Profit issue-14

WElComE

I3TH IDEA

n the run up to the federal budget, there are many points of view in the market of ideas for the government to act up on. We have outlined some of them in this issue of Profit. These range from those who preach the gospel of the free market like former planning commission boss Nadeem-ul-Haq to leftist highbrows like Qaiser Bengali, who was instrumental in putting together the BISP. This right-to-left spectrum, obviously has many distinct shades of opinion on the issue of taxation.

It is on this front of taxation that we here at Profit would also like to take a crack at throwing out an idea to the government. Except, unencumbered by the expectation of actually being taken seriously by the finance ministry (a luxury that the two aforementioned gentlemen do not have) we can afford to be rather bold in our loud thinking.

Try this for bold: we propose that the government scrap the personal income tax all together. Yes, you read that right. Completely scrapped. Compared to us, Nadeem-ul-Haq looks like Qaiser Bengali.

But why, you ask? Well, there are several arguments for it. For starters, in one fell swoop, the black economy (other than that derived from non-tax crime) would become legal. With no reason to hide their money, the individuals in question will their cash out of non-productive stores of value like gold and deposit it in the banks.

This would undoubtedly be a fillip to investment in the country.

But where would that money that we would be letting go of come from? Well, first of all, as a proportion of federal receipts, it is not as large as one would think. But, to answer the question: indirect taxes. But that isn’t fair, you say. Progressive income taxation is the way to go; taxes on consumption are regressive and hurt the poor.

Well, yes, but two answers to that. First of all, the merits of pro-

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gressive taxation are best discussed in countries that have effective systems of taxation, which we don’t; the trading classes get away with everything whereas the low-hanging fruit that is the salaried class bears the brunt. Secondly, even the poor are hurt by direct taxation in terms of the withholding taxes that they have to pay on consumer products like, say, cellular calling cards. Yes, but they can be redeemed and reimbursed, you say? No one redeems. No one from the middle class and certainly no one from the poor working classes will take the additional cost of having a tax accountant having a look at all their receipts We need to be selective about increasing the indirect taxation. Perhaps slap higher rates on luxury items; pigovian taxation, if you will. Whatever the resulting mix is going to be, there is going to be a corresponding inflation. But one accompanied by increased spending and economic stimulus as well.

This removal of income tax should be accompanied by an encouragement by the government for the people to utilise proper banking channels and financial technology. With an increased documentation and, indeed, understanding, of the economy, we could perhaps move back to the imposition of income tax in due time.

Anything is better than this current system, where, in the name of lofty ideals of progressive income taxation, it is the salaried class and the poor (through withholding taxes of consumer items) that pay and the fat cats remain mostly out of the net.

Babar Nizami

Managing Editor: Babar Nizami l Joint Editor: Yousaf Nizami l Contributing Editor: Farooq Tirmizi l Sub Editor: Fatima Farooq Editor Reporting: Farooq Baloch l Reporters Karachi: Aisha Arshad l Arshad Hussain & Usman Hanif Reporters Lahore: Syeda Masooma & Abbas Naqvi l Reporters Islamabad: Nida Jaffery l Ahmed Ahmedani & Amir Sial Director Marketing: Zahid Ali l Regional Heads of Marketing: Muddasir Alam (Khi) l Zulfiqar Butt (Lhr) l Mudassir Iqbal (Isl) Design & Layout: Rizwan Ahmad l Illustrator: ZEB Photographers: Zubair Mehfooz & Imran Gillani Publishing Editor: Arif Nizami Contact: profit@pakistantoday.com.pk

FROM THE MANAGING EDITOR

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US Consultate in Lahore is looking to develop human resources in Pakistan.

In this regard, about 10,000 students will complete their PhD’s in US universities” Yuriy Fedkiw, Consul General, US Consulate Lahore

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“We should make a conscious effort and encourage others to reduce pollution and waste for sustainable environment” Khushali Microfinance Bank President Ghalib Nishtar

30pc hike could be faced in oil import bill by Pakistan according to an IMF report. The International Monetary Fund (IMF) has warned Pakistan and other oil importers against rising oil bills for 2017 as a result of the rising global prices. The oil import bills are expected to be around 30pc higher than the previous year. Any further increases could affect consumption, increase fiscal risks, and worsen external imbalances, the IMF has warned in its May 2017 Regional Economic Outlook for the Middle East, the Gulf, and North Africa, Afghanistan and Pakistan (MENAP). The IMF considers Pakistan to be among the countries where savings from low oil prices and reduced subsidies have led to increased spending on infrastructure, health-care, education, and social services. But the IMF has shown concern that it may be difficult to maintain this spending in the wake of the oil prices being higher than expectations.

have been proposed by the Planning Commission for 50,000 housing units in upcoming annual budget 2017-18. The proposal stated that as many as 50,000 units should be constructed under the public-private partnership (PPP) mode with a special allocation of Rs8.58b while Rs8b should be allocated as a contingent liability after two years under the credit guarantee scheme for the risk coverage of banks. The minister of planning, development and reform proposed three financing options for the initiative including markup subsidy on 20,000 housing units for the middle-income group, downpayment subsidy on 20,000 units for the lower middle-income group and underwriting of the risk by the federal government for bank financing for 10,000 units for the low-income group.

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5.2pc growth rate has been forecast for Pakistan in fiscal year 2017-18 according to the The Economic and Social Survey of Asia and the Pacific 2017 report from the United Nations. Due to initiation of the China- Pakistan Economic Corridor (CPEC), inflows from China have seen a rise to finance projects under it, although transportation and construction related imports have also registered an increase.

The global rise in crude oil prices will directly impact and increase inflation along with fueling a rise in domestic petrol prices. Inflation is expected to go up from 5pc in 2016-17 to 5.5pc in 2017-18, the survey notes. The agriculture sector will see improved output of maize, cotton and sugarcane. The biggest beneficiary of improved energy security will be the large-scale manufacturing segment, for which gas prices will fall for industrial use.

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Business of South Punjab are demanding that the govt extend financial support to young entrepreneurs, so they can utilise their skills” Multan Chamber President, Khawaja Jalaluddin Roomi

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Rs2.8t

will be raised by the government through the auction of Market Treasury Bills. The State Bank of Pakistan reported on Tuesday that the government will raise Rs2.650t through MTBs and Rs200b through PIBs during May-July period. The maturing amount of treasury bills during this period is Rs2.443t which means the government will have to raise additional Rs206b. However, the government has decided not to offer more PIBs as the maturing amount during the period will be Rs698.3b and it would have to raise an additional Rs498.3b through the higher selling of T-bills.

financing and loans will be provided by the Asian Development Bank for nine projects in Pakistan particularly in water and irrigation sectors during 2017-2019. The projects which are to be approved by ADB for financing including loans, grants and identified co-financing of dollars 1055 million for 2017-2019 are Balochistan Water Resources ($5m), Punjab Intermediate Cities Improvement Program – MFF, Tranche 01 ($200m), Greater Thal Canal Irrigation Project ($50m), Balochistan Water Resources Project ($100m), Jalalpur Irrigation Project ($150m), Sindh Urban Development Project ($100m), KPK Intermediate Cities Project ($ 100m), Cholistan Water Resource Development Project ($150m) and Punjab Intermediate Cities Improvement Program – MFF, Tranche 02 ($200m).The Asian Development Bank is expected to deliver its concurrence for water projects in Balochistan province as well as two cities of the Punjab province including Sialkot and Sahiwal during current calendar.

$1.055m

growth rate could be achieved by Pakistan this fiscal year after a gap of nine years. An official source said that the committee will be discussing the provisional growth figures for the outgoing financial year and finalizing figures for the last financial year. The government had projected a growth target of 5.5 per cent for the current fiscal year, as compared to 4.7 per cent GDP growth of last fiscal year. The source said that the GDP growth is estimated to remain close to 5.2 per cent, already assessed by the World Bank. The growth would be in the range of 5.2 to 5.5 per cent and the final figure would be assessed by the committee. The source said that the manufacturing sector has shown good growth. The availability of electricity and gas have led to the increase in the output of the manufacturing sector. The growth would have been higher if the exports would have increased during the outgoing financial year.

5pc

projects have been approved by Central Development Working Party (CDWP) including a CPEC scheme ‘Revival of Karachi Circular Railway’ and a Khyber Pakhtunkhwa government’s Peshawar Sustainable Bus Rapid Transit Corridor Project. CDWP recommended the ECNEC to consider the approval of 7 mega projects in energy, transport communication, water resources and manpower sectors. The CDWP also accorded concept clearance to two projects including construction of Hyderabad-Sukkur Motorway (M6) worth Rs 238b, and Sindh Renewable Energy Development Project (SREDP) worth $122m. In transport and communication sector, CDWP recommended four mega projects worth Rs 102 billion to ECNEC. The forum approved Revival of Karachi Circular Railway of Rs 27.6 billion, a project included in the China-Pakistan Economic Corridor framework during 6th JCC in Beijing, China last year on.

Rs130b

$24m loan agreement has been signed between Japan and Pakistan for the first phase of implementation of Islamabad-Burhan Transmission Line Reinforcement Project. Japan Cooperation Agency (JICA) will implement the loan project, with an objective to improve the reliability of the national grid and to meet the growing demand for electricity transmission through reinforcement of transmission lines necessary for power supply to the Islamabad capital territory and its surrounding areas, thereby contributing to the improvement of the economic infrastructure of Pakistan. The scope of the project includes civil work and equipment for transmission lines of 220 kv between the Tarbela Hydropower Plant and the Burhan sub-station. Japan has provided the loan on very concessional terms, with an interest rate of Japanese Yen LIBOR plus 10 basis point (equivalent to 0.12 percent) and repayment during 30 years, including a 10 year grace period.

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Opening of banking channels with Iran will boost bilateral trade by 100% in one year” FPCCI President Zubair Tufail

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$5b

bilateral trade target should be achieved between Pakistan and Iran said Prime Minister Nawaz Sharif in a meeting with Iranian Foreign Minister Dr Javad Zarif. He hoped that the two sides would continue to expand economic interaction for promoting mutually beneficial cooperation in the areas of trade, investment, energy and connectivity. The Iranian foreign minister thanked the prime minister and the government of Pakistan for the continued efforts for strengthening bilateral relations and enhancing interaction in all areas, including trade and economic cooperation as well as border and security issues.

plan has been drafted for the Pakistan Steel Mills (PSM) according to sources in the Ministry of Industries and Production. Business Development Committee (BDC) of PSM Board of Directors (BoD) led by former Chairman Oil and Gas Development Company Limited (OGDCL) Razi-ud-Din Razi has devised a new business plan worth Rs 32b called “Resurgence of Pakistan Steel Mills”.

The business plan which is likely to stretch over a period of 2 years will be submitted to Finance Minister Ishaq Dar before the commencement of Ramadan. Sources are reported to have said that PSM will acquire funding worth Rs 22b from banks in order to pay off its liabilities towards SSGC, K-E and for expense on minor things, whereas Rs 10 billion will be obtained for value addition. Of this, the government will be providing funding worth Rs 5 billion from its resources. It is pertinent to mention that this will be the sixth bailout package to help revive the PSM.

Rs32b

infrastructural financing will hopefully be provided by the Asian Development Bank said Finance Minister Ishaq Dar. The minister described his meeting with the ADB president, held on the sidelines of ADB Board’s 50th Annual Meeting as “very productive and useful.” The minister said ADB had already agreed in principle for enhancing its annual financial allocation for Pakistan to $2b.

ADB was in fact requested last year, during its meeting held in Frankfurt in that regard, which also led to merging of two major financing lines as part of its plan for 2017-19. Citing Pakistan’s long partnership with the ADB, Ishaq Dar said the bank extended financial support valuing $1.2b for infrastructure project last year. Besides the bank had made commitments of $ 1.2b for National Disaster Risk Management Fund, out of which $200m had been released by the bank.

$2.5b

of Solar power projects have been approved by the The Alternative Energy Development Board (AEDB). The AEDB has issued seven Letters of Support (LoS) and 17 Letters of Intent (LoI) for various solar power projects, which will generate cumulative electricity of 556.52 megawatts (MW). Official sources told APP on Tuesday, that seven projects were in the process of achieving financial closing and would add 72.52MW electricity to the system by December 2017 and March 2018. The officials said that 17 solar projects worth 484MW were at different stages of development and would be completed by 2018-19.

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33pc cut in salaries for CPEC contracted employee is in the offing. This move was taken by the federal government after the Ministry of Finance’s refusal to pay these employees as per their contract. It is expected that for regular employees increase of 10-15pc is expected in the next financial year 2017-18. This happened after the Accountant General of Pakistan Revenue (AGPR) raised reservations over the fixing of salaries of employees contracted for CPEC projects which did not meet the requirements of the Standard Pay Package of 2009 for project staff and was confirmed in a notification issued by the Ministry of Finance. The PCI-I approved salaries and those under the 2009 Standard pay package do not compare with the market rates on offer. Amidst all this, the government is still struggling to hire the best available talent and this has impacted many projects including ones coming under CPEC.

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By: Syeda Masooma and Yousaf Nizami

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After a successful run Haleeb’s uninterested and incompetent managements of the past caused it to lose its leading market position. Will a new marketing strategy help Haleeb recapture its former glory?

t might be hard for Pakistan’s current generation to comprehend this but back in the 80’s and for the better part of the 90’s the water we drank was from the tap and boiled while the milk we had did not come in fancy packaging. But of course there was demand for healthier and cleaner options of these products. Mineral water took its time to hit the market but back prior to the millennia with few of its kind available, the name that was synonymous with branded milk was Haleeb. the journey began in 1984, when Chaudhry Dairies Ltd (CDL) established a plant over 37 acres of land with a capacity to process 80,000 liters of milk per day. the next year, they started supplying Ultra High treatment (UHt) milk that took almost no time in becoming a popular choice. In 1987, the company started sale under the title of “Haleeb” brand.

It was also the first dairy unit to acquire ISO 9002, HACCP and ISO 14000 certifications. Even though, Haleeb was not the only brand for this kind of milk, its latest technology gave it a clear edge over more than twenty other plants operating in the country, including Nestlé MilkPak . the continued success of the company allowed it to venture into new product lines and by 2004 Haleeb had morphed into the corporate identity of “Haleeb Foods”.

Fast forward to 2017 and the former market leader in the milk category that enjoyed more than 52 percent share of the market of packaged milk in 2006-07 is now down to less than 2 percent.

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the company’s management has been revamped and the marketing strategy is being shaped from scratch again.

In such a highly competitive market, gaining back lost share is no small challenge, yet Haleeb is gearing itself to gain back its market leadership in the white milk category.

How and why Haleeb Foods lost out on its market and how does it aim to gain back its long lost glory? to seek answers to these questions Profit met Chief Operating Officer of Haleeb Foods Haroon M. K. Lodhi.

Management Changes DL sold its controlling interest in Haleeb to Mega Conglomerate Private Limited (MCPL) in 2009. the company claims to be one of Pakistan’s biggest conglomerates and has quite a diverse portfolio ranging from shipping and logistical services to cement and with Haleeb it is now in the dairy business as well. In 2015 the company had reported assets of Rs 1.1 billion with

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M.Habibulla Khan as its chairman. three years after buying CDL, in 2012 MCPL got managerial control.

MCPL has a somewhat difficult history with regards to investing in Pakistan in the past. In 2013 Meezan Bank Limited , the first and largest Islamic bank in Pakistan in terms of deposits was up for purchase.

According to its share price at the time the deal amounted to around Rs 30 billion and one of the leading bidders was an offshore company based in the British Virgin Islands by the name of Vision Financial Holdings looking to buy the entire shareholding.

Bids from offshore companies are mostly frowned upon in such large acquisitions. that along with the revelation that

AS THE SECOND BEST BRAND OF TEA WHITENER ON ONE END WHILE BEING CLOSE TO LAST IN THE WHITE MILK CATEGORY AT THE OTHER END, IT SEEMS MOST IF NOT ALL OF THE REVENUE HALEEB CURRENTLY MAKES IS FROM THE FORMER AND THAT IS WHERE ITS LIMITED RESOURCES SHOULD BE DEPLOYED FMCG

HALEEB HAS CONDUCTED FIELD RESEARCH IN 36 AREAS OF LAHORE. THE PURPOSE WAS TO COMMUNICATE THE BRAND TO HOUSEHOLDS IN THOSE AREAS AND OF THE 28,000 HOUSEHOLDS VISITED IN FOUR WEEKS 98% RESPONDED

the company was in fact owned by MCPL that was already heavily invested in Pakistan contributed to the deal falling through.

The failure of the old Haleeb The downfall of the company can mostly be attributed to the previous management’s shift in focus from their core product, white milk, to other categories. Although those other categories have not resulted in a total loss as Haleeb is still number two in the tea whitener category, Engro and Nestle have taken over the market space vacated by Haleeb in the milk category.

“Our focus is on building the brand Haleeb Milk again.” said Chief Operating Officer (COO) Haleeb Foods, Haroon Lodhi.

Haleeb may have seen some tough times in 2007-08 but Haroon maintains that the real setback came in 2016 at the hands of the government when the dairy sector was moved from the zero rating category to the tax exempt category which meant that the company would no longer be able to claim the credits for value-

added tax paid on inputs. “This caused the sales tax that the company paid to become part of the cost.” added Haroon.

Shifting more blame on the government, the COO explained that the 25% extra duty imposed on powdered milk dealt another major blow and the company is yet to recover from

are not Haleeb specific, they are for the entire industry. So they can be part of the problem but are certainly not the primary reason for Haleeb losing their market position.

Rubab Gardezi, Brand Manager of House of Nurpur explains, “Haleeb did not keep its focus on the white milk category which was scooped up by new players in the years from 2005 to 2007, which is when Olpers entered the market and took a major chunk out of their share”.

Not only that but she added that the quality of Haleeb’s product also went down allowing other players to take their market share. Explaining this further she added

“THE WHOLE INDUSTRY IS SUFFERING BUT WE ARE ALSO LOSING OUT TO OTHER PLAYERS AND IN ADDITION TO THAT WE ARE ALSO COMPETING WITH LOOSE MILK WHICH IS MAKING THINGS HARDER FOR US” Haroon Lodhi, Chief Operating Officer, Haleeb Foods

this cost. However it is unlikely that the company absorbs the entire 25% increase in cost without passing it on to the customer.

Both these changes in the tax structure

“since white milk is a commoditized product, and the margins on commoditized products are very low as compared to differentiated products, Haleeb shifted its focus to the latter and lost out on the former as a result, meanwhile other companies, both new and old players like Nestlé, kept their focus on white milk and more importantly its quality”.

Losing to loose milk akistani milk market is also a unique one. Loose milk accounts for 95 percent of the total milk market in the country. The remaining five percent is shared between packaged milk supplier giants like Engro and Nestlé and some former leaders like Haleeb. On

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the state level, a number of bodies like Pakistan Standard Quality Control Authority (PSQCA) and Punjab Food Authority (PFA) are responsible to ensure that quality milk is being provided by these packaged milk producers.

Estimates suggest that Pakistan produces around 38 billion litres of milk annually and only 1.3 billion litres of this is sold in packaged form while the remaining is sold as khula (loose) milk and a large amount of this is wasted as well.

The loose milk industry remains highly unregulated due to its sheer size. The odd raid to curb adulterated loose milk is conducted but by and large the sector remains free to operate and pays close to no tax nor did they take any measures to ensure quality or hygiene. This makes loose milk very cheap and as such there is high demand for it.

“The whole industry is suffering but we are also losing out to other players. Plus we are also competing with loose milk which is making things harder for us.” Haroon of Haleeb said.

The battle between packaged milk and loose milk is not a new one. Despite massive campaigns being run by packaged milk producers, the milk market is still dominated by the milkmen selling loose milk in metal containers. To add to the packaged milk producers’ problems, the Supreme Court (SC) in September of 2016 ordered – on a petition filed with the apex court - the University of Agriculture Faisalabad, the University of Veterinary and Animal Sciences Lahore and the PCSIR to conduct a chemical examination of all domestic and international brands of packed milk available in the market.

In January the findings were released and out of the six brands tested in the Ultra High Temperature (UHT) category only Haleeb was found to be unsafe for consumption as it contained formalin and cane sugar.

“Our samples were sent to three labs, two of them said that it was safe for consumption and one said that it was not good enough. I won’t name them but one government lab said that it was not good. Instead of giving us a chance to defend our position, the media picked up the first report and highlighted it.” explained Haroon.

The media cover-

age hurt other brands as well but Haleeb felt the brunt of it. At the same time the Punjab Food Authority (PFA) was conducting a separate inquiry into Haleeb and their finding was contradictory to the SC’s report.

Haroon says that the media did not carry the PFA report and this skewed coverage proved so harmful to Haleeb that consumers stopped buying their milk.

“The government has never carried out a strict campaign against these milkmen who bring low quality and harmful milk to households. They are only after the packaged milk industry because there is a perception that it is more harmful for health”. Haroon added.

An official from Nestlé shed more light on the matter saying that the court case was regarding the quality of packaged milk as well as loose milk. She attended most of the court proceedings and there were two issues deliberated in the court, the quality of water available, be it tap water, bottled water or purified water, and the quality of packaged milk vs. loose milk.

She added that Punjab Food Authority is holding talks with Milk Suppliers and Sellers Association in Punjab regarding their means of transportation, preservation, hygiene, animal care etc. to account for the quality of the milk supplied by them.

New kids on the block ack in 1999 CDL experimented with plastic bottles and pasteurized milk when it entered into a joint venture with Candia, a French product that was to be packaged and licensed by CDL in Pakistan . That venture failed primarily because of a weak marketing campaign and the fact that the market was not ready for plastic bottles of pasteurized milk that has

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HALEEB WAS TOO EARLY WITH THESE PRODUCTS BUT NEW conPLAYERS HAVE RECENTLY TESTED THE MARKET WITH sumer base now realises that PASTEURIZED MILK WITH GOOD RESULTS. MILLAC AND in reality UHT loses its DAYFRESH LEAD IN KARACHI WHILE ANHAAR, color, not the other way around.

FARM FRESH, PREMÁ, GOURMET, HALLA, Pasteurized milk currently has only a of 3% share in the packaged milk market, NURPUR AND PRIME ARE AVAILABLE low qual- which might not be much there is room for IN LAHORE. ANHAAR ALSO ity milk and it growth. One of the biggest challenges it too failed. faces is the short shelf life (two to three OFFERS ITS PRODUCT Haleeb was too early days) and in the absence of a high quality IN PLASTIC with these products but new players cold chain infrastructure it is difficult to have recently tested the market with pasmaintain the freshness and quality of the PACKAGING. very short shelf life as compared to UHT and had a different color and taste.

After this Haleeb made an attempt at packaging milk in tetra fino packaging. ‘Haleeb Dairy Queen Milk’ was launched in a soft pillow shaped carton.

This time the entire package gave the look

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teurized milk with good results. Millac and Dayfresh lead in Karachi while Anhaar, Farm Fresh, Premá, Gourmet, Halla, Nurpur and Prime are available in Lahore. Anhaar also offers its product in plastic packaging.

Pasteurized milk is first and foremost cheaper than UHT. Prices are close to loose milk and it is a much healthier option. The problem back in 1999 with this variety of milk was the different color and taste as compared to UHT milk. A more informed

milk for even that short a period.

Nonetheless the UHT producers, apart from the challenges posed by loose milk now have to worry about the new kids on the block as well.

The Tea Whitener he PFA may have given Haleeb’s milk a clean chit but the story with their tea whitener is different. As Haroon explains it “After the 18th amendment, the Punjab Pure Food rules were put in place. They were conflicting with the national standards governed by the Pakistan Standard Quality Control Authority (PSQCA). All our products are registered and certified with PSQCA and all our packs have their stamps. They test and audit our products.”

The Punjab Pure Food rules however have different definitions of tea whitener and that has caused Haleeb’s products to fall out of their standards. After deliberations with the PFA Haleeb has been able to convince them to apply national standards to their milk whitener. The only condition PFA had was that Haleeb clearly display on their packaging whether the product inside is milk or whitener. Haroon says they already do this.

The quality of Haleeb’s white milk remains debatable but when it comes to tea whitener Haroon says that it is top notch. The main input in tea whiteners is vegetable oil which according to Haroon, Haleeb imports from the USA or Europe rather than sourcing it locally. He very confidently invited the PFA to even check their L/C records to confirm where the vegetable oil is imported from. He added,

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“While Haleeb is following the quality and marketing standards for tea whiteners, which is not milk, most other companies in the market are not doing so”.

Improving and maintaining the quality of their tea whitener brand ‘Tea Max’ is a sound strategy as it is currently the fastest growing category of milk in Pakistan. The major advantage of tea whitener as opposed to conventional white milk is the cost saving. Only 30% milk is required to make a litre of tea whitener explained an industry expert.

The huge amount of tea consumed in Pakistan coupled with the average price of Rs 18 to 20 for a 250ml pack of tea whitener makes the product quite attractive to consumers of loose milk. It is a smart way to introduce them to a packaged form of milk (packaged tea whitener) to eventually move them onto the main product - packaged milk.

It is no wonder therefore why every milk processor is making tea whitener.

Engro’s ‘Tarang’ is the market leader with around 52 % (Source: Nielsen Retail Audit Report, 2015) share in the tea whitener category followed by Haleeb’s ‘Tea Max’ with 25% market.

The remainder is shared by the likes of Shakarganj’s ‘Chaika’, Nurpur’s ‘Chai Mix’, Premier’s ‘Millin’ and Nestlé’s by ‘EveryDay’.

Rebuilding the brand image aleeb is now focusing on all purpose milk as part of their marketing and advertising strategy. They have started supplying in smaller packaging as well and are targeting different socioeconomic classes (SEC’s) with different packaging. This strategy is not random either. For the KP province they did research and began producing a specific packaging for the All Max brand based on imagery and designs that were preferred in that geographical area. This differentiation is also done in terms of the size of the packaging, for example in the case of Haleeb milk, as smaller packs are sold cheaper, the 250ml pack is targeted at SEC B and C. The Tea Max product is popular in the outskirts of main cities but the company is now

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“HALEEB DID NOT KEEP ITS FOCUS ON THE WHITE MILK CATEGORY WHICH WAS SCOOPED UP BY NEW PLAYERS IN THE YEARS FROM 2005 TO 2007, WHICH IS WHEN OLPERS ENTERED THE MARKET AND TOOK A MAJOR CHUNK OUT OF THEIR SHARE” Rubab Gardezi, Brand Manager, House of Nurpur (Fauji Foods)

planning to enter big stores like Jalal Sons and Al-Fatah to target the main urban population as well. “We have most of our sales at wholesale stores and second tier stores.

We are at Metro, Imtiaz and Hyper and now we plan to enter Al Fatah and Jalal Sons stores by next year.” explained Haroon.

Over the years Haleeb has paid little attention to their marketing strategy resulting in very little innovation towards the image building of the brand. Other brands did not make the same mistake with examples like Olpers that hit the market with “Subah Bakhair Zindagi”, Good Milk (Shakarganj Food Products) came up with “Roz Roz Goodmilk Piya Karo” and Nestlé brought “Khalis Hi Sab Kuch Hai”.

Haleeb however stuck with their ‘Garha’ milk with “Aik Garha Rishta Umer Bher K Liye”.

As Ex-CEO Engro Foods Sarfaraz Rahman puts it, "From mid 90s to mid2000 they [Haleeb] marketed 'gaarha doodh' which was in accordance with the mentality of milk consumers here at the time. They sort of created that market. They are like 'the grandfather brand' of processed milk brands. Unfortunately, since mid2000s (2005) they started to de-

cline."

The resistance to move away from their image of ‘the grandfather brand’ is one the reasons Haleeb never really adapted to a changing market. Justifying the delay in taking this step he said that the new management firstly had to clean its house and remove the problems persisting in HR and other parts of the company. Now that that has been taken care of, Haleeb can move on to focus on its branding. For this around Rs400 million out of the Rs16 billion they made in revenue in 2016 has been dedicated to marketing.

Disruption using research and activation he marketing strategy of Haleeb is dedicated towards building a family product image and aimed

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towards the younger generation. Haroon said that this decision was made after an extensive research and study program.

Their new marketing strategy is a 360 degree program where they will venture into several different platforms for marketing and advertising.

“We have main key accounts; we have brand ambassadors who are standing there convincing the consumers to buy this brand. We have seen the result of such campaigns and they actually work.” explained Haroon.

“We have to go slow. We have to build it really well and in a thoughtful manner. For now we are doing door to door selling and door to door trial generation activities.” added Haroon.

Haleeb has conducted field research in 36 areas of Lahore. The purpose was to communicate the brand to households in those areas and of the 28,000 households visited in four weeks 98% responded.

“These are the people who were either using loose milk or our competitor brands” said Haroon referring to their research.

A parallel survey was also conducted in those 36 areas of Lahore to see the effects of their activity for which data was collected in between and after the activity period. Haroon claims that the results showed a 36% increase in Haleeb sales.

They plan to monitor it again in the mid of and end of April.

Will it work? ccording to Haroon, Haleeb is all set to regain its lost market share. “The quality checking systems in practice ensure that it will become the favoured product for the consumers.” He also has high hopes for the market to respond well to their measures after conducting their research.

Other players in the market do not share Haroon’s optimism. Rubab Gardezi was of the opinion that this market is so competitive that merely advertising or marketing will not help Haleeb gaining any more market share.

“Some big player has to give way in the market to allow Haleeb to take over, just like Olpers did with Haleeb. There is no room otherwise to take back the market share.”

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"THE PACKAGED MILK INDUSTRY OVERALL HAS RECENTLY SEEN A DECLINE IN CONSUMERS DUE TO THE ONGOING SPECULATION AND RUMORS ON SOCIAL MEDIA ON QUALITY OF PACKAGED MILK” Sarfaraz Rahman, Ex-CEO Engro Foods

Sarfaraz Rahman believes that the milk industry as a whole is headed for choppy waters. “I am not directly a part of the dairy industry now so I am not very certain on how the re-launch is [shaping up]."The packaged milk industry overall has recently seen a decline in consumers due to the ongoing speculation and rumors on social media on quality of packaged milk”. he said The media speculation and rumours about its quality will die down eventually and are even manageable to an extent. The real threat however still persists to be the market for loose milk and the more recent competition from pasteurized milk that is gaining momentum.

Haleeb’s problem is twofold. On one hand there are issues, challenges and restrictions the entire industry has to face and are to a large extent out of Haleeb’s hands. Tax hikes, failed quality checks, negative PR owing to the media and tough competition from new entrants and loose milk are all variables that have negatively affected the industry in the past and will continue to do so in the future. All the company can do is deal with them as they come.

The second problem is inherent within Haleeb and its history. Years of an uninterested management that

was focused on higher margins has destroyed a one-time giant. In the process the quality of what should have remained its flagship product, white milk, suffered.

Procrastination over rebuilding its own image while ignoring what others were doing with theirs gave way for more innovative brands to enter the market.

As the second best brand of tea whitener on one end while being close to last in the white milk category at the other end, it seems most if not all of the revenue Haleeb currently makes is from the former and that is where its limited resources should be deployed.

Haleeb has set itself on a stagnant trajectory with respect to white milk. It’s research numbers may tell a different story but considering the current market dynamics with so many small players with deep pockets entering it, Haleeb may be able to reinvent itself but not the market it wishes to re-conquer.n

FMCG

In order to get a fresh perspective on the upcoming federal budget for 2017-18, Profit spoke to leading economists, industrialists and former economic managers of the country which include: Mian Muhammad Mansha, Sakib Sherani, Dr Nadeem Ul Haque, Dr Kaiser Bengali, Shabbar Zaidi, Humaima Bukhari and Dr Ikramul Haq

By Yousaf Nizami Additional reporting by Farooq Baloch, Amer Sial, Babar Nizami Every year around this time the same question starts being asked everywhere, ‘what are you expecting in this year’s budget?’.

The answer more often than not is ‘nothing new’ or ‘same old’. For Profit’s first ever pre-budget story we decided to ask the country’s top economic and business minds a different question: What suggestion or idea would you give to the Finance Minister for the upcoming budget?

Ideally this can be something specific but a general comment about the direction of the country’s economic policy will suffice.

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1 For God's sake make a proper budget and for once follow it!

By: Dr. Nadeem Ul Haque, Former Deputy Chairman, Planning Commission of Pakistan

2

We do not have a budget. It is a farce. In the rest of the world planning and discussion over the budget starts in November and all stakeholders at every level of government are involved. In Pakistan the budget is made two week prior to it being passed. This non serious attitude to such a serious matter is criminal.

It is no wonder therefore that the proposals and the outcomes are very different. The document says one thing and the Economic Coordination Committee (ECC) does something completely different as and when it suits their political/budgetary needs. The budget is â&#x20AC;&#x2DC;debatedâ&#x20AC;&#x2122; and passed in both the lower and upper house and once passed it becomes a law. By going against what By: Dr. Nadeem Ul Haque, Former Deputy has been written in law you are essentially Chairman, Planning Commission of Pakistan <Insert Picture> breaking the law.

Taxation in Pakistan is very distorted. The process of filing for tax is too compliTherefore the ECC and the Finance mincated which makes it even more difficult for the government to widen the tax net. istry works outside the scope of the People just donâ&#x20AC;&#x2122;t bother. There should be simplicity but instead each year it becomes budget. When there is no intention of more complicated with new types of taxes and slabs and what not. following what is decided in the There also has to be a distinction between a tax filer and a taxpayer. There are a lot more taxbudget then very little time will payers than there are filers for the mere reason that each and everyone who consumes goods be spent in preparing it renand services pays one form of tax or the other. For example a person with a 20,000/month salary dering it a mere formality. pays withholding tax on a mobile phone he buys or sales tax on the milk he purchases.

Before anything else this So when that person does not file his tax returns it does not mean that he has not paid his taxes, in fact is what has to change. he has paid more than he is liable to. Therefore this whole rationale of non tax filers are evading tax is

Think out of the box

wrong and there has to be some out of the box thinking to fix this.

Look at Dubai, they have no income tax and they are doing fine. That is not to say that we eliminate the income tax in Pakistan but it should be the direction of thinking at least. That direction has to be accompanied with research in order to break these colonial era outdated taxation policies

BUDGET 2017-18

3 Allocate Rs 2 billion for research By: Dr. Nadeem Ul Haque, Former Deputy Chairman, Planning Commission of Pakistan ton of money is spent on infrastructure and mega transport projects with very little consideration given to the pre planning stage of these projects.

There has to be analysis of a cost benefit analysis to come up with a feasibility that makes economic sense. Only then should a project get green lit.

Theses flyovers and underpasses do not have a rate of return, all they are good for is getting you from A to B just a little quicker.

The way the PSDP is used these days contributes very little towards economic growth.

If I had Rs 2 billion to give under the PSDP I would much rather give that money as a grant to someone conducting research than spend it on another road or bridge. So do something better with PSDP that contributes to the economy and society.

There is money in the PSDP for education but the Finance Ministry does not release all the funds on time. This is criminal, in fact they should have more money and should definitely get By: Kaiser Bengali it on time.

4

Increase Petrol Prices back to Rs 110

The General Sales Tax (GST) should be reduced from 17% to 5% gradually over 3 to 5 years. Parallel to this the the oil prices (at gas stations) through whatever mechanism should be raised to equivelant of $100/barrel and be maintained at that level until the international prices cross this level.

There will be a shortfall in government revenue due to the reduction in GST rates but the increase in oil prices will compensate for that. The government should not have reduced oil prices here in the first place when they started to come down internationally. That reduction only benefitted motorists only but it did not bring down public transport rates or goods transport rates as there is a certain stickiness to these prices whereby they increase immediately but do not come down as rapidly.

An added advantage of this will be to that people will to the environment as people will be discouraged to use their vehicles due to the higher cost of fuel.

22

5 Abolish the ministries By: Kaiser Bengali There are around 15 to 20 divisions in the federal government that need to be abolished. After the abolition of the concurrent list from the 18th amendment these divisions became constitutionally redundant and therefore need to be devolved to the provinces but that has not been done.

This would mean that the salaries of all those secretaries, additional secretaries, joint secretaries and divisional secretaries and their staff of a minimum of five each that includes clerks peons and drivers would no longer be paid by the federal government. There are all sorts of other expenditures that go along with having such a staff as well so the cost saving would be quite significant On the expenditure side I think the development budget has to go up to at least 10% of GDP between now and five years. Currently, effectively, it is less than 3%. Infrastructure has virtually collapsed in this country and we need to invest into rebuilding our infrastructure.

We do not have industrial estates in Pakistan, which is a big disadvantage to industrialists who want to set up a factory but are unable By: Kaiser Bengali to acquire land.

This expenditure in industrial estates There should be a website where the details of each and every import L/C that is opened will also make it necessary to invest should be made available including the number of units and per unit price. Anyone on that in all the infrastructure that goes website with the proper credential then has a first right of purchase whereby he can offer the with with that includes roads, L/C opener 20% over and above the invoice amount that he has quoted. electricity, gas and water. A So for example person X is importing mobile phones from the US for $300 but - in order to pay a four star hotel would also lesser duty - has under-invoiced and claimed he bought the good from his US supplier for $100. be required to accomPerson Y sees the goods on the website and offers to pay $120 for the goods which person X will have modate foreigners. to accept and take a loss of $180.

In turn this practice of undervaluing the actual value of imported goods to avoid paying more duty will be discouraged. This is not being done with regard to import L/Câ&#x20AC;&#x2122;s but India uses the same mechanism in their real estate market to achieve the same thing - the true market value of the product.

This will measure will generate more revenue for the government while it could eventually discourage certain products being imported which would positively affect the balance of trade.

6

OďŹ&#x20AC;er 20% more and the imported goods will be yours!

BUDGET 2017-18

7 OďŹ&#x20AC;er cash incentives to merchants and buyers for automation and digitisation By: Kaiser Bengali

8

Pakistanâ&#x20AC;&#x2122;s tax collection system is more of an extortion racket than a workable solution to get everyone to pay their fair share. There is a fine line between tax evasion and tax avoidance and the latter is very easy to pull off given the outdated approach of the tax collection authorities.

There is a need to update, automate and digitise this system to generate the required information that would in turn enable tax authorities to identify discrepancies and follow up on them. More than half the work is done by the banks. Although each and every transaction is recorded digitally there are ways around it like using cash cheques as currency or not swiping debit card at Point Of Sale (POS) and instead just using the ATM. For this there should be incentives and rewards by banks that encourage both buyer seller to use and accept cards respectively. The government on the other hand, just By: Kaiser Bengali to meet targets, is discouraging people away from banks by taking counterproductive measures like the 0.6% The purpose of tax is not merely generating money to finance government tax on banking transaction. Automating the sysexpenditure. If done properly it can enhance efficiency and promote redistritems of the tax authority is very important. The bution of wealth. Unfortunately in Pakistan the government is always fixated Federal Bureau of Revenue (FBR) has so far on the revenue generation and ignored the rest. received two world bank grants to automate This flawed approach increases distortions in the tax system. Globally the approach their systems but so far they have not is to heavily tax finished good while minimum tax is applied on raw materials. Here been able to. It does not take internawe do the exact opposite. tional donor money to do this, just For example ready made books are imported as they are tax exempt hence cheaper than those take a look at the Sindh Revenue produced here which are made using imported raw material like paper that is heavily taxed.

Board (SRB) that was auto85% of our taxes are indirect that are largely regressive and hurt the poor the most. A study mated by a team I was headshowed that the richest 10% pay 12% tax (all taxes included) on their income while the poorest ing using only internal 10% pay 16% (all taxes included) on their income. resources. The SRB has You see there are goods and bads, meaning that certain products are good for you while others are 90 people working bad. The bad ones like cigarettes, cooking oil and even fuel should have increased excise duty on them. while FBR has This will curb their use and increase revenue. The government has to be cautious though so that there 33,000. arenâ&#x20AC;&#x2122;t any secondary distortions like smuggling that would hurt local producers of these products.

Then there is the problem of a fragmented tax base. Agriculture income, under the constitution is not taxable which is why the provinces inefficiently do it collect peanuts. That is also largely attributed to the fact that around 80% of our farmers are very small scale hence out of the tax net. But nonetheless agriculture tax should not be exempt and there should be a constitutional amendment that allows it so that it is done at the centre.

There also no justification for there being no wealth tax. It is very unfair that the amount of tax the rich pay has a lesser effect on their disposable income than someone who earns much less than them. Talking about all these reforms and discussing these suggestions is futile until and unless there political will starting from the top all the way down to seriously review and reform our taxation policy.

Bring back the Wealth Tax

24

9 Allow private DISCOs to operate and compete with publicly owned ones in major cities BY: Mian

Mu h am m ad Man s h a , Chairman MCB

10

Whenever there is a debate about the budget, taxation reform is at the heart of it. It is true that Pakistan’s tax net is very narrow with only around 300-350 people paying more than Rs 10 million in taxes but equal if not more attention is required on the cost cutting side.

Public sector enterprises like PIA and WAPDA rack up billions in losses every year and continue to hemorrhage money. Attempts have been made at privatising them but failed due to resistance from unions and other factors as well. But that is not the only way to do it.

Publicly owned power supply companies like LESCO for example have very strong unions so it is tough to privatise them. Why then not allow and provide licenses to small private companies who can do the same thing in Lahore. The same can be done for other cities like Faisalabad and Gujranwala.Let the public sector companies compete.

Delhi for example has three companies competing in the city namely Reliance, Tata and Essar.

The government is currently busy trying to increase megawatts in the grid with new projects. What it does By: Shabbar Zaidi Partner at A. F. Ferguson and Co. not seem to understand is that if the percentage of distribution losses remains the same and power It is about time government took radical steps by documenting assets, such as land, generation increases it will cost even more prize bonds and bank accounts. If the government were willing to take this radical step, it and the government simply does not afford would be as simple as it could get. How can you prepare people’s income record unless you it. have their assets record? The entire taxation mess can be corrected if the government is willing As it is all the good well paying custo document assets of everyone, especially those living in the upscale localities, the likes of tomers of these publically run disBahria Town and DHAs. Let me break down our problem. Three quarters of our official gross dotribution companies are setting mestic product is excluded from taxation. Agriculture and Exports, each 25% of the GDP, are exempt up their own power generafrom taxes; Traders, which are about one-fifth of the economic output, and unorganized services (doction solutions and are leavtors and lawyers, for example) that contribute 10% to the GDP do not pay taxes. These figures are for the ing them which is a big official GDP only as they do not take into account the underground economy. dent in their revenue.

So, you are taxing only a quarter of your GDP, that is why you are collecting only Rs3.5 trillion or $35 billion of So spend more entax revenue from 25% of your economy, which is the highest rate in the world. Since that contribution mainly ergy and try to comes from manufacturing, you are hurting the backbone of your economy. control costs.

The major issue we are facing is the country is divided in two parts: on one side are 20 million people who are getting

Document assets, stop presumptive taxes, revamp custom tariffs

richer and on the other side are 180 million people who are getting poorer. So disparity of wealth has increased a lot.Major tax evasion is happening in trade and industry but they are the vote bank of the incumbent. You can’t form and income record unless you determine the actual ownership of their assets. once you complete the documentation of assets, you can stop all kinds of presumptive taxes. To be precise when the economy’s assets are undocumented, how can you talk about tax collection? We also need to revamp our custom tariff arrangements with China and Thailand. A lot of their goods are coming to Pakistan but nothing is going there. The current tariffs need to be terminated and new ones formed to local industry.

BUDGET 2017-18

11 Reducing Tax Rates, Reforming FBR and Facilitating Exports By: Sakib

Sherani, former economic advisor to the government

The top three priorities should be to reduce the tax rates, reform FBR and facilitate the export sector.The first and foremost thing is that the budget strategy should be for at least a three year period. Different strategies and targets are difficult to implement as well to achieve in a year but longer duration allows far more room to achieve the desired results.

The tax base has not increased during the last three years. The reason is the high tax slabs for sales tax and withholding taxes. The sales tax has to be rolled back from 17 percent to 12.5 percent within the first three year. Corporate tax has to be brought down to 20 percent.

A completely roll back of the Gas Infrastructure Development Cess and Petroleum Development Levy is also necessary as they have a massive impact on the efficiency of the private businesses and make them less competitive By: Huzaima Bukhari and Dr Ikramul Haq, Adinternationally.Yes, these steps would result in ballooning the fiscal junct Faculty Members at Lahore University of Management deficit, but only for the first financial year and would normalise over Sciences) the next two fiscal years as all the incentives will be provided to the businesses and manufacturing sector, increasing their proThere is a consensus in Pakductivity which will help in getting more jobs, revenue and existan that the ill-directed, illogiport earnings. Reforming the FBR is overdue and has to be cal, regressive and unfair tax done immediately. Improvement in the tax collection malaws, regulations and highhandedchinery will produce the most positive impact on the ness of tax agencies at federal and economy. If FBR is reformed it will help government provincial levels are causing a dampenrecover more taxes and doing away with the noning effect on the industrial and business necessary taxation. The export sector has to be growth. The sole stress on meeting revenue targets from the existing taxpayers, without given more support and for this an allocation of reforming the tax system and evaluating its impact on the economy, is a self-defeating exerRs 6 billion per annum is necessary. The govcise. Direct tax system intends to achieve the twin aims of maximizing revenue as well as ernment brought out a Strategic Trade Polachieving socio-economic justice. The tax system that will work smoothly for Pakistan must be a icy Framework in FY2010 which was a flat rate with no compliance hassles. All taxes should be merged into one single tax with complete major document with many appropriate assurance to the masses that they would be free from any kind of harassment; and money collected measures to boost exports. However, would be spent towards their welfare. Where the public is blamed for not paying their due share, public it failed to release a single penny authorities are equally, if not more, responsible for indulging in corrupt means. Currently the FBR colduring the last six years because lects much less than the actual tax potential of Rs 8 trillion. although the government did In these circumstances, Pakistan needs a paradigm shift in tax policy and revamping of the entire tax adminiscollect cess on export protration by establishing National Tax Agency (NTA). Through consensus and democratic process, all the parliaceeds to facilitate the exments can enact laws for establishing the NTA, which shall be an autonomous body comprising of specialists and port sector, it never professionals that would facilitate people to deal with single body rather than multiple agencies at national, provinreturned it to the excial and local levels. porters. That money A tax intelligence system is essential as well. This system should send quarterly information to potential taxpayers about is instead used to their economic activities so that they can be informed in advance as to how their incomes and expenditure should finally look finance fiscal like in their tax declarations. Simple taxation like a 10 percent flat rate tax on net income of individuals and reducing corporate debt. tax rate to 20 percent would induce voluntary compliance provided citizens are aware that competent tax machinery exists.

According to the available data, the total number of persons having taxable income of more than Rs 400,000 is between 10 to 12 million and tax base is around Rs 50 trillion (after taking into account informal economy). Flat rate taxation of just 10 percent with strong enforcement system will yield Rs 5 trillion under income tax alone. If amnesty for earlier years is given, not less than further Rs 2 trillion can also be collected. All existing indirect taxes should be replaced both at the federal and provincial levels with Harmonised Sales Tax (HST).

Direct and flat taxation with a new tax authority

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12

BUDGET 2017-18

OPINION

Jazib Nelson

one of its prime causes. Resultantly, a curb on tax evasion as a tool to increase tax revenue is incorporated as one of the many conditions for securing loans.

After the PML-N government undertook IMF’s Extended Funds Facility (EFF) program of worth $6.6 billion in 2013, there have been active efforts on part of the government to decrease tax evasion.

Government’s policy to reduce tax evasion is twopronged. First, the government has been running an aggressive campaign to crack down tax evaders. Second, it is relying on moral suasion to persuade against evading taxes. The Raftaar campaign is based on this premise. Just like Raftaar, the Federal Board of Revenue (FBR) too has utilized media campaigns o issue in Pakistan currently attracts as to not only convince Pakistanis into paying tax but much attention as that of tax evasion. On also to threaten them. one hand, we have the people of PakOther than the threat of being caught and subseistan accusing the politicians for being quently punished, both of these policies are flawed in tax thieves while on the other hand a a sense that they fail to give any incentives to the certain group called Research and Advoeconomic agents like consumers and merchants not cacy for the Advancement of Allied Reto engage into the practice of tax evasion. Economic forms (Raftaar) claims that most of the agents respond to incentives. Nobody needs to be a Pakistanis are tax evaders. Tax evasion professional economist to see that. A good economic has become a polarizing subject in Pakistan. policy can’t be expected to draw results by merely Even Pakistan’s major creditors which include International appealing to an individual’s consciousness. Similarly, Financial Institutions (IFIs) like the International Monetary using coercion as an instrument to an outcome can Fund (IMF) and the Asian Development Bank (ADB) rouonly be good enough to be more disruptive than continely blame Pakistan’s development woes on tax evasion. As structive. Trust and confidence on FBR by the Pakper them, Pakistan’s low tax-to-GDP ratio has tax evasion as istani business community has been diminishing markedly owing to this aggressive push.

It isn’t much of a surprise then that tax evasion continues to remain unabated in Pakistan. The governJazib Nelson ment needs to focus on more effective and less disruptive measures. One such is an Adjunct Scholar at alternative can be the promotion of electronic payment system in Pakistan. For an Policy Research Institute economy like Pakistan, its case is quite convincing. of Market Economy An ideal tax system is based on the principle of perfect information. The reported income by an individual is accurate and the incidence of tax evasion is zero. However, just like any other country in the world, it is not difficult to realize that that’s not the case in Pakistan. Individuals do not provide perfect information on their taxable income. Reasons for such behavior can be traced to avoidance of paying a high tax or cumbersome administrative procedures. This is true for any developing country as well.

Even in developed countries where the share of reported income in total income is

A guide to ending tax evasion in Pakistan

No issue in Pakistan currently attracts as much attention as that of tax evasion

N

ECONOMY

29

higher, tax evasion exists.

In the presence of such information barriers, taxmen have to run third-party information trails by studying transactions patterns of an individual to see if he has reported his income correctly and is not evading taxes. Third-party institutions like employers, banks, and pension funds etc. report such information. In countries where the share of third-party verified income goes up; the intensity of tax evasion decreases.

But in Pakistan, this third-party information is not that prevalent. For example, in case of banks, most of the Pakistanis still donâ&#x20AC;&#x2122;t have any bank account. Financial inclusion is low. Not many Pakistanis have invested funds with an asset management company either.

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Those who deliberately avoid such thirdparty institutions in any transaction for tax reasons prefer to settle in cash. Settlement in cash by not registering a purchase gives incentives to tax evasion. If electronic payment system is promoted in Pakistan, a purchase canâ&#x20AC;&#x2122;t go un-registered by both seller and buyer. Mostly electronic payment system involves use of debit/credit card or an online purchase.

These electronic means of settling a transaction are in place in Pakistan as well. In few cases, the government is also playing its due role along with private banks to entrench them more firmly. Despite the efforts, electronic settlement of transaction is not picking up. Incentives for electronic payment system are not in place which is hurting their take-off.

Consumers can be given tax discounts on GST if payment is made through a debit/credit card. For example, if an individual pays a restaurant bill through his debit card he gets a 1 percent discount on his General Sales Tax (GST) liability on the amount of purchase. Similarly, merchants can also be given tax discounts on Value Added Tax (VAT). Measures like these would give both consumers and merchants incentives not to settle a transaction in cash and hence a transaction would be automatically recorded.

Such smart alternatives geared with proper incentive structures should be focused by the government of Pakistan rather than subverting private enterprise through coercion. The current approaches canâ&#x20AC;&#x2122;t be expected to halt tax evasion in Pakistan. n

ECONOMY

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OPINION

Ayesha Aziz

and economic growth through employment. True economic parity, however, can only be realized when women can go beyond making a choice between contributing to their countries’ development and sustaining their households and are able to perform both roles successfully.

Raising children, going back to school, personal tragedy – no matter why you had to take a lengthy break from your career, the prospect of re-entering the workforce can be terribly intimidating. Many people who have taken long breaks from the workccording to the World Economic Forum’s force find themselves facing unique challenges (WEF) Global Gender Gap Report 2016, when it comes to landing a new job. Those who Pakistan ranks 143 out of 144 countries in manage to break into the workforce are regarded the gender inequality index, way behind with amazement and envy—especially during Bangladesh and India which rank 72nd and these days of high unemployment. In fact, getting 87th respectively. Pakistan is also the worst the job is only the first step in a challenging readperforming state in South Asia and has justment. been for the last couple of years, while Sri Not only do former at-home parents land like Lanka ranks 100th, Nepal 110th, the Malreal-life Rip van Winkles in a strange new world dives 115th and Bhutan 121st.Pakistan of technology, team dynamics, office fashion ranks 141st on the Economic Participation and Opportunity suband water-cooler talk at the office, but they must index this year. It is one of the ten lowest-performing countries on simultaneously renegotiate their relationships at all indicators of this sub-index with the exception of Wage Equality home, with spouses and kids. They usually take for similar work. Pakistan is one of the three countries with the lowa big cut in job status and pay, while facing est percentage of firms with female participation in ownership. pressure at work to prove themselves all over Approaching the issue of women’s re-employability with sensitivity again. is a must in order to achieve the targets listed in the newly ratified The key challenges faced by women returning to United Nations’ sustainable development goals - gender equality work after a career break are the lack of workplaces that offer flexible work options and the unavailability of quality pre-schools and daycare centre’s for childcare. Only when quality and affordable childcare is assured to them, can women Ayesha Aziz be empowered – both financially and personally. Having childcare support in is Mom, Mechanical place, whether off-site or on-site, not only helps companies bring women back to Engineer, Teacher, work but also boosts their morale, reduces absenteeism and increases productivity.

Aspiring Masterchef and Apart from quality childcare, companies can offer re-introduction programmes Photographer, Wanderer with internships or part-time positions before getting employees on board fulland a lot more! time to make the transition back to work as seamless as possible. In this way, companies can hire individuals who have valuable life experiences that can benefit the company and recruit from a fresh pool of highly talented individuals who they can’t reach through normal recruiting methods.

Further discouraging women from returning to employment after their career

Return of the Stay-at-Home Mom: The Way Forward

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break, is the insensitivity and indirect pressure present in the working culture of many companies. A working mother is not always considered a long-term asset to the company — they are seen as liable to take more leaves and likely to quit.

The five top challenges women returning to the workforce face are: 1. Getting your confidence back The actual transition back to work after a prolonged hiatus might be tough for women who have spent months or even years out of touch with their chosen field. This causes a reduction in their skill set and in turn decreases confidence in their working ability. The emotional intelligence research shows that women are significantly less confident than men; women out of the workforce have added challenges of wondering if their skills and accomplishments have a shelf life that has expired

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or whether they can compete effectively once they've gotten off the treadmill.

2. Translating your accomplishments - Women have a harder time marketing themselves than men do even under the best of circumstances. Women are more uncomfortable touting their accomplishments or even seeing their accomplishments as something special. They tend to talk about "we did this," rather than claiming credit individually and they tend to deprecate their accomplishments, "Oh, it wasn't that big a deal." Women, much more than men, believe that good work speaks for itself, and the very idea of "selling" is unseemly. But the truth is that people speak, work doesn't.

Translating your contributions into quantifiable accomplishments is hard for any job-seeker, but especially for someone who

has been out of the workforce. It's hard, but it's also imperative: Look for specific contributions with quantified results on your former job, as well as with any volunteer or part-time work you may have done while away from your career. If you organized a successful fundraiser for your child's school, raising 50% more than in prior years, say so. Accomplishments build your case for your next job, no matter where you've been recently.

3. Dropping your self-defeating stories - Women who have been out of the workforce are vulnerable to the self-defeating stories that they tell themselves and others tell them about how hard or impossible it will be to reenter the work force. What are the most popular stories that women tell themselves?

• My skills and knowledge are out of date - who is going to hire me?

• I cannot market myself.

• I'm not the contributor I used to be, so I'll have to settle for what I can get.

Although there are plenty of stories out there in the media about difficulties people face in re-entering the

CAREERS

work force and all of us know people who have experienced such difficulties, the main limitations women face in pursuing their dreams and goals of getting back to work are self-imposed, by stories they tell themselves about how their own skills, knowledge, marketing abilities, and potential contributions are lacking or less than they were, should be, or must be. All these negative vibes reinforce poor self-confidence, diminish women's professional demeanor and self-presentation, and decrease their efforts to find the right job, and lead them to settle for jobs and salaries that are below their capabilities.

4. Getting your foot in the door -- When you've been out of the workforce, it can be especially difficult to get a prospective employer's attention but with the help of people who know how intelligent, hard-working, and dedicated you are, you have the chance you need to show why you are the best hire. Women executives at the top of their game have difficulty using their networks in this way; women who have been away from the workforce are especially hesitant to use their networks, doubting their contributions as well as unsure about whether this is a misuse of their contacts.

5. Finding a good employer - The most traditional male-dominated companies and industries are less likely to be successful targets for women returning to the workplace. Identify companies with family-friendly policies, larger numbers of women managers and executives - companies, in other words, more receptive to life/work balance and emphasizing the importance of women in the workplace.

Five Top Misconceptions Women Have About Returning to the Workforce 1. Your new job is not on the internet -Despite the attention given to job websites, the fact is that the vast majority of jobs are still filled by using your contacts and not the internet. Putting your time on the highest yield strategies is one important path to a new job.

2. A recruiter is not going to find a job for you - Another common misconception is that recruiters work for jobseekers. Recruiters work for the companies that hire them to fill vacan-

CAREERS

3.

4.

5.

cies and they are generally looking for round pegs for round holes - in other words, highly traditional candidates, NOT a woman who has been out of the workforce. Put your emphasis on your network where people can provide endorsements and introductions that can open doors for you. Recruiters are highly unlikely to open doors for women returning to the workforce.

Updating your old resume is pointless -- Updating your resume is not the goal, transforming it is. The traditional resume filled with job descriptions is not what will catch an employer's eye, certainly not with a gap in employment. If you can present your work achievements in hard-hitting terms, your achievements will impress an employer, not any gaps in your employment.

Using your network is not unseemly, it's essential - There is plenty of evidence that women don't do a good job of professional networking. Why is this so, when women are excellent at building friendships? Because women believe that using a relationship for a business purpose, like an introduction to an employer, information about an industry or company, or endorsement is a misuse of a relationship. Women need to learn what men have always known: that their network is among the most powerful assets which help them in landing a new job, a source of introductions, information, and endorsements that can be invaluable in helping you back into the workforce.

Luck has nothing to do with it - effort does. The evidence shows that the more time you devote to your job search, the faster you are likely to be re-employed. If you think re-entering the workforce is a matter of luck, you have less incentive to work at it. If you are waiting for a lucky break, you could be waiting a very long time. By getting out there with your network (which includes the husbands and family members of your women friends, many of whom are employed and likely to be good sources of contacts, referrals, and jobs), you take the first important steps to getting back to work.

Five First Steps for Women Reentering the Workforce 1. Determine your "right job right now" - what makes for the right job for you at this stage of your life and career?

Define your target precisely.

2. Build your strongest case for your target job with an accomplishment-oriented resume. You need your "A" game to reenter the workforce and you can do this with a resume that emphasizes specific contributions and results you've made on the job or in the community. It will also build your selfconfidence as your accomplishments remind you of what you have to offer.

3. Define the facts about your career (competitive advantages) that show why you are the right person for a particular employer or opportunity.

4. Focus your job search on your network (not the internet or recruiters).

5. Act self-confidently to build self-confidence. The psychological evidence shows that the best way to build selfconfidence is to behave in a self-confident manner and your beliefs about yourself will change in line with your behavior. If you are afraid to get out there, take the advice of any female executive whose career had known many ups and downs and who was a mentor to other women. Your behavior will change your attitudes.

After two years of continuous struggle, today I have not one but three job offers from three great companies, and I will be joining one of them soon. At a recent interview with the CEO of a renowned group, he asked me if I was looking for a job in my field after such a long break for the money.

My answer to him was that everyone needs money, but I am doing it for my boys who will grow up to be husbands and fathers one day, and for other women who need motivation and inspiration to get back there and use their skills and education for the betterment of the society.

In my life as a teacher I came across many bright young women who had aspirations and dreams to do something different, and they would tell me that they want to be like me when they grow up. So yes, I want them to look at me and say that we didnâ&#x20AC;&#x2122;t give up on our dreams because of you. To all the talented beautiful girls out there, your dreams have no expiration date, go get them! n

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In the last decade, American newspapers saw revenues drop 80% while half of reporting jobs were lost, forcing both academia and industry to reinvent themselves. Amid this challenging environment, a digital-only newspaper, Texas Tribune carved out a niche market through an innovative business model: a case study for newspapers in Pakistan where digital disruption is about to take off.

By: Farooq Baloch hen digital disruption hit newspaper businesses in the United States, most publications rushed to launch their Internet versions, some even tried paid walls. But, revenues from digital didn’t grow as expected, leading to speculations that print journalism was dying. even today, academics, entrepreneurs and publishers are worried about what could

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be a sustainable business model for the newspaper industry -- and they have a reason to. In the last decade, the business from print ads, which was once 80% of newspapers’ revenue, has dropped from $62 billion a year to $12 billion, but earnings from digital have remained almost flat.

“Since 2007, half of the reporting jobs in America have been lost. As a result, local communities lost reporting resources,” said Ryan Thornburg, executive Director of Reese news

Lab, an initiative of the University of north Carolina at Chapel hill that is teaching students to become entrepreneurs and look for new business models in the media to create jobs.

“We are teaching students to come up with innovative ideas, pitch them and fail fast so they can start over and repeat till they succeed,” Thornburg told a group of 18 international journalists during a visit of UnC, which was part of the Foreign Press Center Tours

2017.

The lab teaches entrepreneurship in media as a tool to tackle the creative destruction facing journalism. Moreover, UNC has made it compulsory for everyone to take the audiovisual course so they could learn the vocabulary of digital.

“We [the journalists] need to believe we can reinvent,” said Susan King, Dean School of Media and Journalism at UNC Chapel Hill.

“We are producing students who will create journalism tomorrow. We make them learn economics of journalism.”

The culture at Reese News Lab, an example of which is hard to find in any journalism school across Pakistan, is very similar to what one can experience at a technology incubator: students come up with startup ideas, pitch them before their mentors who critically assess their commercial viability.

Journalism schools may not have thought about teaching entrepreneurship to students a decade ago, but it was inevitable -- according to a report by PEW Research Center, the number of daily newspapers have reduced by 100 since 2004.

The academia seems to have responded to the changing times but statistics for the past decade aren’t very impressive. With an average 10 newspapers closing every year (between 2004 and 2014), the sad state of affairs certainly begs one question: is Journalism in danger?

“Newspapers are in trouble, journalism is not,” says Prof. Rosental Alves, who is Director of Knight Center for Journalism in the Americas. “It [Journalism] may be different today than what it was a decade ago,” the Brazilian acknowledged while speaking to the same group of journalists who also toured Journalism School, University of Texas at Austin.

Giving an example of Fernando Rodrigues, a senior political reporter and his for-

“SINCE 2007, HALF OF THE REPORTING JOBS IN AMERICA HAVE BEEN LOST. AS A RESULT, LOCAL COMMUNITIES LOST REPORTING RESOURCES” said Ryan Thornburg, Executive Director of Reese News Lab

“WE ARE PRODUCING STUDENTS WHO WILL CREATE JOURNALISM TOMORROW. WE MAKE THEM LEARN ECONOMICS OF JOURNALISM.” Susan King, Dean School of Media and Journalism at UNC Chapel Hill

mer colleague from Brazil, Alves said the former was fired in 2014 by Folha de S. Paulo, Sao Paulo’s largest newspaper, but started his own news business.

Rodrigues launched Poder360 Jornalismo, a paid newsletter for corporate subscribers. It covers important policy news of Brazilian government and offers analysis on the same. “He made a lot of money from his newsletter because he was the finest political reporter there,” Alves said of Rodrigues who later hired 20 people and launched a full-scale news website, which now attracts 1 million unique visitors per month and is seen as a successful digital publication.

“Journalists and newspaper owners need to think beyond the basic ad and subscription model,” Alves said adding they have to find other ways of making money. Though he gave examples of digital publications like Vox, Politico and BuzzFeed as success stories, the professor enthusiastically discussed the success of The Texas Tribune -- an Austin-based digital-only newspaper, which, earned $1.4 million in profit within three days from a single event.

The Texas Tribune: a case study for aspiring entrepreneurs and newspapers in Pakistan.

If current numbers are any indicator, newspapers in Pakistan are likely to face digital disruption very soon, if it has not started already -- courtesy a significant rise in the number of the country’s Internet users and double-digit growth in the digital ad spend.

Since the April-2014 auction of licences for 3G and 4G technology, telecom operators have been adding more than 1 million new Internet users per month to the country’s broadband base, which currently stands at 40 million. As a result more people are using social media, resulting in digital ad market’s growth.

The digital ad spend of Pakistan is ex-

pected to grow by at least 40% in 2018 from the current $20 million. As per market estimates, it can reach to 30% of the total ad market by 2020, up from the current 15%, Profit has already covered this in a previous report.

With brands diverting more money towards digital, newspapers’ print business is likely to bear the brunt and will eventually lead to more layoffs in an already tight job market.

In fact, this may have already begun: a top-tier newspaper and New York Times’ Pakistani affiliate The Express Tribune fired more than two dozen staffers last year because of what media reports say was low circulation numbers, which forced the company to cut costs. With plans to increase focus on the digital side, the publication merged web and print desks resulting in a few more staffers to leave earlier this year.

However, unlike Politico and Poder360, which were founded by out-of-job or retired journalists, some of those who were laid off from or left The Express Tribune struggled to find jobs that matched their qualifications. A few even switched careers to development sector. On the digital front, publications like Propakistani have done well, but they are narrow in scope of their coverage.

As print media in Pakistan braces itself for a creative destruction that stormed the journalism industry in the United States, the innovative business model of The Texas Tribune can be an interesting case study for aspiring entrepreneurs and publishers struggling to make money from the outdated ad and subscription model.

The Texas Tribune is all about entrepreneurship, innovation and creativity, but ad-andsubscription based model it is not.

“Since the beginning, we have had a three-pronged approach: news, data, and events,” the newspaper’s Chief Product Officer Rodney Gibbs told FPC Tours 2017 reporting team during a visit of their office in Austin --

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and this model has worked for them.

The 2009-startup, which was launched with $4 million in seed capital and a staff of 17 people, now boosts an employee headcount of 60 (half of them journalists) with $44 million in all-time (seven years) revenue. It attracts 1.5 million unique monthly visitors of whom 25% come from social media where it has a fan base of nearly 250,000 fans.

Only seven years into launch, The Texas Tribune has the largest team of reporters covering state legislature in Texas and is giving old and popular newspapers, the likes of Dallas Morning News and Houston Chronicle, a run for their money -- the former was growing significantly when these established newspapers were cutting jobs in their Austin bureaus.

So how did it achieve all this success, was it quality journalism or display of excellent business skills? It was a combination of both with innovation and creativity at the core of their model.

“We do more than 50 live events every year and this is our biggest source of revenue,” the CPO said.

These events are the major financial strength of The Texas Tribune. All these events are free with the exception of Tribune Festival, which is their biggest annual event. Last year, the newspaper earned $1.4 million in profit through ticket sales and sponsors from this single event over a weekend -- about 4,000 people attended the paid event with tickets ranging between $150 and $300 and as many as 60 brands sponsored it.

However, the benefits of Tribune Fest are not limited to revenues.

“It has many benefits. It makes us a lot of money, secondly it often gives us news when some speaker, a legislator for example, says he is going to introduce som new bill that can affect people,” Gibbs said adding, “Very often our news content from that event is picked up by leading national news organizations like CNN.” Tribune Fest has become quite a brand of its own, for it serves as a major platform to connect people with important personalities including state legislators, offering locals networking opportunity where they can interact with their elected representatives and ask questions. It invites keynote speakers, holds panel discussions and opens up question-answer sessions with audience, all of it anchored by a Tribunian, usually Evan Smith, the CEO himself.

“This is engagement with the community, brings people together who agree and disagree on political issues. We bring politicians

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and public together,” Gibbs said of their events all of which they live stream through their Youtube channel.

The newspaper never had a print version and was in profit in its third year. It describes itself as non-profit, non-partisan digital newspaper publishing up to 15 stories a day. To ensure transparency, they publish a full list of their donors, from individuals contributing as little as $20 to corporate donors with gifts running in millions.

“The CEO and one of the cofounders thought there was a need to cover state-wide politics and other important stories on healthcare, education, immigration, energy and environment,” Gibbs told the touring journalists, explaining the need to fill the gap as major policy issues were not given due coverage.

Since day one, news has been one of the three major focus areas for The Texas Tribune.

“If legislative session is going on, that’s the main focus, if not, we focus on issues like criminal justice, and healthcare,” the CPO said.

The newspapers coverage of important news and some top-quality journalism complements the other two components of its core business model. It works on a combination of breaking news and investigative journalism.

Their investigative cell -- a dedicated team of three reporters and an editor -- carries out indepth reports every now and then on important topics, such as guns on campus.

“Our investigative work has won us awards and helped influence legislation,” Gibbs said.

The newspaper has some of the best reporters covering policy beats, but they didn’t restrict themselves to the traditional style of reporting. Their data service is, perhaps, the most innovative aspect of journalism they produce.

“We are heavy on data visualization,”

Gibbs said as he took the visitors to a newsroom tour, pointing towards a dedicated space that accommodates a four-person team for data visualization. The Texas Tribune data app is the largest source for traffic on their website, accounting for 40% of the total visits.

They make interactive infographics to engage readers. For example, their data graphics on employees salaries throughout the State of Texas is a big hit. However, it is a bit of effort to obtain that data and visualize it for the ease general public.

“It is the data that is often buried in government documents or websites and is hard to understand. We visualize it and make it easy for our readers to understand,” Gibbs said adding they often use Freedom of Information Act to obtain this data. “We maintain a whole database on topics like education, schools, salaries of state employees and prisoners for example,” he said of their data project, which is very popular but often puts more pressure on their staff who have to update it very often.

The Texas Tribune offers a great case study for journalism students aspiring to be entrepreneurs and even for the publishers of traditional print newspapers, but it still heavily depends on gifts and sponsors, which account for two-thirds of its all-time revenue.

Gibbs, however, don’t see it as a weakness. “Our events have been the key to our earnings, but we try to keep all revenue buckets equal as opposed to depending on one,” he says -- the revenue from Tribune Fest increased 17% in 2016 compared with that of the preceding year.

When asked how they sell it to the sponsors, the CPO said, “We don’t tell sponsors that their message will reach out to millions of people, we just tell them it will reach the right people.” n

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Using public transport in Pakistan, especially for working women, can be quite an unpleasant experience. Paxi is a women only cab service that aims to solve that problem By: Aisha Arshad

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A few months ago after getting her two older children married and sending her youngest son to Malaysia, 47 years old Rubina Naseem did not know what to do with her time anymore. After wandering around to find ‘a new purpose in her life’, as she says, she found a job opening on social media in Pakistan’s first women only cab service – Pink Paxi by Paxi Pakistan.

The popularity of ride hailing services such as Uber and Careem among females and the unsuitable condition of public transport inspired Zahid Sheikh – CEO Paxi Pakistan – to initiate a cab service for women driven by women.

Launched on March 23, in Karachi, Paxi is the first ever private cab service that exclusively caters to women travellers of the metropolitan. With over 7 Suzuki Every Vans and Nissan Clippers – which display the company’s pink and white branding – Paxi has a fleet of female drivers who are well trained for driving, interpersonal communication and safety measures.

As many as 22 percent of Pakistani women are a part of the country’s workforce. Previously, most of these women used public buses, rickshaws and taxis to commute on daily basis; however with the launch of ride-hailing online cab services two years ago, a large number of women have shifted to the new transport medium.

A correspondent for Profit carried out an informal survey on a women only group on Facebook, and out of 50 respondents, only 1 had not used any of the online cab services.

“I work as an audit trainee and for my job I have to travel to various parts of the

“WOMEN WHO ARE TRAVELLING FOR WORK PURPOSES [OR OTHER] USUALLY FACE HARASSMENT, WE WANT TO ENSURE THAT THEIR TRAVELLING CAN BE AS SAFE AS POSSIBLE WITH THEIR FELLOW WOMEN” Iqra Hameed, Marketing Manager Paxi Pakistan

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city. Previously I used rickshaws but after the launch of cab services in Pakistan, they are my go to option,” said 23 years old, Habiba Farooqi who considers these services safe, reliable and pocket friendly.

“Women who are travelling for work purposes [or other] usually face harassment, we want to ensure that their travelling can be as safe as possible with their fellow women,” said Iqra Hameed, Marketing manager Paxi Pakistan.

“Harassment is not only physical or verbal, it’s non-verbal, emotional and comes in many forms,” said Hameed. “A rickshaw

driver adjusting his rear view mirror to eve tease is also harassment, an inappropriate remark of a conductor in the bus is another form of harassment, we want to counter that,” she added.

It is estimated that as many as 55 percent of women travellers face some sort of harassment while commuting. The international online cab services Uber and Careem has male drivers as well as females but the background check by both the companies and facility of ride tracking that can be shared with family and friends is what draws female passengers to these services.

Paxi Pakistan decided to take a step further and introduced a women only cab service which is driven by trained women drivers referred to as Pilots. “Most pilots belong to the age group of 35 years and above while some younger pilots are also joining Paxi’s fleet”, said Hameed.

Naseem, is also a part of the 15 member fleet that is a part of the newly found venture. With a basic salary of Rs 20,000 ($200 approx.) and performance based cash rewards, Paxi Pakistan is also helping

women like Naseem to earn a livelihood.

“I think it’s an amazing opportunity for women like me. With minimum formal education and only on the basis of good driving experience, I was hired for this job which helps me be productive and keeps me busy,” said the Paxi pilot, dressed in her pink scarf and black long-coat uniform.

The pink service is currently available on-call; this is done to maximize the cab’s reach to a larger customer base. Furthermore Paxi can also be hailed on the road, like any regular taxi, however a security code has to be entered by the passenger to start the ride. The company soon plans to launch a mobile application for the tech savvy segment.

Paxi Pakistan started around two months ago and is offering multiple services. Although the face of the venture remains the women only cab service, the ride company also offers bike service for males, a general cab for both men and women and bike delivery service. The women only Paxi also offers van service for pick and drop on various routes – mainly for office going women.

“Unlike other cab services, Paxi is not dependent on driver’s availability,” said Hameed. “They have to report at the office at 7 a.m. and from here pilots proceed to their routine pick and drop routes for office going females. Once they are back, they take regular rides throughout the city,” explained Hameed of the service that currently has 18 regular customers using the van service on a daily basis.

However, due to security concerns a few areas have been restricted by Paxi Pakistan for women drivers and passengers to travel to, this according to Hameed is one the many safety measures the company has taken to ensure safety of both the pilot and the passenger.

A CORRESPONDENT FOR PROFIT CARRIED OUT AN INFORMAL SURVEY ON A WOMEN ONLY GROUP ON FACEBOOK, AND OUT OF 50 RESPONDENTS, ONLY 1 HAD NOT USED ANY OF THE ONLINE CAB SERVICES “We cannot provide a 100 percent guarantee, what we can do is take safety measures and that is something we are working on every day,” said the Marketing Manager. For this purpose, Paxi has trained its pilots to counter any emergency situation; from installation of fire extinguishers to availability of first aid kit, it is taking all preventative measures. Moreover, Paxi Pakistan is also offering accidental insurance to both riders and drivers in case of any incident.

“Installment of CCTV in the cars is our next step, we have also trained our pilots for self-defense in order to maintain their safety and CPR training was also conducted in case there’s an emergency during

a ride,” said Hameed.

Despite the novelty of the idea and need of a women only cab service in a country like ours Paxi has been deemed as an ‘expensive’ alternative for public transport by market experts. With a per kilometer price of Rs15 and per minute price of Rs3, many in the market consider the service’s rate higher than its competitors.

“We have done branding on the cars and equipped our cars with extinguishers and kits, we are training our pilots for at least a month before sending them out on the road, these things cost us and that’s why people might feel we are expensive,” explained Hameed.

She further went on to say, “But we know that our quality is up to the mark, even better in some cases, and once the demand is created for a women only cab service, we will lead the market.”

According to Hameed, the demand of the cab service is still on the rise and the recipient of ‘Inspiring Woman Award’ – an award for highest numbers of ride by Paxi – Kiran Rao alone made 24 rides in one week.

“It’s all about capturing the market,” said Hameed of the strong female consumer base which has given a new niche segment to the ride hailing services to focus on. n

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