buyingtheir goods without letting them know the market price),a town dweller should not sell the goods on behal o thelatter. Ibn Abbas was asked, what does he mean by noselling the goods o a desert dweller by a town dweller?He said, He should not become his broker.

[3:367-O.B Bukhari The book o sales (bargain)]

The policy would create open competition among thenew entrants and let the market orces determine theprices. Such healthy competition would eliminate theconcept o subsidy. The policy o open competitionshould be adopted in all those areas where prices areregulated and consumers are subsidized.

Narrated Ibn Umer [RA], Allahs Messenger [PBUH] said,you should not try to cancel the purchases o oneanother (to get a beneit thereo), and do not go ahead

to meet caravans (or buying the goods) [but wait] till itreaches the market. [3:374 - O.B Bukhari The book osales (bargain)].

For instance, i we take the example o IPPs, then theroot cause was the initial contract o Government in 90sagreeing over the basic price o purchase o electricity.Moreover, the current practice o purchasing the wheatand cotton at preset prices rom armer is a mere eyeillusion.

Islamic Economic Governance would only requirepurchasing rom small armers who have no access tomarket or are helpless but that is also neither at presetprices nor or urther sale.

a. Price Stability and Cost AuditPrice stability is chronic issue which wasnt always tackledat the grass root level. Regulators never looked at thepros and cons o the issue, hence, it was never dealt atstrategic level. Islamic Economics suggests the concepto air proit.

The airness in the concept o air proit is let at thediscretion o the businesses that are expected to act airly

in this regard. However, industrys proit and generalproit level could be used as benchmark in this regard.It is in accordance with the principles o shariah that thetraditions and convention o each community are to bereerred to or deducing a judgment in such matters as

sales, renting, measuring and weighing where there is noixed judgment.

Further, many writers suggest the elimination othe concept o deduction o Royalty, Technical andManagement Fee by declaring it an inadmissible expenseunder the Income Tax Ordinance, 2001.

Consequently, one wonders about the dormant concepto cost audit embodied in Companies law. The concepto cost audit may be implemented ully ledged being adeterrent to unair prices. At the moment there are airnumber o proessionals o accounting bodies [ICAP,ACCA and ICMAP] are available to eectively help thegovernment in implementing the same.

b. Price Stability and Future TradingLooking at west, creative accounting, o balance sheettransactions, complex inancial derivatives and uturetrading are the root causes o price instability which

result in erosion o prices, that is, inlation. These issuesare creeping and are against the constitution principleso Quran and Sunnah.

It is pertinent to note that al gharar (the sale o what isnot present) and Habal il Habala (the sale o what is inthe womb o an animal) is prohibited. Narrated Abdullahbin Umer [RA], Allahs Messenger [PBUH] orbade the salecalled Habal il Habala which is a kind o sale practiced inthe Pre-Islamic Period o Ignorance. One would pay theprice o she-camel which was not born yet and would beborn by the immediate ospring o an extant she-camel.

[3:353 - O.B Bukhari The book o sales (bargain)]

It is worthwhile to note that i somebody sells ruitsbeore their beneit is evident and ree rom blights andthen they get alicted with some deects (they will begiven back to seller). Narrated Anas bin Malik [RA], AllahsMessenger [PBUH] orbade the sale o ruits till they arealmost ripe. He was asked what is meant by are almostripe. He replied, till they become red, Allahs Messengerurther said, I Allah spoiled the ruits, what right wouldone have to take the money o ones brother (i.e. otherpeople)? [3:403 - O.B Bukhari The book o sales(bargain)]

It is strongly suggested that uture markets and badla instock exchange are strictly prohibited in Islam and willdeteriorate the result o any eorts or price stability. Thecore reason is that it is normally done in raw materialsthrough speculation meant to mint money rom money.

Distribution not Concentration o Wealth

Excess capacity o an economy means that insuicient

demand exists to warrant expansion o output while

interest based economy bondholders view strong

capacity utilization as a leading indicator o higher

inlation which decreases bond prices. Consequently,

tight monetary policies shrink the size o economy by

reducing the level o economic activities.



20/60

Apart rom above, the crowding out eect can only beextinguished through the eective implementationo Islamic Economics. Islamic economics, in contrast,advocates or generation o economic activities insteado limiting the same. This concept can easily be deducedrom the concepts o Islamic Financial Instruments andconceptual ramework o zakat and sadqa. This conceptis duly adopted by Multinational Companies (MNCs)through expansion as many industries in the developedcapitalist economies suer rom chronicexcess capacity.

The critics o capitalism are in avor o very principlesenunciated in Islamic Economics. However, thegeneration o economic activity should be aligned withdevelopment expenditure (instead o non developmentexpenditure) and Islamic Financial Instruments.

Islamic Financial Instruments or

Development Expenditure

The alternate o auction o treasury bills and bondmarket is Islamic Financial Instruments. Developmentexpenditures in developing or even developedeconomies are normally identiied on the basis o itspotential beneits which are then transormed in theshape o easibility report. In the light o principles oShariah, such development expenditures ought to becarried either on the basis o Build, Operate and Transeror Islamic Financial Instruments.

The most important aspect o BOT basis is an independentcheck over collection on the project o development

project and audit by external proessionals or the verypurpose o transparency. The payment to the contractoron the basis o Islamic Finance ought to be correlatedwith rate o return on such development expenditure.Each project o development expenditure ought to beaudited by external proessionals. External proessionalsmay include members o ICAP, ACCA and ICMAP.

This approach will have many olds like transparencyin development expenditure, generation o economicactivities, limiting non-development expenditure to theextent o tax revenue, reducing the pressure o inancingon the development expenditure and elimination oiscal deicit or reliance over treasury bills and increasein employment.

International Loans and Interest

During the Last Sermon o Holy Prophet SAW, he madeit clear that interest is no more payable among Muslimsand is evident rom his declaration about Abbass RA.However, co-relating the various verses o Holy Quranand Ahadees, it is strictly orbidden.

It is suggested that no more international loans should

be taken on interest, hence, whatever has been takenshould be the ending line or the start o a new era.Consequently, existing commitments o repayment oloan and interest thereon should be ulilled.

Foreign Currency Reserve/Gold Standard and

Barter

Austrian economists advocate the return to genuineree market leading to abolition o the state-sponsoredcentral bank that protects, supports and controls modernractional reserve banking and advocate ree banking or

a return to a 100 percent gold standard which is practicedin Islamic Economic Governance.

In act the recent statement o IMF is more surprising.Dominique Struass-Kahn, the ex-head o IMF suggestedthat the organization one day might be called upon toprovide countries with a global reserve currency thatwould serve as an alternative to the US dollar. That dayhas not yet come, but I think it is intellectually healthy toexplore these kinds o idea now. He said having otheralternatives to dollar would limit the extent to which theinternational monetary system as a whole depends onthe policies and conditions o single, albeit dominant,

country.

Moreover, he said that we must build on this positivemomentum: to reorm the und into an institution evenbetter equipped to meet the challenges o the post crisesera. Consequently, it is high time or strategic thinker tolook at the pros and cons o the statement o ex-IMF chiein terms o oreign currency reserves.

Islamic Banking and Takaul

Islamic Banking and Takaul industry has developed with

the passage o time. Shariah Advisory Boards are alreadyin place at Bank and State Bank Level. However, there isa dire need that conlict o interest need to be avoided.The person appointed on State Bank o Pakistan ShariahBoard should not be a member o shariah board o aBank.

This would encourage the concept o Shariah CompliantFinancial Product Audit at SBP. Further, on test basis theaudit report be urther vetted internationally by IDB etc.The Takaul regulatory ramework needs to be aligned bySECP with the concept o shariah board o SBP.

Conclusion

The implementation o Islamic Economic Governance is

not much diicult as most o the postulates are already

in place but it is the zeal and ervor that is requisite. The

solution o our economic problems is available in Islamic

Economics prima acie Ahadees o Bukhari quoted above

that provides a clear cut solution. On the other hand, the

monetary and iscal economists even do not agree on

any remedial measure or inlation and ending recession.

It is much more than adjusting interest and exchange

rates apart rom adjusting Government Expenditure and

increasing tax to GDP ratio.



21/60

Tax Laws in the

Islamic Republic

Favour RentSeekers and

Interest

EarnersNasim Beg, FCA

Our taxation system is a continuationo an archaic system where the eudallandlords, on behal o the rulers,collected taxes rom the people. Therulers exempted the landlords rompaying tax.

There is on-going debate on the

unair system o exempting the eudallandlords agricultural income. Butthis is only one part o the issue thelandlord earns agriculture income andinvests his surplus in property. In turnhe earns rent on the property and paysa reduced rate o tax o a maximum o10% not the normal rate o 25%. Theother option he has is to earn interest on bank deposits orNational Savings Schemes; here too, his interest income(called proit so as not to prick his religious conscience)is taxed at a maximum rate o 10%.

On the other hand, i you wish to indulge in entrepreneurialactivity and invest your money in a business, you will betaxed at a much higher rate or being a proit seekingbusinessman. I you set up a company to run yourbusiness, the company will pay a tax rate o 35%. I thecompany has enough let over ater paying taxes anddistributes a dividend to the investor, he will pay another10% tax on the dividend out o the already taxed (at 35%)income. There is urther discrimination, i the corporateentity retains some earnings or uture expansion andkeeps this money on deposit, it will pay 35% tax on theinterest earned but i it were to orgo expansion and pay

out the surplus, the individual shareholder can keepthe money on deposit and pay only 10% on the interestthereon.

Thus it is better to earn rent and interest and not risk yourmoney in setting up a business, which will ace variousrisks, including being cut o rom gas and electricity, notbecause you didnt pay your bills but because someoneelse (probably a rent seeker) doesnt. Never mind i your

entrepreneurial indulgence creates jobs and generateseconomic activity or perhaps earns oreign exchange.The system avours the rent seeker and the interestearner. Just sit home and earn your money, why take anyrisks or worry about paying back business loans lest youget hauled up in courts and are declared a deaulter andearn a bad name.

The tax law was not this skewed when we started out 65years ago; we had inherited a tax law rom British Indiawhereby it distinguished between Earned Income e.g.salary, business income etc., and Un-earned Incomesuch as interest and rent; the then tax law taxed un-

earned income at a higher rate but somewhere down theline we, in our Islamic Republic, have started avouringrent seeking and interest earning.



22/60

Encouraging LeveragingThere is a urther issue; like most other countries, our taxation system encourages high levels o leverage. Theeconomic crisis that the world is acing today has been caused by excessive use o leverage. Given below is anexample o how the taxation system avours leveraging:

The numbers used are just assumed igures and are intended to highlight the issue. The assumptions includethat the businessman can provide 100% equity or a combination o equity and loan. The interest rate is assumed

at 12%, the corporate tax rate at 35% and a total tax rate o 10% on dividend and interest income.

Particulars

Business based on pure

equity

(Rs. 000)

Business based on some

equity and loans

(Rs.000)

Capital Employed

Equity 50,000 15,000

Loan - 35,000

Total 50,000 50,000

Earnings beore interest and tax 7,500 7,500Interest - 4,200

Taxable proit 7,500 3,300

Corporate tax 2,625 1,155

Distributable proit 4,875 2,145

Dividend 4,875 2,145

Tax on dividend 488 215

Tax paid on Interest (say a TFC) 420

Total tax collected by the exchequer 3,113 1,790

Net-o-tax earnings on equity investment 4,387 1,930

Return on equity 8.78% 12.87%

Thus a businessman is better o borrowing money - his returnon equity is higher. Because o the tax arbitrage available, thebusinessman can actually lend money to his company by investingin corporate bonds issued by his company. The governmenteectively subsidises you i you borrow money and do business.

We need to address these very undamental issues i we areto encourage investment in economic activity that will bringgrowth and create jobs. Even though the tax system encouragesbusinessmen to borrow, it does not quite compensate or the low

o savings towards rent seeking and interest earning avenues most o the money attracted by interest paying schemes ends upin unding budgetary deicits, i.e. wasteul spending; or moneygets attracted to real estate and drives its prices beyond the reacho the common man. The tax arbitrage in avour o running abusiness on borrowed money is tilted in avour o big businesses,SMEs do not normally have access to borrowing money rom theormal sector; thus they cannot claim interest expenses in casethey pay this to loan sharks. In any event their return on equitywill be lower than those who can borrow rom the ormal sector.



23/60

STOP giving more tax burden and INCREASING tax rateson the existing tax payers instead improve legislature

and close down tax heavens, put more controls througheective statutory provisions and tax regulations.

One o the most risky and tricky area, as ar astax avoidance is concerned, is non-proit makingorganization including NGOs, Trusts and Societies andthere are very minimal statutory requirements, also taxcontrols are eectively not in place and those that existare not implemented.

These non-proit organizations are established witha purpose to serve the community and country indierent areas including medical, education, health

etc. We acknowledge that such organizations are reall

pak accountanapr sep2012

Documents