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9 Weekly Roundup 14 Bramerz — The unique story of losing satisfied customers and then fighting back 22 Daraz.pk: Let it live or let it die?
27 27 Piracy: A bane for booksellers and writers alike 32 Who’s fault is it anyway ?
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44
36
36 Dhaba’s for all 40 9 Reasons That Open-Space Offices Are Insanely Stupid
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44 44 Studio- Seven: Finding a niche in the furniture market 48 Viable Payment Methods
CONTENTS
wElCOME
“LOOK MA, NOT PROFITS!” arooq Tirmizi, our contributing editor isn’t too confident about the viability of Daraz.pk, as is plain to see in his write-up on page 22. And he thinks Alibaba chief Jack Ma should take a good, hard look at the bottomline before going ahead with his rumoured acquisition of the company. Daraz.pk might be the market leader in local ecommerce, but it is said to be haemorrhaging financially. Instead of shelling out the Rs 15 billion valuation that Daraz.pk is currently going by, Tirmizi thinks Alibaba could set up an outfit of its own at a fraction of the cost and destroy Daraz.pk. Though the analysis is astute, when push comes to shove, the variables at play might not remain the same to begin with. Both Daraz.pk and Alibaba are rational players. Rocket Internet, which runs Daraz.pk, seems to have developed a speciality in incubating a business, plumping it up and then selling it off. Given that experience, we’re sure they would know their weak negotiating position and might not demand their current valuation. And with that, Alibaba could hit the ground running in Pakistani e-commerce, albeit at the risk of inheriting all the legacy costs that Daraz.pk comes with.
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bly seen each one several times. But, more than anything else, it is a story of a fight back; a story of not giving up no matter how big the challenge. Take the example of big ticket accounts like Nestle, Pepsi, Coke and Samsung, clients it had serviced successfully for years. In 2015, when these clients finally started to realize the full potential of digital, it seemed that the time to reap the fruit of all those difficult years put in by team Bramerz had finally come. That wasn’t to be; the big boys, the sharks of the industry, were all set to crash the party. The bigger ad agencies had a trump card up their sleeves: international affiliations with other ad agencies that had these big accounts. Soon, many of these big accounts were poached away from Bramerz and the other local digital ad agencies. But Bramerz wasn’t an agency to take this lying down. It decided to take the fight to the big boys and actually pitch directly to the international clients. And their performance on that front hasn’t been bad at all; they have already secured TetraPak’s account for the Middle East and North Africa region. One day they hope to reach a level where they will be giving out their own affiliations in other countries. Someone once said: “They say I dream too big. I say they think too small"
Taking the fight to the big boys On page 14, we narrate the interesting times in Pakistan’s digital ad industry through a case study on one of its leading players, Bramerz. The story of Bramerz is that of a business that has seen all the highs and lows of a business cycle and proba-
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
7
“The growth rate has reduced 3 to 4% because of the energy crisis, but the present government is committed to cover this downfall” Khurram Dastagir, Commerce Minister
QUOTE
BRIEFING
“The government is taking steps to strengthen the trade sector by giving priority to solve its core issues” Punjab Governor Malik Muhammad Rafique Rajwana
120%
was the margin by which the which the Current account deficit widened to more than $5.4b in July-Feb, as reported by the State Bank of Pakistan (SBP). Due to an increase in current account deficit, the exchange rate comes under pressure and affects the country’s external sector. It indicates that the country is a net borrower from the rest of the world and uses foreign funds to meet its domestic requirements.Trade deficit was $15.4b in the first eight months of 2016-17, up from 26.8pc a year ago. Rising imports contributed to an increase in deficit which increased 11.2pc, accompanied with a decline in exports that dropped 2pc over the same period. Current account deficit as a percentage of GDP was 2.6% in comparison 1.3% in the same period last year.
Rs 161b savings were achieved by Central Directorate of National Savings (CDNS) till last week of the third quarter of the current fiscal year, from July 1 to March 8, 2016-17.The target for the year 2016-17 was Rs228b, while the directorate managed to achieve Rs 218b for the previous fiscal year, a CDNS official Monday said. He said the CDNS had notified upward revision in the profit rates for various saving certificates to benefit its investors especially the widow and pensioners, which had been applicable from February 1, 2017. The official said that the profit rate of return for specialised savings schemes like Bahbood Savings Certificates and Pensioners’ Benefit Account had also been revised upwards and fixed at 9.36 pc to provide a safety net to specialised segments of the society.
BRIEFING
$7m would be paid by Pakistan as fine to Asian Development Bank (ADB) for failing to utilize loans worth $4.5b, media sources have reported.ADB had granted $6.4b to Pakistan as loans to finance various projects but the federal government has only utilized an amount worth $1.80b. ADB imposes commitment fee of 0.15pc on unutilized funds that will approximately equal $7m. ADB has cancelled loans worth $29.36m in the previous year over delay. Out of a total of $2.90b loan granted for the energy sector, only $400m has been utilized till date. ADB is already assisting Pakistan in 37 uplift projects and one sector reform program. ADB has expressed concern over inefficient utilisation of granted funds.
9
BRIEFING
will be spent by the government on the development of export sector over next three years under Strategic Trade Policy Framework (STPF) and to counter effects of global recession. Commerce Division on Monday said an incentive for technology up-gradation has been announced in shape of investment support of 20 pc and markup support of 50pc up to a maximum of Rs. 1m per annum per company for import of new plant and machinery.Prime Minister has also announced Trade Enhancement Package of Rs. 180b to restore competitiveness and boost exports.
“The country’s economic growth is now back on an upward trajectory, which has been duly acknowledged by international donors” Sindh Governor, Muhammad Zubair
QUOTE
Rs 20b
year-on-year (YoY) increase was recorded in Pakistan’s food and oil imports which reached $10.652b in the first eight months of the current fiscal year although crude and grain prices have fallen globally. The proportion of these products in the country’s total import bill in July-Feb was 32pc, straining the country’s balance of payments. According to Pakistan Bureau of Statistics (PBS), petroleum imports have increased 20.97pc year-on-year to $6.682bn in July-Feb. Imports of petroleum products went up 23.28pc to reach $4.193bn during the reviewed period. However, a decrease of 7.13pc was witnessed in import bill of petroleum crude. The import bill of natural gas liquefied hiked up 144pc while that of petroleum gas liquefied registered an increase of 45.38pc during the same period.The reduction in the oil import bill in July-Feb led to a sharp rise in import of petroleum products, highlighting that local refineries are operating under capacity.
18pc
loan agreement has been signed between Pakistan and Korea for constructing a state of the art multipurpose information technology park. The Secretary Economic Affairs Division (EAD), Tariq Mahmood Pasha and Executive Director of Korean Exim Bank, Younghoon Chang signed the loan document. The ceremony was witnessed by the Finance Minister Ishaq Dar, Minister for IT Anusha Rehman, and Korean Ambassador to Pakistan Dr Dong-gu Suh. The IT park would be constructed in the Chak Shahzad area of Islamabad at a cost of $88.38 million (Rs 9.2 billion), including a loan of $76.3 million from Korean Exim Bank under the Economic Development Cooperation Framework (EDCF) arrangement. It may be mentioned that EDCF arrangement worth $500m was signed with Korea in October 2015.
$76.3m
2.5pc
is the expected figure to be reached by Shariah compliant sector assets by 2018, as stated by Punjab Provincial Minister for Finance, Dr Ayesha Ghous Pasha. “Islamic finance is expected to take off in Pakistan in the coming years due to new regulations on Shariah-compliant banking, new industry supporting regulatory bodies, as well as the rising demand from foreign investors,” she said, adding that the country’s Islamic banking industry has been growing at over 30% per annum over the past five years, which is above the average global rate. The government is serious in maintaining the growth of Islamic banking in the country. Initiatives have been undertaken for the effective implementation of Islamic finance that includes the formation of task force to make amendments in the legal and regulatory framework, she mentioned.
year-on-year (YoY) fall in exports of textile and clothing to $1b was revealed by The Pakistan Bureau of Statistics (PBS) till February. It happened because of a fall in receipts from raw material and low value-added products such as cotton yarn and fabrics. The decrease in export receipts was clearly apparent in rupee terms. In the course of this month, value-added products registered an increase in terms of value and quantity.The export figures for knitwear increased 2pc, ready-made garments rose 5.3pc, for towels it decreased by 3.9pc and bed linen climbed up by 2.7pc for the month of February. The textile policy declared last year offers a 4pc rebate on the exports of ready-made garments on 10pc incremental increase over the preceding year, 2pc on home-textiles and 1pc on fabric. In the last fiscal year, the government paid out Rs 2.5b under this policy, which helped in some ways to improve exports of value-added textile products.
$17.6b 10
BRIEFING
“All available resources are being utilized for completing hydroelectric power projects, which will help benefit the industrial sector” Azad Jammu and Kashmir President Masood Khan
QUOTE
14.6pc
decline was recorded in the import of mobile phones on a month-on-month basis to $60.02m in Feb 2017 from $70.17m in January 2017 as per the data released by the Pakistan Bureau of Statistics (PBS). It is pertinent to mention here that State Bank of Pakistan (SBP) on February 24, 2017, had imposed 100 percent cash margin requirement to curb import of non-essential items.The overall import of mobile phones declined 7.61 pc to $459.37m during July – February 2016/2017 in comparison to $497.2m in the corresponding period of the last fiscal year.
worth of gas expansion schemes have been sanctioned by the government. Most of the gas schemes have been extended to the constituency areas of parliamentarians who share the ruling party’s political base. Of the 97 new gas schemes, only a minor of 20 schemes have been reserved for Khyber Pakhtunkhwa, Balochistan and Sindh — areas which have the largest share in terms of gas production while the remaining 77 new schemes recommended by PML’s MNAs will be launched in Punjab. Punjab, where most new gas schemes have been approved, contributes a mere 3 pc to the country’s combined gas production and consumes a significant chunk of 42pc. Sindh produces 64 pc of all domestically produced gas and consumes 46 pc. Likewise, Baluchistan contributes 17pc to gas production against a minor consumption of 2 pc. On the other hand, KP has an equitable share in production and consumption of about 10 pc and 9 pc respectively.
Rs 37b
higher are the domestic oil prices in comparison to those internationally as reported by media sources. The government has heavily taxed the petroleum products especially petrol and high-speed diesel in a struggle to reach its revenue targets. A report by Oil and Gas Regulatory Authority (OGRA) sent to the Economic Coordination Committee (ECC) reveals that during the fiscal year 2015-16, oil consumers paid the highest rates of general sales tax (GST) ( Rs 29.57/liter on diesel) along with Rs 6 in petroleum levy. On petrol the GST was Rs 15.22/ liter, Rs13.18/liter on kerosene oil and Rs12.21/liter on light diesel oil (LDO). Later, as the crude oil prices began to rise in the global markets, the government decreased taxes on petroleum products and absorbed some of the price increase shock to provide some relief to the consumers. The tax on diesel was reduced to Rs 19.39/ liter in the current fiscal year. Moreover, the GST on petrol was Rs 10.71 per/ liter, kerosene oil Rs 2.83 and LDO Rs4.64. Overall, Rs25b as GST on petroleum products and Rs10b as petroleum levy contribute to government revenues every month.
38%
Rs 24b
increase was recorded in inflation for the week ended on March 25th. According to the data released by Pakistan Bureau of Statistics (PBS), the Sensitive Price Indicator (SPI) for the week under review in the above mentioned group was recorded at 226.46 points against 223.36 points last week. During the week under review, average prices of 09 items registered decrease, while 13 items increased with the remaining 31 items’ prices unchanged. The items, which registered decrease in their prices during the week under review included pulse gram, garlic, wheat, wheat flour, gur, pulse mash, pulse masoor, pulse moong and red chilly powder. The items, which recorded increase in their average prices included tomatoes, eggs, chicken farm, potatoes, onions, mutton, rice basmati broken, cooked beef, LPG cylinder, firewood whole, sugar, vegetable ghee and bananas.
losses have been incurred by Pakistan Post in the last 6 years, according to an official document. PPOD had earned Rs 133.532m profits in 2005-2006, Rs 153.804m in 2006-7, Rs 128.798m in 2007-08 and Rs 404.199m in 2008-09. PPOD had started enduring deficits in FY 2009-10. The department had endured Rs 25,060.275m losses from 2009-10 to 201415.The expenditures during 200910 to 2014-15 were Rs 52,104.243m. The department had suffered Rs 145.890m losses in 2009-10, Rs 1,893.104m in 201011, Rs 4,258.540m in 2011-12, Rs 6,588.540m in 2013-14 and the department had endured Rs 6,331.066m deficits during financial year 2014-15.
1.19pc
BRIEFING
insight
14
Bramerz
The unique sTory of losing saTisfied cusTomers and Then fighTing Back With more and more people consuming their content via non-traditional media, the growth numbers for digital Ad spend have increased phenomenally. Despite a booming industry and its early mover advantage, Bramerz, arguably Pakistan’s best digital agency is astonishingly losing some of its most satisfied customers By: nida Jaery & farooq Baloch
media & markeTing
he digital ad spend of Pakistan is almost $15 to $20 million at present and it is expected to grow by at least 40 percent in 2018,” said Badar Khushnood, the Country Consultant for Twitter and one of the three CoFounders of Bramerz, a top-notch digital marketing agency operating out of Lahore. Bramerz has led the digital marketing scene in the country over much of the past decade. In fact, it won’t be wrong to say that growth of Bramerz is synonymous to the growth of digital media in the country. Bramerz, which has to its credit projects like Pakistan Super League, and Uber, and served multinational giants like Nestle, Unilever, Levi’s, Samsung, and PepsiCo, inspired a whole generation of digital marketing professionals and launch of many new players in the past few years. However, times seem to have changed now and competition intensified. With some of the large brands, especially multinational companies, willing to spend up to $3 million on digital campaigns, the relevant spend is expected to increase to 15 percent of the total media ad spend this year. Market estimates suggest it can reach up to 30 percent of the traditional ad spend by 2020. With the industry growing at this unprecedented rate, digital marketing agencies, like Bramerz who had first movers advantage in the arena and were set to tap this growing market, are feeling the pinch as traditional advertising agencies and media buying houses eat into their market. In other words, specialized digital marketing players are now faced with competition from traditional players, which are using their regional affiliations to steal away large multinational clients that were once catered by those who specialize in digital media -- and Bramerz seem to be worst hit. As the battle for a share in the rapidly growing digital space intensifies, Profit takes a look at how companies like Bramerz with their specialized knowledge of the field and early mover advantage consolidate themselves to prepare for the challenge ahead.
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The rise of Bramerz igital marketing has become a lucrative segment for advertisers over the last couple of years, thanks to the explosive growth in the number of broadband and social media users in the country. However, it was companies like Bramerz that started working on this market segment long before it could evolve into an important business segment. It started about a decade ago when digital market players came to Pakistan. At that time, brands were looking at the digital platform mainly as a tool for corporate social responsibility (CSR) and PR campaigns. It was the time when companies like
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Bramerz saw an opportunity. What started as an inspiration that three graduates namely, Badar Khushnood, Zeeshan Salim and Amer Sarfaraz discussed in their drawing rooms, quickly turned into a reality when in 2006 Bramerz in 2006 won its first contract from Nestle Pakistan. Nestle was looking for an agency with specialists certified by Google, a criteria not every company could meet which is why Bramerz got the contract – courtesy Sarfaraz who had received a certification in Google Adverts in 2007. Bramerz is a Google Certified Partner with its specialists bearing certification in Google Analytics, Google Apps and Google Adsense. In fact, Bramerz is one of the 42 Google Adsense partners in the world and the only in Pakistan to have this accreditation.
At the time Amer Sarfaraz was working for PIA as a sales representative in Lahore while simultaneously was working on Bramerz in his free time, sometimes even during his lunch breaks. Similarly Badar Khushnood was Google’s representative in Pakistan and was also a sleeping partner in Bramerz. To add to its accomplishments, the agency stood successful in establishing and maintaining the entire digital ecosystem of the inaugural edition of Pakistan Super League. Khushnood, termed this online coverage of PSL, Mission critical. “Though the lucrative cricket league was played in Dubai, digital experts at the Lahore office of Bramerz managed to provide ball by ball score update on the PSL website,” said Khushnood. The digital service provider was also involved in helping international companies like Ocean Five and Uber to establish their operations in Pakistan – a job made easier because of their background in the technology industry. Bramerz introduced several other online tools and services. Although their first product, a blogging platform by the domain name buzzvines.com, wasn’t very successful, other projects are some of the market favorites. The list includes Publishrr.com – a platform that provides tailor-made web content management systems for newspa-
“IN DIGITAL YOU DON'T HAVE TO WAIT FOR BRAND HEALTH TRACKING RESEARCHES TO SEE HOW WELL YOUR CAMPAIGNS ARE DOING. ONE CAN MEASURE INSTANTLY IF THERE IS POSITIVE ENGAGEMENT AND YOU ARE GENERATING ACTUAL BRAND ADVOCACY. THE MEASURE NOW IS NOT MASS REACH, IT IS ENGAGEMENT” Ahmed Nizami, CEO DHQ
“HONESTLY, SOME OF THE CLIENTS’ MENTALITY IS THAT WE ARE JUST A PART OF THE GLOBAL TEAM, ALL WE HAVE TO DO IS TO DO OUR WORK AND GO HOME. THEY DON’T KNOW MUCH ABOUT DIGITAL MARKETING. THEY JUST FEEL THERE’S NO POINT IN MAKING AN ISSUE” Amer Sarfraz, Co-founder Bramerz
pers, magazines, and TV and radio channels. It successfully launched inboxerz.com, an email marketing tool; clickclick.pk, an ad network for Pakistan; olround.me, a location-based loyalty service app that help users explore restaurants and retail stores nearby their locations; and fishry.com, an auto-manageable ecommerce solution. “We studied the market carefully and launched applications when people needed them the most,” said Khushnood. “We aim to be even more active in the coming years
as companies are now allotting special budgets for their digital development, which wasn’t the case when we started.” From a small-time freelance agency run by three people, Bramerz went from strength to strength to become a digital services giant, which now employs more than 100 people and has its talons spread across multiple sectors of the digital market. It provides all kinds of digital services: advertising, publishing, monetizing, content management, product marketing, servicing arms, B2B and B2C lead generation, and claims, “We are not only directing eyeballs to our clients’ digital podiums, we are also helping them sell.” The company booked $3 million in annual revenues last year and was growing at an impressive growth rate of 25 percent according to Khushnood. If numbers are any indication, the digital ad spend has seen exponential growth in the last couple of years. This growing demand for digital service providers meant more business for digital players. For example, a few years ago Bramerz initiated 3s Crowd, another digital marketing agency to cater to the demands they received from the competitors of their existing clients. “We work with clients like Nestle and Samsung. At the same time, their competitors like Wall’s and Huawei want us to provide them services,” Khushnood had told Profit in an interview last year explaining how growing demand for their services led them to form new subsidiaries. “To maintain confidentiality for each client, we have
MEDIA & MARKETING
launched another company.” The advent of new social media platforms have enhanced the scope for digital marketing. In other words, digital agencies have a lot more outlets to place the content of their clients on. Exact numbers are hard to find as one connection can be used by multiple users but as per official numbers, 50 million people have access to the internet in Pakistan with almost 40 million mobile broadband connections or smartphone users. More than 2 million people use Facebook, 3 million people use Twitter, and 1.5 million people use Instagram in Pakistan. However, just when things were looking good for Bramerz and the likes, the size of the pie grew too big to lure the traditional ad agencies and media buying houses, which used their regional affiliations and made it hard for digital only players to retain large clients. "Digital penetration and the surge in availability of cheaper smartphone made brands realize that they needed to move from corporate PR to creating brand advocacy on social media,” said Ahmed Nizami, CEO of Digital Headquarters (DHQ), one of the leading digital marketing agencies in Pakistan owned by Interflow Communications, which is an affiliate of Bates, an international advertising agency. Talking about recent changes in the digital marketing scene, Nizami said with growth in smartphone and social media penetration, digital agencies started gearing up to produce content for brand advocacy. “For example, if Nestle has twenty brands, each of them will have its own social media page and they [digital marketing agencies] creating content to get consumer engagement and create advocacy along with A standard
“MORE CASH FLOW IS EXPECTED FROM SMES IN THE YEARS TO COME. THE AUDIENCE IS GETTING CLOSER TO COMPANIES AS DIGITAL PENETRATION IS INCREASING IN THE COUNTRY Badar Khushnood, Co Founder Bramerz
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corporate page.” Nizami said digital started eating into the market share of traditional media buying houses some of the money spent on TV and print advertisement diverted to digital. As a result of the growth in digital ad spend, traditional media buying houses, which have affiliation with international advertising agencies used their regional partners (those based in Dubai, for example) to win the digital marketing contracts for the Pakistani subsidiaries of their multinational clients. PepsiCo and Cocacola, which were major clients of Bramerz went to traditional media buying houses. And it didn’t stop here. Bramerz also lost most of Nestle’s business. They also lost Samsung but later regained its creative work. In short, they lost some accounts partially and others completely. According to industry sources, their revenues are now one-tenth of what they were at their peak. “We haven’t lost most of our multinationals clients” Sarfaraz from Bramerz told Profit rubbishing street talk that they have suffered heavily. “We lost mainstream brands of Nestle, we are only left with two categories now,” he added.
Sarfaraz, however, acknowledged they lost Pepsi and Coke, adding when it comes to the business of media buying, the traditional agencies do influence their regional partners. Explaining, he said the actual call for awarding the advertising contract is local that is the decision should be taken in Pakistan. But the problem is that locals [Pakistani arms of MNCs] are so scared that they don’t really stand up. “Honestly, some of the clients mentality is that we are just a part of the global team, all we have to do is to do our work and go home. They don’t know much about digital marketing. They just feel there’s no point in making an issue,” Sarfaraz said. “For them, it’s the global company that decides,” he said. However in Nestle’s case he says. “I know for a fact that they [Nestle Pakistan] had pressure, but i think it wasn’t to that extent that they couldn’t stand up to it and refuse.” He further said in certain cases, Samsung for example, there is no choice and they have to do it. “There are some companies where they pressurize too much and don’t allow to work with the agency of their choice.unless the local affiliate totally
messes it up – but nobody knows the criteria for that.”
Bramerz fight back ith large clients lost to the local partners of international and regional advertising giants, Bramerz have started focusing on national companies because “their decisions are not taken in Dubai”. They recently won a contract from local broadband giant Pakistan Telecommunication Company and are tapping into small and medium-sized business, a huge market segment that is adopting digital. “More cash flow is expected from SMEs in the years to come,” Khushnood said adding, “The audience is getting closer to companies as digital penetration is increasing in the country.” However, Bramerz didn’t stop here. It first tried to get affiliation from international advertising agencies whose multinational clients have presence in Pakistan. But it turned out, all those agencies already had local media partners in Pakistan. Next, they reached to agencies with no partners in Pakistan, but that didn’t work either because they didn’t have clients in Pakistan. But for a company, that has remained on the forefront of digital advent, giving up wasn’t an option because they can’t afford to lose multinational clients. So they decided to take the battle to the competition’s home turf. They got in touch with the regional head offices and pitched directly to the principals of multinational clients for handling their digital media. With the kind of track record, it had, Bramerz was able to win a contract from Tetra Pak, not only its Pakistani subsidiary but also for the entire region.
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“THE DIGITAL AD SPEND IS CURRENTLY NOT EVEN 2 PERCENT OF THE TOTAL AD SPEND BUT IT IS EXPECTED TO IMPROVE TREMENDOUSLY IN THE COMING YEARS” Awais Akhtar, Senior Digital Marketer and Strategist at Mindshare
The challenge ahead t wasn’t just the expertise of Bramerz that helped them win a regional contract, the traditional media buying houses seem to have played a part. For example, they managed to bag some lucrative contract for digital marketing, but experts believe that they don’t seem to be doing well on that front and it will be challenging for them to deliver on the digital front. “Many agencies are still working with traditional mindset, in nontraditional media. What needs to be done in Pakistan is you need nontraditional thinking in nontraditional media,” Nizami of DHQ said. It is for this reason, DHQ is working as a separate digital marketing agency as opposed to being a digital wing of a traditional agencies, he said. “Creating consumer engagement consumers to attain Top of mind has become increasingly difficult and challenging for the brands now,” Nizami said. Referring to traditional agencies, he said they need to see if they could participate in content-led innovation and become part of the programs. “It is happening around the world, but in Pakistan what is happening on TV is being replicated in social media too. This is a mindset problem what advertisers need to realise Nizami says to understand digital, you need to understand the customer interacts with digital in a very different way than he interacts with conventional advertising.
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With the kind of growth digital media has seen in the last couple of years, content-led innovation, which leads to consumer engagement becomes even more important. “As digital penetration increases, digital disruption will come all over the country,” Nizami said. The market talk is traditional agencies are still working traditional thinking and can’t bring brand advocacy unless they change this mindset. Facebook is the biggest phenomenon in recent times. It curates content, Nizami
says. The biggest library in the world right now might be YouTube and there, too, people are creating their own content, he said. The giant players in the world of content, even biggest newspapers, are now coming on Facebook. “We need to catch them [audience] where they are,” Nizami says. In Pakistan, internet penetration is increasing as nearly one-fifth of its population is online and smartphones are also becoming available to more people. WiFi spots, smartphones, and apps are all increasing. This must be exciting times for advertisers dealing in digital media. However, experts also warn it will get harder in the future, because one person will be targeted by so many people and only those with best content will be able to bring engagement. “The biggest difference in conventional and Digital is that in the latter the communication is two way. You don't have to wait for brand health tracking researches to see how well your campaigns are doing. Results are instant. One can measure instantly if there is positive engagement and you are generating actual brand advocacy” Nizami says. “The measure now is not mass reach, it is engagement,” he adds.
MEDIA & MARKETING
opinion
?
LET IT LIVE OR LET IT DIE Daraz.pk is probably going to go out of business if Alibaba's Jack Ma does not buy it out. Will he?
By Farooq Tirmizi
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Cover Story_Layout 1 4/1/2017 9:46 PM Page 2
How much is Daraz.pk worth? Absolutely nothing!
umour has it that Alibaba wants to buy Daraz.pk from rocket Internet for $150 million (approx rs 1500 crores). If the transaction goes through, it would easily be the largest buyout of a Pakistani startup in history. This article, however, is not about the rumours. It is instead asking the much more interesting question: should Alibaba buy Daraz.pk? And if so, what should it pay? Before we delve into that, it is first important to understand Alibaba’s interests, intentions, and objectives when it comes to the Pakistani market. With respect to Alibaba’s interest in Pakistan, there are no two opinions about it: Alibaba executives have visited Pakistan, Jack ma has met with Pakistani government officials on the sidelines of the World Economic Forum in Davos, and there are public statements from the company and its celebrity chairman about being interested in investing in Pakistan.
MERGERS & ACQUISITIONS
It is also clear that Alibaba wants to get into the e-commerce space in Pakistan, as evidenced by the persistent rumour mill that Daraz.pk is an acquisition target. Of course, that makes sense. Daraz.pk is by far the largest e-commerce player in Pakistan and, at least on the surface, makes for an attractive acquisition target, both in terms of its market position as well as the quality of its personnel and technology. What is somewhat unclear is just how much Alibaba is willing to commit to Pakistan, specifically whether they are willing to commit the resources necessary to gain the dominant position in the country’s small, but rapidly growing e-commerce space. The winner-take-all nature of business on the internet suggests that if Alibaba is remotely serious about the Pakistani e-commerce market, it should either go big or go home: either invest what it takes to become the largest player in the market or not enter the market at all. It seems a safe assumption that Alibaba executives are smart enough to understand this and therefore are willing to make the necessary commitment to Pakistani e-commerce. This is where the decision tree gets tricky. Alibaba can realistically pursue one of the two main paths: it can either buy out Daraz.pk and thus inherit its leading market position, or it can build out a position from scratch, invest in its own infrastructure, and
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WHAT IS SOMEWHAT UNCLEAR IS JUST HOW MUCH ALIBABA IS WILLING TO COMMIT TO PAKISTAN, SPECIFICALLY WHETHER THEY ARE WILLING TO COMMIT THE RESOURCES NECESSARY TO GAIN THE DOMINANT POSITION IN THE COUNTRY’S SMALL, BUT RAPIDLY GROWING E-COMMERCE SPACE outcompete Daraz.pk. Which path is the right combination of easier, cheaper, and faster? My money is on the latter: Alibaba should forget buying out Daraz.pk and instead focus on building out its own platform and crush Daraz.pk on its way towards market dominance. Why? Because while it is certainly easier to just buy the number one player in the market you want to enter – especially when you are as well-capitalised a company as Alibaba – in this particular case, it will be significantly more expensive to do so and is not necessarily the fastest route to sustainable market share either. The problem, as far as Alibaba is concerned, is that Daraz.pk is still a relatively young company that has yet to have any major stumbles. That is why it is likely to ask for a high selling price and that is why the number rumoured to be under consideration as a selling price is in the $150 million range. Daraz.pk earns nowhere near that
number in revenue and is likely asking for a multiple of its revenues normally associated with some of the most promising startups. (Executives at the company did not accept an invitation by this author for an interview.) How much does Daraz.pk make in revenue? That is hard to ascertain since the company does not release financial information. It did, however, state that it made Rs1 billion during its Black Friday sale in November 2016. Blockbuster sales events such as these tend to make up anywhere between 20% and 25% of an e-commerce company’s annual revenues, so a ballpark estimate of Daraz.pk’s revenue would put them around Rs4-5 billion. If $150 million is indeed the selling price, that would imply that Daraz.pk is being sold at around 3 to 3.75 times its annual revenues. That is not surprising, given that it is a fast-growing ecommerce company and may well be a fair price.
It may be tempting for Alibaba to simply pay that money and get it over with. But it would be a mistake. It would be much cheaper to invest in building its own capacity, hire some of the best talent in the country, pump money into building up a world-class infrastructure to support large inventories, state-of-the-art logistics, and customer service. To put things in perspective, it cost approximately $45 million to set up Makro Habib, the retail chain that eventually merged with Metro Cash N’ Carry. And while Makro started a decade ago, it had to build up a much larger, much more expensive infrastructure since it was in the physical retail business. So what, you might ask? Daraz.pk is not a giant yet, but it has a substantial infrastructure of its own that Alibaba would be buying for that $150 million. True. But it is not as though Alibaba would not need to pump money into Daraz.pk to grow its
DARAZ.PK EARNS NOWHERE NEAR THE RUMOURED $150 MILLION ASKING PRICE IN REVENUE AND IS LIKELY ASKING FOR A MULTIPLE OF ITS REVENUES NORMALLY ASSOCIATED WITH SOME OF THE MOST PROMISING STARTUPS business. After all, even if Daraz.pk has achieved positive cash-flow (which is not clear at this point, given management’s reluctance to talk about financials), it would still need continuous investment in growing its business beyond the relatively small proportion of Pakistanis who use the website. As Flipkart and Snapdeal’s woes in India prove, customer acquisition in emerging economies only gets harder the more you grow. Why waste money on an acquisition premium when you could be spending that precious cash on building up the infrastructure you need for long-term customer acquisition? And then there is the example of Amazon in India, which offers a highly relevant parallel for Alibaba in Pakistan. Sachin and Binny Bansal both worked at Amazon and left in 2007 to start Flipkart,
MERGERS & ACQUISITIONS
no doubt assuming that they would one day get to sell their company to their former employer for a handsome profit. Amazon, however, did not go by their playbook, instead opting to enter the Indian market in a greenfield investment where they created Amazon India from scratch. Amazon was ruthlessly competitive, pouring $5 billion into its Indian subsidiary and went after Flipkart’s market share with a vengeance. In one year, it had effectively caught up with Flipkart. The Indian company manages to hold on to a market lead against its American competitor, but barely. In the meantime, Flipkart’s valuation has halved in less than a year and a half, going from over $11 billion to just over $5.5 billion. It is now considering buying eBay India to shore up its position in its home market against a competitor over which it had a 7-year head start. Think about this situation from Amazon’s position: instead of having to buy Flipkart for $11 billion, it instead invested
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$5 billion its own infrastructure that works seamlessly with its global standards (and thus no risk of merger integration issues) and has effectively achieved the same market share it would have had if it had chosen to buy out Flipkart instead. The parallels to the situation in Pak-
been watching the events in India unfold with alarm and hoping that Alibaba decides on a strategy in Pakistan different from that of Amazon in India. The experience in India, however, suggests that Alibaba would be better off forgoing an acquisition entirely.
AFTER ALL, EVEN IF DARAZ.PK HAS ACHIEVED POSITIVE CASH-FLOW (WHICH IS NOT CLEAR AT THIS POINT, GIVEN MANAGEMENT’S RELUCTANCE TO TALK ABOUT FINANCIALS), IT WOULD STILL NEED CONTINUOUS INVESTMENT IN GROWING ITS BUSINESS BEYOND THE RELATIVELY SMALL PROPORTION OF PAKISTANIS WHO USE THE WEBSITE istan are interesting. Like the Bansals, Rocket Internet’s ultimate objective in building Daraz.pk was to sell it to a global e-commerce giant. Like Flipkart, it has a dominant market position. And like Flipkart, it is vulnerable to a cash-rich foreign competitor swooping into the market and eating its market share for a lot less than it would take to acquire it. One suspects that Rocket Internet executives have
This then begs the question: if Alibaba is better off not paying $150 million for Daraz.pk, is Daraz.pk really worth that much? My contention is that it is not. Sachin and Binny Bansal have nowhere else to go and they will fight to the death to keep Flipkart alive, innovating and strategizing their way out of the bind that Amazon has put them in. Rocket Internet has no such loyalties to Daraz.pk. If Alibaba starts eating their lunch, they have no incentive to stay. They will likely cut their losses and go home, leaving behind in their wake another first for Pakistan’s nascent tech startup scene: an e-commerce carcass. NOTE: The views expressed here are those of the author and do not necessarily represent or reflect the views of the publication
MERGERS & ACQUISITIONS
By: Usman Hanif INSIGHT
The books market has been severely hit by rampant unabated piracy not to mention the growing market for digital copies. We spoke to the owner of one of the oldest bookshops in Pakistan to get his take on the matter. 27
ground plus two storey British era building once a hot destination for elites of the country now lies dilapidated and books are getting dusty on the ground floor as you take the steps upstairs the situation gets worse. You have to make your way through a spider's’ web to reach Zafar Hussain, the owner of the book shop which is older than Pakistan, sitting overwhelmed by feelings of helplessness passing his time with tea and pan who says piracy is the main culprit that ruined the historical book shop ‘Pioneer Book House’. Hussain’s grandfather Anayat Hussain, a member of the business community hailing from Mandsaur district of Madiha Pardesh established Pioneer Book House before partition of Pakistan in 1945 on M.A Jinnah Road opposite Dow Medical College. It was renowned for its law and other international publications. Famous personalities like the former Prime Minister, Zulfikar Ali Bhutto; former chief election commissioner, Fakhruddin G Ebrahim; Abdul Hafeez Pirzada, Khalid Ishaq Advocate; educationist, Anita Ghulam Ali, AK Brohi, Abrar al Hassan Advocate used to visit and buy books from here. Anayat Hussain started this shop after their contract ended with Faber and Castell as a serving and leveling instrument agency under which he had been running two branches namely Nobel Stationary in Karachi and Bombay Renown at Fort Road Bombay since it was compulsory under British Law to have at least two branches of any company in India. The shop has fallen prey to piracy so Anayat’s grandson and present owner Zafar Hussain has finally announced to sell the shop. “I will donate the books to make the souls of my elders happy after selling this shop as we can’t survive in Rs 500, Rs 1,000 or Rs1,200 sales per day,” he said talking to Profit while mixing sugar in tea at the nostalgic architecture of early 20th century. He can still remember trams running outside his shop at M.A Jinnah Road “when I was ten years of age, I joined my father at his shop,we used to commute on tram to reach here,” 52- year-old Hussain recalls. Pioneer was once the distributor of
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Government of Pakistan Publications and other 265 books, reports and journals publishished across the country. Zafar recalls how in 1980s and 1990s public made queues to get their hands on a copy of the import policy. Their quota was 60 copies which got sold out in just half an hour or 45 minutes, now he sells only 20 to
25 copies per year. Piracy is a product of the black economy and Pakistan is among those countries which are largely affected by it. At least 40 percent of Pakistan’s total regular economy, amounting to $7.5 trillion takes place in the parallel sector, said the then chairman of Central Board of Revenue
(CBR) M. Abdullah Yusuf in 2007 while talking to Pledge, a quarterly newsletter of Anti Counterfeit & Infringement Forum (ACIF). This is the information age and knowledge is very prized. Piracy discourages writers as a consequence we cannot hear from exports of different realms. It means indirectly piracy undermines the reader and the whole society, for instance we can find books of international writers in our markets but can’t find local writer’s books who can share his local experience thus in last two decades Pakistan hasn’t seen any remarkable writer. “One can gauge the influence of piracy that in last 70 years we haven’t been able to produce even a single book recognized on an international level,” says Amar Naseer member Editorial Board of Pledge. Due to this reason supply of quality books in the market remains low and on the other hand demand is increasing day by day. With a rapidly growing education sector, demand for books keeps constantly expanding. At present, the market value of book business in Pakistan is approximately more than Rs12 Billion, Chairperson of Anti Counterfeit and Infringement Forum and Managing Director Oxford University Press Ameena Saiyid said in an email. Despite positive growth rate in the book market, Pioneer is shutting down as almost all the textbooks are being pirated. According to Zafar,approximately 100,000 copies of ‘Principle of Marketing’ by Philip Kotler are sold every year, its original price is Rs 8,000 while one can find a pirated copy of this book for just Rs200 to Rs250. Also ‘Personnel: the management of People at Work’ by Dale S. Beach which originally costs Rs13,000, its pirated copy can be found in just Rs150. Pioneer used to sell 40 to 50 copies of the above mentioned
books but now they are able to sell only two books in a year, “one by the library and other would be by the father of the student who want to give his child a good book,” says Zafar. European Pharmacopoeia which costs Rs 220,000 is available for just Rs 17,000 which is a pirated copy. Furthermore, a pirated copy of British Pharmacopoeia can be found for just Rs 30,000 whereas its original price is Rs 238,000. USA Pharmacopoeia costs Rs300,000, whereas the pirated version sold in the market is procurable for just Rs40,000. The rampant spread of intellectual property infringement in Pakistan continues to harm the economy, lower investment, reduces employment prospects and opportunities, endangers consumer health and safety, decreases innovation, inventions and creativity, diminishes brand image and perceptions of Pakistan internationally, said Ameena Saiyid. She also added if this gets addressed through strong enforcement, Pak-
ANAYAT HUSSAIN STARTED THIS SHOP AFTER THEIR CONTRACT ENDED WITH FABER AND CASTELL AS A SERVING AND LEVELING INSTRUMENT AGENCY UNDER WHICH HE HAD BEEN RUNNING TWO BRANCHES NAMELY NOBEL STATIONARY IN KARACHI AND BOMBAY RENOWN AT FORT ROAD BOMBAY SINCE IT WAS COMPULSORY UNDER BRITISH LAW TO HAVE AT LEAST TWO BRANCHES OF ANY COMPANY IN INDIA
istan would then be able to benchmark itself against national and international trading partners. Due to rampant piracy, Pioneer is hardly able to cover its expenses, said Zafar Hussain telling that rent of the store was five rupees initially, then in 1981 it increased to Rs130 and currently they are paying Rs 15,000. The building has been declared a protected site by Archeology Department Sindh as it was built before 1900's. At the time when this bookshop was established, its neighbour was a renowned tailor Mughal Anayat-Ullah where elites came to get their dresses stitched. The Government declared it forsaken property and in 1973 Sultan Ahmed purchased it at an auction and renamed it Sami Chamber after his son Samiullah who is the current owner of this building, before it was named Avon. Ram Jethmalani who was leader of Bharatiya Janata Party (BJP) and former Law Minister of India had taken upper floor of the building for his company SM Mallaney Company, interestingly K-Electric is still sending a utility bill on the name of his company. Pioneer Book House has remained popular for decades for books related to Law, Income Tax, Constitution of foreign countries and various official gazettes. Likewise Lawyers, Researchers and Tax Advisers were always among its main clientele. Most of the above mentioned publications are uploaded by their publishers free of
INSIGHT
cost, which has also contributed in creating a bankruptcy like situation for Pioneer. Internet piracy has changed the whole situation and the book market is badly struggling because of it. Majority of books published globally by any press has a digital pirated copy at any given moment, says Ameena Saiyid. Since 1980 the shop has been robbed countless times and these burglaries have not inflicted damage like piracy has done. Piracy affects the national treasury to the tune of billion of rupees in taxes and duties.. Book piracy deprives writers of their royalties, publishers of legitimate income and the government of tax revenue. According to an estimate, the government lost Rs25 billion to piracy during 2012, says Ameena Saiyid. In fact the aforementioned amount is equal to the budget proposal made by Higher Education Commission (HEC) in 2016-17 to achieve its vision 2025. Piracy prevails in market in different shapes for instance this practice is more common in the name of ‘Intekhab’ (selection of literary work) in the country, “sometimes, in the guise of ‘Intekhab’ 10 to 15 of my poems are printed, without my consent. This bad practice affects the sale of original books,” Amjad Islam Amjad was quoted by Pledge as saying. Markets are flooded with counterfeit books of popular writers i.e. Mumtaz Mufti, Parveen Shakir, Ahmed Faraz, Munir Niazi and Faiz Ahmed Faiz. Even though one can find various pirated editions of Manto’s books ,his heirs don’t receive any royalties. Iftikhar Arif says when he sent a royalty cheque to Mrs Manto called Safia Aapa for using ‘Manto Rama’ for a telecast she wondered what the money was for as it was very first time when somebody paid her the royalty. After a writer dies, his heirs can’t stake their claim as rightful copyright holders as pirates offer the argument that if the writer had any objection he would have filed a lawsuit against them. n addition, most authors complain that publishers make an agreement “all rights for all time” through which the publisher keeps on earning perpetually, while after a certain period they stop paying royalty to authors saying that their books aren’t selling anymore. Author Khurram Sohail who has written several books and dealt with various
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publishers terms this act “another kind of piracy introduced by publishers in Pakistan.” He says publishers make a deal for one edition which normally comprises of 500 books, however, the first edition never finishes according to the publisher after which they inform the author that his book is not selling. However upon checking through other sources he came to know that the publisher had published 3500 books and was making a profit on it without informing the writer. Infringement of copyright is an arrestable offence under S.66 of Copyright Ordinance 1962 and under sections 420,468 and 471 of the Pakistan Penal Code with imprisonment, fine or both as punishment. But the law exists on paper and due to lax enforcement of the law pirates are encouraged to continue this unscrupulous activity. Zafar Husain explauns that in light of his ancestors experience that “Goray Sab k baad Kala Saab aya tu uss nei poochna shuru kia k mera kiya” (when the white master {the Britishers} left and the black master {native} came into power they started asking what’s in it for me). Due to delayed justice system authors don’t resort to litigation against pirates “au-
“ACCORDING TO AN ESTIMATE, THE GOVERNMENT LOST RS25 BILLION TO PIRACY DURING 2012, IN FACT THE AFOREMENTIONED AMOUNT IS EQUAL TO THE BUDGET PROPOSAL MADE BY HIGHER EDUCATION COMMISSION (HEC) IN 2016-17 TO ACHIEVE ITS VISION 2025” Ameena Saiyid, Chairperson of Anti Counterfeit and Infringement Forum and Managing Director Oxford University Press
thor may die until a court decision comes in an infringement case”said Khurram Sohail. Here people write only to satisfy themselves, it’s not necessary that renowned authors whom we have grown reading must
have earned from their writings, he added. The federal and provincial governments should show political will to strengthen the IP regime, minimum punishment should be introduced in respective laws instead of leaving it to the discretion of magistrates who let off the infringers with low fines and hence no precedent is created. IP legislation should be reviewed and strengthened to comply with global best practices, said Ameena Saiyid. IPR tribunals should be made functional in all major cities,currently one tribunal is fully functional in Lahore and legal prosecution should be done effectively. Intellectual Property violations should be prevented through civil, administrative and criminal procedures, specialized departments should be created in the provincial police to deal specifically with IPR violations. This has been done at the FIA level to great effect, she added. Due to lack of awareness about Intellectual Property Rights, many buyers don’t know whether they are buying original or pirated books. Therefore it becomes vital to increase familiarity about IPR. Market experts suggest that a campaign of seminars, distribution of literature, awareness via electronic, print and social media should be launched by the government down to district level to highlight the loss and damage being caused by piracy. Although some buyers who are aware of piracy agree with action against it, they say if they stop buying pirated books what will they do as genuine books’ are priced way out of their reach. Competition can be the solution for this situation so that buy and seller should have win/win situation. After writing a book and investing money to get it published, authors either end up being cheated by their publisher or if they become popular, they fall prey to
piracy. Piracy is a worldwide phenomena, but in the subcontinent it has become a menace. India and China are on priority watch list of United States of America while Pakistan is on watch list due to violation of Intellectual Property Rights (IPR). Iftikhar Arif had given his first books “Mohray Doo Neem” publishing rights to Education Foundation in order to avoid piracy. Ironically he found pirated versions of his book in Indian Markets when he visited there. He observed that popular books of Mushtaq Yousufi, Ahmed Faraz, Mumtaz Mufti and Amjad Islam Amjad have fallen prey to piracy in the Indian market. Likewise, we find pirated books of Krishan Chander, Munshi Premchand, Rajinder Singh Bedi and other Indian writers in Pakistan, since both countries don’t have any agreement to protect their authors, respectively. The piracy problem can be improved by reviving the National Book Foundation (NBF) which was established in the mid 1970s. It used to procure rights from the authors and provide books to readers on subsidized rates, in this way both the reader and author reaped the benefits. This way the writer received his due share,the reader would purchase the book at cheap cost, and the government would pay the difference to the writer. “I remember NBF used to provide books related to field of Medical, Engineer, Commerce and Arts sold in just Rs150 which otherwise may have coasted Rs1500 to students,” recalls Zafar Hussain from their good times. Although competition in the local market can curb piracy, no international publisher is ready to come in Pakistan because of it. In fact, except Oxford University Press, we don’t have a representative of any other international publisher in Pakistan. If more publishers come on-board, this will lower the prices and increase competitiveness. As an outcome of this, when genuine books become available at a lower cost, buyers will then not opt for pirated ver-
“I WILL DONATE THE BOOKS TO MAKE THE SOULS OF MY ELDERS HAPPY AFTER SELLING THIS SHOP AS WE CAN’T SURVIVE ON RS 500, RS 1,000 OR RS1,200 SALES PER DAY” Zafar Hussain, owner Pioneer Bookshop
sions. Paperback editions of books is also a good way to cater to lower-end buyers of a book. Some other booksellers like Liberty Books, Paramount and publishers like Oxford University Press (OUP) have come up with a solution of their own to this huge challenge.Paramount and OUP started focussing on the textbook market, on the other hand Liberty focuses on fiction and international magazines. Director, Strategy and Business Development, Liberty Books Sameer Hussain says they try to engage the reader to actual stuff by providing discounts, promotions, price control “When a reader will get good quality and rather low cost for the original book why would he or she go to pirated version.” Pioneer could have saved itself by some innovative measures however Zafar says it is impossible to survive in today's situation without unethical marketing gimmicks “If I had the money I could have revived my book centre but still it wouldn’t be possible without compromising my ethics and principles which I can’t.” He says those who have survived have resorted to unethical tactics for example bribing school administrations through gifts, tours and foreign trips like Pharma industry does with Doctors. Piracy has serious implications on the continuing development of any field, not only does it cause publishers like Pioneer Book House to shut down but it also discourages speakers and teachers who are interested in proper attribution and in making money via copyright protection from writing books in the first place. The result is that what they have learned in the course of their careers is lost to the rest of us.
INSIGHT
interview
By: Syeda Masooma
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T
he capacity to learn is a gift; the ability to learn is a skill; the willingness to learn is a choice. – Brian Herbert.
In Pakistan, we usually hear sentiments that will translate herbert’s quote into: The capacity to learn is the amount of money you have, the ability to learn is dependent on your teachers and the willingness to learn stems out of the potential job prospects. With such an environment it becomes difficult to find the problem, get to the root of it and propose remedies to these identified issues. Because of this confusion, it means that the status quo continues along with all its issues. In modern times, education has morphed into a commoditized business than being a means to gaining enlightenment or learning. Amidst such persistent mayhem, Profit reached out to a student, a teacher, a PhD scholar, a former heC official and a Vice Chancellor of one of the leading educational institutions in Pakistan. All this is one man, Dr. Sohail Naqvi.
sity of Management Sciences (LUMS) as its fourth Vice Chancellor. While at University of New Mexico, Dr. Naqvi introduced innovation in methods of diffractive optics and added a patent to his credits. During his 8-year tenure as executive Director of the higher education Commission (heC) he helped develop and implement a comprehensive strategy for the revival of the university education sector of Pakistan. he also worked with high-tech startups and oversaw the development and implementation of several heC programs worth over Rs 15 billion. he was also member of the human Resource Development at Ministry of Science and Technology, IT&T Division, Pakistan. The
OF THE E T A T S RRENT OT ALWAYS U C E H T IN IGHT N H CONDIM T I Y M ECONO SIBLE FOR SUC UDENTS BE POS IST, SO THE ST ED TO PAR O EX TIONS T LSO BEING PRE ING SUCH ARE A AD IN CREAT D OF A E E L T S E N H I TAKE T VIRONMENTS THE JOBS EN FROM G N I N I A REFR
Dr. Naqvi received his early education from Cadet College hasan Abdal and earned his BSc, MSc and PhD degrees (all in electrical engineering) from Purdue University, USA. he served as an Assistant and Associate Professor of electrical engineering at the University of New Mexico, Albuquerque, USA, before returning to Pakistan in 1995 to join the Faculty of electronics at the Ghulam Ishaq Khan Institute of Technology (GIKI). he remained at GIKI until end of 1999 as Professor and Dean. he joined the higher education Commission (heC) in 2002 and became its executive Director in 2004. In July 2013, Dr. Naqvi joined Lahore Univer-
the capacity for the country towards objectives aligned with the national objectives. University is a multidisciplinary institute by definition and its responsibilities stem accordingly.” his current position as the VC includes academics, teaching faculty, and research among others. “higher education at the level of the university goes to the core foundation of pushing the boundaries, disseminating ideas and setting new boundaries. It’s also responsible for services that encompass all its dealings with its stakeholders and community,
unifying theme throughout his career has been higher education. All this experience gave him rich insight and knowledge of problems plaguing the higher education sector of the country and allowed him to get a deeper understanding of their micro and macroeconomic implications. however, he continues to maintain a positive outlook for the students and people of Pakistan and stays true to the potential of the country instead of its pitfalls. his transition from a student to a faculty member and then from a management position at an international institution to a Pakistani one reinforced his belief in the role of universities in the development of any economy. In his own words, “Universities and higher education are responsible for building
industry, government, policy makers and all other aspects that allow you to excel in each of these domains.” he considers the choosing and development of students from their admission to their graduation a responsibility of the university. “The core role in this is of the faculty. The support system, the environment, the landscape to produce productive members of the society lies with the faculty and then there is also research that ventures into new areas.” In an educational institution you are always striving to improve and that can only happen if every segment of the university is consolidating towards it. he said that the decisions in the university are not made at a single point, but are rather a combined decision of several entities. Mentioning his own experience at
EDUCATION
LUMS, he said the measures that were intended to bring LUMS at par with international institutions, starting with the elimination of their own admission test in favor of the internationally recognized Scholastic Aptitude Tests (SATs). He accentuates that there are lots of brilliant minds in the country that are not able to receive quality education due to financial limitations. To cater to this, LUMS – being a non-profit organization, has carried out extensive campaigning to inform the students that money should not be a problem if they are determined in exercising their skills to learn more. He informed that there are numerous merit and need-based scholarships being offered to students. “At the end of the day, good things cost money, and we are proud of the fact that we lose money.” He says it with delight in his voice that LUMS is home to numerous students belonging to diversified backgrounds, but with one unifying factor that is their ability and academic performance. While this seems to be a positive move in a country where education has become a business, it still begs the question of where the financing needs of LUMS are fulfilled. To answer this question, Dr. Naqvi said, “That’s the million-dollar question. It comes from the support of the community which includes everybody out there, individuals, corporations, associations, philanthropists and everyone.” He said that there are two sides to the story, capital expenditure and operational expenditure, from infrastructure to all capital proceedings are entirely financed through these contributions. “On the operational side we try to keep the burden minimum on the tuition costs.” He is sure that these inflows will continue. Quoting the example of MIT and Stanford universities, he said, “All the top univer-
sities of the world are operating this way. The only difference is that the governments also play their role in this process and that is extremely important.” However, he does not dismiss the importance of balancing the books. “We wish to do so much more. We wish to have more international speakers, more workshops and so many other things. But at the end of the day you need to balance your books and budget.” Despite being a widely recognized business institution LUMS failed to make part of the HEC rankings announced in February 2016. In response to this, Dr. Naqvi said, “As per HEC rankings 50 per cent of the student have to be studying business for a university to be classified as a business university. In the case of LUMS, less than 30 per cent of the
THERE ARE TWO SIDES TO THE STORY, CAPITAL EXPENDITURE AND OPERATIONAL EXPENDITURE, FROM INFRASTRUCTURE TO ALL CAPITAL PROCEEDINGS ARE ENTIRELY FINANCED THROUGH THESE CONTRIBUTIONS. “ON THE OPERATIONAL SIDE WE TRY TO KEEP THE BURDEN MINIMUM ON THE TUITION COSTS.” HE IS SURE THAT THESE INFLOWS WILL CONTINUE 34
total student body studies business and therefore it is not classified as a business university.” During his time in HEC, he attempted to rectify this issue to a certain extent and achieved some measure of success. “I am talking about the decade long efforts whereby HEC did issue many research scholarships.” Considering that he has had experience in HEC himself, he continued to elaborate the government’s role and its fulfillment. “I am not saying that the government is not doing anything, they are not doing as much they should be.” Speaking about the government, there does seem a non-ending problem routine where education is consistently neglected or at least seems to be low on the priority list. The question is raised how educational reform at the university level can produce any change in the higher echelons of government level. To this the vice chancellor said, “The minimum education requirement for any government official is a bachelor’s degree. So, when you produce change at that level, the whole country automatically benefits from it. Everyone reaching that position would have that much higher education and by making the educational environment better, you are definitely inculcating change at the higher
levels too.” To explain the continued failure of any visible change then, he said that it is not only the education that matters when it comes to the governance and policy making of an economy. “When there is no accountability and the way the system works also contributes to all the problems we see in the education system of our country.” He laments that when almost half of the school going age children are out of school, the problems are inevitable. So the remedial action starts from there but the improvements in the higher education do not go waste even if levels of the government are to be considered. He is also optimistic and happy about the changing technical landscape of Pakistan. “It is true that a few years ago the demand of certain skillsets was a lot more than their availability but now people are becoming more aware, students are being trained and skilled workforce is being produced in the country.” His position as VC in LUMS also brings him across situations where the graduates of LUMS are perceived as unwilling to accept certain job offers or do tasks because they believe they are from a better university and the task at hand is below them. “We accept this criticism and are working with our students and faculty on this issue. However, there needs to be some understanding that the students here are definitely among the most intelligent lot of the country and they deserve a certain environment to fully utilize their skills.” In the current state of the economy it might not always be possible for such conditions to exist, so the students are also being prepared to take the lead in creating such environments instead of refraining from the jobs. An inherent lack of entrepreneurship in the country, despite the presence of such excellent business and economics educational institutes in the country is indeed baffling. To explain why it is so, Dr. Naqvi responded with his signature positive outlook, “Even though the students of LUMS and such institutions are not seen to enter entrepreneurship immediately after their graduation, they do have this ability and calling to enter into their own businesses sometime in the future. To quote one instance, the class of 1990, 27 out of 30 students are heading their own businesses now. So the motivation is there but sometimes it takes time to turn into tangible
“UNIVERSITIES AND HIGHER EDUCATION ARE RESPONSIBLE FOR BUILDING THE CAPACITY FOR THE COUNTRY TOWARDS OBJECTIVES ALIGNED WITH THE NATIONAL OBJECTIVES. UNIVERSITY IS A MULTIDISCIPLINARY INSTITUTE BY DEFINITION AND ITS RESPONSIBILITIES STEM ACCORDINGLY” Dr. Sohail Naqvi
output.” Entrepreneurship is not the only thing deficient in the country, the number of PhD scholars is very low too. As far as LUMS is concerned, the vice chancellor said, “I don’t have the exact statistics but a large proportion of sciences students go for their doctorates. The students of humanities show a mixed trend while business students often stick to their professional lives.” However, several PhD scholars who finish their degrees from LUMS return as members teaching faculty in the university. At this point, Dr. Naqvi also mentioned his time in HEC and said that the reforms and research funding scholarships in that time led to a notable increase in the number of students pursuing PhDs and from 2008 to 2012, the number of PhDs in Pakistan was fourth highest in the world. He also shared the plan of LUMS to add another school in its family, for Education. Dr. Naqvi said, “It is not going to be a teacher training school. Its focus will be on the level of policy making and management of education.” So far, the school of humanities (MAGSHSS) has the largest number of students, closely followed by the sciences (SBASSE), then the business school (SDSB) and in last is the law school (SAHSOL). “Our law school is young so it has a smaller number of students as of now.” Not only is he proud of his work and remains hopeful for all students across the
country. He feels privileged for being a teacher and member of management of such a prestigious institution. Rubbing away all notions about changes in student-teacher relationships, he stressed that the integrity between students and teachers is as pure as it was decades ago, irrespective of whatever people may perceive. “Some of my students are now working right here in LUMS. And every time I see them or meet them, it is just like parents meeting their children. The beauty and respect in this relationship has always remained intact.” He said that you can ask any student and they will tell you of the impact his or her teachers have had in their lives. To conclude his opinion with regards to all the complaints about the flaws in the education system, he refuses to put the blame on any one segment of society. “We as a society are all responsible. It’s the entire infrastructure, the laws, and the accountability mechanisms that need to be improved. Provision of the support system and conducive environment to each and all in the society is essential if the education sector of Pakistan is to grow and its benefits are to be reaped.” He never let go of his faith in the students and teachers, as well as those at the helm of affairs. He maintained that it is everyone’s responsibility and all are to be blamed for the pitfalls in the education system and everybody needs to play their part for its betterment.
EDUCATION
profile
After failing to find an appropriate place to enjoy tea Schanilla Awan along with her partners decided to open a Dhaba where everyone, especially women and families, could enjoy tea and snacks By Aisha Arshad
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ust as he finished an interview at Chai Shai, a teashop on the main Sea View Road, Mustafa Kamal encountered a group of young boys, a couple with their toddler, and two middle aged women, all of whom have been eagerly waiting for the ex mayor for a photograph and chat. Kamal stopped to greet and submerged in the crowd that had come to merely have a cup of tea at the place. Such encounters – where the general public meets businessmen, celebrities, politicians and other elites – are becoming more common these days because of places like Chai Shai and Chai Wala that are essentially roadside cafes (dhabas) have opened in the upscale neighborhoods of Clifton and Defence over the past couple of years. Previously associated with the members of working class, dhaba culture has now become a trend among Karachiites; it is symbolic to at at least have a selfie in front of the truck art or filmy graffiti adorning the walls of these cafes. They have become hot spots for the likes of Mustafa Kamal who have largely remained out of public access. Today, the trendiness of these dhabas and the casual ambiance they provide is something that celebrities, politicians, and businessmen enjoy equally as a common people – and this is what Schanilla Awan, one of the four partners at Chai Shai, says brings famous names to the tea houses. “We see actors, cricketers, and politicians coming in here to get rid of the protocol they always have. People go to them to take pictures and talk to them, but usually nobody bothers them and this is what celebrities enjoy the most,’’ says Awan. The list of renowned names who have visited her dhaba, includes – but is not limited to – politicians Zulfiqar
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Mirza, Fehmida Mirza, Asad Umer, businessmen Salman Iqbal, owner of ARY network, Sadruddin Hashwani, owner of Hashoo Group, and sportsmen like Shahid Khan Afridi. After Karachi operations’ fruitful results last Ramadan, Karachiites found a new place for Sehri (pre-dawn meal) namely Chai Shai, that offered them a combination of cheese paratha and a hot cup of cardamom tea to enjoy in open air with their family. The parathas did not end on cheese, tea didn’t finish on cardamom and the dhaba businesses certainly did not close down on chaand raat. The love for chai dhaba continued to flourish in the hearts of Karachiites and so did the business, which started among friends to eventually grow in the heart of Karachi itself. Awan recalls the days when she used to go for tea at night with her friends and the females had to sit in the car as the place was ‘inappropriate’ for them. ‘’One
PREVIOUSLY ASSOCIATED WITH THE MEMBERS OF WORKING CLASS, DHABA CULTURE HAS NOW BECOME A TREND AMONG KARACHIITES; IT IS SYMBOLIC TO AT AT LEAST HAVE A SELFIE IN FRONT OF THE TRUCK ART OR FILMY GRAFFITI ADORNING THE WALLS OF THESE CAFES
“WE SEE ACTORS, CRICKETERS, AND POLITICIANS COMING IN HERE TO GET RID OF THE PROTOCOL THEY ALWAYS HAVE. PEOPLE GO TO THEM TO TAKE PICTURES AND TALK TO THEM, BUT USUALLY NOBODY BOTHERS THEM AND THIS IS WHAT CELEBRITIES ENJOY THE MOST’’ day we thought that there should be a place where families and girls can also come in to enjoy a cup of tea. The next day we started looking for places; we didn’t have a feasibility plan or anything, we just went out for it,’’ Awan laughs while telling the ‘inspiration’ behind the idea that transformed into a functional dhabba some ten days before Ramadan last year. This worked out well for the group and Chai Shai along with other similar dhabas started receiving female customers in a large number –shifting traditional customer base of the tea houses. “We usually come here in the
FOOD
‘’ONE DAY WE THOUGHT THAT THERE SHOULD BE A PLACE WHERE FAMILIES AND GIRLS CAN ALSO COME IN TO ENJOY A CUP OF TEA. THE NEXT DAY WE STARTED LOOKING FOR PLACES; WE DIDN’T HAVE A FEASIBILITY PLAN OR ANYTHING, WE JUST WENT OUT FOR IT’’ Schanilla Awan, one of the four partners at Chai Shai
evening to have a talk over a cup of tea. Although there are other cafes and restaurants, but females do not have many openair options, and these places provide us with that,’’ said Nazish Khan who was there with her female friends – one of the many girls-only groups that these dhabas have welcomed. Initially, Chai Wala and Chai Shai were the only two that wanted to take the tea home. However, as more people started ‘checking-in’ on Facebook at these places, others such as Lollywood Café, Chai Master and Café Clifton also jumped in to serve the pizza paratha, Nutella paratha, chocolate chai, and Kashmiri chai with their own unique tinge. Today,
on Chota Bukhari only – the birthplace of Chai Shai and Chai Wala’s – seven dhabas are functional and many others are serving the traditional cuisine all across the city including two in Gulshan e Iqbal, one in North Nazimabad and another at Tariq Road. Chai Shai, that Awan says clicked unexpectedly, also expanded from one outlet to three in South of the city and introduced full-fledged variety in their chai paratha menu in a year due to the overwhelming response. Awan and co. soon plan to go to the ‘other part of the city’, and introduce breakfast menu at the sea view outlet. The rich and famous, however, are
AS MANY AS 100 PEOPLE COME TO CHAI SHAI EVERY DAY, AND ACCORDING TO AWAN ON SPECIAL DAYS LIKE RAMADAN, WORLD CUP MATCHES, AND PUBLIC HOLIDAYS THE TURNOVER IS HIGHER AND IT’S DIFFICULT TO ACCOMMODATE SO MANY PEOPLE AT ONCE; HOWEVER THE CUSTOMERS DO NOT MIND WAITING FOR HOURS TO HAVE THEIR CHAI-PARATHA MEAL 38
not the only visitors at the chai dhaba. Muhammad Faizan, manager of Chai Shai sea view outlet thinks their brand name and corniche location attracts customers from all over Karachi. ‘’Since it’s the beach, we see all kinds of people coming in everyday. However, it is families mostly who like to have a reasonable outing at sea view.’’ Awan also endorses the statement when she accounts that ‘pocket friendly’ menu was another thing that she and her friends wanted to introduce. Although these fancier dhabas are pricier than a conventional small one - tea at a regular dhaba goes for Rs 25- Rs 40 max while it goes for Rs 80 - Rs 100 at a place like Chai Shai for example. The premium is justified by the ambience and environment these new places provide and customers are more than willing to pay it. Soothing fragrance of tea, an unnoticed yet noisy bustle, and comfort food – paratha – served hot in changair (traditional plates) well defines the scene of these open air tea stalls. Faizan says that as many as 100 people come to his outlet every day, and according to Awan on special days like Ramadan, world cup matches, and public holidays the turnover
is higher and it’s difficult to accommodate so many people at once; however the customers do not mind waiting for hours to have their chai-paratha meal. The claim becomes valid upon visiting the ‘tea stalls’ after 10 at night. Seats filled to the brim, waiters rapidly serving orders, families, friends and co workers engulfed in chit chat over hot tea and paratha prove Karachiites’ love for these dhabas. ‘’I belong to Karachi; its sea and sunset is the best combination a Karachiite can ask for, I am definitely visiting
THE LOVE FOR CHAI DHABA CONTINUED TO FLOURISH IN THE HEARTS OF KARACHIITES AND SO DID THE BUSINESS, WHICH STARTED AMONG FRIENDS TO EVENTUALLY GROW IN THE HEART OF KARACHI ITSELF again for the sake of tea and sea,’’ Kamal – who was there for the first time – said while standing among his fans who’re now used to of finding Kamal and the likes at chai dhabas. Whether it’s a place for females to peacefully hangout, families who want pocket friendly outings, business tycoons
who want simple pleasures of life, or politicians who like to mingle among the common masses without security protocol, these dhabas have changed the portrayal of how chai dhabas looked like a couple of years ago and welcomed customers from all walks of life making ‘Mehmood o Ayaaz’ sit in the same row.
FOOD
StrAtEgy
By Georey James Open-plan offices (large open spaces, shared work areas, and few private offices) are all the rage. In fact, approximately 70 percent of all offices now have an open floor plan. If you're thinking about making the leap, though, you
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They decrease productivity
Contrary to popular belief, open offices don't increase collaboration or make people more productive. An Exeter University study showed they create a 32 percent drop in "workers' well-being" and 15 percent reduction in productivity.
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might want to think again, because despite their popularity, open-plan offices create huge problems. And if you're stuck in an open-plan office, you might consider finding more traditional digs, because, well, here's the straight skinny:
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They make employees miserable A study of 10,000 workers funded by office furniture giant Steelcase revealed that "95 percent said working privately was important to them, but only 41 percent said they could do so, and 31 percent had to leave the office to get work completed."
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They create timeconsuming distractions Office workers lose an average of 86 minutes per day due to distractions associated with open-plan offices. As a result, many employees are "unmotivated, unproductive, and overly stressed," according to the study funded by Steelcase.
They result in more sick days Not surprisingly, employees in open-plan offices take more sick days. According to The New Yorker, companies with open-plan offices can expect employees to take a whopping 62 percent more sick leave.
They create vast political turmoil. In open-plan environments, there are always a handful of private offices for the bigwigs. Because everyone hates the open plan, the struggle over who gets a "real office" is cutthroat, creating unnecessary bad blood and wounded egos.
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They make employees sick A study at Queensland University of Technology's Institute of Health and Biomedical Innovation found that working in environments without offices "caus[es] high levels of stress, conflict, high blood pressure, and a high staff turnover."
They communicate a lack of trust. People aren't stupid. They know that behind the hip-sounding bizblab about "collaborative work areas" lies the perennial desire of the paranoid, insecure micro-manager to peer over every worker's shoulder at a moment's notice.
They blunt your highlypaid brainpower According to one study, "senior engineers, bankers, and people working in financial services...found the open-plan environment challenging, particularly when focusing on complex tasks like analyzing figures or working on documents."
They cost MORE than private oďŹƒces Here's the real kicker. As I pointed out in a recent post on LinkedIn, open-plan offices are so incredibly destructive to productivity that they're a net huge loss, even in areas where office space is pricey.
MANAGEMENT
TALKING HEADS
“The first phase is basically a financing package for energy and infrastructure projects. There is no economic corridor in this CPEC. In that greater vision of what can be CPEC, these will form parts of that. But as of right now, we have not started working on what truly would be an economic corridor” Asad Umar MNA
“The point is that we are working hard trying to pull the wind tariff down, but what about coal and hydro. The irony in our country is that wind is bad at 8 cents, and coal is good at 8-plus cents. In coal, you have not accounted for environmental cost and the real logistics cost” Kashif Mateen Ansari CEO Sachal Energy Development (Pvt) Limited
“The negative perceptions about Chinese products have changed over the years and the average buyer is looking to save electricity and the brand that delivers this benefit will be the quickest to disappear off the shelf” Zeeshan Ali Khan Media Manager, Orient Home Appliances
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Dubai based architects and interior designing team of Rais Chohan and Mubashir Khamisa believe that their high quality and durable new furniture line is fit for export but there isn’t enough government support to make it happen
By Arshad Hussain
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P
akistan is far behind in exports of furniture compared with our neighbouring countries like China, india, nepal, Bangladesh and iran etc -- only because of supply chain obstacles, lack of modern technology and low qual-
ity materials. as a result, Pakistan is losing its edge in traditional, carved, solid wood furniture domestically because of its high price and in markets abroad due to poor quality and designs. a Dubai based company ‘studioseven’, an architecture and interior designing firm recently commenced its own quality furniture-making business in karachi to contribute its share in the $250 billion worldwide furniture demand.the company is already providing interior Décor to clients in Dubai and Pakistan for the last 18-20 years and for that purpose it has to import quality furniture from thailand, Malaysia, italy and other European markets to meet the demand. “Our customers give us their dreams and we convert these dreams into a reality,” said Rais Chohan and Mubashir khamisa, owners of studio-seven in an interview with Profit magazine. Both the owners have been partners in this business for the last many years. “We established this new (furniture) venture about two-years ago in Dubai and after it succeeded, we started making these Rosewood products in Pakistan through our own skilled workers. “ the cost of our complete Rosewood Bedroom set is around Rs 2,200,000 (Rs 2.2 million) but it depends on the customers’ designs,” they said. there is a unique customerbased demand for this long-life furniture -and multiple generations of the customers may use it, they claimed. Our lowest cost product is a pillow which costs around Rs 7000, they added.“Our preference is to provide quality furniture in minimum budget to the customers,” the owners said. We have different quality buyers in Pakistan especially in karachi, Lahore, islamabad and Dubai, they added. the country’s furniture exports, which mainly comprise traditional solid wood items, have declined from $18 million in 2007 to $6 million during the last financial year, and are continuously plunging. Furniture exports stood at $2.29 million down by 9 per cent
during the first half of this year from $2.50 million during the corresponding period last fiscal year. in Pakistan, we just use Rosewood as a Pakistani material, while all other material including special quality mattresses and cloth have to be imported from abroad. Because of such expensive material im-
port, the cost of our product is higher compared with other brands in Pakistan, but our products are solid, long-life and will be used by many generations of the customer, they claimed. “studio seven is trendsetter in Pakistan’s furniture industry till now. Unlike other brands, we have introduced quality steel work in our all products. We are giving quality components and durability. in Pakistan, we imported ‘Getha Foam (used in mattress, bedding, and couches)’ for the first time, which isn’t available in our markets and our company imports such material from Malaysia. this name Getha is symbolic and holds true to its identity proudly in the use of 100 percent natural Malaysian rubber latex. We are providing 100 per cent Rosewood (shisham wood) with steelwork and trying to be pioneers in this field, they said. We are designers and interior decorators aswell which is why we launched such a furniture-making business. “You can say that it is designer furniture, similar to what others are claiming in Pakistan,” they said. Commenting on the law and order situation in Pakistan, the owners explained that it was the main hurdle in the development of such kind of businesses, but now they believe investors are coming to Pakistan to start quality businesses. “after China Pakistan Economic Corridor (CPEC), all businesses of the country will improve and now we are gearing ourselves for an increase in demand,” they claimed. the more affluent class is importing furniture
TRADE
“AFTER CHINA PAKISTAN ECONOMIC CORRIDOR (CPEC), ALL BUSINESSES OF THE COUNTRY WILL IMPROVE AND NOW WE ARE GEARING OURSELVES FOR AN INCREASE IN DEMAND” Rais Chohan and Mubashir Khamisa Owners Studio-Seven
from Dubai, Europe and other countries. Now that such quality furniture is available in Pakistan they don’t need to import it from abroad. The owners said, “We can provide a series of world’s latest designs for the local and international customers for those who want to have quality and solid wood products.” Earlier on, this wasn’t possible in Pakistan. “Few
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months ago, we took part in an exhibition in Lahore and received an overwhelming response and also received several orders. And we will be participating in an exhibition in Islamabad later on this year.” Our furniture that features steel plates embossed with Islamic calligraphy and is in demand in Pakistan--- we want to create an identity in this type of signature furniture and create a brand so that our company can receive orders from international markets. There is a lot of demand for quality handwork furniture in Europe, Middle East and other neighbouring countries The main aim
of Studio Seven is to sell its products abroad.“It is very unfortunate that the government doesn’t even recognize furniture-making as an industry,” they said. China, for example, was nowhere on the scene in the early 1990s but emerged as the 9th largest furniture exporter in 2000. It is now a top exporter with market share of about two-fifth or $94 billion. Malaysia too, grew fast to raise its furniture exports to over $1.5 billion with its companies graduating from original equipment manufacturers (OEMs) to original brand manufacturers (OBMs) and then to original design manufacturers (ODMs). “Others have done this. We can do it too. For that we need the government’s support in getting easier access to technology, raw materials, trained labour and credit,” they stressed. With regards to imports and exports, they informed us that there is still a problem in the import of foreign materials as the custom authorities have to be informed about it beforehand. Similarly export of furniture is also difficult because of the traditional customs checking at seaports etc. “Government’s taxes are not a big issue, but checking of material is the main issue and customs officials
instead of checking, drill into the products to see what is in it. They (customs officials) do not use modern technologies of scanning or other facilities that don’t damage the product. The company has selected special skilled workers in their Karachi factory and have been given training to work with latest equipment who have been selected from Karachi, Punjab and Chiniot and are experts in their work. In Pakistan, we have high quality skilled labour. “We have to develop this business in the country and it will take 4 to 5 years at least and will try to set a trend of quality furniture in Pakistan” they confidently said. The government needs to put in place a plan to create and develop a sustainable, low cost source of wood raw materials, eradicate illegal timber trade, train designers and labour, organize single-country road shows to market local products in key export markets
like the Gulf states, the US, the European Union and Japan. Pakistan could still earn a lot of foreign exchange by creating a high-end ‘niche’ market for its traditional and ethnic furniture. “Our industry has no contact with any global brand or store, which is essential to boost exports”. Wood furniture making mostly remains a cottage operation in Chiniot, Gujrat, Lahore, Peshawar and Karachi outside the documented economy. But a few small furniture companies in the organized sector have expanded their production by acquiring technology to produce quality, cheaper modern items — mainly for the Rs 7 billion domestic market but also for exports. “At the moment, the furniture industry is focused more on the domestic market which is expanding very fast on the back of growing consumer spending and a booming housing and construction sector, along with a huge jump in remittances sent by the Pakistanis working abroad in the recent years,” they
said. “Besides, the industry isn’t prepared to handle large export orders. We don’t have the capacity or backup… Exports will follow once we create mass production facilities,” the owners said. Many such manufacturers, however, complain of rising cost of doing business owing to high price of electricity, low labour productivity and use of costly imported and local solid wood and alternate raw materials. This makes products expensive and uncompetitive against imported Chinese furniture in the local market.
TRADE
FINTECH
VIABLE
PAYMENT METHODS Without safe payment solutions like PayPal available in the country, Pakistan is unable to realise the true potential of its online market
I
By: Nida Jaffery
’d prefer a little less competent freelancer with a PayPal account over someone with excellent skills but no access to PayPal,” said Michael Nguyen, CEO of a UK-based online consultation firm and one of the major employers of freelancers worldwide.
This statement alone indicates that the unavailability of credible payment solutions is a perturbing void that must be filled on an immediate basis, especially in Pakistan - the world’s fourth largest online freelance community as stated in the Global Online Review by Elance-oDesk Inc. With a subscription base of more than 197 million active user accounts, PayPal processed almost $99.3b in payments only during the last quarter of 2016, translating to 1.76 billion transactions in three months. The platform is operational in 190 countries including USA, Australia, UK and Canada, largest recruiters of the world’s freelance communities in the field of IT. The extent of the widespread popularity of this online money transfer platform can be gauged by the fact that 45 percent of the total revenue of eBay, a business-to-customer and customer-to-customer sales service company, comes from PayPal.
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“The online workforce in the country suffers tremendously due to PayPal’s unavailability in Pakistan,” Twitter’s Country Consultant Badar Khushnood said referring to the world’s most famous online payment solution. “Freelancers are often unable to take employment contracts because many employers can only pay via PayPal.” Although freelancers in Pakistan use alternative solutions to make and receive payments worldwide, the hurdles they face cannot be neglected. This is because international clients rarely adopt substitute payment solutions to pay freelancers in countries like Bangladesh and Pakistan where PayPal is not available. According to a report provided by the International Data Group, 40 percent of working Pakistanis freelance in one capacity or the other. Elance-oDesk Inc., the largest online jobs portal since the merger of the two entities in 2013 reported that out of a total of 4 million freelancers registered on the website, 214,000 or 5 percent were Pakistanis as of 2013, the latest period for which the data was available. For a country that forms the world’s fourth to ninth largest freelance base, the elimination of basic hurdles such as the unavailability of proper payment solutions is absolutely essential.
“In my four-year experience of freelancing online, I have lost many good opportunities because of payment issues,” said Abid Hussain, a freelancer registered on Upwork.com, oDesk’s new name post-merger. He further said that he has even considered moving out of Pakistan as freelancing is his bread and butter. He cannot afford to lose well-paying projects every now and then only because of unavailability of popular payment solutions in Pakistan. Hussain’s frustration can be rightly explained by understanding the fact that out of almost 26 online freelancers hired by Nguyen, only one is paid using an alternative payment system to Paypal. Some other commonly used online payment solutions include Skrill (formerly Moneybookers), Payza.com, Payoneer Card, Perfect Money and Bitcoin. But, many of these solutions are also not available in Pakistan. Skrill, one of the most favorite payment solutions used by Pakistanis, will be rendered dysfunctional on Elance (Upwork and Free-
lance) from April, as per the announcement by the company. “Even if it [other payment solutions] is available, international clients do not go through the hassle of using it. It is inconvenient for them to use several solutions at one time,” said Hussain. Another money transfer solution, Western Union has franchises in over 200 countries in the world. Even though Western
“PAKISTAN IS INVITING GLOBAL TECHNOLOGY COMPANIES LIKE AMAZON, EBAY AND PAYPAL TO START OPERATIONS IN PAKISTAN” Anusha Rehman, IT Minister
“THE ONLINE WORKFORCE IN THE COUNTRY SUFFERS TREMENDOUSLY DUE TO PAYPAL’S UNAVAILABILITY IN PAKISTAN” Badar Khushnood, Twitter’s Country Consultant
Union is widespread, employers prefer PayPal as it can be directly connected to the users’ bank account, hence saving travel time to the Western Union location and the hassle of conveying the code for payment and collection of money. The Ministry of Information Technology has recently taken measures to invite and facilitate international companies like PayPal, eBay and Amazon to launch their operations in Pakistan. In IT minister Anusha Rehman’s own words: Pakistan is inviting global technology companies like Amazon, eBay and PayPal to start operations in Pakistan. Pakistan’s recent inclusion in Financial Action Task Force’s (FATF) white-list is expected to encourage technology companies to explore Pakistan as a viable market. However, PayPal, which labelled Pakistan as an important market, responded vaguely to the aforementioned invitation. “As we look at expanding our global footprint, we see Pakistan as a market with great opportunity, but we are not able to comment on future plans,” PayPal’s spokesperson said in an interview to ValueWalk – no fur-
ther development has been observed from either side since then. As opposed to a general understanding, PayPal’s use isn’t limited to international payments, the platform can also help increase the size of local digital economy. With Pakistan’s e-commerce market expected to surpass $1 billion and the digital ad market to account for 30 percent of the total ad spend by 2020, making PayPal available
in Pakistan can boost the numbers a lot more. For example, payments to ecommerce platforms and tech giants, such as Google and Facebook are currently made through credit cards, which can be done via PayPal once it is available. Industry experts have repeatedly stressed on the resolution of such challenges, especially if Pakistan expects to see great boom in the digital market in the years to follow. “Pakistan is unable to sign bilateral and multilateral treaties with digital companies mainly due to a lack of feasible legal framework,” said Khushnood, the Country Consultant for Twitter. “This is the main reason companies like PayPal do not launch in Pakistan.” He further added that it is high time the government rolled up its sleeves and took the right decisions to improve the conditions of the IT industry.
ECOMMERCE