Profit Issue-26 by Profit (by PT)

WElCoME

THE SILVER BULLET he government should drop the ancient practice of doling out plots as end-of-career economic security to its elite cadre of civil and military bureaucracy and instead pay them corporate level salaries.’ Whether that is quite the silver bullet that Nadeem ul Haque proposes, one doesn’t quite know. For even if the officers in question were to get corporate level salaries, since the pull of land and plots is so well-entrenched in our national psyche (not just the civil servants), their development mantras might still be spatially skewed, only towards the urban spaces that the open market is gravitating towards.

‘T

That does segue to a subject closer to my heart: the national fixation with plots of land as a store of value. It seems anyone with some extra money to invest is looking to buy a ‘file’ or a plot as opposed to putting it to some productive use and in turn contribute towards increasing the real GDP of the country. The sheer crowding out effect that this causes could be way more than the one caused by the infamous government borrowing from our banking sector. How does one incentivise other avenues of investment? Well, that is a tall order. Pakistan just slipped by three spots to 147 in the Ease of Doing Business Index. Unless that improves, which is a project beyond the scope of

FROM THE MANAGING EDITOR

a series of single fixes here and there, but a holistic whole that requires a rethink of the idea of our Republic, we can’t do much. In the meantime, we have other relatively lower hanging fruits to divert investments. Consider, for instance, the bourses. Yes, the Pakistani financial capital markets might not be as integrated into the actual economy as they are in the developed world, but they are still injecting a whole lot of equity into the listed companies. It’s not dead capital. And it has been bullish for more than a decade now. The government could incentivise it by rationalising the capital gains and value taxes on the stock markets. In fact the Prime Minister recently promised to do just that in his maiden meeting with the stock brokers. Also important is to stick to a corresponding correction of the “DC rates” in the real estate sector, even if property dealers cry themselves hoarse. The fixation with land and plots, much like that other mass delusion, the affinity for gold, needs to be done away with. It is illogical and completely completely unproductive.

Babar Nizami

8 Weekly Roundup 12 Another feather in Sialkot’s much-festooned cap 16 Dollar Brawler Hassan Aslam

18 18 The great landtheft 24 Male Allies vs Silent Bystanders #metoo Ayesha Aziz 26 Tab to taxpayers: Rs5 billion 30 D360’s watchwords: ‘Anything, Anytime, Anywhere’

34 Financial inclusivity: Where does Pakistan stand? Anam Saeed 36 Creating a niche from nowhere 40 The cost of surplus power KK Shahid

Managing Editor: Babar Nizami l Joint Editor: Yousaf Nizami l Contributing Editor: Farooq Tirmizi l Business Editor: Agha Akbar Editor Reporting: Farooq Baloch l Reporters Aisha Arshad l Arshad Hussain l Usman Hanif l Syeda Masooma l Ahmed Ahmedani 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

CONTENTS

“Pakistan spends only 1.4pc of GDP on education and less than 3pc of that on vocational training German Envoy to Pakistan Martin Kobler

QUOTE

BRIEFING

“Consistency in economic policies is crucial for progress of the country” Interior Minister Ahsan Iqbal

of loans have been obtained by Pakistan during the first quarter (July-September) of financial year 2017-18 to shore up foreign exchange reserves. Foreign commercial banks provided the bulk of loans, touching $458m or contributing one-third of the total amount reported a local newspaper. China provided $239.8m and Islamic Development Bank gave $392m for budgetary support purposes as per Ministry of Finance and Economic Affairs. Total foreign assistance during first quarter of FY 2017-18 touched $1.5b out of which $130.5m were grants provided by UK to the tune of $81.6m and US provided $21m. $923m of these $1.5b loans from foreign commercial banks were obtained to help Pakistan in meeting its foreign currency requirements. Also on Tuesday, the finance ministry completed the process of hiring financial advisors for the issue of Eurobond and Sukuk to raise further loans. During the four-years of this incumbent govt, external debts and liabilities have ballooned to over $83b. Project loans according to official data stood at a mere 38.7pc or $583m compared to 61pc budgetary loans acquired in the same period.

$1.4b

Rs800b

of Pakistani Stocks have been bought by foreign investors since the beginning of September as Pakistan Stock Exchange (PSX) is again beginning to look as an attractive and cheap destination for foreign funds. $402m of net outflows have been reported in the first nine months of 2017 by foreign investors which was reversed into $54m of inflows from purchase of Pakistani stocks since start of September. From being the best performing stock market of Asia in 2016 to being the worst in 2017, Pakistan Stock Exchange has endured contrasting fortunes as it tries to continue its recovery drive after months of political uncertainty. KSE-100 benchmark index has fallen by 25pc since reaching a high in May and the continuing political crisis, rising civil-military tensions aren’t helping the market. In June, Pakistan had been reinstated to emerging market status by index provider MSCI and reentered S&P’s Emerging Broad Market Index from S&P Frontier BMI in midSeptember.

of loans were obtained by Finance Minister Ishaq Dar without approval of cabinet or the parliament to run the country’s economy. Sources well-aware of the mounting burden of loans on country’s economy said that federal cabinet had never been briefed about the details of foreign loans obtained during last four years tenure of PML-N government. They also said that total foreign loans without the knowledge of the parliament or the cabinet are around $ 83 billion and government’s domestic debt increased to Rs 15.4 trillion by end of July 2017. Similarly, foreign loans alone stand at a point where the country needs almost $ 8.2 billion a year to pay back. Almost 20 per cent of Pakistan’s national budget will go to pay back loans. And, if the loans go above $ 100 billion, which will be almost 32 per cent of the GDP, the repayment cost might cross $ 12 billion a year while a developing country with a loan of $ 100 billion will have no choice but to declare bankruptcy, sources said.

$54m

BRIEFING

“Exports can be enhanced by 12pc provided electricity tariffs are reduced and gas surcharges removed” Federation of Pakistan Chamber of Commerce and Industry President Zubair Tufail

QUOTE

18.5pc

growth in revenue was recorded for first four months of financial year 2017-18 touching Rs1.03b compared to same period last year (SPLY). Refunds during this period have been issued to the tune of Rs 42 billion as against Rs 21 billion issued during this year depicting an increase of 100 per cent during the corresponding period of the previous fiscal year. In addition to the issuance of these refunds, another amount of approximately 13 billion has been issued a sales tax refund to refund claimants. During October 2017, according to the provisional figures received so far, FBR has made a net collection of more than Rs 267 billion as against Rs 237 billion collected during October 2016.

savings will be made in nine months from the imposition of regulatory duties on select import items in next nine months of the current financial year. Since the major import items are not affected by the recently levied RD, the duty on 47 items will not make a difference in the move of reducing import bill. The Senate’s Standing Committee on Finance, Revenue and Narcotics, which met on Tuesday with its chairman Saleem Mandviwalla, showed its displeasure over the sudden increase in duty on import items knowing that the same would not reduce the ever-increasing trade deficit. The meeting was held to discuss a single agenda of imposing RD on 731 items by Federal Board of Revenue (FBR). Submitting reply to the committee’s query regarding the sudden decision of imposing RD on import items, FBR Chairman Tariq Pasha said that purpose of recently-levied duties was to reduce the import bill, provide enabling atmosphere for competition to local manufacturers and further economic growth of the country.

$500m

anti-dumping duty has been imposed on import of Deformed Concrete Reinforcing Steel Bars (rebars) from China. The ADD is in addition to the 30pc already in-place regulatory duty on import of re-bars from the neighboring country, thus taking total duties to 49.15pc. The commission has imposed the said duty after a year-long investigation at the behest of applications lodged by Amreli Steels Limited (ASTL), Agha Steel Industries Limited and Abbas Engineering Limited on behalf of the domestic steel industry producing re-bars. The commission established that the domestic industry producing re-bars suffered material injury on account of volume of dumped imports, price undercutting, decline in market share & productivity and magnitude of the dumping margin. CC Billet earlier had 24.04% ADD and 15% regulatory duty; total: 39.04%. While re-bar previously had only 30% regulatory and now a 19.15% anti-dumping duty has resulted in a total 49.15% duty.

19.15pc

has been wiped out of the stock market due to political uncertainty and turmoil that is plaguing Pakistan. Share prices have nosedived and no equity-based fund has achieved a positive return in last nine months. In contrast to 2016, PSX had been proclaimed the best performing stock market of 2016 in Asia with an astounding return of 46pc. Contrarily 2017 has been the exact opposite for PSX, as it has endured a terrible run which has resulted in it becoming the worst performing stock market of Asia. PSX had divested 40pc of its stake to a Chinese syndicate at Rs28 per share, and till Thursday it had lost 30pc of its total value of $86m. 2017 remains the worst performing year for the stock market since 2008 as turmoil/uncertainty has increased and volumes have dried up.

$18.5b

Rs1914.770m have been released for the Petroleum and Natural Resources Division under the Public Sector Development Programme (PSDP 2017-18) against the total allocation of Rs 3987.778 million. According to the official data, Rs 1.798 million, out of Rs 8.992 million allocations, have been released for exploration and evaluation of metallic minerals in Bela and Uthal areas of district Lasbella, Balochistan. Funds amounting to Rs 1912.274 million have been provided for supply of gas to various localities in Baddhomali Town of district Narowal, NA-112 of district Sialkot, NA-129 of district Lahore, NA-132 of district Sheikhupura, NA-04 Peshawar, NA-30 and NA-31 of Swat and Shangla besides PK-27 of district Mardan, while Rs 0.698 million for exploration of Tertiary Coal in Punjab Central Salt Range.

BRIEFING

“There will be no gas loadshedding for domestic and industrial consumers during this winter season” Special Assistant to Prime Minister Miftah Ismail

profit has been posted by Pakistan State Oil for first quarter of financial year 2017-18, registering a 33.7pc rise from same period last year (SPLY). Highest ever quarterly sales were recorded in MOGAS and Jet Fuel, up by 30.1 per cent and 22.6 per cent respectively over SPLY. Considerable sales growth was also witnessed in HSD, LPG, lubricants and LNG businesses with the growth of 31.4 per cent, 71.0 per cent, 36.0 percent and 49.9 percent respectively over SPLY. Furnace Oil (FO) sales, however, were down by 9.4 per cent in line with a reduction in industry volumes partly due to low consumption by GENCOS and partly due to higher LNG utilisation. PSO continues to maintain its strong market leadership position with an overall liquid fuels market share of 55.8 per cent as on September 30, 2017. Higher sales and cost-effective borrowing resulted in 14.9 per cent growth in PSO’s profit after tax which has increased from Rs 4.4 billion to Rs 5.0 billion vs SPLY and as a result, the earnings per share grew to Rs 18.5 vs Rs 16.1 SPLY.

Rs258.6b

QUOTE

70pc

of Telenor’s network will be converted to 4G/LTE. Chief Executive Officer, Telenor Pakistan, Irfan Wahab Khan told media persons that subscribers are at heart of everything as new brand philosophy `Jo Har Pakistani Chahay’ portrays that very commitment where we make the product and service adapt to customer lifestyle rather than other way around. Among the top two cellular providers in the country, Telenor Pakistan also unveiled its rejuvenated brand philosophy `Jo Har Pakistani Chahay’ along with forthcoming 4G expansion plans, signifying its relentless focus on delivering on evolving customer needs.

46pc

50pc

62pc

increase in revenues was reported by Pak Suzuki Motors year-on-year in third quarter 2017, on account of the volumetric growth of 30 per cent in unit sales, change in sales mix as sales of higher value units increased and price increase of Bolan and Ravi variants. Earnings growth was led by both topline growth and better margins. PSMC’s higher volumes were supported by sales of Mehran, Wagon-R and the new Cultus (launched last quarter), which constitute around 70 per cent of total volume. PSMC sold 32,777 units during Q3 2017, up by 30 per cent YoY. Sales of Mehran touched 10,516 units, up 27 per cent YoY. Cultus, which lately has been well received by buyers, saw sales touch 5,181 units, up 56 per cent YoY. The volumetric growth of Suzuki Wagon-R remained the most impressive with volumes reaching 5,789 units in July-Sept 2017, up 71 per cent YoY.

reduction in train fares has been announced from the 1st of November, said Railways Minister Khawaja Saad Rafique. The fare from Peshawar to Lahore in an air-conditioned business class train of Jaffar Express and Khyber Mail will be reduced to Rs 900 from Rs 1,740. On the other hand, fare from Peshawar to Lahore in air-conditioned sleeper carriage of Jaffar Express will be Rs 1,410 instead of Rs 2,280. The economy class rates of Jaffar Express and Awam Express will also come down, with passengers having to pay Rs 860 instead of Rs 1,340 for air-conditioned standard carriage, to travel from Peshawar to Lahore. Passengers will also be able to travel from Peshawar to Lahore for as low as Rs 390 in an air-conditioned standard carriage of rail car train. The rate of the travel before reduction is Rs 480. Saad Rafique said that the fare of Green Line Train will also be reduced soon.

increase was reported in gold imports during the first quarter of current financial year 2017-18 compared to same period last year (SPLY). Pakistan imported gold worth $ 5.666 million during July-September (2017-18) compared to the imports of $ 3.489 million in July-September (2016-17), showing an increase of 62.40 per cent, according to the data of Pakistan Bureau of Statistics (PBS). In terms of quantity, the imports of gold witnessed an increase of 49.48 per cent during the period under review, compared to the last year. According to the data, Pakistan imported 145 kilograms of gold during the first three months of the current fiscal year compared to the imports of 97 kilograms during last year. On a year-on-year basis, the gold imports increased by 9.06 per cent during the month of September 2017 compared to the same month of last year.

BRIEFING

By: Syeda Masooma mongst the town and cities of the undivided Punjab – quite like, Jalandhar, Amritsar, Lyallpur, Ludhiana and Hoshiarpur – Sialkot, the north-eastern entry point to the fabled state of (now Indian Occupied) Kashmir, was small in size, but by no means insignificant in terms of producing men with intellect and enterprise. The last of the two from the indisputably acknowledged quartet of great Urdu poets, Iqbal and Faiz, were both from Sialkot – and of Mission School and Murray College. And so was Maulvi Mir Hasan, mentor to both Iqbal and Faiz. Post-partition, the get-up-and-go spirit of the Sialkotis manifested itself by the city turning itself into

the sports gear and surgical instruments capital of the world – to the extent that for its quadrennial global showpiece, the World Cup, the FIFA relies on the craftily produced hand-stitched soccer balls from Sialkot. The denizens of Sialkot neither wait for nor lament the unavailability of external or even government support when it comes to taking the bull by the horns when it comes to the welfare of the city. Sports goods, clothing, surgical instruments, and leather products, Sialkot produces these and every year rings up as much as 10 percent of the country’s entire exports – $2 billion to be precise. Catering to almost 100 national and international brands, Sialkot’s industry also employs nearly half a million skilled and unskilled force û 400,000 of it directly while another

‘WE HAVE TOLD THE GOVERNMENT MANY TIMES OVER THAT THE SOLUTION TO THE ECONOMIC ISSUES LIES IN NOT JUST EXPANDING EXPORTS. IT IS RATHER INTO TRAINING PEOPLE IN MODERN TECHNOLOGY WHICH IN TURN WOULD HELP CREATE EMPLOYMENT AND MAKE THE COUNTRY'S ECONOMY GROW’ Fazal Jilani, Chairman of Air Sial and Former President Sialkot Chamber of Commerce & Industry 100,000 in related jobs including vendors and traders. The city has been able to negotiate through the country’s worst period in terms of declining exports. As overall exports took a tumble from $25 billion-plus in 2013 to under $20 billion by the middle of 2017, Sialkot’s was able to hold its own in the world market. This could partially be explained by the fact that Sialkot has small and medium enterprises which do not require massive subsidies or protection. To prosper, trade-friendly policies are all they hanker for. Former president of Sialkot Chamber of Commerce and Industry Fazal Jilani said, “the Sialkotis are a community.” They know that there are not many incentives for people from other regions to care for the city and they will have to help themselves if they want to bring about any change. Lucky for Sialkot, the government sometimes makes itself available for matching grants when the locals themselves are bent on something – be it the construction of roads, industrial areas or recreational facilities.

Sialkot Airport, signal success

he success story of Sialkot International Airport Limited (SIAL) isn’t an unknown one. Situated 8.7 miles west of Sialkot, it is the

first privately owned public airport in Pakistan and perhaps the only one in South Asia. Save the new greenfield Islamabad International Airport – scheduled to open in December – it also has the longest runway in Pakistan. Less than seven years into operations, Sialkot airport is host to almost 58 flights every week – with an average of 38,000-40,000 passengers embarking or disembarking from here. The emirates, Qatar Airways, Flydubai, Gulf Air, Salam Air, Air Arabia, PIA, Shaheen and Airblue, all have SIAL as one of their destinations. Titled as Air Sial, Sialkot’s industrialists/exporters are now poised to launch an airliner of their own. Fazal Jilani, the Chairman of Air Sial, spoke to Profit to give us a lowdown on the soon-to-take-flight airline. “everyone talks a lot about the government not doing much for us, but the thing about the people of Sialkot is they take the bull by its horns.” In the next breath, he mentioned the government lending a hand, “once it saw that we were determined” to do it anyway. Despite being smaller in size compared to other larger chambers, Sialkot’s Chamber of Commerce and Industry (SCCI) has emerged more public-welfare oriented than others. “We deliver because once a proposal is agreed upon, the members and the entire community owns it”, said Fazal Jilani. The SCCI currently has

‘PRESENTLY, SIALKOT IS MEETING AROUND 70% OF THE GLOBAL DEMAND FOR SURGICAL INSTRUMENTS. BUT IN ORDER TO EXPAND ON THAT, BETTER TECHNOLOGY AND BETTER-SKILLED PEOPLE ARE THE NEED OF THE HOUR’

about 9,000 active members, with a governing body of 20-odd. “having served as the Chamber president for two years, I know full well how motivated the governing body is and how cooperative the members are once we decide on an initiative.” With Pakistan International Airlines’ (PIA) – once the nation’s pride – suspending its operations to the US due to annual losses of $0.4 billion, Jilani has next to no hope for the flag carrier hitting the recovery curve anytime soon. “Once PIA was amongst the top three airlines in the world. Now it is nowhere. With all things being as they were – nearly 25,000 employees serving 18-20 aircraft – it's not viable by a long shot. “Meanwhile, there is a yawning gap in the market for an efficiently-run airline. Since we’re already running an airport, we know it. “We belong to the business community and we realised that we don't have good flying facilities of our own. We also saw that none of the airlines in the market met the needs of our community,” said Jilani.

Knowing its limitations t the same time, Air Sial is acutely aware of its limitations. “We neither can nor intend to compete with international carriers like the emirates or the Qatar Airways. Not today, not ever. We will only be competing with similar local private sector airliners.” The airline’s launch has been an arduous but self-fulfilling process. A community-based project, it has 200

AVIATION

directors, each investing Rs10 million to make it a neat Rs2 billion. “Every step of the process consumes time and effort, starting from motivating people, putting the process in place and then obtaining the license. It commenced in my tenure as the chamber president, and in the backdrop of the airport’s success it was

not too difficult to convince people to come on board,” said Jilani. Initially, each investor was asked to pitch in with Rs5 lakh to complete the first step – registering Air Sial with the Securities and Exchange Commission of Pakistan (SECP). A complication arose, as in one company the SECP only allows

a maximum of 25 directors. Until then, 110 were already on board. So, these 110 were dubbed as ‘promoter directors’, which were to decide among themselves which 25 would be registered with the SECP. Jilani explained, “It took a couple of months but the 25 directors were eventually named without much of a hiccup.

Sialkot International Airport Limited

Key Information Annual passengers – departures/arrivals 1,000,000 Location 8.7 miles (14 km) west of Sialkot

Compatibility Load of 10 Boeing 747s or A340s

Contractor Habib Construction Services Limited

Construction Cost Rs180 million

Runway 3,400x45 metres, with 7.5 metre wide shoulders on either side (as per International Civil Aviation Organization Category)

Services Fuel farm, Catering, Aircraft ground maintenance services

Consultant Nespak

Cargo Airline Qatar Airways Cargo to Doha

Destinations Sharjah, Riyadh, Jeddah, Bahrain, Dubai, Abu Dhabi, Dammam, Doha, Muscat, Kuwait, Karachi, Lahore

Link Taxiway 263x23 metres, with 10.5 metre shoulders

No. of aircrafts

(narrow body airbuses) Initial investment

Rs 55 million

Owner body

Sialkot Chamber of Commerce and Industry

CEO

Mian Ameen Ahsan 200

Fazal Jilani Rs 2 billion

May/June 2018

No. of Directors

Chairman

Capital expenditure (invested)

Launch date

VITAL STATISTICS

License issued

Oct 2017

When everyone is pulling in one direction, cooperation comes easy.” The next step was to apply for a license that not only required submission of detailed information of all investors to IB, ISI, MI, and other state authorities but also a business plan to the Pakistan Civil Aviation Authority (PCCA). “That took another seven to eight months. The PCCA was very supportive, indeed appreciative of the initiative.” Having pushed through several stages of increasing registered capital investment as and when needed with the SECP, dozens of rounds of discussions and submission of piles of paperwork with PCAA, in the first week of October, Air Sial has finally been issued a license. “The celebration is still due. “No one amongst us belongs to the aviation industry or any related field, but we decided to go for it – and now it is happening.” Just like the Sialkot Airport, Sial Air is also a public limited company, but not listed on the stock exchange. The core management team is in place with Mian Ameen Ahsan as CEO, but the organogram is still to be worked out. The SCCI plans to hire professional experts for every department from marketing to airline staff to flight attendants. The airline will begin operations with three planes that will be most likely be narrow body aircrafts or airbuses. The chamber is currently in negotiations with international leasing companies for aircraft procurement. According to the chairman, Air Sial shall take to air in May-June, 2018. Regarding the airline’s operational plans he said, “Other local airlines fly regionally, only up to the Middle East. We too shall commence with flying to the Middle East including Jeddah, Dubai, and Qatar, but we won’t stop there. Our plan includes reaching up to Europe in the next 3-5 years, and then fly farther – to North America. We will decide on it after looking at the routes that suit us the most.”

‘THE DENIZENS OF SIALKOT NEITHER WAIT FOR NOR LAMENT UNAVAILABILITY OF EXTERNAL SUPPORT WHEN IT COMES TO TAKING INITIATIVE FOR THE PROGRESS OF THEIR CITY’ On the pricing and the target group, supremely self-confident Jilani said, “Air Sial will be for everyone. As for pricing, at the moment, I cannot disclose the details. But I’m positive: even prior to its launch, Air Sial would be sold to capacity – because of quality of service and competitive pricing. Look, everybody knows what the international and local airlines are offering. So, we’d enter the fray by topping it up.”

Profit, not the only prime mover espite being a for-profit, the primary target of the airline is not to make money. “All 200 people who invested in this airline are already successful in business. Not one of them is dependent on this airline to run their kitchens. Our primary objective is to facilitate our passengers. If the customers are happy and satisfied, the profit would come by itself.” It is not just SIAL or Air Sial. The Sialkotis are known for helping themselves when it comes to the development and upkeep of their city. In the past two decades alone, Sialkot has seen massive improvement not only in its industrial infrastructure but also its residential neighbourhoods, with discernible improvement in the road network and quality of life – most of it spawned by the denizens on their own. On the general sentiment of the people in Sialkot, Jilani said, “We are businessmen, and when it comes to investing, to us it’s not just our factories and employees. The entire city is ours, and when we have international patrons coming over, we do not want to present them with

‘THE AIRLINE’S LAUNCH HAS BEEN AN ARDUOUS BUT SELF-FULFILLING PROCESS. A COMMUNITY-BASED PROJECT, IT HAS 200 DIRECTORS, EACH INVESTING RS10 MILLION TO MAKE IT A NEAT RS2 BILLION’

a dilapidated-looking place. They would think twice while doing business with us if they thought we were not treating our people or our city properly.” Jilani laments, there is only so much that the businessmen can accomplish on their own. “The government officials ask us, how can we increase exports? But they never listen to what we tell them.” Presently, Sialkot is meeting around 70% of the global demand for surgical instruments. But in order to expand on that, better technology and better-skilled people are the need of the hour. “We can import computer numerical control (CNC) machines but where will we find people with the requisite skill to operate them. There is no technical training institute. We have a few of our own but they simply do not suffice. “This tragedy with our country is that we never look at the grassroots level. We never try to solve the reasons of a problem but just concentrate on the superficial.” If the government facilitates the exporters in training the workforce to technologically advanced, nothing would stop Sialkot and Pakistan in making its mark in the world economy. “‘We have told the government many times over that the solution to the economic issues lies in not just expanding exports. It is rather into training people in modern technology which in turn would help create employment and make the country's economy grow.” With the prevalent attitude, Jilani maintained, Pakistan might not gain much from the CPEC either. “They talk about $46 billion investment coming into the country. When our exports are already taking a tumble, what are we going to do with that $46 billion? It should have been a boon for us, but that would have only been possible if the local industry was strengthened first. And that is not happening. “The only solution to all our economic problems is having a clear vision. With self-interest the only motivation, nothing can be accomplished.” n

AVIATION

OPINION

hassan Aslam

dollar brawler Rupee devaluation an eventuality amid contracting remittances ver wondered why the rupee quotes at 108.20 or 110 and not at Rs120 or Rs125 to a dollar? It’s not much different from how the prices of mangoes are determined, for example, whether currency movements or prices of mangoes, the most important factor determining their price is the same – market forces of demand and supply. If the demand for dollars increases, the value of the dollar will appreciate. As the quotation for PKR/$ is a two-way quote, that is, the price of one dollar is quoted in terms of how much rupees it takes to buy one dollar, an appreciation in the value of the dollar would automatically mean a depreciation in Pak Rupee and vice versa. Besides the primary powers of demand and supply, the rupee-dollar rates are determined by other market forces as well such as market sentiments, speculation, central bank intervention, import/exports, public debt, fiscal policy and interest rates most commonly amongst the others. The combination of the above circumstances has contributed to the fall in the value of the rupee vis-a-vis the US dollar as it has been predictable to a considerable extent with a promising upward trend since 1947. Pakistan’s near-term growth outlook is amongst the most favourable of all economies in the MENAP region. Initial estimates of FY2017 growth had seen an expansion of 4.9% y/y in real terms, al-

hassan Aslam is an alumnus of Manchester Business School (MBS) and currently working at Thomson Reuters. He can be contacted at: hassanaslam145@gmail.com

‘Although Allowing the currency to depreciAte in line with fundAmentAls would certAinly help boost the competitiveness of the externAl sector, if history is Any guide, policymAkers could certAinly Allow forex reserves to be neArly depleted before chAnging course.’ though the central bank recently upgraded this projection to 5.7%. This compares well to an average rate of growth since 2008 of 3.6%.

remi‫מּ‬ances peak behind us

espite this broadly favourable macroeconomic outlook, there are several issues that relate to the economy’s external position. The outlook for remittances is a case in point, which account for almost 7% of GDP – compared to 5.6% for MENA and 3.8% for South Asia altogether. In FY2016/17 remittance inflows came in at $19.6bn, which is just under the total value of all goods exported at a value of $21.7bn. Most recent data shows declining remittances (measured on a three month on month basis average to dampen volatility) that constitutes towards five consecutive months of contraction. Looking ahead the main concern is the source of these imports, with roughly 60% originating in the GCC. In this respect, there are two primary risks that underpin Pakistan might have seen it’s ‘peak remittances’. First, the pace of growth across the non-oil economies of the GCC has recently settled on to a lower trajectory, implying less growth in demand for expatriate labour. Second, and perhaps more importantly, there are also policy initiatives underway which could actually lead to a decline in the overall number of expats employed in the Gulf in the near term. This category would include the recent

decision to lift the ban on women driving in Saudi Arabia (implying less demand for expat drivers), in addition to Oman’s most recent push to rapidly boost employment of nationals. Many economists have argued in favour of remittances holding Pakistan intact, terming it as the backbone of our economy but this cautious outlook for remittances places in a broader concern about the external position of the country in FY2017/18. In Q2 2017 the current account deficit surged to USD4.4bn, compared to USD1.0bn in the same time a year earlier. More up to date figures show the value of imports increasing 18% y/y in August, marking the eighth consecutive month of

double-digit growth. Persistent pressure on Pakistan’s stock of forex reserves meanwhile suggests that capital inflows have not been sufficient to cover this shortfall.

Several issues with external position hese external pressures are being exacerbated by the government’s reluctance to allow greater exchange rate flexibility. Having experienced a ‘mini-devaluation’ earlier this year, which was subsequently reversed and blamed on miscommunication, the rupee has since been held at USD105/PKR. Although allowing the currency to depreciate in line

with fundamentals would certainly help boost the competitiveness of the external sector, if history is any guide, policymakers could certainly allow forex reserves to be nearly depleted before changing course. Recent efforts at curbing the deficit by attempting to clamp down on luxury goods imports are unlikely to fundamentally change the trajectory of the economy’s external position. There is a high chance that the improved policy environment in the recent years could have been on account of Pakistan’s previous IMF agreement, which concluded in 2016. Whether any reform momentum can be sustained without this IMF anchor is questionable at this stage. A rupee devaluation is widely expected in the next few months, and for the domestic buyer, this has already been factored in. The Pakistan stock market peaked in March and since then has corrected by 22 percent, making it one of the worst performing emerging market in this year. Investments too have decreased from Pakistan in the backdrop of an arguably artificially stabilized rupee along with an asset boom in the local real estate and property market. However, recently the political instability coupled with the fears of devaluation on the horizon has sparked a flight of capital back into places like Dubai and the UK. The International Monetary Fund has warned that the Pakistan rupee is overvalued by 15 to 20 percent. During this time of extreme pressure on the external sector, a dollar brawler seems inevitable. n

ECONOMY

â&#x20AC;&#x153;My gravestone should read he fought for end to perks, plot protocol all his lifeâ&#x20AC;?

THE GREAT

LAND THEFT Pakistan’s civil servants use their control over the allocation and development of government land to curry favours, entrench their power, and build generational wealth for themselves, argues Nadeemul Haq in his new book By: Farooq Tirmizi f there is a single place that can be thought of as the foremost cathedral to free-market capitalism, it is not the New York Stock Exchange, nor any other place in Lower Manhattan, or the City of London; it is Saieh Hall at the University of Chicago in the historic Hyde Park neighbourhood on the south side of Chicago. Fitting, perhaps, then that the building was originally built as a theological seminary and has a decidedly religious architecture. In this building is housed the University of Chicago’s economics department, which has produced or otherwise been affiliated with 29 Nobel laureates in economics – more than any other institution in the world. It is here that Nadeemul Haq, former head of the Planning Commission and author of Looking Back: How Pakistan Became an Asian Tiger by 2050, got his training as an economist. It is not possible to understand his work – arguably one of the very few forward-looking visions for economic growth for Pakistan put out in recent years by a trained economist – without understanding where he comes from.

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Say the name Nadeemul Haq in front of any bureaucrat or journalist in Islamabad (or really anywhere else in Pakistan), and you will get the same look. That smirk, coupled with a rolling of the eyes. A knowing look of the cognoscenti. “Oh, that doddering fool. Yes, of course we know of him. He has no idea what he is talking about. All he has are theories from America. We know how the real world works, especially in Pakistan.” And in some ways, they are right. Haq is a man obsessed with ideas in a country where – by his own acknowledgement – there are very few readers even among the literate and educated segments of the population. And while he has documented the ways in which the civilian bureaucracy maintains its stranglehold on Pakistan’s economic resources perhaps better than anyone else, he never quite managed to find a way to thwart their control. To use an analogy from the 1980s British political satire Yes, Minister, it would be as though the minister Jim Hacker understood exactly what his top bureaucrat Sir Humphrey Appleby was about to do, but did not know how to stop him. Yet despite these appearances of being a misfit in the government of Pakistan, Haq – through his papers and now this book – has diagnosed the fundamental disease of Pakistan’s lack of economic growth and progress quite well: the charge of moving the country’s economy forward has been given to an institution (the Civil Service of Pakistan) that is far more interested in maximizing their own gains and that they do so specifically through their control of urban geography, in particular through their control of the country’s prime real estate. Looking Back is a quick read (I finished it on a six-hour flight) and covers a wide range of subjects (more on the book’s

‘THEY KILLED MY CONFIDENCE IN PAKISTAN. AND THERE I WAS IN CHICAGO, HAVING BECKER AND HECKMAN [BOTH NOBEL LAUREATES] ASKING ME TO CRITIQUE THEIR PAPERS’ Nadeemul Haq

unique storytelling mechanism later), but is most persuasive when it lays out its case on exactly how land is used as the ultimate economic resource in Pakistan. Control of prime real estate is used to not only enrich the higher echelons of the civilian and military bureaucracy, but even within that bureaucracy, to provide greater benefit to those who toe the line more to the Establishment (in the broadest sense of the word) than those who are seen as less subservient. Say all you want about Haq’s theories, this diagnosis of the primary ills of Pakistan is hard to argue with. How did this supposedly out-of-touch Chicagotrained career-IMF economist come to so clearly understand and diagnose the travails of Pakistan’s bureaucracy? Well, it helps that he grew up among them.

A privileged upbringing, a flirtation with Marxism, and Chicago

adeemul Haq was born in 1952 to S.I. Haq, a very well-known civil servant of the time and a member of the old British-era Indian Civil

‘THE CHARGE OF MOVING THE COUNTRY’S ECONOMY FORWARD HAS BEEN GIVEN TO AN INSTITUTION (THE CIVIL SERVICE OF PAKISTAN) THAT IS FAR MORE INTERESTED IN MAXIMIZING THEIR OWN GAINS AND THAT THEY DO SO SPECIFICALLY THROUGH THEIR CONTROL OF URBAN GEOGRAPHY, IN PARTICULAR THROUGH THEIR CONTROL OF THE COUNTRY’S PRIME REAL ESTATE’ 20

Service (ICS) who went on to become the last chief secretary of West Pakistan. It is unsurprising then, that he went to Aitchison College and Government College Lahore before jetting off to London in 1971 to begin an undergraduate degree in economics at the London School of Economics. Perhaps most shocking for a man who would later go on to study in Chicago around the likes of right-of-center icons such as Milton Friedman was his very serious inclinations towards Marxism. Sitting in the living room of his house in the suburbs of Washington DC – the fruits of a lifelong career at the International Monetary Fund – I asked him what on earth he was thinking when he decided to become a Marxist. “You don’t understand. It was the peak of socialism back then. Marxism had hope and promise. The United States was embroiled in the Vietnam War. Meanwhile, the Soviet Union was showing tremendous technological promise.” And Haq was not just a campus Marxist either. He was one of a band of roughly a dozen Aitchisonian boys – privileged lads, all – who decided to take their ideas about a Marxist utopia to Pakistan and fight alongside Baloch separatists in the insurgency in early 1970s. These boys included Najam Sethi, Ahmed Rashid, and a few others. It appears that the nerdiest, and least capable of fighting, was Haq (though most accounts suggest that the others were not much better either). The Aitchisonian alumni in the Baloch insurgency, however, were not seeking to actually support the separatist cause. They were trying to persuade the Baloch to become the vanguard of a Marxist revolution that would encompass all of

Pakistan. In other words, they wanted the Baloch militants to be revolutionary and Marxist, but not separatist. Haq was arrested before he had a chance to do anything and spent a night in jail before being bailed out by Najam Sethi, who vouched to the government as to just how truly useless a militant Haq was. The youthful indiscretions notwithstanding, Haq spent the next few years working at the Pakistan Institute of Development Economics (PIDE), working alongside professors who had never studied what was then still the relatively new subfield of econometrics, the now standard quantitative side of economics. He was always an academic at heart and after a few false starts, finally managed to land a slot at the University of Chicago’s PhD program in economics, where he started in 1979. At Chicago, Haq went from being surrounded by people who barely knew what a regression was to being surrounded by Nobel-prize-winning economists who expected him, a humble graduate student, to critique their work. His thesis advisor was Gary Becker, the man who practically invented the concept of human capital as a theory in economics (he would go on to win a Nobel Prize in economics in 1992). “They killed my confidence in Pakistan,” he said. “And there I was in Chicago, having Becker and Heckman [both Nobel laureates] asking me to critique their papers. I would go into the standard Pakistani mode of deference to them. Becker looked at me point-blank and said: ‘This is not you being impolite. This is your job. You are supposed to critique my work.’ Papers of mine that were rejected at PIDE were picked by Heckman for me to deliver seminars on at Chicago.” That serious training in economics – alongside giants in the field – laid the intellectual foundation of Haq’s career. Although he spent the next 30 years at the IMF, his mind kept working on the most fundamental question that should plague any Pakistani

‘WHILE HE CITES MANY AREAS WHERE THIS SYSTEM OF PERVERSE INCENTIVES MANIFESTS ITSELF, A THEME THAT RUNS THROUGH MUCH OF THE BOOK IS THE MANNER IN WHICH CIVIL SERVANTS CONTROL LAND AND HOW THEY USE THAT CONTROL TO ENRICH THEMSELVES AT THE EXPENSE OF THE NATION AS A WHOLE’ economist: why has Pakistan lagged behind so many of its peers in Asia, and what is stopping it from attaining the kind of economic growth that would create a truly broad-based prosperity in the country?

Looking back: the narrative tool ather than the standard, dry economics texts where the writer simply expounds their views on what ails Pakistan (I’m looking at you, Shahid Javed Burki), Haq tries a different approach. He imagines a prosperous Pakistan at a point distant enough in the future (he picked 2050), and then works his way backwards as to how he imagines Pakistan could get there. In this, it is a fundamentally more optimistic view of Pakistan, laying out a vision of what the national interest should look like, and then tries to imagine a path the country could take to get there. Haq is the first to acknowledge that the path he lays out is by no means the only right one. Indeed, in the preface to his book, he states that his purpose in writing it is to encourage a conversation among Pakistanis as to what they think is the optimal path to getting there. In Haq’s imagination, the key to solving Pakistan’s problem lies not a single theoretical model, but rather in viewing Pakistani society, politics, and its economy as an interwoven complex sys-

‘AT EACH LEVEL, THE BUREAUCRATS ARE PAID VERY LITTLE, BUT GIVEN ACCESS TO HOMES, CARS, AND SERVANTS, THE KIND OF LUXURIES ONE WOULD EXPECT TO BE ABLE TO AFFORD ONLY IN THE LATER STAGES OF A HIGHLY SUCCESSFUL CAREER IN THE PRIVATE SECTOR’

tem that has its own dynamics and is best shaped by fostering a bottom-up ideas-led approach to solving local problems that then work their way up throughout the entire complex system. Yet while his ideas about what might allow Pakistan to move onto the path of becoming an economically prosperous, politically peaceful, and socially vibrant country are interesting, the most well-developed parts of his book are those where he tries to diagnose the problem. And the fundamental problem – he argues – is that the government of Pakistan is a badly designed institution that is geared to serve the interests of its elite members, not of the country as a whole. While he cites many areas where this system of perverse incentives manifests itself, a theme that runs through much of the book is the manner in which civil servants control land and how they use that control to enrich themselves at the expense of the nation as a whole.

Land: Pakistan’s biggest Ponzi scheme ny international investor who has analysed Pakistani real estate will tell you that the market makes no sense whatsoever. Rental yields are abysmally low, mortgage financing virtually nonexistent, and yet somehow property prices are astronomically high. There are now several buildings in Karachi and Lahore with $1 million asking prices for apartments. How does this make sense? Who can afford these places and how are they paying for them, if not through a mortgage? To understand the absurdity of Pakistani real estate, one must first look at what constitutes prime land, how it is zoned, how it is used, and thus how its relative scarcity determines its prices. And in

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this, it helps to understand how the government – specifically, its top decisionmakers – think about land. Drive through any major thoroughfare in any city in Pakistan and one finds the vast majority of the real estate there occupied by government buildings. Not public institutions accessible to the public at large, mind you. No, these are buildings built by the bureaucratic elite to serve the bureaucratic elite. Close to these buildings are large suburban-style developments meant originally for government officials. These developments have the best infrastructure Pakistan has to offer, and proximity to the heart of the cities they are located in, and they are given away at throwaway prices to the elite of the civilian and military bureaucracy. Instead of developing dense cores around which to center economic and social life, Pakistani cities have central districts designed to create generational wealth for bureaucrats. (Disclosure: I am personally the beneficiary of this unjust socio-economic order. My father is a retired military officer who sold one of the plots he received after retirement to pay for my undergraduate education at a university in the United States, an educational experience that has fundamentally transformed my life, and significantly enhanced my lifetime earning potential. Yes, you absolutely should hate me, and people like me.) But even if one were to ignore the grand larceny that are the plots and perks that bureaucrats award themselves, the economic costs of using prime land for residential rather than commercial purposes makes no sense. The Planning Commission and the Capital Development Authority estimated in 2011 that Islamabad alone had 60 million square feet of land dedicated to awarding perks to civil servants which, if commercially developed could result in Pakistan’s entire GDP being raised by 2-3%. And that is just Islamabad. Cities all over Pakistan have this

HAQ’S BIGGEST CRITICISM: THAT DONORS DESIGN POLICIES AND PROPOSALS WITHOUT EXAMINING THE ABILITY OR WILLINGNESS OF THE BUREAUCRACY TO IMPLEMENT THEM. CRUCIALLY, NO DONOR APPEARS WILLING TO EVEN TOUCH THE SUBJECT OF CIVIL SERVICE REFORM’ kind of prime real estate being wasted. But Haq goes beyond just pointing out such waste. His central argument is that the government does not work for ordinary Pakistanis because it has set up a perfect system to maximise wealth for its own senior members and to ensure that there is no internal dissent within the civil service. Junior civil servants run local governments, mid-level bureaucrats run the provinces, and the senior-most babus run the federal government. At each level, the bureaucrats are paid very little, but given access to homes, cars, and servants, the kind of luxuries one would expect to be able to afford only in the later stages of a highly successful career in the private sector. At each level, bureaucrats are charged with decisions on where to allocate government resources, and how to allow private resources to be allocated across urban Pakistan. And at every level, bureaucrats are reminded that while they may be living large, they are cash poor, a situation that will only be remedied upon retirement, or close to retirement, when they get their plots of land and houses to build on them. Given the fact that their whole life’s financial success (assuming they are the most honest officers imaginable and do not take any bribes at all) depends on the value of the land they will get upon retirement, what kind of decisions do you think they will make about public policy? Where will the roads get repaired faster? Which neighbourhoods will get the heavier police presence and better security? Which neighbourhoods will get allo-

‘IN HIS BOOK HAQ IMAGINES A PROSPEROUS PAKISTAN AT A POINT DISTANT ENOUGH IN THE FUTURE (HE PICKED 2050), AND THEN WORKS HIS WAY BACKWARDS AS TO HOW HE IMAGINES PAKISTAN COULD GET THERE’ 22

cations of land for schools and hospitals? Where will the street lights be functioning? And conversely, which neighbourhoods will these supposedly noble civil servants not care about? The answers, based on their incentive structures, are obvious. That, in a nutshell, argues Haq, is Pakistan’s problem. Resources are allocated to pad the retirement benefits of the bureaucracy, not to create a vibrant society and dynamic economy. No set of policies, no matter how well designed, will work to fix Pakistan’s woes unless the government charged with implementing those policies has its incentives shifted away from serving themselves and towards serving the nation as a whole. On this, he is scathingly critical of bilateral and multilateral donors and their consultants who make painstaking efforts to analyse various sectors of Pakistan’s economy and develop policy recommendations, which are then adopted wholesale by the bureaucracy, because it relieves them of the burden of having to do any thinking for themselves. Haq’s biggest criticism: that donors design policies and proposals without examining the ability or willingness of the bureaucracy to implement them. Crucially, no donor appears willing to even touch the subject of civil service reform. In his book, Haq argues that one way to significantly improve the functioning of the government is to adopt what is fundamentally the Singapore/Japan model: high salaries, with very few fringe benefits, which forces bureaucrats to think about the infrastructure of the country as a whole, not just the specific colony in which they plan to retire. Whether Haq is being optimistic in expecting the civil service to give up their luxurious benefits, or whether he has a realistic plan, remains an open question. One key piece of evidence? His proposals for civil service reform, which he put forward in 2011, went absolutely nowhere. n

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OPINION

Ayesha Aziz

the workplace.” I had always thought that at the time when I started working in a factory, it was a little unusual for people to see a young woman on the shop floor, so their reactions were understandable. I was at the receiving end of some tasteless jokes and comments and it always made me uncomfortable, but I didn’t speak ince the latest high profile sexual harassment scandal of Hollywood proI chose not to speak. Since I invaded the man’s world ducer Harvey Weinstein surfaced on the media around the world, a numby choosing my profession, I had to give up my perber of women have come forward to recount their own alleged sonal space in compensation. But times have changed experiences with Weinstein and to comment on harassment in the media and the men now are used to the fact that there is a and entertainment industries, in general. woman or two in their team. In an effort to show the enormity of the issue, actress Alyssa Milano took to When you leave home for work in the morning, Twitter with a simple suggestion: Any woman who has been sexually assaulted or hayou spend at least a third of your day in an office with rassed should reply to her tweet with the words "me too." Her tweet received over your colleagues, which takes up the majority of your 44,000 replies, and the phrase was quickly turned into a hashtag that spread across active time. When there is a healthy level of camasocial media as people began sharing their own stories of sexual harassment. raderie between colleagues, the overall environment of While the world has achieved progress towards gender equality aunder the Susthe workplace is positive and keeps the morale of the tainable Development Goals, women and girls continue to suffer discrimination and employees up and the spirit of teamwork alive. violence in every part of the world. Women around the world are beginning to tell Companies of today encourage more open and their stories and expose the pervasiveness of sexual harassment in their societies. The friendly environment than it was a decade ago and it is level of tolerance for sexual harassment varies from culture to culture. not an issue if female colleagues are seen at the same Since more women have entered the work force, their vulnerability to harasstable for lunch as their male counterparts or sharing a ment has also increased. Often reported in the media are criminal acts of rape, assault joke over coffee with a male colleague. Sexual harassand molestation, while the ‘less severe’ forms of harassment like verbal abuse, rement of women at today’s “modern” and “educated” peated lewd emails or texts, physical touching, or unwelcome comments on behavior, workplace does not happen. Really? attire or body are given free reign because they do not qualify as criminal acts. The The “parhi likhi harassment” as one of my UN Convention on the Elimination of All Forms of Discrimination Against Women friends at work calls it - the kind which can neither be (CEDAW) has also noted the seriousness of this issue, and urged for “measures to recorded nor reported, but you know it’s there and it protect women from sexual harassment and other forms of violence or coercion in bothers you. It’s that specific look, that tasteless joke, that murky comment about a coworker you are particularly friendlier with than the rest, or the triumphant smile of the guy who offers you a ride to lunch. It’s that gossip and assumptions that spread like wildfire even Ayesha Aziz before they know you personally. It takes away your peace of mind and lowers your morale. Changes you is Mom, Mechanical from a happy, friendly and joyful person into a closed and depressed individual who is stuck in a situation no Engineer, Teacher, Aspiring Masterchef and one understands and no one thinks is a problem, and if it is a problem, it’s her fault! Photographer, Wanderer and a lot more!

Male Allies vs Silent Bystanders - #metoo

The Cost of Sexual Harassment

It is no secret that sexual harassment remains widespread across professions , especially in sectors that are predominantly male. Marginalizing and alienating 50% of the nation’s talent is a script for failure. Women who become targets of harassing, demeaning, or disrespectful workplace behavior often experience a range of negative psychological and job-related outcomes. Their organizations also suffer, in the form of direct costs (em-

ployee turnover, legal fees) and indirect costs (diminished morale, damage to organizational reputation etc.).

The Top Man Strong leadership can set the right tone for genuine gender inclusion. This includes being purposeful in creating a workplace environment where women feel they belong and are accepted as full members, and are not excluded, objectified, or sexualized. Employers are responsible for the conduct of supervisors and managers as well as to protect their employees from harassment by non-employees (e.g., customers, vendors, etc.). Managers are liable for sexual harassment between co-workers if they knew or should have known about it and took no steps to stop it. The existence of company policies and procedures alone does not automatically insulate employers from liability; they should also take action against sexual harassment once they are aware it is occurring. Leaders, through overt actions or tacit silence, have profound influence on the organizational climate for women and men at work, and are accountable. For instance, it is infinitely more challenging to hold men in the company accountable to standards of dignity and respect when the CEO dismisses his own boasts about sexual harassment as mere restroom banter. On diversity and inclusion, leadership matters.

Sensitization and Awareness An effective sexual harassment policy stresses the illegality of sexual harassment and delineates a clear and appropriate complaint process while ensuring the confidentiality for the victim. Additionally, such a policy encourages witnesses or victims to report the behavior immediately and mentions that retaliation against persons reporting harassment is illegal and will not be tolerated. Having an anti-harassment policy does not mean that there will be no harassment complaints. However, having effective policy and procedures, coupled with anti-harassment training for all staff on a regular basis, will assist in preventing harassment and support individuals who are being harassed to come forward and ensure that the problem is addressed quickly and effectively. The circulation of information, open communication and guidance is of particular importance in removing the taboo of silence which often surrounds cases of sexual harassment. Information sessions, personnel

meetings, office meetings, group discussions and problem-solving groups can prove very effective in this respect. Guidelines and staff development programs on sexual harassment at work can be helpful for coping with aggression. A lot of men are scared of what can happen if women resort to abusing this power and using the law in malicious ways, so their insecurities and apprehensions. The predominant apprehension that most men seem to have is the fact that the powers provided by the law can be used lethally by ill-willed women to destroy careers and hard-earned reputation. However, the truth is that changing the mindset of people can minimize or eliminate misuse of anti-sexual harassment laws completely. Organization wide sensitization and awareness is the most important factor when it comes to discouraging the misuse of the sexual harassment law and the company’s sexual harassment policy. The law aims to equip organizations to handle a workplace-related evil, not give women undue power or to put men in fear. It is true that women-friendly laws have been misused in the past, but people have become sensitive to this and they are more careful now to check the genuineness of complaints before about taking adverse action.

The Silent Bystanders and the Male Allies When women are marginalized, disrespected, and harassed in an organization, focusing only on the top is a mistake. An exclusive focus on senior leaders as culprits causes us to miss a problem that is often far more serious and pervasive: everyday guys in the trenches who are missing in action when it comes to having the moral courage to stand up to such behavior. It is flat-out not enough for male mentors to do their best to avoid gender stereotypes and implicit or explicit bias against women. Sorry, gentlemen, but that’s the easy part. Female colleagues, in particular the women you mentor, also need you to be boldly saying and doing something when discriminatory or harassing behavior arises. And it is just as important that young men see their male mentors stepping up to confront and call out this kind of behavior. I remember a time when I was newly married and one of my really good male friends joked with my husband that he must be a brave man to have married a woman who is so “friendly” with the guys at work. On another occasion when I was talking to one of my unmarried colleagues, one of the other guys joked that it’s high time he gets married or he’ll have

to do with second-hand material. Things like these not only changed my perception about my ex-friend, but also my equation with all the people I previously enjoyed working with. These people were not the low-lives and eveteasers on the road, they were highly educated and broadminded men who were my comrades. There is a profound distinction between passive gender inclusion (attendance at diversity and gender workshops, working to avoid harassment and bias in one’s own relationships) and active gender inclusion (demanding respect and equity for women, in both word and deed, especially when no woman is watching). It turns out that many men are abysmally inaccurate at assessing the extent to which they are active allies for women and minority groups at work. Real male allies for women have to accept the inescapable connection between championing the careers of women and being a deliberate, public role model for other men. A man’s legitimacy as an ally to women is only fully expressed when he is an intentional exemplar and fiercely watchful of the behavior of other men. This assertion finds support in the voluminous research on the bystander effect. Social psychologists Bibb Latané and John Darley discovered that bystanders who stand idly by when others are harassed or even assaulted are not necessarily morally indifferent or sociopathic. Rather, when other bystanders are present, human beings fail to feel much personal responsibility to intervene. One powerful antidote to this effect is to observe a respected role model jumping in to help. Legitimate male allies consciously engage other men, first demonstrating respect for women and then holding other men accountable for the same. I am not asking you to treat me like your sister, mother or daughter, just treat me like a person. Be neutral to my gender and treat me with respect that every human deserves regardless of the gender they choose to identify with. Passive gender inclusion is cheap. It costs a man very little to give a nod to the rights of women to feel safe and respected at work, just before he looks the other way when a female colleague is being harassed or humiliated, even if he himself is not a part of it. When men get mired in the passive stage of gender inclusion, never daring to become active allies for respect and inclusion, we see a failure of both moral imagination — how a dignified and respectful workplace for women might look and how it might benefit women, men, and the organization’s bottom line — and moral courage: Physical bravery has little connection to moral courage. Moral courage is harder. n

WORKPLACE

By: Arbab Ibrahim ocated around 318 kilometers east of Karachi, the headquarter of Tharparkar, amid the sand dunes lies Mithi – infamous for its droughts and famine and one of the lowest in terms of human development index among Pakistan’s districts. While bypassing the city, towards the Thar Coal Mines, often touted as Pakistan’s solution for its energy crisis, one cannot ignore a sprawling two-storey structure, spread over 89 acres enclosed by a boundary wall and covered in sand. Neither an office for the Thar Coal project nor housing a well-funded NGO devoted to improving the lives of the Thar’s marginalized communities, it is Cadet College Mithi – under construction since 2012,

yet barely accessible by car to this day. Once complete, this project boasting of four playing fields, a swimming pool and a gymnasium, shall lodge 300 resident students. Its completion, however, stays a distant dream, as Profit gathered from its recent visit of the site. Approved as part of the Annual Development Program (ADP) in 2007, Mithi Cadet College was supposed to be completed by mid-2014 at a cost of rupees 492 million. While funds for the project were released year-onyear since 2012, despite Rs132.32 million already spent on the project, come 2017 it is said to require another two years at the least – with the fruits of last five years of labour only yielding the 8-class room academic

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block and the boundary wall. For the institution to be functional, the residential block for the students and the faculty need to be complete, which would take two more years. Meanwhile, the cost of the project has increased by some Rs500 million – taking it to Rs993 million. Cadet colleges are amongst the very few government-run educational institutions that are successful. Their reputation for imparting quality education and instilling a sense of discipline in its pupils inspires the elite to send their children to cadet colleges. No doubt cadet colleges have played an important role in producing highly disciplined, committed and useful citizens of the country. On top of it, these colleges have their own micro economies and play an important role in the uplift of the area where they are built, usually suburban or rural areas. The people of the area get employment in one form or another in the institution and also many day to day necessities like milk and meat are procured from the nearby farmers. Further non-skilled jobs like watchmen, bearers and cooks also go to the locals. Education is billed as one of the Sindh Government’s top priorities, manifested in the appreciable increase of 24% over the last year’s budget, it is also the highest in terms of resources allocated to any department. To put it into perspective, the outlay for the year 2017-18 is equal to 74 percent (Rs276.4 billion) of the Balochistan govern-

ment’s budget. Though education gets a fair amount of funding from the Sindh government, at the least this is what the numbers reflect, where and how the funds are used is altogether a different question. The education department has long been marred by allegations of corruption and misappropriation of funds. With Cadet Colleges being credible entities, it may be the reason why the incumbent Sindh government since coming to power announced establishing many in different parts of the province. Some of these have been completed while others are said

to be ‘work-in-progress’, albeit at a very slow pace for the last many years, adding substantially to the overall cost of the projects as the estimated costs of setting up the colleges are revised and rerevised each year. Interestingly, the Mithi Cadet College is not the only one that has suffered, almost every other project that has been approved and for which funds have been released under the ADP has hit snags. These include: Cadet Colleges at Khairpur, Dadu, Karampur (Kashmore), Jacobabad, Nawabshah and Larkana . The last two, at Larkana and Nawabshah are meant to be set up for girls. Named after the daughter of Pakistan Prime Minister Benazir Bhutto, Bakhtawar, the first cadet college for girls at Nawabshah is estimated to cost Rs1.89 billion. Around Rs957 million have already been spent, and its financial progress up to June 2017 is 66%. The college was slated to start functioning by 2013, but it started off only recently with the induction of the first batch of students in May 2017. Had the project been completed on time, its cost to the exchequer would have been Rs885 million, thus saving the Sindh government a neat one billion rupees in this project alone. To be set up in Larkana – the home to the Bhuttos for generations, whose PPP has been in government in the province for 10 years on the trot, the work at the second cadet college for girls was approved in 2011. The project has not moved an inch in

the last six years. Part of the Sindh Public Sector Development Programme since 2009, and scheduled for completion in 2013, Cadet College Kaker at Dadu had to set back the provincial exchequer by Rs450 million. Its after-revision cost in 2016 was Rs813 million, an addition of Rs363 million. With Rs243 million already used up, up to June 2017 only 35% stands completed. Approved in 2011, Cadet College Khairpur was to cost Rs600 million, but the last year’s upward revision added to it one and a half time, another Rs900 million taking it to a whopping Rs1.5 billion. An outlay of Rs175 million has already been spent while another Rs194 million has been allocated for it this year. Establishment of Cadet College Jacobabad was approved in 2013 after a feasibility study conducted the same year. The project's cost was revised and another Rs500 million were added to its cost. The project is nowhere near completion and would require another 3-4 years owing to the negligence of the government, resulting in raising of the cost of the project. The Cadet College Karampur at Kashmore – expected to commence classes by next year – has been completed on time, yet the overall cost has bloated to almost Rs1 billion, Rs488 million added to the cost from initial estimates. Cadet College Gadap, a project set to commence in 2005, has been completed recently – a full one dozen years late, with Rs800 million added to its initial cost! Another alarming point to note is: the cost of establishing Cadet Colleges across the province has seen jacking up in terms of cost. Here is why. Once a project is put on the ADP, no funds are released for a couple of years. Only after a revision of costs owing to inflation – usually a Rs100 million spike – it proceeds at a pace slow enough to require an upward revision of the revision in its outlay, bloating the overall expenditure

beyond comprehension. What is worrying: the pattern is similar in all Cadet Colleges projects, even those that have recently seen completion! A gross and deliberate mismanagement of public funds and a disregard for the taxpayers’ hard-earned money? Mega corruption scandals have been in the news lately and rupees 5 billion may not seem like a huge amount to some and to make the readers aware of the huge amount, we can compare it to the cost of the Karachi-Hyderabad motorway (M9) which is a 134 km road with 11 bridges and 8 interchanges. The cost for the completion of the M9 is rupees 3.1 billion. Meanwhile, back in Mithi the on-site representatives of the contractors, besides complaining about the extreme working conditions and the desert heat, alleged that non-availability of electricity and technical labor locally must also be taken into account for the delay. Despite many requests,

EDUCATION IS BILLED AS ONE OF THE SINDH GOVERNMENT’S TOP PRIORITIES, MANIFESTED IN THE APPRECIABLE INCREASE OF 24% OVER THE LAST YEAR’S BUDGET, IT IS ALSO THE HIGHEST IN TERMS OF RESOURCES ALLOCATED TO ANY DEPARTMENT

ONCE COMPLETE, THIS PROJECT BOASTING OF FOUR PLAYING FIELDS, A SWIMMING POOL AND A GYMNASIUM, SHALL LODGE 300 RESIDENT STUDENTS. ITS COMPLETION, HOWEVER, STAYS A DISTANT DREAM the contractors lament, with the near-city site of the Cadet College taking access out of the equation, the electricity connection had not been provided. A Mithi resident, Piyaro Sawand, didn’t sound optimistic about the project’s completion anytime soon. “For the last 10 years, we have been hearing about it. Perhaps it’ll take another 10 years before the college is functional.” Despite repeated efforts to contact the Secretary College Education Sindh, on his cell phone the secretary chose not respond to our queries on the subject. n

GOVERNANCE

The online, on-demand delivery intra-city logistics startup is already creating its own waves fter a brief stint in supply chain management and marketing at various renowned businesses, a failed attempt to launch his own ride-hailing service, having eventually founded D360, Kamran Shabbir Rana launched D360 – an online, on-demand delivery service based out of Karachi. As the D360s founder and chief executive, Rana is intent on giving the leading lights in the business a run for their money and then catapult it to the very top. Launched earlier this year, in March to be precise, D360 is the latest to enter the country’s growing logistics market, vying for an ever-larger chunk of the pie. There is already a robust presence of established entities like the TCS, the DHL, Muller and Phipps (M&P), and Leopards, to name a few – with an estimated $300 million annual turnover between them.

New horizons nticipating a market of about more than 15 million consumers, online delivery business is aiming to conquer new horizons.

A 30

By: Fatima Rehman and Sara Noor

‘WE MAKE SURE THAT YOUR PRODUCT REACHES ITS DESTINATION WITHIN THE BLINK OF AN EYE, WITH ITS SECURITY AND SAFETY ASSURED. THIS IS WHAT HAS HELPED US IN ATTAINING OUR INITIAL TARGETS OF REACHING OUT TO FIRST 100 PATRONS’ Kamran Shabbir Rana, Chief Executive D360

Since the time when the big players like TCS, Leopards, as well as the other startups like Delivery Chacha, entered the fray, the consumer is spoiled for choices, and new benchmarks have been set in terms of delivery period and quality of service. Amid such a strong competition, cre-

ating a niche of its own should have been a challenge for the newbie. However, Rana says he has gotten off to a flying start already. With the seed capital of Rs10 million, and holding 60 percent equity in the enterprise, Rana initially planned to hire three riders. Instead, the number quickly proliferated to 10, and still doubled to above 20 within no time.

Armed with a BBA degree in marketing from Iqra University, Rana has previously worked for Nestle, Metro Pakistan, National Pakistan and Singer in roles of marketing, promotion and field management and has first-hand experience on supply chain, delivery and merchandising – all of which has turned out to be an asset in his novel approach to the courier industry. “Our vision is to be the number one online and on-demand delivery service in the markets we serve,” says Rana, improving the lives of his patrons through offering efficient, reliable, and standardized delivery services with innovative high-tech solutions being the aim. “We want to extend our scope by reaching out to the entire world,” he adds. Beginning with an idea of ride hailing business, he somewhere did not stand confident with it because he wanted to bring innovation to the idea of logistics. The concept of 24-hour service and 90minute delivery time makes D360 a tad different from services like Delivery Chacha and TCS, according to the CEO but the Delivery Chacha is also making similar claims on its website. “We make sure that your product reaches its destination within the blink of an eye, with its security and safety assured. This is what has helped us in attaining our initial targets of reaching out to first 100 patrons,” Rana told Profit. “One must take risks, because if one doesn’t work on one’s idea, one will never grow”, said Rana, emphasising on the synonymity of entrepreneurship and risktaking. Another thing that motivated Rana was the growth of e-commerce here. “There are young girls setting up small face book pages and making arrangements with bigger players to sell their items or buying at a fraction of the price; that is all good but they need to deliver on what they promise”. He spoke of how they can act as complete logistical support, where they can pick up the item from the main supplier, deliver it and bring the income to those pages. “This is a revolution we are going to start”. Such short delivery times at affordable rates, means that it's cheaper to send your study notes to a friend than to start up your car and do it yourself.

Restaurants jump on the bandwagon ith ‘Anything, Anytime, Anywhere’ being the watchword, D360 just doesn’t stop at delivering goods from stores or students exchanging notes. “We weren’t expecting restaurants to jump in this soon”. Serving restaurants and food chains was something that they had kept for later, as part of their expansion, but looking at their work, these smaller food chains tired of limited delivery circle of food apps opted to seek their services instead. The D360 is currently offering only intra-city service, but it has plans to expand its wings initially to other major cities of the country, before still enlarging the scope by going everywhere. Plans a few years down the line are still more ambitious, with the Middle East pencilled in. Another initiative is introducing an App that offers live-tracking of orders and riders by all parties involved. “I think the future lies in giving comfort and this is what we want to give to the people – by getting things done at economical rates. “If you ask how economical is economical: there are three packages: ‘Extreme’ 60 for Rs299, where 60 minute

pickup is guaranteed, ‘Day Definite’, for Rs199 and ‘Overnight’ for Rs99.” As much as70 percent of D360’s income from each delivery goes to the rider, with the rest going to the company. “The riders are not our full time employees, they can keep their jobs, only engaging with us when their cell phone rings.” Signing up contracts with several cafes like ‘Roaster Joint Cafe’, has found D360 a new vista to expand. “Ultimately, the optimal way forward will be partnerships. By working together, courier and e-commerce companies can have synergies that will give customers the very best service,” MD Daraz pk, Zain Suharwardy told Aurora in an interview. The mechanism is simple. The cost is charged on the basis of time into kilometers – and weight, Rs99 being the benchmark for every three kilo parcel. Within 15 km all over Karachi, the charge is Rs250, with Rs300 on top for every next 50 km. Having swelled to 22-25 couriers at the moment, D360 certainly aims high in the logistics sector. The project is ambitious, the idea doable and the execution flawless but it needs time and dedication to grow. That said, the positive news for the Karachiites is that if anyone wants something delivered in real quick time there are more options on offer. n

E-COMMERCE

OPINION

Anam Saeed

Financial inclusivity: Where does Pakistan stand? In the case of microfinance, Pakistan is far behind other economically similar countries akistan is a lower middle-income economy, located in the heart of South Asia, with a GDP estimated at $284 Billion (2016), and a population of around 207 million (2017). With such a large population, it is surprising that the Pakistani banking sector has a very limited penetration rate – serving around 3 million borrowers (1.5% of the population) and 20 million depositors (9.6% of the population). About 100 million adults in Pakistan do not have access to formal and regulated financial services. This number accounts for about 5% of the world’s unbanked population, which stands at 2 billion. Despite a series of reforms in the past few years, the percentage of women who own a bank account has remained stagnant at around 3% since 2011. In addition, there has been little increase in the 0.3% of women who have borrowed from a formal financial institution; and, the 1.5% of women who have saved at a formal financial institution. In the case of microfinance, Pakistan is far behind other economically similar countries.

Anam Saeed is a Research Analyst at Spearhead Research www.spearheadresearch.org

‘ONLY 2% OF THE ‘POOR’ POPULATION IN PAKISTAN HAS ACCESS TO MICROFINANCE SERVICES, COMPARED TO 35% IN BANGLADESH, 29% IN SRI LANKA, 8% IN NEPAL AND 3% IN INDIA’ Only 2% of the ‘poor’ population in Pakistan has access to microfinance services, compared to 35% in Bangladesh, 29% in Sri Lanka, 8% in Nepal and 3% in India. According to SMEDA, Small and Medium Enterprises (SMEs) constitute 90% of the business enterprises and provide 80% of the employment opportunities to non-agriculture labor force in Pakistan. While State Bank of Pakistan (SBP) reported a 27 % increase in SME financing from March 2016 to March 2017, the share of SME financing as a percentage of total private-sector financing dropped to 7.99% from 8.2% during the same period.

Need for financial inclusion

In 2008, the State Bank of Pakistan launched a Financial Inclusion Policy (FIP) initiative in collaboration with the Department for International Development (DFID). Under the FIP, the Government of Pakistan had set a preliminary target of reaching out to three million microfinance borrowers by 2010 and 5 million by 2012. In May 2015, Pakistan launched its National Financial Inclusion Strategy (NFIS), a roadmap to help the country achieve its financial inclusion goals. It is built on the Asian Development Bank’s (ADB) “Access to Financial Services (A2F)” budget support program. Pakistan’s goal is to achieve universal financial access, with a target of expanding formal financial access to at least 50% of adults, including women and youth, and to increase the percentage of SME loans in bank lending to 15% by 2020.

Three-tier approach The financial inclusion policy was initially a five-year program, which began in 2008 and intended to achieve preliminary goals by 2013. The total funding by

DFID amounted to around £50 million. It intended to provide assistance and create financial depth through a three-tier approach – Macro, MESO and Micro. The macro tier includes infrastructure at the government level, supported by the State Bank of Pakistan, the government itself and DFID; the MESO level includes credit enhancing and providing units like microfinancing banks, commercial banks and other financial intermediaries with liquidity; and, lastly, the Micro level includes smaller fund managers and committees at individual and household levels.

Recent Development The most recent development in terms of financial inclusion is the approval of a further $137 million by the World Bank for Pakistan’s NFIS. The target and objectives are aligned with the initial goals set by DFID as early as 2008. “1) Direct Support to the NFIS Implementation, aims to provide direct support to implementation of the NFIS in line with the priorities laid out in the NFIS action plan; 2) Supporting Expansion of Access Points for Financial Services, aims to support investments, capacity building and analyses that will drive financial access points; 3) Improving Access to Microfinance and to Financial Services for Micro, Small, and Medium Enterprises” (World Bank).

Where does Pakistan stand now? Pakistan’s has set ambitious goals for financial inclusion, however, the progress has been slower than expected. To achieve the goals and improve the future prospects through realization of these goals a lot more needs to be done. Despite, the mega launch of NFIS in 2015 with a structured roadmap and ample funding, financial inclusion in Pakistan only increased by 1% from 2015 to 2016 (Financial Inclusion Insights (FII) Report 2016). The Financial Inclusion Insights Report 2016 entailed a very detailed analysis of the progress from 2015 to 2016, ranging from increase in overall adult population holding a bank account to mobile banking and gender-based financial inclusion. According to the survey analytics, Pakistan’s proportion of the adult population holding a bank account from a full service financial institution remained stagnant at 9% from

‘THE POLICY SO FAR HAS BEEN ON THE RIGHT TRACK AND INCLUDES A WHOLESOME MACRO, MESO, AND MICRO LEVEL MIX OF INTERVENTIONS. YET, THE PERFORMANCE CAN’T BE SOLELY MEASURED BY NUMBERS UNLESS THE CONDITION OF THE ‘NEGLECTED’ PARTS OF THE COMMUNITY IS ALSO ANALYZED’ 2015 to 2016. The FII survey further highlights that more than half of the adult population saved money, but around 77% of the savers had saved money informally and around 20% had used Rotating Credit and Savings Associations (ROSCAs). Pakistan also has one of the highest mobile money users/accounts penetration in the region, standing at 5.8% of the adult population as compared to the regional average of 1.8%. However, Financial Inclusion Insights’ report further revealed that around 93% of these mobile money users hadn’t registered a proper account until 2016 and preferred using over the counter transactions only. Apart, from active borrowing and mobile banking, another strategy employed by NFIS is to utilize microfinance institutions for easier access to bank loans to try and reach out to a bigger and more diverse audience and focus on segments like minorities, females and lower SECs. Pakistan has been fairly successful so far in this venture and the number of microfinance borrowers has doubled since 2011 according to the report published by Pakistan Microfinance Network. The penetration within the districts had also increased by the end of 2016, reaching out to more than 130 districts, as compared to 104 in 2011. Pakistan’s NFIS also tries to encompass financing for Small and Medium Enterprises. According to the recent report by State Bank of Pakistan, the loans and finance for SMEs had increased by 27% from 2016 to 2017, i.e., by around Rs380 billion. The private sector finance had increased by around Rs699 billion during the same period and is almost double the SME financing amount. Another policy being capitalized upon to improve the financial inclusion is the Branchless Banking sector in Pakistan. In fact, according to the latest IMF country report, State Bank of Pakistan has been relying primarily on branchless banking to drive and pave the way for financial inclusion. NFIS & SBP heavily funded this

avenue to support the 2020 vision, and as of March 2017 the sector included around 24 million money wallets, circulating over $5 billion of transactions every quarter (Source: IMF Country Report).

On the right track The policy so far has been on the right track and includes a wholesome macro, MESO, and micro level mix of interventions. Yet, the performance can’t be solely measured by numbers unless the condition of the ‘neglected’ parts of the community is also analyzed. The money wallets might seem a lucrative avenue but it should be kept in mind that SBP also reported that more than 40% of the money-wallets are inactive and females only account for around 22% of the money wallets operated by branchless banking. Similarly, by the end of June 2017 the SME financing share in the overall financing was just hovering around 6.06% with a high default rate. Overall, it can be concluded that financial inclusion in Pakistan is holding strongly onto the NFIS principles with a few hiccups here and there. Yet, the aspirations are higher than the performance so far and with new $130 million injected by the World Bank, Pakistan can reach its goals if stronger initiatives are taken to not only enhance branchless banking and microfinance, but to sustain it through a variety of measures. The regional counterparts i.e. Bangladesh and India already have set up examples of a successful NFIS strategy for Pakistan to follow. A stronger wave of education and awareness, especially among women and regions like Gilgit-Baltistan, Baluchistan, peripheries of Sindh and the Punjab is needed. Measures are needed to formulate stringent policies regarding SME financing to counter high default rates as well. NFIS needs not only to be triggered rather it needs to be contained and sustained for a longer goal of sustainable and equitable growth. n

MICROFINANCE

By: Aisha Arshad

n a spot of financial bother, her father Jawed Yasin asked Amal Faisal Shahoor to take the plunge within days of her graduation from the cityâ&#x20AC;&#x2122;s prestigious Institute of Business Administration (IBA). Still smarting from the loss of what was not long ago a thriving construction business, Amal Shahoor was handed over whatever was remaining, with a yearning to create a legacy for herself and her father.

“He wanted me to create a business out of that, and roll back the years at the same time,” said Amal Faisal Shahoor. With partners defrauding him, despite her father’s considerable losses in the construction business – under the title Saima Projects – the family was well-todo enough to lead a comfortable life. But the desire to give it another go was overwhelming enough for the father to urge his daughter to venture into uncharted territory and get into the shoemaking business. Why shoemaking? Perhaps what provided the spur to Yasin was because of his nemesis who defrauded him, and whom he would not name, also owned a prominent shoe brand. “He rummaged whatever was left, and we went about building the business anew from the scratch,” said the 29-year old CEO of Sulafah Shoes. “Personally, being a gourmand, I wanted to get into restaurant business. I was a food connoisseur who was happy experimenting in the kitchen”, said the lady entrepreneur. Being young and raw, and told upfront by almost everyone who came across that she “would not survive in a man’s world”, the then 23-year old remained unflinching despite the odds.

Fledgling start ith its first store opening in Hyderi Market in 2011, Sulafah Shoes commenced business. Now that she had taken the plunge, the reality started sinking in – gradually. When she delved into the itsy-bitsy, the realised the wisdom in the dire warnings of the detractors. The entire business indeed had a male-heavy orientation. Dealing with designers, vendors and labour was cumbersome on its own. What made it all the more difficult was the whole lot being singularly unwilling to work for small brands, for it meant smaller volumes and hence smaller in-

come. Her gender and her youth both were additional handicaps. “Often people would not take me seriously at all”, recalls Shahoor, adding, it still is hard for a woman to survive in the predominantly male shoe industry. The early days were indeed a struggle, with Shahoor made to ponder on giving up every other day, only to end up coaxing and cajoling herself “to take it one day at a time, to give it another try and to hang in there for another week”. One thing that kept her going was the urge to not to disappoint her father. “Already he had been let down by too many people and I did not want to be the next person to do it.”

‘SULAFAH’S PER PAIR COST MAYBE HIGHER THAN WHAT THE MAJORITY OF PAKISTANI WOMEN WOULD BE ABLE TO AFFORD, SHAHOOR MAINTAINS, THE COST IS OFFSET BY QUALITY COMPARABLE TO STILL HIGHER COSTING DESIGNER BRANDS’

With every passing day, small successes added to the learning process, and every new stratagem incrementally instilled confidence. Sulafah, she had decided early on, will have separate brand entity – distinctly different from that of her father’s business. Today, six years on and as many stores later, one of these a fully operational online store catering to customers across Pakistan, Shahoor feels the struggle is still the same, the only difference being after half a dozen years of slog, she has a handle on how the business works. From looking after the 50 plus employees and their families – whom she considers her responsibility – to managing the day-to-day affairs, Shahoor is now comfortable in her shoes. With a young team installed in office and even younger labourers manning the factory, right opposite the newly-established office in North of Karachi, she solely manages the design department – something foisted on her by force of circumstance. “When we started operations, on a pattern similar to our erstwhile partners, it

ENTREPRENEURSHIP

was actually reselling. We bought shoe stock from local vendors supplying to almost every shops in the city, pasting our label on it and then putting it up for sale at our outlet,” said she. Though she continued in this fashion for two years, Shahoor knew that if she wanted to establish a brand, this was not going work, for that required something different than what everyone else was doing. She then started learning shoemaking and joined a shoe factory where she would implement her internet knowledge, practice on the available resources and create designs which the factory owner would sell as his own designs.

Mastering the art

“I

was okay with the factory owner benefitting from my input as long as I had a platform to experiment with my

designs and master the art. The resourcecrunch meant limited options. This was a desperate measure anyway, as many renowned shoe designers had refused to work for Sulafah – for the brand was too small for them to be associated with it”,

‘SHE DOES AIM HIGH, TURNING SULAFAH INTO FIRST A NATIONAL AND THEN INTERNATIONAL BRAND BY CREATING AWARENESS AMONG BUYERS WITH REGARD TO THE DIFFERENCE BETWEEN HIGH-STREET FASHION AND LOCAL VENDOR SHOES. THIS WOULD MAXIMIZE PROFITS, BUT, SHAHOOR SAYS, THE OBJECTIVE IS TO TURN SULAFAH INTO A BRAND THAT IS SYNONYMOUS WITH WOMEN EMPOWERMENT’ says Shahoor. After almost a year’s sweat in the factory, Shahoor felt confident enough to take the leap, hire her own team and turn Sulafah into a designer shoe brand. Having established a factory in rental space in the north of the city, stores in high-end malls – Dolmen Mall, Tariq Road; Lukcy One Mall etc. – were opened, introducing Salafah as a niche brand for people with aesthetic sense and

Today, the five Sulafah stores opened hot on the heels of another have brought the catapulted the business to break even phase. To Shahoor, profit is still a long way off, but the good thing is that the expansion has come by ploughing back the money earnings. “That Sulafah has become self-sufficient and no longer draws on the financing from her father, who is now doing his own business.

sophisticated taste – the literal meaning of Sulafah, an Arabic word. “As a kid, I had lived in Saudi Arabia. So while thinking of names, I had to connect it with the place closest to my heart,” said Shahoor.

“The cycle is unending, as earnings are invested back into expansion. It’s still not easy to really thrive in the market where a large part of the customer base does not want to spend a sizable sum on a quality shoe,” said Shahoor. Sulafah shoes range between Rs2,000 to Rs5,000 – a sum not many patrons are willing to part with for a pair. Nevertheless, the brand’s Dolmen Tariq Road store is generating highest footfall and at around 40-50 customers buying stuff every day on off-peak days, and the number significantly increases at special occasions like the Eids and the weddings season. With traditional marketing avenues,

‘THE ENTIRE BUSINESS INDEED HAD A MALE-HEAVY ORIENTATION. DEALING WITH DESIGNERS, VENDORS AND LABOUR WAS CUMBERSOME ON ITS OWN. WHAT MADE IT ALL THE MORE DIFFICULT WAS THE WHOLE LOT BEING SINGULARLY UNWILLING TO WORK FOR SMALL BRANDS, FOR IT MEANT SMALLER VOLUMES AND HENCE SMALLER INCOME’ 38

like television and print ads, being costintensive, Sulafah has to largely resort to social media to get its message across – something Shahoor looks after personally.

Aiming high n addition to that, since Sulafah as a policy issue does not rely on female models for promoting it, the limitation becomes all the more pronounced. So for illustrative materials, Sulafah has to adapt; yet its Facebook page has a growing fan following, hitting over 100,000 recently. It also helps that over the years, Shahoor has managed to build her own loyal clientele which mainly constitutes of working women and young girls with interest in high-end designer brands. And for now, the entrepreneur is content with that small yet significant client base.

She does aim high, turning Sulafah into first a national and then international brand by creating awareness among buyers with regard to the difference between high-street fashion and local vendor shoes. This would maximize profits, but,

Shahoor says, the objective is to turn Sulafah into a brand that is synonymous with women empowerment. Sulafah’s per pair cost may be higher than what the majority of Pakistani women would be able to afford,

‘TODAY, SIX YEARS ON AND AS MANY STORES LATER, ONE OF THESE A FULLY OPERATIONAL ONLINE STORE CATERING TO CUSTOMERS ACROSS PAKISTAN, SHAHOOR FEELS THE STRUGGLE IS STILL THE SAME, THE ONLY DIFFERENCE BEING AFTER HALF A DOZEN YEARS OF SLOG, SHE HAS A HANDLE ON HOW THE BUSINESS WORKS’

Shahoor maintains the cost is offset by quality comparable to still higher costing designer brands. “One must also realise that cost of producing high-quality stuff is higher too.” At the other end, the social activities that Shahoor plans to initiate – exclusive parks, swimming pools and clubs – will be as per the affordability of the common womenfolk. Gems, jewels and dresses do not enamour her, says Shahoor, adding, what fires her is not even profit but turning Sulafah into a brand to reckon with. Such single-minded devotion and drive of Shahoor are indeed infectious. What is more, it bodes well for Sulafah. n

ENTREPRENEURSHIP

OPINION

KK Shahid Crude AwAkening

The cost of surplus power Tall claims true or mere propaganda? rime Minister Shahid Khaqan Abbasi recently said that the country would experience an electricity surplus in the region of 2,400-3,400 MW by February next year. The idea that Pakistan could be producing electricity excess has circulating for the past four months, with the earliest reports suggesting that the country would produce surplus electricity by 2020. However, altered estimates were broken on October 6 by Sun Wedong, the outgoing ambassador of China to Pakistan, which were then repeated by the Punjab Chief Minister Shahbaz Sharif, a few days later. Sharif expressed his belief that Pakistan would produce a surplus of electricity by 2018, a claim supported by the PABA (Pakistan American Business Association) which estimates that the country would add 5,770 MW of electricity to the national grid by March 2018. With an estimated 4,500 MW of shortfall, the added electricity is expected to bid adieu to the long-term energy crisis that Pakistan has found itself in the midst of since the mid-2000s.

‘THIS RELUCTANCE TO INVOLVE LOCAL BUSINESSES, PREFERRING, INSTEAD, THE MORE EXPENSIVE ROUTE OF IMPORTING THE SAME ALL THE WAY FROM CHINA, PAINTS A WORRYING PICTURE OF THE COMPETENCE AND QUALITY OF PAKISTAN’S LOCAL BUSINESS SECTOR’

or are just a part of Pakistan Muslim League (Nawaz)’s pre-election campaigning: the Chief Minister of Punjab did not lose time in crediting his political party and its current chief, his ousted brother, Nawaz Sharif, in achieving this coveted landmark, when he said, “This is all because of the efforts of Pakistan Muslim League Nawaz and its head, Nawaz Sharif.” It is important to remember that Pakistan’s ruling party, its chief and his family have been embroiled in multiple corruption scandals, which have seen the former Prime Minister being legally ousted from office in July, leading to a drop in the party’s popularity – at least in vote counts – manifested in the recently conducted by-elections in the party’s stronghold of NA120, in Lahore. However, it remains to be seen whether these tall claims are, in fact, met The Chinese leadership, on the other hand, seems to be using this landmark achievement in glorifying the efforts of China in the developmental advancement of Pakistan. Speaking at the Parliamentary Committee meeting on CPEC, Wedong KK Shahid outlined the monumental role played by the China Pakistan Economic Corridor in is Energy Correspondent, speeding up the economic progress of Pakistan. Apart from insisting that the “19 Profit Early Harvest Projects” have thus far contributed 1820 MW of electricity to the Pakistani national grid, Wedong further added that the project has produced as many as 60,000 jobs for the Pakistanis and has helped the country’s growth rate jump from 3.6% to 5.6%, this year.

Rushing to take credit

Contrasting reports on CPEC However, reports elsewhere suggest otherwise. One news report implies that the

Chinese project has, in fact, produced 30,000 jobs for the Pakistanis, and has done negligible benefit to the country’s private sector, preferring not to employ local businesses in a majority of the 59 projects thus far underway or completed. According to another news report, a prolific businessman comments on the situation in the following words: “When China chose Pakistan for a huge investment initiative under the ‘One Belt, One Road’ plan, it generated euphoria in the business circles. However, just four years later it seems to be giving way to despair. The inability of private Pakistani companies to match Chinese demands has frustrated tycoons.” Certainly, when the Chinese announced their intention to invest in Pakistan and its development, nowhere did they promise to give employment to the Pakistanis or patronizing country’s local business. Nothing was to bar them from importing entrepreneurial staff and workmen from their own country. However, this reluctance to involve local businesses, preferring, instead, the more expensive route of importing the same all the way from China, paints a worrying picture of the competence and quality of Pakistan’s local business sector. Resuming focus to the production of electricity in the country: of the “19 Early Harvest Projects” which Sun Wedong credited for helping to rectify the country’s electricity shortage, five are reported to have

‘ONE NEWS REPORT IMPLIES THAT THE CHINESE PROJECT HAS, IN FACT, PRODUCED 30,000 JOBS FOR THE PAKISTANIS, AND HAS DONE NEGLIGIBLE BENEFIT TO THE COUNTRY’S PRIVATE SECTOR, PREFERRING NOT TO EMPLOY LOCAL BUSINESSES IN A MAJORITY OF THE 59 PROJECTS THUS FAR UNDERWAY OR COMPLETED’ been completed, and at least four functional. The latter four include the Sahiwal coalfired power plant, which is currently said to be contributing 1,000 MW of electricity to the national grid, Sachal wind farm, Jhimpir, contributing 50 MW, UEP wind farm, Jhimpir, contributing 100 MW, and HydroChina Dawood wind farm, Gharo, contributing 50 MW. About the sixth, the Quaid-e-Azam Solar Power Park, varying reports have surfaced over the past year, with some suggesting that the power station is functional and producing 100 to 300 MW of energy, while others report that the Park has turned into a white elephant for the Punjab government due to its inefficient production of electricity, and has thus been used sparingly. In all, the total power currently being produced by these projects amounts to 1,200 to 1,500 MW, which is at least 320 MW off from the estimate presented by the Chinese ambassador. Furthermore, with a regularly reported shortfall of 4,500 MW,

how are CPEC’s currently functional ‘Early Harvest Projects’ not only making up for the deficit, but also succeeding in providing the country with an excess of electricity? Are analysts expecting electricity demand across the country to drop more than 3,000 MW, or are these power projects believed to triple their output overnight? And what about natural gas shortages, which are rampant across the country in the winter season? The prime minister of the country is reported to have directed the concerned authorities to shut down less efficient power plants and convert oil-based plants to gas as early as possible. Would that not aggravate the natural gas situation in the country, come winter? And when is the country going to start rejecting non-renewable energy in favour of renewable energy? A lion’s share of even the Early Harvest Projects rely heavily on combustible sources to produce electricity. There are definite loopholes in the story that Prime Minister Abbasi – and others – should be held answerable for. n

ENERGY