The Dawn News - Business (2024)

A TAX-FREE, Covid-19–centric Rs1.2 trillion Sindh budget appears to be a relatively sensible and compassionate response to the current distressful situation, which is deepening the health challenge and compounding livelihood/food security risks.

However, the historical baggage of corruption, political biases and underperformance failed to rekindle hope or generate much goodwill, particularly in the business community.

Chief Minister Murad Ali Shah who also holds the finance portfolio was hardly audible during his speech in the Sindh Assembly as the opposition — Grand Democratic Alliance (GDA) and the PTI — hooted throughout the session. Besides the disruption induced by the pandemic, Mr Shah highlighted the threat to food security due to the locust attack over a vast area under cultivation in the province.

Current expenditures of Rs969.9 billion command almost 81 per cent of the total budget. About Rs39.2bn (3pc) is reserved for current capital expenditures while the remaining 16pc is earmarked for Rs232bn Annual Development Plan (ADP). In the current year, the focus of development efforts is on social services with about one-fifth or Rs44.5bn earmarked for health and education. The size of total development spending has been chopped by 19pc from last year citing the financial crunch.

The Sindh budget reinforces the perception that the status quo serves the ruling PPP well

The priority has been given to schemes nearing completion, especially in transport infrastructure and the provision of drinking water besides social protection, irrigation and the supply of affordable inputs for the agriculture sector.

To provide relief, Mr Shah proposed a salary increase of 10pc for government employees and a social protection and economic sustainability package of Rs34.2bn for the marginalised population bearing the brunt of the lockdown. An amount of Rs440 million has been set aside for locust control.

The Sindh budget, which was an opportunity for the ruling party to incrementally implement its economic vision, did not even mention the 2018 agriculture policy, business revival strategy or sustainable development goals (SDGs). If the budget had shown any progress on devolving power further down, it would have earned the PPP a high moral ground to wage a better fight against the federal government’s attempts to roll back the gains of the 18th Amendments and the 7th NFC Award.

Steps to check the pilferage of public funds are also missing from the budget. Some tangible measures aimed at moving towards a leaner and cleaner government would have earned the economic team the confidence of people other than the loyal mass base who are impressed with the handling of the Covid-19 crisis by Team Murad Ali Shah.

Despite acknowledging the need for better insight into economic growth drivers for effective interventions at multiple public forums, the subject of strengthening structures for tracing and tracking of the provincial economy did not get the attention of the budget makers.

This reinforced the perception that the ruling PPP does not wish to fiddle with the status quo that serves it well. Despite criticism, the mass rural base of the party is perceived by the leadership to be intact. The provincial bureaucratic hierarchy privately laments the state of affairs in Sindh run more on the whims of politicians than rules of business. Fearing a backlash, they keep their resentment to themselves as they watch the culture of patronage at play.

Currently, the provincial team is preoccupied with the daunting challenge of containing the pandemic and fixing the rickety health infrastructure. But the long overdue focus on the above-mentioned subjects could have supplemented their efforts.

Some enlightened members of the chief minister’s team tried to make necessary adjustments for better outcomes, but the top leadership is said to be risk-averse. It actively opposes anything radical that in its mind can trigger a domino effect and weaken its hold on its last bastion of political power — Sindh.

Haroon Farooki, former president of the Karachi Chamber of Commerce and Industry (KCCI), saw the budgets in the current uncertain environment with both unclear revenue and spending estimates more of an exercise to meet the constitutional requirement.

“We need to peek into the mindset of the provincial leadership that is geared to anything but serving the business interests. It is not without a reason that the business community detests the ruling party in Sindh. Is there anything for Karachi in the budget? Sadly, we are made to pay for the political friction between Sindh and the federal government,” he said.

Syed Asad Ali Shah, who runs a private company and sits on multiple boards, was also not too happy and termed Sindh budget unrealistic. “Receipts from the federal government are overestimated along with the projections of expected revenue generated from service tax in Sindh. The government should have explored alternative avenues to raise funds. The budget also lacks a game plan to revive and rehabilitate the provincial economy,” he said.

Dr Nadeem Javed, former chief economist Planning Commission found the pattern of Sindh budget comparatively stable. In his view more than the ‘will’ the issue in Sindh is that of ‘capacity’ to implement the budgetary measures.

“Sindh had been at the forefront of designing and implementing policies to deal with Covid-19. In the wake of a premature lifting of the lockdown under court orders, it slowly lost the initial gains and is now struggling with the fallout. If you compare the Sindh budget with the federal budget, it clearly better corresponds to the reality,” commented a former economic adviser to the Sindh government.

“With no available data on provincial GDP or the share of key sectors, one has no option but to carry on creatively, rehashing the old template year after year. There is no incentive to experiment with innovative ideas. When the rule of thumb to succeed is to appease the powers that be, why would anyone care about anything else?” said an insider.

Published in Dawn, The Business and Finance Weekly, June 22nd, 2020

The last year had a mixed effect on the middle-income group. The annual Business & Finance survey that assesses the income and spending of the middle class was answered by 850 respondents across Pakistan. Its result indicates a shift towards higher income brackets for those who remain employed while others suffered a loss in household income.

Published in Dawn, The Business and Finance Weekly, June 14th, 2021

THE outbreak of the Covid-19 pandemic has affected every sector of the economy. And the agriculture sector is no exception. The Sindh government has reduced the development portfolio under the annual development plan (ADP) for 2020-21. The agriculture sector’s share was reduced as the government’s focus will be on the completion of on-going schemes.

Sindh’s total ADP (excluding foreign-funded programme’s assistance) of 2019-20 stood at Rs208 billion, but this year it stands at Rs155bn, excluding foreign projects assistance. Chief Minister Sindh Syed Murad Ali Shah has, however, announced Rs1bn each subsidy for the provision of pesticides, fertilisers and quality rice seed to farmers with 25-acres of landholdings. A loan scheme is to be launched for haris who would get interest-free loans of Rs25,000.

“Out of the Rs14bn agriculture budget, Rs2.5bn are provincial spending for agriculture’s development while the remaining 90 per cent is donor-funded, which is a liability for us. We don’t know how the subsidy is to be transferred and I genuinely fear that the Rs25,000 loan — announced for haris - will not be transparently disbursed given past experiences,” remarks Nabi Bux Sathio, a progressive farmer from lower Sindh.

In addition to the pandemic, Sindh is also facing locust attacks. Under the National Action Plan announced for controlling it, Sindh’s share is Rs728.8 million while the federal government will pitch in Rs204m for a three-stage programme till June 2021 to curb re-growth and re-hatching of locusts. So far the Sindh government has spent Rs696.19m to control them.

The procurement of machinery and vehicles is mentioned in the budget but when locusts attack they are nowhere to be seen

“Sindh government needs to do more than what it is doing. People of Sindh have voted for Pakistan People’s Party (PPP) that’s why they believe PPP will rescue them, not PTI. Its voters are not concerned what PTI’s government is or is not doing because locust is another pandemic for them,” asserts Miran Mohammad Shah, president of Sindh’s oldest farmers’ body, Sindh Chamber of Agriculture.

He himself is a PPP diehard like his late father Syed Qamar Zaman Shah and brother PPP’s MNA Syed Naveed Qamar. He believes a permanent solution for locust control needs to be found by the Sindh government. It is not tenable that swarms of crop-eating pests keep attacking and farmers can keep them at bay through conventional methods.

“The procurement of machinery and vehicles is mentioned in the budget but when locusts attack these vehicles and equipment are nowhere to be seen. Budgetary allocations in this regard must match the on-ground situation. Then comes allocations for research and nothing is done in this regard whilst farmers are burdened with spurious seeds only to lose per acre productivity of crops,” argues Shah.

The chief minister’s budget speech was mostly devoted to donor/foreign-funded programmes insofar as the agriculture sector is concerned. If the foreign-funded assistance is to be excluded from the agriculture sector’s budget, it would perhaps have an insignificant contribution to the economy. The World Bank funded the Rs8bn Sindh Agriculture Growth Project and the Rs18bn Sindh Irrigated Agriculture Productivity Enhancement Project (Siapep) that are underway in Sindh, both of which are scheduled to be completed in June next year.

While targets of other components of Siapep are being met, the one about the shifting of 35,000 acres of agriculture land onto a high-efficiency system — drip — is far behind its goal as only 1,265 acres, according to the chief minister, have been covered. Sindh is said to have around 12.5m of commanded area fed through the 14-canal system of Sindh’s three barrages.

The below-par performance of the project is attributed to farmers’ reluctance to share the 40pc cost by Siapep’s project director Nadeem Shah. He, however, adds that 3,500 watercourses have been lined (30pc length of each watercourse was already lined) so far against the target of 5,500 watercourses.

It is quite evident that allocations under the donor-funded programmes are multiple times higher than the size of Sindh’s agriculture ADP. It serves to indicate the major policy gap in overall planning to achieve the desired goal of sustainable agriculture and to meet Sustainable Development Goals (SDGs) as well. Out of 17-SDGs, three directly or indirectly concern the farm sector.

The policy gaps could be covered through the Sindh Agriculture Policy passed by the Sindh government in April 2018. It could help the government to take things in the right direction. But the agriculture budget is silent about this fundamental document. The policy seeks to achieve 4-5pc annual growth in the agriculture sector to raise income and reduce poverty and food insecurity.

“We continue to remain dependent on foreign-funded projects. Where is the agriculture policy for which a steering committee was formed? Did anyone hear whether this forum met to come up with plans to deal with locusts, commodities’ prices, the decline in cotton production or sale of spurious seeds?” quips Sindh Abadgar Board vice president Mehmood Nawaz Shah, one of the members of the steering committee.

Despite intricacies, agriculture policy gaps and political issues, Sindh’s major crops (barring cotton) of wheat, rice and sugarcane seemed to have performed better to some extent, according to the agriculture department’s figures for 2019-20. Wheat performed well, producing 3.85m tonnes against a target of 3.8m tons although growers again were not able to get the support price. Paddy production’s target was missed by 4.9pc primarily due to the sterility and poor quality of seeds, which is why there was a provision of Rs1bn subsidy for better quality rice seeds to farmers with 25 acres of land in the 2020-21 budget.

Published in Dawn, The Business and Finance Weekly, June 22nd, 2020

Udhaar Book, a digital bookkeeping app for small businesses in Pakistan, has raised $6 million in seed funding, it emerged on Monday.

The round saw the participation of multiple investors including Fatima Gobi Ventures (FGV), Plaid co-founder William Hockey’s Muir Capital, Tinder co-founder Justin Mateen’s JAM Fund, Commerce Ventures, Liberty City Ventures, Atlas Ventures, Integra Partners, Omri Dahan of Marqeta and Immad Akhund of Mercury Bank.

According to a press release, the funds will be used to build the app's ecosystem, which now enables small businesses to conduct digital bookkeeping, manage inventory, invoicing, staff attendance and payroll.

Udhaar Book was launched last year to help small businesses keep a track of sales, expenses and credit and crossed over a million installs a few months ago.

The brainchild of Fahad Kamr, Shah Warraich, and Myra Ali, the app has since graduated from Y Combinator’s accelerator programme and expanded its solutions to become a super app for small businesses.

Kamr, Udhaar Book's founder and CEO, said that a majority of small business owners in Pakistan continue to do their accounts on paper and process payments in cash which is kept in a "wooden cash drawer".

"So small business owners typically work 16-hour days to monitor this drawer and minimise theft. Solving this problem requires digitising all manual elements of the business, while making the transition as seamless as possible for the already busy business owner," he said.

“Udhaar Book has now evolved into a super app, essentially an operating system for small businesses. We free up the small merchant’s time so he can spend it with his family and develop the full potential of his business,” he added.

Read: Tech talk — an online ledger to manage your receivables

According to the press release, the startup has collaborated with various telecommunications firms and banks including Telenor, Zong, United Bank Limited, and Bank Alfalah in an effort to expand the app ecosystem.

“Our partnerships with telcos, banks, and wallets means Udhaar Book’s 1.4 million small merchants are now able to sell mobile top-ups digitally to earn ancillary income," Kamr said.

He said that in the past three months, monthly active users have skyrocketed 300 per cent with over 1.4 million registered users across Pakistan and 510,000 monthly active users.

"Growth has been great, while retention rates are trending upwards as more business owners stay for our wide variety of solutions,” he said.

FGV General Partner Ali Mukhtar lauded Kamr and his team for taking the app to "new heights".

"We can't wait to see what is next in the pipeline, and are excited to join Udhaar Book on its journey to bring Pakistan into the global digital economy," he said.

Tinder co-founder Justin Mateen noted that the app's monthly active users had grown by over 1,100 per cent this year, a feat that was achieved by "focusing on the needs of their micro SME [small and medium enterprises] users".

"Excited to be a part of the journey," he said.

According to the press release, Pakistan is home to an estimated 25-30 million micro-SMEs that are still run manually.

"These small businesses contribute 74pc to the country’s gross domestic product, highlighting the massive value-add potential when their operations are digitised," the statement said.

Pakistanis recently witnessed a repeat of the 2015 petroleum shortage. The reason was, once again, the falling global prices and the attempt by the oil industry to avoid inventory losses.

The difference this time was that the crisis developed over a period of time, persisted too long and saw a far poorer response from the government. There was no sign the authorities concerned, regulators and market players had learnt any lesson from the January 2015 crisis.

It also transpired, meanwhile, that the supply chain had always been dependent on smuggling — by some companies and dealers — from Iran with around 5,000 tonnes daily imports or 150,000 tonnes monthly supplies.

As the Pakistan-Iran border was closed more than three months ago, the shortage started to build up. According to an official estimate, Pakistan is losing about Rs300 million per day (Rs110 billion per annum) on account of sales tax and petroleum levy owing to the smuggling of petrol, diesel and liquefied petroleum gas (LPG) from Iran.

The oil industry always tends to minimise losses when prices fall and maximise inventory gains as they move upwards. Businesses rarely follow principles, but the repeat crisis this year confirmed the governance structure is no better than it was five years ago.

Stakeholders attributed the fuel shortage to a sudden surge in consumption. This is confirmed by neither official record nor circ*mstantial evidence

The oil industry had slowed down its imports and local production as the price decline hit the market in December-January. But red flags were already up when the coronavirus led to lockdowns by the end of March and consumption dropped. The wheat harvest was just around the corner when local refineries started to close down for limited offtake by oil marketing companies (OMCs).

It was quite clear by the end of March that OMCs were not maintaining mandatory stocks for the 20-day consumption cover as per the rules and licence conditions. The strategic reserves necessary for security purposes had already been compromised. The supply chain disruption was nationwide and affected all major cities and towns in Punjab, Balochistan, Azad Jammu and Kashmir and Gilgit-Baltistan. Khyber Pakhtunkhwa officially said its 77 petrol stations had completely dried out.

By the first half of April, all stakeholders were fully aware of the initial shortages. The Oil and Gas Regulatory Authority (Ogra), the Petroleum Division and the oil industry were making friendly communications to show file work.

Ogra asked the director general of oil (Petroleum Division) to enforce its decisions on the industry to arrange imports and uplift the local product. The director general reminded the regulator to exercise its relevant power and enforce mandatory stock requirements on all OMCs. “Despite lockdowns across the country, higher sales of petroleum products have been witnessed since April 1,” said a Petroleum Division note in the first week of April.

The rationing of oil products came into play around Eid in the third week of May. Some unfriendly correspondence is also on the record, suggesting the minutes of meetings were changed to favour the companies of choice to benefit from the increase in prices that followed a few days later. While a few made billions of rupees in inventory gains and windfall earnings in the petroleum levy, others protested.

There were some calls for a change in the pricing mechanism to a quarterly or weekly basis. In fact, when the priority should have been maintaining the stocks through administrative, regulatory and policy response to the shortage, the institutional debate was focused on hedging against global oil prices.

No wonder it was the supply chain that was managed like a Ponzi scheme. For a large country like Pakistan, it is not an easy job to move stocks from the port to upcountry. Ironically, the world was suffering from storage constraints owing to a price crash while Pakistan went through one of the worst oil shortages, with many consumers being forced to pay double prices.

As the crisis peaked in the first week of June, the industry along with the regulator and the government in its public discourse attributed the shortages to a sudden upsurge in consumption in June. It quoted consumption of 850,000 tonnes in the month against the usual monthly consumption of around 650,000 to 700,000 tonnes.

That was corroborated by neither their record nor circ*mstantial evidence given the fact that most major cities are far from resuming normal business and educational activities.

The official record put the actual average consumption of petrol in the first 19 days of June at 24,000 tonnes per day. At this rate, the monthly consumption would not go beyond 720,000 tonnes. Also, the Product Review Meeting (PRM) attended by all OMCs, refineries, Ogra and the Petroleum Division on May 13 estimated total demand for petrol in June at 651,747 tonnes. The PRM under the DG Oil is a forum that jointly finalises consumption estimates for the next month and allocates responsibilities to each company for imports or local production.

Interestingly, an extraordinary PRM presided over by the secretary of petroleum on June 4 did not make any material change to the demand estimate that was put at 683,000 tonnes — just a difference of 33,000 tonnes or 5pc.

More surprisingly, the government appointed a seven-member probe committee led by the same officers and under the supervision of those offices that should have been subjected to a probe for acts of omission and commission and a conflict of interest. The result was not unexpected: blame the industry. Separately, the regulator sent show-cause notices to nine OMCs for not maintaining mandatory stocks and finally imposed absurdly low fines on six of them.

This is despite the fact that in meetings with the prime minister, Ogra blamed the DG Oil. The regulator took the stance that its responsibility was limited to building the physical storage infrastructure while the Petroleum Division was required to get these tanks/depots filled by OMCs with stocks for minimum 20-day consumption. Yet no one questioned it how it imposed fines on OMCs in that case.

While the stocks in Punjab, Khyber Pakhtunkhwa and Balochistan still remain limited to three to five days of consumption, shortages are likely to recede as the Pakistan-Iran border opened for trade last week. Also, the exchange rate has already come under pressure as the companies gear up for the revival of imports for inventory gains with the expectation of about Rs17-20 per litre increase in the price on July 1.

Published in Dawn, The Business and Finance Weekly, June 22nd, 2020

Estimates, forecasts and the budget are all very well if one wore fringes and bead headbands while looking into a crystal ball.

Every hope of a V-shaped recovery is contingent on there not being a second wave of Covid-19 while Pakistan is firmly in the grip of the first wave.

Another unknown is the possibility of the coronavirus mutating down the road the way the Spanish flu did when the second wave hit.

Much of the world is banking on a vaccine that may as yet not exist.

Short of a winged messenger bringing glad tidings, all talk of the growth rate and future prospects is just that: talk.

The PTI government’s (only) feather in the cap is the 71 per cent decrease in the current account deficit.

Hence a few across-the-board changes such as 2pc customs duty being abolished on 1,600 tariff lines and reduction of tariffs on raw materials and semi-finished goods fit the bill.

More specifically, a kaleidoscope of segments, from Quran publishers to button makers,has benefitted from the budget.

Trade, as we know it, had been changing before Covid-19 as the ‘leader of the free world’ Trump was one of the harbingers of bringing back the age-old notion of economic growth: import substitution.

Independently of the pandemic, many countries had jumped on this bandwagon.

Pakistan had made some hay, and was looking to make some more, when the US-China trade war started in the hopes of attracting some of the foreign direct investment in the textile sector.

There was some chatter about growing/importing soya beans to export to China, one of its biggest imports from the United States.

None of the plans bore much fruit before the coronavirus whammy hit. Going forward, Covid-19 can put globalisation into a coma, if not killed it, as suggested by some international analysts.

The pandemic will entrench a bias towards self-reliance for all global economies.

And is that a bad thing?

Even though Pakistan is a cotton grower and textile exporter, till last year one could find t-shirts made in Bangladesh in Karachi’s Zainab Market and baby rompers manufactured in India in malls despite the trade ban.

India is waiting in the wings to grab China’s slice of exports.

It has readied land twice the size of Luxembourg to offer companies that want to move their manufacturing out of China and has reached out to about a thousand American multinationals, reports BBC.

Clearly, Pakistan has been losing the international game.

But the pandemic has uprooted global supply chains and changed how the game is played.

It may be an idle hope but closed borders could force local industries to step up and deliver to domestic demand, leading to first domestic than global competitiveness.

Pandemic-induced protectionism may be this decade’s fad, but it could lead to an increase in domestic trade.

With an import-reliant economy for consumption and manufacturing, a high enough increase in trade within borders to offset the drop in exports appears so far beyond the realm of possibility that it is laughable.

As part of the Belt and Road Initiative, the China-Pakistan Economic Corridor foresaw a world that took global trade to new heights, a vision that may have at least been put on the back burner till we are under the pandemic’s shadow.

Keep in mind that the aftershocks of the 2009-10 recession were still reverberating when the coronavirus reared its ugly head so there is no knowing when, or even if, the global economy will resume its pre–Covid-19, pre–US-China trade war levels.

Thus, the laughable must become conceivable, starting with the food bill.

The humble daal eaten in ramshackle houses belonging to those at the bottom of the economic strata is an imported product.

It is ludicrous that an agrarian economy had food imports of $4.5 billion, accounting for nearly 12pc of the imports, in July-April this fiscal year.

Edible oil, pulses and tea were the top three items and while growing tea leaves is not feasible, oilseeds and pulses can be grown if crops could be made less politicised.

By the same token, raw cotton is the top textile input.

Pakistan produces short- and medium-staple fibre raw cotton with a high trash content of 9pc as opposed to a global average of 3-4pc.

While domestic supply is fully utilised, global demand requires synthetic fibres and long-staple clean dry raw cotton.

With the exception of denim products where Pakistan is globally competitive enough to be part of Levi’s supply chain, apparel made from Pakistan’s cotton results in defected low-quality fabrics that are not usually printed or dyed.

Why can’t investment be made to improve the quality of local cotton instead of spending hundreds of millions of dollars each year importing it?

Together, edible oil, oilseeds, pulses and cotton imports clocked in at $2.8bn till April this fiscal year.

This roughly converts to Rs461bn (at the current exchange rate), an amount greater than the petroleum levy the government hopes to earn this year.

Why can’t the budget set aside a proportion of that amount to develop Pakistan’s domestic supply instead of playing around with subsidies and tariff lines?

The auto sector, which The Economist called “an absurdly protected industry” in 2015, has been an elephant in the room for some time.

With the contraction in the economy, its imports nearly halved this fiscal year though there has been the excitement of new players, fresh investment and higher domestic competition in the not-so-distant past.

It is debatable how much localisation each player achieved, but an inward-looking economy requires a renewed interest in a higher level of import substitution.

Pakistan cannot be self-sufficient like Cuba, North Korea or Iran, nor should it aim to do so. But a reduction in imports cannot be through the hammers of duties and a more expensive dollar alone.

History bears witness that regional export powerhouses, India and China, became competitive domestically before becoming forces to be reckoned with.

But these are realities that this budget, and all the budgets before, has ignored.

The measures necessary to bring about sweeping changes are not projects that deliver growth rates today.

Ours may not be the generation that will benefit but those of our children and grandchildren. But this philosophy does not guarantee re-election.

Hence, the government will toot the horn of the short-term reduction in the current account deficit, which will balloon again when times are better. And the future will be ignored once again.

ISLAMABAD: The power division and its power companies at a public hearing on Wednesday sought recovery of about Rs120 billion in additional revenue on account of fuel cost, the impact of high inflation and prior-year adjustments in power purchase price and distribution margin.

This will require a cumulative increase of about Rs3 per unit in average consumer tariff for all distribution companies (Discos) of ex-Wapda. This will include about Rs1.87 per unit increase for one month to be recovered in November on account of monthly fuel price adjustment after a separate public hearing on Oct 4, while the remaining Rs1.15 per unit increase will remain applicable for at least six months.

The National Electric Power Regulatory Authority (Nepra) conducted the formal hearing, but reserved its ruling on the request of the distribution companies to recover about Rs93bn from consumers on account of quarterly adjustments.

An official explained that subject to Nepra approval, this amount would be recovered from consumers at the rate of about 60 paisa per unit for one year or Rs1.15 per unit for six months.

Distribution companies’ plea for recovery of the amount will require cumulative increase of Rs3 per unit in consumer tariff

At the public hearing presided over by Nepra chairman Tauseef Farooqi, the regulator heard viewpoints of the power division, Central Power Purchasing Agency (CPPA) and some distribution companies for their common request to pass on the Rs93bn impact to consumers on account of prior-year adjustments and distribution margin indexation with inflation and exchange rate.

Three major distribution companies of Lahore, Islamabad and Faisalabad have in their applications demanded an additional recovery of Rs30bn under their multi-year tariff (MYT) adjustment mechanism for the fiscal year 2019-20, while all the Discos, including these three, demanded Rs33bn adjustment for the last two quarters of 2018-19 on account of power purchase price and distribution margin.

During the course of hearing, Nepra explained that it had also received another application on Tuesday from the power division for another additional requirement of Rs30bn revenue to be recovered from consumers on account of inflationary impact on operation and maintenance cost of the power companies due to much higher inflation.

Representatives of the power division and CPPA pleaded that out of additional requirement of Rs30bn for inflationary impact, an amount of Rs19bn should be passed on to consumers along with quarterly adjustments on a provisional basis and a separate hearing should be held to deal with the matter for future.

Nepra case officers opposed the fresh request, saying the distribution companies were previously allowed Rs24bn recovery from consumers on account of bad debts for one year with a condition that these write-offs would have to be approved by their respective boards of directors. However, the Discos had been recovering this additional amount for 18 months without a report if their boards had approved the previous write-offs.

Nepra directed the Discos to submit written reports on the subject and also provide their audited accounts to consider their requests for quarterly adjustments.

Published in Dawn, September 26th, 2019

The business community fears that the export promotion agenda may be lost to the demands of a populist budget.

They foresee a deeper crisis at the external front if issues compromising the viability of exports are not tackled in the upcoming budget by Finance Minister Ishaq Dar’s team.

While multinationals were not perfectly comfortable, many leading local business groups and traders were calm, willing to forget their wish list for now and extend support to the PML-N government for its last budget before the 2018 elections.

Sensing the conciliatory stance of the big boys in cement, auto, sugar and IPPs, the export-oriented and second tier companies, particularly in value added textiles, were extremely nervous as they dread the government might decide to compromise their interest for its politics.

Many leading local business groups were calm … second tier companies were nervous while for the struggling third tier, the federal budget is a non-event

For the struggling third tier companies, the federal budget is a non event as many operate on the periphery of the formal economy.

The budget is to be announced at a time when twin deficits (fiscal and trade) seem to be assuming alarming proportions. The current account deficit has ballooned. According to the SBP data it rose by 200pc in the first 10 months and is expected to widen to $9bn by the end of the current fiscal year.

Despite mounting pressures on the external front the government has managed stability in the currency market, a policy that exporters believe, hurt, more than help, the economy by making imports cheaper and exports prohibitively expensive.

Azhar Majeed Sheikh, an articulate representative of textile exporters, was equipped with a stack of papers and the relevant data at his finger tips, when he visited the Dawn office last week.

He shared a lot of material to substantiate his case for government to bring the cost of the textile business in Pakistan at par with competing nations such as Bangladesh, India, Vietnam, Indonesia and China, in order to reverse the trend of dwindling exports.

“Reversal of zero rating for the export sector in the next budget would be a death knell for whatever little is left of the export oriented industry in the country.

“The duty on packaging material that makes up 3pc of the cost should be waived, GICD should be withdrawn and the government must ensure swift implementation of the textile package by earmarking and disbursing funds immediately for the purpose.

“Let the government do its part and mark my words, we will triple exports over the next three years. We have both the industrial capacity and entrepreneurial capability to beat the best of the best on an even playing field.

“However, if our working capital is held back by the government indefinitely and the industry is subjected to utility charges of 12pc to 173pc higher than competitors, and labour charges 10pc to 98pc higher, the only direction exports can go is south”, he argued.

Bashir Ali Muhammad, Chairman Gul Ahmed Textiles and founding director of the Pakistan Business Council, was cautiously optimistic when commenting on budget expectations.

“The government is under pressure to collect maximum taxes but I hope they will give relief to the five export sectors on Gas Infrastructure Development Surcharge in the budget, or else export markets will be lost for good”, he warned.

Shaukat Tareen, former finance minister, thought the leading economic team lacks a pragmatic approach and tends to cling to out dated notions. Commenting on the upcoming budget he said, “I would very much like to see concrete steps in the budget to help exporters, in general, and value added products, in particular, to boost exports and relieve pressure on our external account”.

“It would make our products more competitive so as to compete for relocation of the Chinese industry in Pakistan. By some estimates China is relocating around 85 million jobs to other countries in textiles, leather, steel, etc. over the next decade. With the present cost structure we stand little/no chance”, he said.

A leading tycoon with interest in cement, real estate, and the retail sector thought that the business community should utilise the year ahead to look inwards and make the necessary adjustment in business practices and structures to be better equipped to respond to market calls now that the country is finally breaking out of the low growth spiral.

“Call it a burden of democracy if you wish, the government’s behaviour in an election year is typical. It would be lame to expect the government to make adjustments for the business community. The waiver of the fiscal deficit limit announced by the prime minister means that the economic team is packing goodies to cultivate voters”, he said requesting anonymity.

Riaz Pasha who owns a small unit of electronic kitchen appliances in Karachi said small businesses have their own business eco system that has little to do with Islamabad. “Who would care for margins when survival is at stake?” he asked. “Besides I do not have the luxury of time to indulge in empty discussions”, he said.

In a pre-budget press conference last week in Islamabad the Overseas Investors Chamber of Commerce and Industry’s tone was different though demands were the same as earlier. It opposed tax amnesty for dishonest citizens, demanded to kill the super tax and repeated the call to broaden the tax net.

Members appeared dejected despite several key economic indicators improving. Some observers said their anxiety could also be rooted in the country’s hasty drift towards the East in the wake of the CPEC.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

Breaking low-growth shackles, the economy moved past the 5pc (in 2007-08) economic growth rate to an estimated 5.28pc — highest in around nine years.

The government is expected to spend more than Rs800 billion allocated for the public sector development programme by year end owing to higher than targeted foreign aid flows.

While there may be those pointing out that the GDP growth target of 5.7pc was missed except for some slippages on the manufacturing side, all other sectors particularly agriculture and services, either achieved or surpassed targets after a gap of many years.

This calls for more effort than complacency.

The current growth rate calls for more effort than complacency

The lower than targeted growth in manufacturing at 5.3pc instead of 6.1pc also appeared to be visible in, or because of, export losses and will need to be examined to determine whether international orders were on the lower side due to a global slow down or the unavailability or uncompetitiveness of exportable surplus.

The government estimates total exports at $21.7 billion during current year instead of the $24.8bn target.

On the whole, the industrial sector is estimated to have grown 5.02pc against a target of7.7pc and revised growth of 5.80pc last year. Here the manufacturing showed a 5.3pc growth instead of the targeted 6.1pc and 3.7pc growth last year. Large scale manufacturing posted a 4.9pc growth, well behind its 5.9pc target even though it performed better than last year’s 2.9pc increase.

Surprisingly, electricity generation and distribution and gas distribution showed a miserly 3.4pc growth against a target of 12.5pc and last year’s 8.4pc growth despite the government’s full focus on these areas.

Construction, another governmental priority, also increased by 9pc, against an increase of about 15pc last year, and missed the target of 13.2pc. Both these areas were also part of the CPEC focus that consumed more than Rs450bn during the year.

The government has flagged exports loss as a major challenge to tackle in the coming budget.

According to Planning Minister, Ahsan Iqbal, export decline was a major challenge for Pakistan because of a contraction in leading world markets like the United States. Nations with a focus on value addition were exceptions but Pakistan has been focused on commodity exports over the past 30 years, he said.

Therefore, allocations have been proposed for cluster based development in agriculture, mining and industry to secure growth of the entire supply chain of value addition, he said.

Based on this, exports are projected to grow by 6.4pc next year to $23.1bn against this year’s decline to $21.7bn. At the same time, the import growth target has been set at 9.6pc to $50 billion instead of $45.7bn this year.

As a result, next year’s trade deficit has been estimated at $26.9bn against $24bn this year while current account deficit would increase to $10.4bn compared to $8.3bn this year. As such, the current account deficit would amount to 3.1pc of GDP next year against 2.7pc of GDP this year.

In overall terms, the agriculture sector achieved its growth target of 3.5pc this year from a low of just a 0.3pc increase last year. Sub-sector important crops registered an increase of 4.1pc in its output, significantly higher than 2.5pc target and compared to a negative growth of 5.5pc last year.

Livestock subsector retained its last year growth rate of 3.4pc although it missed the 4pc growth target. Cotton ginning also showed a 5.59pc growth this year over last year when cotton output registered a 22pc decline.

The services sector as a whole grew by 6pc against a 5.7pc target when compared with last year’s 5.6pc growth. The financial sector led the growth with 11pc.

With more than Rs2.1 trillion public sector investments next year, the coming year’s economic growth target has been set at 6pc. In a major policy shift, devolved programmes like health and education would no more be part of federal PSDP ‘in accordance with the division of subjects between provincial and federal governments in the post 18th amendment scenario’.

A major focus of the upcoming development plan appeared to be allocations for non-core PSDP that included Rs45bn for the PM’s Global Sustainable Development Goals, Rs20bn for the PM’s Initiative, Rs25bn for gas development schemes, Rs45bn each for security enhancement and relief and rehabilitation of internally displaced persons.

As such, the core PSDP would be put at Rs866bn against Rs655bn of the current year while non-core development spending would amount to Rs135bn. A special allocation of Rs27bn has been made for completion of CPEC projects.

Ahsan Iqbal believed the 5.3pc growth rate had come about because of steps taken by his government towards macroeconomic stability, infrastructure development, energy supply and human resource development.

To achieve a 6pc GDP growth rate, the agriculture sector is targeted to maintain its current year growth rate of 3.5pc while important crops would grow by 2pc instead of 4.1pc this year.

Manufacturing sector is projected to grow by 6.4pc next year supported by a 6.3pc increase in LSM. The services sector was also expected to grow by 6.4pc instead of 6pc this year while livestock would slow down to 2pct growth instead of 3.4pc increase this year.

Completion of CPEC would continue to be the top objective of the next budget with Rs324bn allocation for National Highway Authority instead of Rs190bn of this year.

Another Rs61bn would go to power sector instead of Rs130bn this year, perhaps due to nearing completion of major generation projects. The total Rs385bn allocation for CPEC would also include foreign funding of Rs145bn.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

If Pakistan hopes to make meaningful progress on building up much-needed foreign exchange reserves, opting for an export promotion strategy is not enough. Our agriculture fields will have to become radically more productive to be ready for import substitution, at least in crops, where Pakistan has favourable agro-climatic conditions as well as a comparative advantage. One case in point is garlic — an important marketable condiment.

Pakistan’s local production of garlic meets only two-thirds of its domestic needs. For that reason, Pakistan imported 61,688 tonnes of garlic worth $68.7 million (Rs11 billion) in 2021, whereas the import value was even higher in 2020, standing at $102m, according to International Trade Centre data.

Surprisingly, due to conducive agro-climatic conditions, Pakistan’s yield (tonnes per acre) is higher than that of India and Bangladesh, the second and third world’s largest garlic producers, respectively. Additionally, Pakistan’s farm-gate prices remain far lower than import parity prices. Even with the current production cost and yield, farmers consider it more remunerative vis-à-vis other crops, grown during November-March.

Therefore, the country has good potential for expanding its garlic production to achieve self-sufficiency through progressive import substitution, provided that farmers are facilitated to overcome the challenges they face. For such a large import substitution of a high-value crop, the government has two strategic choices, though these are not mutually exclusive and can be pursued in parallel.

Despite having a yield higher than that of India and Bangladesh, the second and third largest producers in the world, Pakistan is yet to be self-sufficient in garlic production

First, increasing garlic output through expansion of garlic crop area — extensification approach. Garlic is cultivated on 13,347 hectares, primarily in Punjab and Khyber Pakhtunkhwa, with a production volume of 127,463 tonnes (2020-2021). With a current yield of 9.55 tonnes per hectare, Pakistan only needs an additional 6,460 hectares to bridge the current demand gap. This target is achievable as there are at least 15 districts in Pakistan where garlic is cultivated on a significant area.

Seed (cloves of garlic) is a major cost element, comprising over 70 per cent of the total cost, and therefore serves as a primary barrier to entry for smallholders. However, seed-related support is required just once, as farmers use their home-grown seed for the next crop. Since the government is currently facing financial challenges, a far better option is to provide interest-free loans to potential garlic farmers. Fertiliser is the second major cost element, which can also be made part of such a loan.

Garlic planting and harvesting have traditionally been labour-intensive. Labour availability at affordable rates has been a major limiting factor in the expansion of crop area. However, mechanisation with locally manufactured tractor-driven garlic planters and diggers (harvesters) — recently introduced in the local market — will hopefully prove to be a major enabling factor for an increase in area.

Second, increasing garlic production through yield improvement (intensification approach) is another option. China’s yield is currently 25 tonnes per hectare in comparison to Pakistan’s 9.5 tonnes per hectare. If Pakistan has to rely only on this option then it needs to increase its yield by at least 50pc (up to 14 tonnes per hectare) to offset current imports.

But, intensification based on using the right agricultural inputs and improved farming practices can increase yield to a certain level. Beyond this, the use of high-yielding varieties is a must.

Four years ago, the National Agriculture Research Center developed a new garlic variety: NARC G-1. There is immense media hype regarding its yield potential, which is claimed to be at 25-30 tonnes per hectare. Such higher potential, which can transform the entire garlic sector of Pakistan, has already attracted the attention of thousands of prospective farmers. However, the variety is still in the seed multiplication phase and has not hit the retail market. Therefore, its commercial success is yet to be proven.

Undeniably, an increase in production demands investment in storage facilities. Unlike the potato sector, where private sector has invested billions of rupees in the last two decades for setting up cold storages, garlic sector still lacks such specialised facilities, which are very common in several countries and help stabilise the supply and prices throughout the year.

Initially, setting up a few cold storage facilities in collaboration with the private sector and international development agencies can help establish a proof of concept. This will definitely decrease technical and operational risks perceived by potential investors.

The central question is how to engage farmers to increase garlic area or/and enhance crop productivity, using targeted interventions. One of the most successful tools is the cluster-based approach, as adopted by several countries to boost the production of various crops.

Although a lot of efforts have been made in Pakistan to develop industrial and small and medium enterprise clusters, production clusters in the agriculture sector have received little attention, despite the fact that relatively less time, effort and investment are required here to achieve tangible results.

Khalid Wattoo is a farmer and a development professional Rahema Hasan is a political economist and graduate of the London School of Economics and Political Science

Published in Dawn, The Business and Finance Weekly, November 28th, 2022

DOHA: An Arab embargo on Qatar is inflicting pain on foreign migrant workers struggling amid an oil slump and disruption of deliveries for large construction projects linked to the 2022 soccer World Cup.

Saudi Arabia, Egypt, Bahrain and the United Arab Emirates (UAE) imposed sanctions on fellow US ally Qatar in June and cut all transport links with the country, accusing it of supporting terrorism, a charge Doha denies.

To get around the boycott Qatar has flown in food from Turkey and Iran and chartered ships via Oman to bring in construction materials needed for World Cup projects.

But the feud is making life harder for some foreign workers in Qatar, already faced by layoffs caused by low oil prices and a work-sponsorship system that restricts their movement.

Fresh vegetables usually trucked across Qatar’s land border with Saudi Arabia, a route now blocked, have increased in price.

That is indebting some workers from places like India and Nepal who typically earn 800 rial ($219.78) a month and who make up about 90 per cent of Qatar’s 2.7 million population.

South Asian workers have been left stranded on Qatari farms in Saudi Arabia without food after their Qatari employers fled to Doha in June, according to a Human Rights Watch report.

Last week, dozens of Indian and African workers at hotels in Doha were told to take extended unpaid leave and return to their countries because of a drop in occupancy caused by the embargo.

“Our rooms were filled with Saudis on weekends but they don’t come to Qatar any more. We can’t have workers cleaning empty rooms,” said a Doha hotel manager, declining to give his or his company’s name.

Qatar has denied reports of lower hotel occupancy rates and said its preparations for the World Cup have not been affected.

The tiny Gulf state’s economy, buoyed by vast natural gas reserves, can weather years of sanctions, officials say.

But any pause in the flow of construction materials could delay projects and leave migrant workers vulnerable to exploitation, said Gulf labour researcher Mustafa Qadri. “The impact could reverberate to South Asia, the Philippines and East Africa where migrants’ families depend heavily on remittances.”

At an Indian restaurant near Doha’s airport on Monday, Japesh Afsal, a waiter serving fish curry to labourers, said rising prices had hurt business. “Fish prices are up. If we raise our prices this will be hard for customers,” he said.

Raji, a Bangladeshi crane-operator, said his manager told him that his pay could be delayed next month because the company was running out of steel, previously imported from the UAE.

A work-sponsorship system widely enforced in the Gulf and known in Qatar as “kafala” requires foreign workers to get their employer’s consent to change jobs or leave the country. Qatar says it has ended kafala but some migrants still work without proper access to water or shelter from sun, rights groups say.

The crisis may bring change. On Wednesday, Qatar announced a plan to allow Indians and dozens of other nationalities to enter Qatar on arrival without a visa.

Qatar’s emir in a rare public address last month thanked the country’s foreign residents for their contributions.

“Foreigners built this country. Qatar knows it cannot survive without them,” said Marie Trichia, a barista at Doha’s Gate Mall.

Published in Dawn, August 16th, 2017

The government’s failure to document the large shadow economy and effectively secure the country’s borders against the invasion of smuggled and under-invoiced manufactured, intermediate, raw materials and finished goods is forcing manufacturers to opt out of the industry at the expense of tens of thousands of jobs.

“Effective documentation of all sectors of the economy is crucial if we want to stop jobs from shifting to other countries and become competitive,” argued Anjum Nisar, a Lahore-based producer of intermediate industrial raw materials for footballs, shoes, upholstery, stationary products, textile packaging, bags, PVC flooring, etc.

He told Dawn in an interview last week, “It’s time to decide if we want to grow and create jobs at home — or become a consumer society and export jobs elsewhere in the world.”

He contended that businessmen were getting out of manufacturing because of a strong policy-bias against the industry seen over the last few years.

“It’s time to decide if we want to grow and create jobs at home — or become a consumer society and export jobs elsewhere in the world”

“Neither government policies nor its attitude favour investment in the manufacturing industry. So why invest in the industry and work hard to lose money when you can make easy money by investing in sectors like real estate and retail that are off the taxman’s radar? Little wonder then that factories are closing and exports are down by almost a fifth in the last three years.”

The overall pace of indusial growth has slowed down to just above five per cent during the present financial year from 5.8pc last year, according to a report. Manufacturing has recorded a growth of 5.27pc against the modest target of 6.1pc for the year.

Large-scale manufacturing (LSM) expanded by 4.93pc on the back of improvement in the production of cement, sugar, tractors, buses, etc against the target of 5.9pc, while small scale manufacturing rose by 8.1pc.

Anjum was of the view that the lack of documentation of the economy was a major factor behind the shrinking size of manufacturing. “We could have had a large, vibrant and growing manufacturing industry and a lot fewer jobseekers on the streets if our policymakers had focused on documenting the entire economy and did not have a pro-import policy bias.”

He says the conditions in the country are not conducive for investment in new manufacturing industries. Yet he believes that all is not lost yet.

“Pakistan has a strong manufacturing base with a growing young population and cheaper labour force. But the revival of the manufacturing industry in the country, creation of new jobs and improvement in exports depends on how far the government is prepared to go.

“If the government is ready to tweak its policies to encourage investment in small- to large-scale manufacturing by taxing the entire production supply chain instead of selectively punishing the documented segments of the economy, secure its borders against the dumping of semi-finished and finished goods to protect domestic producers and cut the cost of doing business, we can see our fortunes changing rapidly.”

The former president of the Lahore Chamber of Commerce and Industry was also very critical of the role of the trade bodies representing businessmen. “Unfor­tunately, the business leadership, especially the Federation of Chambers of Commerce and Industry, is as little interested in the resolution of problems and issues facing the industry as our policymakers.

“The apex trade body is controlled by people who seem to act as a mouthpiece of the government instead of a representative of the business community’s interests. The role of such business and trade bodies needs to change.”

Anjum looks at the China Pakistan Economic Corridor (CPEC) initiative as a great opportunity for the Pakistani economy. But he thinks that the way the government is handling the connectivity initiative will benefit only Chinese investors and companies and not domestic businessmen.

“I feel that local companies are being discriminated against Chinese firms. If we do not secure our interests today, it will have grave consequences for us tomorrow.

“The corridor initiative will only result in adding to the debt stock and burdening our future generations unless our companies are encouraged to participate in CPEC-related projects and are provided the same tax benefits and policy incentives as Chinese firms.”

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

THE dollar in overseas trade slumped to the lowest level since November as a reaction to President Donald Trump disclosing classified information to a Russian official during the week.

In the local currency market, the rupee traded weaker against the dollar in the first trading session. It lost one paisa and two paisas on the buying and selling countres respectively to trade at Rs104.83 and Rs104.85 against the last closing at Rs104.82 and Rs104.83.

With a rupee continued downslide for the second day, the rupee suffered two paisas loss and one paisa losses on the buying and selling countres against the dollar at Rs104.85 and Rs104.86.

After posting a three paisas loss in the first two sessions, it managed to resist the sharp erosion against dollar in the following three. The rupee/dollar parity remained unchanged in the third trading session when the rupee traded flat versus the dollar at Rs104.85 and Rs104.86 for the second straight day due to comfortable supply of dollar.

During the week, dollar on the interbank market gained against the rupee on a WoW basis

The dollar witnessed bearish sentiments in the last two sessions. The parity closed the week unchanged, trading flat at Rs104.85 and Rs104.86 for four straight days.

During the week, the dollar on the interbank market gained three paisas against the rupee on WoW basis.

In the open market, the rupee/dollar parity showed a slight variation last week. During the week, the rupee moved in a narrow-range against the dollar as traders continued to remain on the sidelines, amid lack of buying interests.

The rupee shed 10 paisas and descended against the dollar to Rs105.90 and Rs106.10 in the first session from the prior weekend’s level of Rs105.80 and Rs106.00.

In the following two sessions, it held steady against the dollar as sufficient dollar inflows were available to meet the low market demand. In the second and third sessions, the parity continued to trade flat at Rs105.90 and Rs106.10 for three days.

In the fourth session, the rupee staged a recovery and posted a 10 paisas gain. As a result, the dollar drifted lower at Rs105.80 and Rs106.00.

In the last session, the parity remained unchanged at Rs105.80 and Rs106.00.

During the week, the dollar on the interbank market traded unchanged against the rupee in three sessions while it managed to gain and lose 10 paisas each in the remaining two sessions, maintaining a stable trend on WoW basis.

Against euro, the rupee remained under pressure, trading in wider range last week. Extending weekend weaknesses, the rupee commenced the week on a negative note and suffered a 90-paisa drop in the first trading session with euro changing hands Rs115.60 and Rs117.10 against the previous week’s closing of Rs114.70 and Rs116.20.

During the week, the rupee lost Rs3.05 against the euro on WoW basis. The euro has so far appreciated by 2.7pc against the rupee in the first three weeks of May.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

LONDON: Ten years after China helped stave off the threat of a global depression with a huge stimulus plan, investors are looking once again towards Beijing as the world economy heads for a slowdown, or worse, in 2019. Booming China has accounted for about a third of the growth in the global economy in recent years.

So recent signs that it is losing momentum is unsettling when the US boom, turbo-charged by President Donald Trump’s tax cuts of 2017, seems to have peaked and Europe’s heavyweights are stalling.

China’s slowdown is already being felt around the world, from Apple’s profit warning due to weaker sales of its iPhones to carmaker Jaguar Land Rover laying off workers, after a 22 per cent fall in sales in the country in 2018.

Policy sources told Reuters in Beijing on Friday that the government is planning a lower economic growth target of 6-6.5pc for 2019 after an expected 6.6pc in 2018, which would be the slowest expansion since 1990.

In the first few days of 2019, China raised infrastructure spending with a $34 billion railway investment and its central bank loosened the screws on banks to encourage them lend more, its fifth such move in a year.

“China, that’s what worries me most,” Joachim Fels, managing director and global economic advisor at bond giant Pacific Investment Management Company, said as he surveyed the outlook for the world economy in 2019.

As well as cutting China’s appetite for imports, a deeper slowdown could weaken its yuan currency and fan the flames of the trade war between Beijing and Washington.

However, Fels said his recession models for 2019 were flashing only orange warnings — not red — in part because the US Federal Reserve was likely to stop its run of interest rate hikes after one or two more increases.

China is expected to do more to help its economy too, although officials in Beijing say they do not plan a stimulus of the magnitude of the nearly $600bn package unleashed in 2008, shortly after the collapse of Lehman Brothers.

“I find it hard to look at it historically and bet against the Chinese authorities managing to stabilise their economy,” Jim McCormick, global head of desk strategy for RBS division NatWest Markets, said.

“When China wants to stabilise its economy, they tend to be successful.”

Published in Dawn, January 12th, 2019

The government raised Rs354.74bn from the auction of Pakistan MTBs of various tenors held on May 11, smaller against the received bids of Rs409.24bn. It was however, higher against the auction target of Rs350bn.

Of the total raised amount, three month T-bills fetched the highest Rs259.45bn at a cut off yield of 5.99pc, followed by six month T-bill Rs92.88bn at 6.01pc and 12-month T-bill Rs2.40bn at 6.02pc.

Three month T-bill attracted the highest amount of Rs283.96bn: six month T-bill Rs119.57bn, and 12-month T-bill Rs5.70bn.

Deposits and other accounts of all scheduled banks stood at Rs11,070.49bn after a 1.28pc decrease over the preceding week’s figure of Rs11,214.04bn, according to the weekly statement of position for the week ended May 05. Compared with last year’s corresponding figure of Rs9,667.62bn, the current week’s figure was higher by 14.51pc.

Borrowings by all scheduled banks decreased in the week under review by 1.90pc. Compared to last year’s corresponding figure, the current week’s figure is higher by 29.92pc

Deposits and other accounts of all commercial banks stood at Rs10,996.66bn against preceding week’s deposits of Rs11,140.12bn, showing a decline of 1.29pc. Deposits and other accounts of specialised banks stood at Rs73.83bn, lower by 0.12pc against previous week’s figure of Rs73.92bn.

Total assets of all scheduled banks stood at Rs15,503.50bn, lower by 0.96pc over preceding week’s figure of Rs15,653.06bn. Current week’s figure is higher by15.42pc compared to last year’s corresponding figure of Rs13,431.80bn.

Total assets of all commercial banks stood at Rs15,258.36bn, lower by 0.94pc over previous week’s figure of Rs15,403.73bn, while total assets of specialised banks at Rs245.14bn, were smaller 1.68pc over the previous week’s Rs249.33bn.

Gross advances of all scheduled banks stood at Rs5,805.25bn, higher by 0.50pc over the preceding week’s figure of Rs5,776.68bn. Compared with last year’s corresponding figure of Rs4,957.68bn, current week’s figure is higher by 17.09pc.

Advances by all commercial banks increased to Rs5,636.76bn from previous week’s Rs5,608.29bn indicating a rise of 0.50pc, whereas advances of specialised banks stood at Rs168.49bn against previous week’s Rs168.39bn.

Borrowings by all scheduled banks decreased in the week under review. It fell by 1.90pc to Rs2,231.01bn against previous week’s Rs2,274.21bn. Compared to last year’s corresponding figure of Rs1,717.24bn, current week’s figure is higher by 29.92pc.

Borrowings by commercial banks in the week at Rs2,203.90bn were lower by 1.96pc against previous week’s Rs2,247.94bn. Borrowings by specialised banks stood at Rs27.10bn against the previous week’s Rs26.26bn.

Investments of all scheduled banks stood at Rs7,791.52bn against preceding week’s figure of Rs7,794.31bn, showing a decrease of 0.04pc. Compared to last year’s corresponding figure of Rs6,822.66bn, current week’s figure is higher by 14.20pc.

Investments by all commercial banks stood at Rs7,736.49bn, smaller by 0.13pc against preceding week’s figure of Rs7,746.50bn, whereas investment by all specialised banks stood at Rs55.03bn against preceding week’s figure of Rs47.81bn.

Notes in circulation stood at Rs3,795.23bn during the week ended May 05, according to the State Bank of Pakistan, against Rs3,731.47bn a week earlier, showing a rise of 1.70pc. Compared to last year’s corresponding figure of Rs3,254.29bn, current week’s figure is higher by 16.62pc.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

After recently signing a memorandum of understanding with Alibaba for promoting exports of small and medium enterprises, Pakistan has taken an initiative that requires a lot of perseverance to turn its dreams into reality.

Jack Ma’s oft-quoted belief is: “We’re never in lack of money. We lack people with dreams, who can die for those dreams.”

“If Prime Minister Nawaz Sharif (who along with Jack Ma, executive chairman of Alibaba group, witnessed the signing of ceremony of the MOU), shares Ma’s belief, if we share it, then our SMEs’ exports will definitely grow. Otherwise not,” opines the president of a large local bank.

E-commerce giant Alibaba can work wonders for boosting SME exports. There are no two opinions about it.

The group does have big data on trading patterns… If it helps us in selecting SMEs for training, it can really revolutionise the sector

“But then our SMEs need to come up with products that can compete with cheap Chinese and Indian products,” remarks a former head of a foreign bank. China is a manufacturing giant. Indians are smart marketers. And both enjoy economy of scale. “It’d be interesting to see how our SMEs’ compete with theirs.”

Under the terms of the MOU, Alibaba, its affiliate payment platform Ant Financial and the Trade and Development Authority of Pakistan (TDAP) have agreed “to foster growth of worldwide exports of products of SMEs in Pakistan — through e-commerce.”

According to media reports, Alibaba group will conduct online and offline training for SMEs to get on-board it’s online trading platforms, and help them boost their exports through e-commerce. TDAP will identify suitable SMEs to participate in such training programmes.

Alibaba group will, in return, provide the TDAP with industry analysis to assist in the selection process.

Alibaba, Ant Financial and TDAP will work jointly to promote growth of financial inclusion in Pakistan in such areas like mobile and online payment services. The parties have also agreed on adopting cloud computing services to support online and mobile e-commerce businesses of SMEs in the country.

On the face of it, if the promises made in the MOU are fulfilled by all parties, realising export potential of Pakistan’s SME sector would be quite a possibility. “But many ifs and buts will come our way. We’ll have to get past them,” admits a senior TDAP official.

For example, handling online and offline training programmes for SMEs can prove quite difficult. But, according to officials, TDAP will seek help from business lobby groups, SMEs representatives, banks and provincial governments in reaching out to those SMEs that already have a presence in export markets or have been catering to export houses directly.

For this, SMEs working in such non-traditional but export potential areas, will be prioritised, like furniture and home décor, personal care, fintech and agritech, along with ICT-related SMEs and SMEs in key traditional export areas of rice and seafood processing, textile, leather, sports and surgical goods manufacturing and light engineering.

Special efforts will be made to revive the carpet industry through promotion of SMEs, officials claim.

A senior official well-versed with the background of the MOU with Alibaba told this writer that lots of details still have to be worked out on how Alibaba would help TDAP in selecting SMEs for the training programme.

Alibaba truly has global experience in providing B2B (business to business), B2C (business to consumers) and C2C (consumer to consumer) online trading platforms.

Businesses from America, China, India, Indonesia, Thailand and Pakistan are already using Alibaba online trading services extensively. The group does have big data on trading patterns, strengths and marketing strategies of SMEs of said countries.

If it helps us in selecting SMEs for training, with the purpose of enabling them to boost exports via e-commerce, it can really revolutionise our SME sector, according to officials of Karandaz, a financial and technical solution providers for SMEs.

But they fear that bureaucratic red-tape in Pakistan, a general lethargic attitude of SMEs and lack of patience in working on innovative ideas plus slow growth of SME financing in the country may bring us some initial disappointments.

In Pakistan SME financing (as of end-June 2016) stood at just 1pc of GDP. “That will have to be raised manifold if we’re really interested in getting the best out of the TDAP-Alibaba deal,” one of these officials says.

“The good growth we see in SME finance (5pc per quarter as of June 2016) comes in the wake of a very shallow base. Volume wise increases are still very low (Rs14bn in Q4FY16). Besides, as percentage of private sector credit, too, SME lending is very low (only 7.3pc as of June 2016). All these numbers will have to be raised dramatically to make our SME sector efficient enough to benefits from Alibaba-facilitated e-commerce.”

Since the MOU signed between TDAP and Alibaba and Ant Financial also stipulates that the three would jointly work for fostering growth of financial inclusion in Pakistan, “this cooperation should result in development of models for improving our payment system besides taking onboard microfinance institutions to boost their lending,” hopes a senior executive of a microfinance bank.

“Besides, the agreement (between TDAP, Alibaba and Ant Financial on adopting cloud computing services to support online and mobile e-commerce businesses of SMEs) should create extensive opportunities for third and fourth generation tech start-ups in the country.”

Federal government officials say exposing our SMEs sector to changing e-commerce dynamics through government-level engagement with Alibaba group is expected not only to expand our merchandise exports, that are currently stagnant, but also lead to streamline services exports.

Of late, Pakistan’s services exports have shown a rising trend but issues related to proper recording and inflows of export proceeds clouds future growth. “We hope that services sector SMEs, particularly those in the IT sector, can do a lot better with greater opportunities coming their way through Alibaba and Ant Financial. They can help our state institutions better record services export proceeds,” according to an official of the Ministry of Information Technology and Telecom.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

Firmness prevailed in the local currency market amid dull trading activities throughout last week. Currency dealers experienced sluggish dollar demand.

On the interbank market, the rupee commenced last week in plus against the dollar after remaining stable at Rs121.54/56 in the earlier week.

It was seen changing hands against the dollar at Rs121.54 and Rs121.55 on Monday over the last closing at Rs121.55 and Rs121.56. The rupee traded flat against the dollar on Tuesday.

The rupee-to-dollar exchange rate traded in narrow range between Rs121.54 and Rs121.56

Amid dull demand from corporate and private sector, the rupee continued to trade flat on Wednesday and Thursday, retaining its overnight rate at Rs121.54 and Rs121.55.

In the last trading session, the rupee traded unchanged against the dollar for the fifth straight day, closing the week at Rs121.54 and Rs121.55.

In the open market, the rupee recorded gains against the dollar after trading flat at Rs124/124.50 in all the five sessions of the previous week.

Market participants showed lack of interest. The rupee posted a 20paisa gain on Monday with the dollar changing hands at Rs123.80 and Rs124.30 against the prior weekend levels of Rs124.00 and Rs124.50.

The parity retained its overnight levels on Tuesday and continued to trade flat against the dollar at Rs123.80 and Rs124.30.

The dollar remained negative on Wednesday as the rupee pushed the dollar further down to Rs123.50 and Rs124.00. The parity maintained its firmness on Thursday as the rupee traded flat against the dollar, closing at Rs123.50 and Rs124.00.

The rupee turned negative on Friday and closed the week slightly weaker against the dollar at Rs123.60 and Rs124.10.

Against euro, the rupee was seen in recovery stage last week. It staged a sharp rebound on Monday, changing hands at Rs144.00 and Rs146.00 against the prior week close at Rs144.50 and Rs146.50.

It, however, failed to hold its firmness and reverted to Rs144.50 and Rs146.50 on Tuesday.

The rupee bounced back against the euro on Wednesday and the euro drifted to Rs143.75 and Rs145.75.

The euro continued its downslide on Wednesday, changing hands at Rs143.50 and Rs145.50.

The downslide persisted on Thursday as the rupee turned buoyant before closing the week near a two-week peak at Rs143.00 and Rs145.00.

Overall, on week over week basis, however, the rupee posted a weekly gain of Rs1.50 against the euro.

Published in Dawn, The Business and Finance Weekly, July 16th, 2018

From sending special offers on restaurants to burger-loving current account holders to selling anonymised credit card records, banks are racing to monetise the huge troves of data they hold.

Wall Street trails Silicon Valley in using customer information to boost revenue but with tech giants such as Amazon and Google wading onto their turf with forays into lending and payments, banks including JPMorgan, HSBC and Barclays are moving to narrow the gap.

Mining mountains of trading data to predict stock moves; partnering with retailers on marketing campaigns and using artificial intelligence (AI) tools to try and speed up credit decisions are some of the areas banks are focusing on.

In the digital era, knowing how much people earn, where they spend it and what they buy – information some wouldn’t divulge to their closest confidants – is valuable, particularly when banks’ earnings from lending and trading are under pressure from persistently low interest rates and tougher regulation.

“We are now seeing some amazing uses of data in banking, and the reason is pretty simple: they know their clients better than anyone, they have a name and address, information about what you’re buying and once you have those you can do so much,” said Craig MacDonald, head of data monetisation at Accenture.

The surge in data mining is happening against a changed regulatory backdrop. New European Union (EU) rules introduced last year allow technology companies to access banks’ customer data if they have customers’ permission.

The EU has also toughened its privacy laws. Companies now have to get permission before they can collect and use personal information gleaned online from people living in the bloc.

But even with the extra protections, sensitive data is still at risk of being exploited because many people are not aware of how they can shield themselves.

CUSTOMER 12345: Tie-ups with retail firms is one way banks are monetising their data.

Customers of Britain’s Lloyds and Spain’s Santander can get special offers from a range of retailers after the banks joined a digital loyalty scheme run by US-based data advertising firm Cardlytics.

The scheme uses spending data to give customers discounts at shops they already frequent or which are in their neighbourhood. So, burger-aficionados get deals at local burger restaurants and fashion fans get ads about discounts at clothing stores.

The banks get a percentage of the fee charged by Cardlytics for running the campaign. Cardlytics gets insights on consumer behaviour which help the retailers tailor and fund the offers and discounts.

Cardlytics, Lloyds and Santander declined to comment on what percentage of the fee banks get.

“We leverage transaction data that’s created every time the card is tapped, every time a direct debit is made by a customer, in an anonymised way,” said Campbell Shaw, London-based head of bank partnerships at Cardlytics.

“We only need to know it’s customer 12345, we don’t need to know the name of the customer for any reason.”

Even with the tougher regulations around big data, privacy experts warn there is still scope for abuse, for example, if highly-indebted people are targeted with unsuitable offers for high interest loans or credit cards.

“If you can use data to get a customer to buy something that they otherwise wouldn’t, it’s good for the bank but not necessarily for the customer and the potential for misuse is significant,” said Paul Bernal, an expert in data privacy at University of East Anglia.

Ashok Vaswani, global head of consumer and payments at Barclays, told attendees at AI conference CogX in London this month that the bank would crunch data in an ethical way.

“We’re going to do it in a transparent and understandable fashion,” he said. “If I can’t explain it [to a customer] I’m not going to offer it.”

Barclays said it doesn’t share personally identifiable information and it sends privacy notices to customers through a combination of email, text, post and via mobile apps. It also has a page on its website explaining its data privacy policy.

DATA LAKES: Using data to improve risk analysis, make faster credit decisions and anticipate customer needs is particularly appealing for banks looking to cut costs.

HSBC plans to use AI tools to rake through its 10 petabytes of data — roughly equivalent to the storage capacity of 2 million DVDs – from investment banking clients in 66 countries.

Europe’s largest bank has struck a deal with Element AI, a Canadian company, to help it tap this so-called ‘data lake’.

JPMorgan, meanwhile, is developing a raft of AI applications to better predict stock moves and to map and mine 3 billion transactions it handles annually.

The bank hired Manuela Veloso, the head of the machine learning department at Carnegie Mellon University, to be its head of AI research last year.

In comparison to newer, tech-focused companies, banks are often at a disadvantage when they look to extract value from their data – they lack in-house experts and their businesses are often siloed with legacy IT systems.

To speed things up, lenders are set to spend $26 billion on big data and business analytics this year, according to analysis by International Data Corporation, up from $23bn last year and $19.7bn in 2017.

Hires for senior leaders with digital experience at financial firms have doubled year on year for the last five years, according to London-based headhunters Heidrick & Struggles.

“These skills are now a necessity within senior leadership teams,” says Marcus De Luca, UK financial services practice leader at the recruiter.

“We are often asked if there is someone who works at Amazon, Google, Netflix, or Facebook who could be tempted to join.”

Published in Dawn, The Business and Finance Weekly, June 24th, 2019

Much is being said about what needs to be done and what goodies will be gotten because of the CPEC.

As ‘a game changer’, it may be a combination of aid with trade and investment at its best. What comes through the course is difficult to forecast.

Pakistan’s banking sector is flexing its muscles to have its share of the pie in the upcoming mega projects. Contrary to the anticipation, the State Bank of Pakistan (SBP), in its second quarterly report for FY2016-17, has admitted that a large chunk of power machinery from China is being imported without using the Pakistani banking channel.

While analysts believe this is owing to the difference between reported imports and actual imports recorded by the Custom department, renowned bankers are less enthusiastic about the banking bonanza in the current situation.

With a declining savings rate, tax regime on bank withdrawal and low interest rates, local banks are pitted against giants. The SBP has issued a banking licence to the Bank of China, the fourth biggest bank in terms of assets.

The Industrial and Commercial Bank of China, the biggest bank of the world, is already operative in Pakistan with two branches. It is anticipated that Chinese banks in Pakistan will play an important role in financing large projects of the CPEC and allied transactions.

“Protocol on banking services to agreement on trade in services between the Government of the Islamic Republic of Pakistan and the Government of the People’s Republic of China” was signed in China on 21 February 2009 and it is an integral part of the agreement on trade.

Under the agreement, a Pakistani bank planning to establish a branch within the territory of the People’s Republic of China shall have total assets of not less than $15 billion at the end of the year prior to the submission of the application.

On Pakistan’s side a foreign bank, whose head office holds paid up capital of at least equivalent to $300 million can have five operative branches, with SBP approval. As an additional commitment, ‘Large Exposure Limit’ under the Prudential Regulations is exempted to Chinese banks.

Strategic Trade Policy Framework (STPF) 2015-18 aims to achieve increase share in regional trade, but does not jot down specific objectives to enhance Pakistan-China. The Sino-Pak trade volume was snailing to $13.77bn in 2015-16.

The proposed Export–Import Bank of Pakistan was scheduled to be established in March 2017. The establishment of the bank was announced in the budget 2015/2016 to promote the expansion and diversification of the export base. However, it is still in the planning and development phase.

The calculus of banking with China is difficult for Pakistani banks, especially with the proposed quantum of CPEC.

An investment of $56bn in a country that holds $21.74bn foreign currency reserves puts a drag on liquidity. Bilateral currency swap agreement is presents as an answer to the problem.

Pakistan and China inked a three-year bilateral currency swap agreement in 2011. The facility amounts to CNY10bn ($1.62bn), and Rs140bn ($1.45bn) and is to facilitate trade and cross currency payments.

The basic concept of a central bank currency swap is to avoid the risk of foreign exchange rate and currency. Cost of this capital is equal to the short term credit interest rate provided by the central bank to a domestic bank with the best reputation.

In short if the SBP employs the CNY capital under currency swap agreement, it is required to pay interest. These currency swaps can be viewed as a credit line that both sides can draw and which need renewal after 3 years. It is not known that the two central banks have accorded approval for the renewal as no instruction from Pakistan’s central bank has been issued after May 07, 2013.

The CPEC is irreversible, one can be sceptical about the Chinese footprint in Pakistan, but cannot deny it. The banking industry cannot afford passivity.

The currency swap agreement between the two central banks will give a positive signal to the market on the availability of liquidity, concessional banking services protocol with reciprocating market entry requirements and strengthening trade with the ‘all-weather’ friend will give small and medium sized banks a level playing field.

— The writer is an investment banker and a visiting faculty at PAF Kiet.
adilf39@gmail.com

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

When they wish to invest, fund managers across the globe look at the Morgan Stanley Composite Index.

Since the index is widely recognised as the leading provider of investment decision support tools worldwide, capital markets must conform to its standards.

Pakistan was part of the MSCI Emerging Market (EM) Index from 1994 to 2007. But during the stock market crash of 2008, panicked regulators and stockbrokers decided to close the exit door for foreign investors. In effect, it trapped foreign portfolio investors in the country.

When the dust finally settled, beleaguered foreign funds marched out of Pakistan and MSCI demoted the Pakistan MSCI Index from ‘Emerging Market’ to ‘Frontier Market (FM)’. The country’s equity market thus lost its access to the trillions of dollars that EM fund managers track.

“We may initially see foreigners test the waters with investments of under $100m”, ponders a veteran stockbroker

The FM market, on the other hand is a club of smaller markets with just a few billion dollars to invest that barely manages to draw the interest of foreign funds.

With the market’s improving fundamentals over the last few years and repeated reassurances by the regulators, independent teams of brokerages, local funds and big corporations, that such an act of restraining the free flow of foreign funds would never again be repeated; the MSCI last year finally announced that it would consider taking Pakistan back in the EM fold. The announcement came in the wee hours of last Tuesday.

The reclassification from FM to EM will be effective from June 1. In the weeks ahead of the MSCI announcement, investors already started to accumulate stocks of companies that they expected to be a part of MSCI EM.

According to the May 15 semi-annual review of the MSCI, six companies qualified for the ‘main index’. Those include United Bank, Habib Bank, Lucky Cement, Oil and Gas Development Company, MCB Bank and Engro Corporation. Two surprise additions to the original qualified stocks included D.G. Khan Cement and Thal Ltd.

Another 27 listed companies qualified for the inclusion in the MSCI EM ‘small cap Index’.

The investor’s excitement over the entry into the MSCI EM has been built on the premise that there shall be heavy foreign inflows of funds from global investors.

According to several Pakistani brokerages, aggregate funds tracking the MSCI EM at the moment amounts to around $1.5 trillion. In contrast, global funds that are tracking the MSCI FM are believed to be just about $18 billion.

Based on specifications, each country in the MSCI EM is allocated weightage. Pakistan has received a weight of 0.14pc, which pales in the face of China, which has the highest weight of 27pc and India with a weight of 8.45pc. But then again, those are infinitely larger markets than the Pakistan Stock Exchange.

Most Pakistani market strategists and local fund managers have drummed up expected inflows of $300-$500 million into the Pakistani equity market from global players who invest through EM index funds.

Is such an amount of foreign portfolio about to enter Pakistan? Mr Nasim Beg, vice chairman of MCB — Arif Habib Savings, in answer to that query, replied: “There are two aspects to it. There are international funds, which are mandated to follow the MSCI Index. Termed as ‘passive funds’, they can invest in Pakistan market according to its weight.

“On the other hand there are ‘active funds’ which try to create value more than the MSCI Index. It is upon them to either invest or ignore any of the markets. Pakistan may still be out of their radius”.

Brokerage Topline Securities has calculated that out of the $14tr — $17tr that track the MSCI EM, about $350bn, equal to 20-25pc of the aggregate are ‘passive funds’, from which Pakistan according to its 0.14pc weightage, be able to pull in $450m.

In anticipation of heavy buying by ‘passive funds’, local market participants both institutional investors and individuals, began to build up positions.

They took the cue from the reaction seen in the Dubai and Qatar equity markets, which had rallied 90pc and 46pc, respectively, between the MSCI inclusion announcement on June 11, 2013 and the actual inclusion on June 1, 2014. But investor behaviour in the local market has been surprisingly different.

Since the announcement of the MSCI decision on May 15, the Pakistan stock market benchmark KSE-100 index has plunged by over 2pc as investors decided to sell-off their holdings and book profit.

Most market watchers admit that the foreign inflows of expected $300m — $450m are not likely to flood-in post inclusion (June 1).

Foreign investors have been persistent ‘net sellers’ of Pakistani stocks in the last three years. They sold-off equity worth $315m and $339m in 2015 and 2016, respectively.

In the four months of the current year to April, foreign outflows have amounted to $210m. These actions worry local investors who wonder if the tide of foreign flows will really turn with the entry of Pakistan in the MSCI Emerging Market index.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

SHRUGGING off all concerns, Pakistanis celebrated Eid 2018 like never before. All across the country, despite successive heat waves, people thronged the market to boost the Eid economy by about 15 per cent; crossing the trillion rupee mark.

The spike in spending is attributed to a combination of economic, social and political factors.

“Even where salaries are static family income has consistently been increasing. One- job, one- earner households are replaced by multiple- jobs, several- earners households. Those better informed (thanks to internet and television) budget more skilfully to create the financial space needed to indulge on special occasions.

“Expectations of a smooth transition of power and improved security situation has provided comfort, dulled collective anxiety and mobilised Pakistanis to take a calculated risk for pleasure,” an analyst commented.

“The law and order situation has improved significantly. For people starved for outdoor family activity the holy festivals provide an excellent chance that no one wants to miss”, Afnan Shah Khan, Director Operations, Emporium Mall Lahore, told Dawn. He sees a 20pc pickup in the market this year over last year.

He mentioned a record footfall of over a million people in Ramazan 2018 up from 830,000 in his mall in 2017.

“Like despair, the feeling of joy, cuts across all social divides. Groups of people of all ages and classes enjoy a good time in bustling Eid bazaars.” commented a banker

“Pakistan is a big country with deep seated problems. You still hear about disturbing incidents. The scale and frequency of terrorist strikes targeting the public, however, has come down to a level where the public now perceives it as something in the horrific past,” another young expert in the retail business supported the view.

The second factor is the public’s buying power. “People don’t head for shopping with empty pockets. They clearly have a budget for Eid irrespective of their social class. It is illogical to compare budgets across the social spectrum as a small accessory for one person may cost more than the entire Eid budget of a low income family,” commented another market watcher.

There is little empirical evidence to suggest a sudden jump in family income over a year. Still leaders of market associations in several cities assert that majority of the people in markets before Eid were out to make purchases, unlike the norm when window shoppers used to outnumber actual buyers in Pakistan.

“People are not just purchasing clothes, accessories and foods and beverages; they are also actively buying cell phones, home appliances, furniture and crockery,” a trader in Saddar, Karachi’s biggest shopping area, told Dawn three days before to Eid.

Buyer enthusiasm was not limited to in-shop purchasing. Online shopping also made records, according to bankers and fintech experts.

Not everyone concurred with the perception of an expanding Eid economy. Some people thought that expert opinion was based on simple observations. “People see a rush on the roads and in shopping areas and they assume that Pakistan is prosperous. For every shopper in the market there are dozens who can barely make ends meet and have no money to indulge,” an artist insisted.

“It is the insufficient physical infrastructure in densely populated Pakistan that chokes roads and causes traffic jams in shopping areas if even a tiny fraction of the population ventures out of its homes at the same time,” he made his point.

“Like despair, the feeling of joy, cuts across all social divides. Groups of people of all ages and classes enjoy a good time in bustling Eid bazaars. It is a pleasure just to watch that,” commented a banker discussing the probable quantum of spending before Eid.

“Many shoppers use plastic cards and the majority of big business houses and brands record all their transactions. It is, therefore, comparably easy to gauge money movement and assess the total quantum of transaction in a specified period today than at any point in the past. An exact projection is not possible owing to the gigantic cash economy,” a mid career banker commented in his office Karachi’s city centre.

A freelance economist did not find the Eid economy projections absurd.

“A nation that can afford to spend Rs175 billion in the holy month for philanthropic giving, 2.4 million citizens can approach the central back to acquire new currency notes — the SBP has confirmed disbursing Rs350bn worth of new notes generally used as a cash gift at the holy festival — people can get bonuses and advance salaries, can very well spin a trillion rupees collectively for the celebration,” she said.

The projection of Rs1.1tr as a volume of the Eid economy is an intelligent guess based on the data provided by the State Bank of Pakistan and the Federal Bureau of Statistics. These include: cash withdrawals by private account holders from banks, fresh notes issued on peoples’ demand, the official and unofficial flow of remittances from overseas Pakistanis and scores on the consumer’s confidence index.

Commercial bankers confirmed massive withdrawals by account holders before Eid. “The time lag of withdrawal and deposit of cash is reducing over time as more businesses depend on banking services for liquidity handling”, a senior banker commented, admitting a major haemorrhage from the deposit base in Ramazan for Eid shopping.

Remittances this year are said to be better than last year. The ten month data of Financial Year 2017-18 posted last week by the SBP recorded inflows of $18.4bn that comes to a monthly average of $1.8bn. Traditionally during Ramazan inflows almost double the average. If the trend is repeated in 2018 remittance inflows through banking channels will be in the vicinity of $3.5bn.

Assuming even a third of that amount ($1.1bn) is spent in rupee terms; total value will come up to Rs134bn at the rate of Rs122 to a dollar. If remittances arriving through informal channels are inserted in the equation a total of Rs250bn may not be too off the mark to project what overseas Pakistanis pitch in into the Eid economy of Pakistan.

“If we assume that remittances are 20pc of the total spending Rs1.1tr is perfectly believable,” a trend gazer commented who finds the estimate actually conservative.

Published in Dawn, The Business and Finance Weekly, June 19th, 2018

THE Pakistan Economic Survey 2017-18 provides no data on the latest unemployment rate in the country. The last official figure was a rate of 5.9 per cent for the fiscal year 2014-2015 when joblessness was on the decline.

The level of unemployment has been rising ever since despite the economic growth trajectory recorded in the past five years, implementation of skill development schemes, self-employment programmes and the setting up of the first ever job placement centre, designed to facilitate and provide career counselling to job-seekers for bridging the gap between employers and skilled persons.

Independent economists question the official data on unemployment suspecting that the government is understating the rate. In an article published in Business Recorder, Dr Hafiz Pasha says that the unemployment rate that emerges from the Household Integrated Survey of 2015-16 is almost 9pc.

He notes that it is significantly higher than the Pakistan Bureau of Statistics’ estimate of 6pc derived from the Labour Force Survey of 2014-15. According to the latest National Human Development Report, the youth unemployment went up from 6.5pc in 2007 to 9.1pc in 2015.

Dr Pasha says the level of unemployment is especially high in urban centres, among females, and highly educated workers. For example, he says that 20pc of the youth in the labour market with post-graduate qualifications is without jobs.

According to the latest Population Census, the population in ten major cities has increased by 74.8pc since the last census was held, following significant movement of people from rural to urban areas in search of jobs and opportunities.

To control this shift in population, the government has set up a Centre for Rural Economy in the Planning Commission to promote sustainable and inclusive growth across the countryside. But the influx of job-seekers in Karachi continues unabated, especially from rural Sindh.

Policymakers are focused on economic growth that measures national income, not the living standards of the teeming millions. They need to evolve an indigenous egalitarian model for economic development that can resolve unemployment.

The problem of the unemployed or underemployed labour force has reached a critical level for various reasons. The mainstream economic activity is shedding labour in a drive to cut costs and improve productivity, helped by information and communication technology, information technology and a cheaper labour contract system.

There is a youth bulge for which enough jobs are not being created. Investments in Greenfield projects that provide more jobs than consolidation of businesses are at a low level. And Chinese workers and experts are competing with Pakistani labour in China Pakistan Economic Corridor projects.

No attention has been paid to the quality of economic growth which may or may not produce enough jobs. This requires that the issue be seen from the broader perspective of a transforming world in which job creation has turned into a global problem.

The elitist economic model needs a strong egalitarian bias to work for the common good. The traditional welfare state is withering away even in the developed economies of Europe where the concept of public welfare was deeply entrenched.

The best substitute that has so far surfaced at the international level is the concept of Sustainable Development Goals. When realised, the SDGs will largely help empowered individuals to earn their livelihood and empowered communities to resolve their problems in a fast-changing economic environment.

SDGs have to be a joint project of the state, business and active citizenry. The Parliament recently adopted a resolution supporting the SDGs and the National Assembly has set up an SDGs Centre.

Similar centres have also been set up at the federal level and in Punjab. Last year’s economic survey had revealed that the process of setting up of such units in other provinces is underway. This year’s survey did not report any progress.

Policymakers’ commitment to SDGs is weak. Political parties are in the tight grip of power politics unaware of the social vulnerabilities it is creating. This also brings us to the domain of lack of creativity in the development of economics science.

Here, a quote from a recent article in The Economist, London would be pertinent: “Economics enjoys greater influence over policy than other social sciences. Striking new finds are published by researchers and their institutions, promoted by likeminded interest groups and politicians and amplified by social media.

“Conflicting results and corrections are often ignored. It is wise to be sceptical about a single result.” Policymakers in Pakistan are still focused on economic growth that measures national income but not the living standards of the teeming millions.

They need to evolve an indigenous egalitarian model for economic development that can resolve the problem of unemployment and tackle accumulating issues in public welfare.

jawaidbokhari2016@gmail.com

Published in Dawn, The Business and Finance Weekly, May 14th, 2018

The development budget released to district governments in Khyber Pakhtunkhwa risks lapsing as only 21pc of the total allocation was consumed in the first 10 months of the current fiscal year.

A number of political, institutional, operational, and technical issues have persistently limited the ability of the district governments to expeditiously utilise the development fund.

The KP Local Government Act 2013 envisioned that 30pc of the provincial development budget would be set aside and distributed among the 25 districts through the Provincial Finance Commission (PFC).

Official data shows that the KP finance department has released Rs21.7 billion for development, in three instalments, to local governments.

One of the major issues to emerge in the local government’s development budget was fund utilisation capacity which was lacking in most of the districts

The first release was made on the very first date of the fiscal year, however, the second release was made with a delay of almost three months in December, while the third release in March — after another delay of two months. The target for the whole year is over Rs28bn.

However, no centralised record is maintained at the finance department of the utilisation of funds at the two other tiers of local government — the Tehsil Municipal Administrations (TMAs) and the village/neighbourhood councils.

District governments in KP are facing two major challenges — delay in the timely release of funds and low utilisation/expenditure owing to several factors.

As per official data, the highest district development funds of Rs406.83 million were released to Peshawar district in the first 10 months, while the lowest development funds of Rs145.78m were released to district Tank.

An official of the finance department said releases from the provincial government to the districts are made hom*ogeneously and thus there is no bias in terms fiscal transfers to the local governments. Expenditures across the districts, however, are not hom*ogeneous and exhibit great variation.

One of the major issues to emerge in the local government’s development budget was fund utilisation capacity which was lacking in most of the districts.

Due to the weather, among other reasons, certain districts could not initiate the development budget till the end of April 2017. These include Abbottabad, Bannu, Batagram, Tank, and Kohistan.

Shangla, though low on most socio-economic indicators in the province, exhibits the highest rate of utilisation proportionate to the releases.

And analysis of the data reveals that most of the biggest districts and those performing well in many of the socio-economic indicators in the province — Peshawar, Swat, Nowshera, Mardan, Mansehra and Kohat — show poor performance in terms of fund utilisation.

Apart from the districts having incurred no utilisation of development funds till date — Batagram, Bannu, Abbotabad, Kohistan, Tank — other districts like Mansehra, could not perform even at par with average execution.

According to the DFID funded sub-national governance programme in KP, the average combined utilisation of development funds is higher in districts like Nowshera, Lakki Marwat, Karak, Haripur, D.I. Khan and Buner, than the average utilisation of funds in other districts.

While the Planning and Development Guidelines for Local Governments warrant at least 20pc allocations for education and 10pc for health in the district development budget, these sectors get little attention by the district political leadership in terms of utilisation.

As per data, only 9pc of the total development budget utilisation is directed towards education whereas only 4pc of the total releases were used for health.

Drinking water, sanitation and roads which attract the favour from local politicians, together show 56pc of the total development utilisation. This highlights lack of political will in prioritising key priority sectors such as education and health.

This is further emphasised when only 7 out of 25 districts made any expenditure in the education sector whereas only 6 districts invested in the health sector.

The challenges for the poor utilisation of funds identified in an official document show that in some districts, no an amicable design for budget allocation was reached due to rifts among councillors.

As mandated in the Budget Rules 2016, the PFC shall provide provisional estimates of fiscal transfers to local governments before November each year. Similarly, final allocations to the district government must be communicated by mid of May each year.

However, PFC allocations to districts could only be communicated by June 20 for FY2016-17, limiting the ability of the district governments to prepare and approve their budgets before the start of the ensuing year.

Councillors’ unwillingness to follow rules to utilise development spending through routine executing agencies; lack of adequate institutional capacity of devolved departments to deal with the unprecedented quantum of the development budget, remained key impediments in an expeditious pursuit of development execution.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

Apparently inspired by the ‘miracle of Shenzhen’, the government of Pakistan is all set to establish nine special economic zones all across the country.

The nine zones include one located in each of the provinces, one model zone in the capital territory, Moqpondass in Gilgit-Baltistan, Mohmand Marble City in FATA, Bhimber Industrial Zone in AJK, Industrial Park on Pakistan Steel Mills Land at Port Qasim near Karachi under federal government control.

The idea of a special economic zone (SEZ) is to establish a specific area of land to promote industrial growth by providing special concessions in tax and economic policies.

However, the idea of SEZs to increase GDP, create jobs, promote trade and foreign direct investment is easier said than done. Though many have tried, most SEZs failed to deliver on their promises, including the recent Shanghai Free Trade Zone — established in 2013 and focused on finance — and SEZs established in the Maharashtra state of India since 2005.

Like the rest of the world, with few examples of successful industrial clusters, Pakistan does have its share of successful industrial clusters including Sialkot surgical goods industry; Gujarat ceramic/pottery Industry; Faisalabad readymade garments manufacturing industry and Khyber Pakhtunkhwa marble industry.

What can work: How to turn urban areas into engines of economic growth?

Pakistan can learn from the Chinese Shenzhen experience. According to the Chinese Government report in 2015, Shenzhen is a major financial centre in southern China with a population of over 18 million. The city is home to the Shenzhen Stock Exchange as well as the headquarters of numerous high-tech companies.

Shenzhen has one of the busiest container ports in the world. From a fishing village, it is now an industrialised, urbanised and modernised city with a GDP of over $100 billion.

Typically, the success of SEZs relies on many factors, mainly a combination of tax and tariff incentives, fast and hassle-free custom procedures, links with local suppliers, growers and the global market and most importantly, infrastructure in terms of quality roads, railway and ports.

While it is not clear how much these SEZs will add to the economic growth of the country, the economy will forgo the much needed revenue as the current tax-to-GDP ratio is just at 12.4pc.

A set of policies and business friendly bureaucracy is a prerequisite for the success of SEZs, among a number of challenges.

First is the governance challenge: how to overcome political influence, inefficient bureaucracy, coordination failures among different stakeholders and corruption?

Pakistan’s economy is ranked 144 out of 190 economies in terms of the ease of doing business ranking prepared by the World Bank.

However, the real test of these SEZs will be their role in establishing urban-rural linkages to help rural transformation which shall be reflected through improvement in the quality of the lives of the poor.

To ensure inclusive growth, the SEZs must target sectors where the poor live and work (eg. agriculture) and use the factors of production that the poor possess.

The efforts of the KP government are commendable in this regard.

It’s Planning and Development Department has chalked out one such project entitled ‘Khyber-Pakhtunkhwa-China Sustainable Donkey Development Programme’ to attract Chinese investment in the province’s agriculture sector.

The donkey is a highly valued animal in China whose hide is dear and is used in medicines. Such a project is an example that has potential to benefit the rural economy and the people living there.

— Dr Abdur Rehman Cheema is a development practitioner and academic based in Islamabad arehmancheema@gmail.com

— Muhammad Haris is a programme officer at the China Study Centre, COMSATS Institute of Information Technology, Islamabad.
muhammadharis@hotmail.com.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

Sindh hopes to complete one-fifth of all ongoing development projects by the turn of the current fiscal year in June.

Chief Minister Murad Ali Shah’s economic team is already busy identifying and processing projects for the next year to ensure quick funding after the budget to generate political capital for the 2018 elections.

According to officials 500 development schemes will be completed out of a total of 2,773 by 31 June. Most (1,777) of 2,773 were old schemes while the rest (996) were launched in 2016-17 covering agriculture, infrastructure, education, health, transport and skills development.

Major completed projects in the current year included the creation of GIS for land administration and revenue management information system, Cadet College Gadab, upgradation of Jacobabad Institute of Medical Sciences, extension of water supply in Badin, road from Wango Mor to Thar coalfield area.

The provincial team was confident that the government will improve its performance scorecard

During the year the shortfall in targeted federal transfers did squeeze the fiscal space. The provincial economic team, therefore, saw a grim chance of surrendering surplus that could help the federal government lock the fiscal deficit around 3.8pc of the GDP in the outgoing fiscal year.

The provincial team members were confident that the province will improve its performance scorecard by ensuring uninterrupted flow of funds to near completion schemes in the year ahead. They hoped to significantly improve governance standards in the province by pursuing reforms under the watch of the World Bank and the European Union.

To this end Sindh launched its Budget Strategy Paper 2017-20, a three-year rolling plan under the EU supported public financial management programme and the World Bank sponsored public sector management reform.

The paper spells policy sets and priorities, reviews fiscal performance of the last two years and projects revenue and expenditure over the next three years. The aim is to address systematic management weaknesses that compromise the credibility of the government by adhering to demands of transparency, accounting and reporting.

According to details provided by the provincial planning department, disbursem*nt of development funds by the first week of May 2017 amounted to Rs184 billion of Rs265bn of the Annual Development Plan (ADP) of which Rs106bn (about 60pc) have already been used. With most busy months in terms of bill clearing, the total release of funds is expected to touch 80pc level by the close of the year.

Muhammad Wasim, additional chief secretary, Sindh and chairman, Planning and Development Board, was not fully satisfied but considered the improvement to be significant under the circ*mstances.

Comparing the quality of governance of Sindh with Punjab he said, “More than performance it is an issue of perception. The hard work of the ruling team in Sindh has started to yield results”.

He partially blamed the media for not reporting judiciously on the good work in the province. “Sometimes it is an issue of focusing more on shortfalls but at others it is plain and simple misreporting, particularly on electronic media.

“The fact is that we have raised the bar higher in fiscal year 2017. Dispersal of 80pc of the allocated development budget is no mean achievement. We have set a new record that will hopefully break next fiscal”, he said, attributing the change to motivational skills of a Chief Minister determined to make up for lost time.

Wasim was particularly excited over the progress of development work in Karachi. “After a very long time Karachi is getting the attention it deserves. Next year it will again get Rs10bn for development”, he said. When his attention was drawn to difficulties that people are facing while commuting and the water problem his reply was measured.

“The gains will make people forget the pain once roads and the underpass and bypass projects become functional. The province is undertaking the K4 water project to ease the water problem. The federal government has agreed to share 50pc of the cost with the province”, he disclosed mentioning a few road projects like Tariq Road that is completed.

“Murad is determined to change the fortunes of his home province. The demographic complexities pose challenges but he has succeeded in raising a small team of dedicated technology savvy officers to close efficiency gaps and curb corruption”, said another senior bureaucrat discussing Sindh.

Afzal Zaidi, an official of the finance department provided an update on revenue mobilisation in Sindh over the current year. He said the Sindh Revenue Board was on track and expected to achieve its target cent per cent.

Sindh has already raised Rs110bn by end April against the projection of Rs166bn. The final figures will be shared after consolidation but Rs127bn that were to be mobilised though other sources will also be realised. The shortfall of 10pc is expected in federal transfers.

Published in Dawn, The Business and Finance Weekly, May 15th, 2017

The budget strategy unveiled for the next fiscal year is stated to have been designed with a view to achieving higher, sustainable and inclusive economic growth in order to provide employment and reduce poverty.

On the face of it, an integrated approach should help the three elements of the growth strategy to reinforce each other. With the conventional model of the welfare state losing its relevance and the Chinese and Russian brands of socialism having lost their way, new ways have to be found to take an egalitarian course.

But, as they say, the taste of a pudding lies in its eating. The outcome will depend on how strong the policy commitment is and the government’s ability to implement the three stated aspects of growth in a balanced way.

There is no doubt that CPEC- related debt financing and investment of infrastructural development will largely serve as a catalyst for higher and sustainable growth for a while.

Long-term sustainable growth is only possible if Pakistan is able to access regional markets, particularly China, to boost export earnings required to service debts and afford rising repatriation of profits on Chinese investments. From a short-term point of view, the target of higher growth of 6pc for the next fiscal year may not sound too ambitious.

The real challenge for policymakers is how to steer the course of economic growth to make it inclusive — without which higher growth will be unsustainable. The problem is aggravated by the policymakers’ effort to paint a rosy picture rather than make serious efforts to resolve the problem of poverty which, it may be conceded, is an uphill task in the current economic environment and the state of governance.

According to a research report completed this month by the Social Policy and Development Centre, the old and flawed methodology used to measure poverty was difficult to sell even to different government wings. So the Planning Commission of Pakistan had to set up a technical committee in 2012, to review the official methodology and remove limitations, to estimate consumption data through Household Integrated Economic Surveys.

The report prepared by SPDC consultant Haroon Jamal points out that even in the revised methodology formulated in light of the technical committee’s recommendations, the “choice of reference group casts doubts over the whole exercise of poverty estimations and it seems that the methodology is adjusted to obtain the required number by trial and errors.”

Some shortcomings in the revised methodology pinpointed by the SPDC are: the unique calorie threshold for both urban and rural areas seems inappropriate, ignoring the difference in consumption pattern between the two segments of the population.

Another worrying factor is the non-adjustment of regional and provincial differences in the cost of living (food and non food expenditure). And despite criticism, CPI formulated with limited geographical coverage has been used for updating headcounts.

Haroon Jamal concludes: according to the official estimates, the poverty reduction phenomenon does not has any link to the performance of the economy. For instance poverty is continuously decreasing — seven to eight per cent points — since 2001-02 irrespective of trends in GDP growth and macroeconomic indicators.

The methodology adopted in the SPDC study takes care of the flaws highlighted by the Technical Committee which were underlined in old official methodology. Its estimates show that 38pc of the population was poor in 2015-16. In terms of absolute numbers, 74 million persons were estimated poor in that fiscal year, up from 61m in 2010-11.

As traditional poverty measures often neglect several important dimensions, the research note attempts to assess the extent of household vulnerability to poverty in Pakistan. Vulnerability estimates show that close to 51pc of the population was vulnerable to poverty during 2015-16, with probability being more pronounced for rural dwellers.

Any serious planning and strategy for inclusive growth, which is now a global concern, has to be based on realistic estimates and authentic data. It is time to go beyond rhetoric and window dressing, given the big picture.

The various conventional methodologies used for research are being questioned and described as old and outdated. Some methodologies are also suspected to have been designed to obtain the desired results. For this state of affairs, some blame a segment of consultancy operating in the field of specialised knowledge in a complex and changing world.

As though that was not enough, critics have often described economics as a dismal science. Lately some eminent scholars have accused free market advocates of turning economics from a social science to a religious faith. And there is also a view that much of the economics science has lost its validity in a sea of change and owing to the absence of real creativity to update it.

Apparently in this context the issue of unemployment, poverty and inclusive growth is lost in the wilderness.

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017

JODIA Bazar and its adjoining wholesale markets of spices and food items are bustling with activity ahead of Ramazan.

Most importers have augmented stocks of Iranian dates, Indian spices, Australian and Canadian chick peas and pulses, Canadian pulses and Chinese and American sauces, food colours and preservatives.

Supplies to about 30 secondary wholesale and semi-wholesale markets in Karachi and also to main markets of interior Sindh, Balochistan and lower Punjab are also growing.

Flour millers are reporting higher off-take of super fine wheat flour (Maida) to bakeries and sweet makers for preparation of khajla, pheni and other Ramazan food specialties.

“For several years, the routine drop in sales of average quality of wheat flour during Ramazan has been somewhat compensated by pre-Ramazan higher off-take of maida, the use of which increases not only for preparation of Khajla and Pheni but also for production of branded readymade “parathas”.

Dawn, Wonder and Man-o-Salwa are known for making large sales of ready-to-bake parathas during the holy month.

Normal sales of coarse rice to semi-wholesale markets are somewhat slipping due to an anticipated decline in demand during Ramazan. But the sales of basmati varieties to eateries that remain open at iftar and sehri are on the rise, traders say.

Superstores selling ready-to-cook branded meat and chicken are busy making big purchases ahead of Ramazan as families switch over to them to save time spent on cooking.

A senior executive of a Karachi-based edible oil manufacturing company says that his company has recorded 15pc sales growth in Sindh and Balochistan between April 15-May 15.

“As we get closer to the holy month, the growth rate will further increase,” he hoped.

Far from the bustling physical trade activity, which involves rolling over of billions of rupees, the online food markets are inducting more riders in their delivery teams.

People associated with online food trading and retailing say, the existing desk-staff handling online customer traffic and back-end IT staff are being offered incentives as online retailing of ready-to-cook and prepared food is expected to increase manifold.

Muhammad Irfan, an independent researcher on food retail marketing, says the recruitment of riders by hotels, restaurants and eateries registered with Foodpanda alone has gone up by an estimated 10pc between mid-April and mid-May.

Traders at Jodia Bazar say anticipating a manifold increase in consumption of gram flour and chickpeas from the last week of May (when Ramazan will begin), semi-wholesalers and shopkeepers are buying these items in big quantities.

They say that wholesale sales of packaged milk, imported and local juices, lemon squash and sherbet of various brands particularly Jam-e-Shereen and Rooh-Afza are also on the rise as the holy month is arriving in summer season.

Sugar dealers say sales of sugar for home consumption are slightly higher already, which should compensate the fall that might occur due to lower demand by hotels and eateries in the month of fasting.

A couple of aspects of Ramazan-related food items trade merit a deeper analysis, but due to poor documentation and difficulty in data collection even for non-tax purposes, these aspects remain professionally unexplored.

“Our food trade deficit has been on the rise for years. It would be interesting to know how food imports behave one or two months ahead of Ramazan. That can help us take a more informed view of food trade movement and plan accordingly to keep a check on deficit,” says a senior central banker.

There is a need to examine how the cost of domestic food trade increases when inter-provincial and inter-city movement of lots of food items accelerates.

This can help identify structural flaws in domestic trade systems and will eventually make markets more efficient. And above all, ‘some proxies can and should be used carefully to reach a range of estimates for Ramazan-related expenses so as to monitor annualised changes using a baseline data that is closer to reality’.

Whereas such proxies like additional inflow of home remittances or short-term money withdrawals from banks apparently look suitable for estimating pre-Ramazan spending, their application involve lots of complexities. But an initiative can be taken to come up with some estimates with the help of fintech and modern analytics, central bankers say.

Food market analysts say online food trade is no more limited to cooked food delivery. “Online presence of all leading importers and a vast number of Jodia Bazar traders is changing pre-Ramazan food trading dynamics,” says Raza Imam who works at one of the business houses at Jodia Bazar.

“Instead of getting orders on phones or via fax, we now receive confirmed orders on our website and our mini-trucks loaded with imported and local food stuff rush to the semi wholesale markets at Water Pump in Gulberg and Aligarh market in Qasba colony, Orangi Town.

In last two weeks we’ve dispatched tonnes of chick peas, gram flour and dates to these two markets.”

At the semi-wholesale markets, smart-phones are at work. “Just a week ago, I’d booked 25 orders for packaged Iranian dates (of 100 packets each) from smaller markets in Orangi, North Karachi and Surjani Town.

As I talk to you I’ve showed availability of dates at my godown in Gulberg. Now, shopkeepers from those areas (members of online buyers group) will come one by one and pick up dates from my place.”

This, analysts say, is another area of pre-food Ramazan trade that needs attention for market analysis. “Gone are the days when shopkeepers had to travel long distances to the khajji (dates) market in Lea Market area to replenish their stocks ahead of Ramazan,” remarked Muhammad Irfan, a dealer in khajji market. “Tonnes of dates now move from one place to another without a buyer-seller meeting in person.”

Published in Dawn, The Business and Finance Weekly, May 22nd, 2017