PRO 04-03-2013_Layout 1 3/5/2013 1:05 AM Page 1
01
B
busIness Monday, 4 March, 2013
Saudi Shares Rise Second Day on Economic Outlook
Deema almashabi BloomBerg
Saudi Arabia’s benchmark stock index rose the most in two weeks, led by Etihad Etisalat Co., known as Mobily, after betterthan-estimated data on U.S. consumer confidence and manufacturing yesterday. Mobily, the second-largest telecommunications operator in Saudi Arabia, climbed to the highest level in more than six years. National Industrialization, the petrochemicals maker known as Tasnee, jumped the most in two months. The Tadawul All Share Index gained for a second day, adding 0.3 percent to 7,016.61 at the 3:30 p.m. close in Riyadh. The gauge had the biggest jump since Feb. 16 on a closing basis as 69 shares advanced, 49 declined and 41 were unchanged. “Gains in the market today are still modest and below expectations and attributed mainly to telecom, petrochemical and banking sectors for various reasons including the positive sentiment in international capital markets during last week,” said Mohammed AlOmran, a financial analyst and president of the Gulf Center for Financial Consultancy in Riyadh in an e-mailed response to questions. Mobily, gained 1.3 percent to 75.5 riyals and Tasnee increased 1.4 percent to 29.1 riyals. U.S. stocks rose last week, sending the Dow Jones Industrial Average to the highest level since 2007. Saudi Arabia’s stock exchange is the only Persian Gulf bourse operating on Saturdays.
Question time with Pakistan's longest serving foreign General Manager of Avari Towers! Karachi
ismail DilaWar
“I
may not leave Pakistan as a better hotelier, but I would leave Pakistan as a much better human being,” says Gordon James Gorman, General Manager of Avari Towers (AT), Pakistan’s leading and tallest 5-star hotel situated at the heart of this metropolis. Gordon, an accomplished international hotelier of Scottish origin who takes pride in leading what he describes them as the world’s 400 best hotel staffers and managers in Pakistan, talked at length about the challenges and opportunities faced by the hospitality industry in Pakistan in an exclusive interview with Pakistan Today last week. The hotelier, who enjoys a profound experience spanning over four decades in the hotel business, also detailed the prerequisites that make a hotel Number 1. Dwelling on the modern customers tendencies in hospitality industry, Gordon said high power shower was the first on the list. “Our water pressure is the best in Karachi. It is hot and, sometimes, it even hurts like someone is taking a full body massage.” Connectivity, to Gordon, stands second when it comes to customers’ liking in a hotel. “They want to connect with their families, businesses and the whole world,” he said recalling that there was no Wi-Fi in AT when he joined the hotel. “Now we have invested tremendously to offer in our rooms free and fastest broadband internet service needing no password!” Other features of the AT, he underlined, are a smoke-free atmosphere, complementary mini bar, seamless check in and out, in-room check out, take-away snack packs, unlimited free mineral Nestle water, coffee making machines to make high quality coffee for businessmen and what not. “It’s all about service and the company’s values. It’s about delivering what you say we deliver,” the GM said. The customers’ trust and confidentiality were other major factors his management was taking care of. Gordon says the AT management maintains a Guest Satisfaction Tracking Index (GSTI) under which daily feedback is secured from at least 70 cus-
tomers. As per GSTI, some 97 percent of AT customers were appreciative of the hotel’s sanity, cleanliness and values-oriented services. Asked to give a breakup of his guests, Gordon said it was 50-50. Half of the guests were local while half were foreigners. “It’s a nice mix. We have great guests,” he cheered. “Our slogan is: Avari Shares, Avari Cares”. Queried how he was taking care of the security issues in AT, Gordon was ready to take this interviewer on a short trip of the hotel premises to witness state-of-the-art security equipment installed around. Backed by high-tech surveillance cameras and sophisticated detection tools, highly trained retired army personnel have been hired to guard the hotel against any incursion. But, the most prominent feather, Gordon thinks, in his hotels’ cap is its highly dedicated staff. Pakistanis related to the hospitality industry now had a clear idea of what excellent customer care stands for, he said. “We have great people who are hospitable, highly educated, talented, skilful, committed and loyal,” said Gordon adding “I feel humbled by these brave people.” “There are, of course, some lu-
natics here, but don’t forget they are everywhere. In America, in UK, everywhere,” said Gordon who feels the ball was in the court of Pakistanis to “force the change”. Concerned about the fast shrinking hospitality industry in the terrorism-hit country, the AT general manager firmly believes that peace, tourism and prosperity would return to Pakistan which, he says, is at the crossroads. “You deserve to do better. You are under performing as a nation,” said Gordon citing negatives, like terrorism and extremism, decades-old mistrust on the Line of Control with India and preemptive drone strikes, as some of the major setbacks for the talented nation. The present “lame duck” government, he said, was also keeping at bay investors from across the globe to sign business deals with a government which was undergoing a democratic transitional phase. Uncertainties on politic-economic front, he said, were taking a heavier toll on the hospitality industry in Pakistan where tourism was next to zero. Gordon said January (2013) was the worst month for his hotel in terms of business, thanks to Long March of Dr Qadri and deadly blasts in Balochistan. “The country was on the brink of anarchy,” he
deplored. However, great thing about the people of Pakistan, who Gordon noticed had been bleeding since partition in 1947 and had now accustomed to it, was their “instant” recovery form a tragedy. “Tomorrow is another day. Let’s get back to work,” was approach of the terrorism-stricken Pakistanis, said Gordon. On the flip side, Gordon said his hotel’s business during July-December (FY13) was recorded as best in last 28 years. According to Gordon, the hotel business was a “tough game” in a tiny market like Pakistan. “You have four hotels present and the market is settled. Where are the fish?” Gordon looked worried while saying hotel business in Pakistan was depleting fats. “It continues to shrink at an alarming rate of up to 20 percent,” he said. The Scottish hotelier, however, eyes Pakistan as an exciting investment opportunity where businesses from across the world had a noticeable presence. “They all are here and competing for mega projects,” he added. Gordon said Pakistan was legging at least 20 years behind the world in terms of infrastructure development, something making the country an attractive market for foreign infrastructure developers. The talkative general manger of AT believes that the greatest risk for Pakistan is the “brain drain” as a large number of educated and skilled youth were flying abroad along with their families. “It’s a sort of demographic time bomb. So many MBAs contact me and ask for help in obtaining visa to go abroad. You are loosing the best of your bests,” Gordon warned. The Pakistani youth, he said, were not ready to “gamble” in a country where politico-economic uncertainties had left them devoid of a good leadership and even hope. Gordon also appeared unique in his view of the fulfillment of Corporate Social Responsibility (CSR) that, he said, many were using just to raise their moral profile in the newspapers. At AT, however, the manager has made each of the 400 staffers a stakeholder in the job by creating a charity fund, Tips for Life Foundation. Of the total CSR money, Gordon said, 10 percent is allotted to the charity fund and 90 percent is distributed among the hotels’ staffers as a tip or gratuity.
In a two-faced euro zone, financial conditions ease as joblessness rises howarD schneiDer Washington Post
Money is returning to the euro zone. Jobs aren’t. That’s the conflicting message of a pair of reports on Friday that show why Europe is less of a threat to the world financial system than it was last year but is still no less of a drag on the global economy. The money returning to the currency union is in the form of short-term investments by U.S. money market funds — often an important supply of dollars and short-term funding for European banks. When the big U.S. funds fled Europe in 2011, they intensified the problems faced by euro-zone banks and heightened the sense that a crack-up of the euro zone was not just possible but even likely. Fitch Ratings reported Friday that the top 10 U.S. money-market funds — the large pools of cash used as play-it-safe investments and money management tools — have nearly doubled their euro-zone holdings since hitting a low last summer. Euro-zone banks now account for 14.5 percent of top fund holdings, or nearly $100 billion, according to Fitch’s research. The 10 firms analyzed by Fitch represent about 45 percent of the roughly $1.5 trillion U.S. money-market pool. The turnaround in money-market investments in Europe is part of a general easing of the region’s
financial crisis. Though the confused results of a recent Italian election were a reminder that problems could worsen again if governments are unable to deliver on promised steps to control debt and revive economic growth, the region has stepped back from what seemed a looming breakup. What hasn’t yet turned around is the real economy, which remains in a recession. The Eurostat statistical agency reported on Friday that unemployment in the 17-nation currency zone rose again in January, to 11.9 percent, compared with 11.8 percent in December and 10.8 percent a year ago. Joblessness in the larger 27-nation European Union also rose a comparable amount, to 10.8 percent compared with 10.7 percent in December. The figures mask a vast discrepancy among countries, from the low of 4.9 percent unemployment enjoyed in Austria to 26 percent in Spain and 27 percent in beleaguered Greece. Officially, the region is in recession, meaning a major pillar of the world economy is contracting — making for more sluggish growth all around. Euro-zone officials and other forecasters expect growth to resume later this year. But recent estimates have also warned of a possibly more protracted downturn and of little expectation that unemployment will fall fast.
PRO 04-03-2013_Layout 1 3/5/2013 1:05 AM Page 2
02
busIness B Monday, 4 March, 2013
Why Democrats Must Get Smart on Entitlements Jonathan alter BloomBerg
I
N a season of depressing budget news, the worst may have been that a majority of US House Democrats signed a letter urging President Barack Obama to oppose any benefit cuts to Social Security, Medicare, Medicaid and other entitlements. That’s the last thing we need. To hold the line on harmful cuts to discretionary spending, Obama and the Democrats must educate the public about the necessity of entitlement reform. Otherwise, the poor and needy - - largely spared by the automatic reductions under sequestration -- will get hit much harder down the road. Liberals are right to reject Republican proposals that would slash social-welfare programs even as they refuse to consider closing tax loopholes for the wealthy. And I agree that the sequestration will cut into the bone of important government functions and investments in the future. That makes two more reasons to start talking seriously about how we will pay for the insanely expensive retirement of the baby boomers. How expensive? Anyone reaching retirement age in the next 20 years (including me) will take more than three times as much out of Medicare as he or she contributed in taxes. By 2030, the U.S. will have twice as many retirees as in 1995, and Social Security and Medicare alone will consume half of the federal budget, with the other half going almost entirely to defense and interest on the national debt. It’s unsustainable. Saying Goodbye If Democrats don’t want to talk about these programs, they can say goodbye to every other pet program. We can preserve Medicare in amber only at the expense of investments in prekindergarten programs or cancer research. To reform entitlements, we should assess what these programs were meant to do in the first place. For starters, Presidents Franklin D. Roosevelt and Lyndon B. Johnson didn’t call them entitlements. Jimmy Carter’s administration borrowed the term from “Anarchy, State and Utopia,” a 1974 book by Robert Noz-
ick, a political philosopher. “Entitlement” sounds selfish and at odds with the dignity and peace of mind that Social Security and Medicare are meant to provide. It distorts the animating idea behind these programs, which is social insurance. FDR didn’t have strong feelings about benefit levels, retirement ages or eligibility standards. He focused on what he called guaranteed return. By that he meant that having paid into the system through a kind of insurance premium (though in fact it was merely a payroll tax), Americans should rest easy that some money would be there for them if they lived long enough to need it. The whole point was “insurance against need.” “Guaranteed return” and “insurance against need” should continue to be the two guiding principles of socialinsurance reform. “Guaranteed return” means no privatization or voucher system for these programs. FDR would have strongly opposed President George W. Bush’s plan to allow Social Security contributions to be invested in the stock market. He thought subjecting retirement income to what he called “the winds of fortune” was a breach of the social contract. Imagine what would happen to someone who retired in 1929 or 2008? No guaranteed return. “Insurance against need” suggests keeping the focus on poor and
middle-class recipients who depend on the money most. That means means-testing, giving wealthier retirees less. FDR, who favored high levels of taxation on the rich, would have been fine with taxing their benefits, too, as long as they were guaranteed to get at least something back. Old Argument Liberals generally oppose meanstesting social-insurance programs. For decades they’ve argued that if the wealthy don’t get a heaping portion of Social Security and Medicare, it will undermine the political support of the programs and turn them into a form of welfare. Once that happens, the theory goes, the programs will be ended. Like the word entitlements, this hoary idea should be retired. Social Security and Medicare are now so deeply in the marrow of the American middle class that they will never be seen as welfare. The question is not whether to reform them, but how. Roosevelt structured Social Security as an insurance program with “contributions” through the tax code “so no damn politician can ever take it away.” He didn’t specify anything about the level of taxation or cost-ofliving increases, which weren’t an issue in the 1930s but would become one shortly after World War II. Today, only the first $110,000 in income is subject to the 7.65 percent tax that pays for Social Security and Medicare. Lifting the cap to higher
income levels (say $250,000 or $400,000) could eventually generate hundreds of billions of dollars. Republicans consider this a tax increase. That’s only true outside the context of these programs. The change could be structured so that no one paid in more than actuarial tables say they would take out. That would still raise billions and be consistent with the idea of paying for your own retirement if you can afford it. For lifting the cap to have any chance, it would have to be matched by reforms such as adopting the chained consumer-price index, a new way to measure cost-of-living adjustments that Obama apparently favors. Liberals oppose chained CPI because it would theoretically result in lower benefits. But less frequent cost-of-living increases aren’t the same as cuts, especially if the current system is, as many experts believe, based on an inaccurate assessment of inflation. Maybe there are better ideas for reforming social insurance. The point is, we better start talking about them. Otherwise, grandpa and grandma and their fellow Grateful Dead fans are going to eat all the food on the table. (Jonathan Alter is a Bloomberg View columnist and the author of “The Promise: President Obama, Year One.” The opinions expressed are his own.)
CORPORATE CORNER Lahorites take Green Valley Supermarket to their hearts LAHORE: New Food & Home sections attract crowds of customers. Green Valley at Mall of Lahore features the largest range of hi-end local and imported products at affordable prices. Green Valley recently inaugurated New Food & Home Sections at its flagship store in Mall of Lahore. The premium supermarket attracted large crowds of customers and took both the management and the shoppers by surprise. Almost doubling its preceding size and now covering an enormous area of 23,000 square feet it offers a complete shopping experience truly unmatched with any other retailer in Pakistan. Green Valley had already established itself as the first choice for grocery shopping which prompted Bahria Town to invest further in developing most extensive sections based on toys, books, electronics, technology, baby care, home décor, tableware, cookware, house hold and many more. Green Valley has truly redefined the shopping experience with unique offerings such as freshly baked organic breads spiked with imported ingredients, food hall offering local and international hot meals and the ability to combine the convenience of a supermarket with the expertise and service of a specialist shop. Press release
LESCO innovating through technology LAHORE: To meet the challenges of rapid technological advancements, Lahore Electric Supply Company has also incorporated latest technology in its operations to optimize the efficiency of its human resource and extend maximum facilities to its over 2.6 million valued consumers in Lahore, Okara, Sheikhupura and Kasur. To make the best use of technology for improved customer service, LESCO established a network of mobile customer service consisting of seven mobile vans fitted with state of the art computerized system of bill corrections and duplicate bills. It facilitated millions of consumers, particularly of remote areas to get all their billing complaints resolved at their doorsteps. Another step towards technological excellence is managing enterprise resource planning system in LESCO. Through these latest technological solutions, complete restructuring and reorganization of LESCO will be carried out and all departments and procedures will be streamlined by linking them through LAN and VAN (Computer Networking) for transparency, speedy operations and cutting down laborious task of unnecessary documentation. Another significant and very modern project introduced by LESCO is “Remote Metering System”. As a pilot project of ten GSM operated, software installed meters are being fixed in various locations of Lahore. Press release
The Road Ahead (or is it behind us?) Joachim Kempin The PC industry undoubtedly needs a savior! Will Microsoft ultimately step up or is this a lost cause, or beyond the company’s changing realm? Declining sales numbers, in a currently shaky economy, are not the only reasons for grave concern. Hurting the industry most, are ever advancing smartphones and tablets, and the increasing use of cloud computing all of which are obsoleting traditional PC usage. Is the PC revolution finally devouring its own children as it endangers PC manufacturers and software developers alike? Observing the trouble Hewlett-Packard and Dell experience today proves this is exactly what is happening right before our eyes. The market research firm, Gartner, recently predicted that smartphone sales will double over the next three years, tablet sales will triple, and PC sales might stay flat at best. This does not mean the PC is dead, but by 2016 tablet units sold could exceed PC units bought. Obviously, you would expect that Microsoft Corporation, which mainly lives and dies with PC software sales, should be the most interested party in revitalizing the industry. From 1987 to 2000, I led one of its divisions and was responsible for selling Windows to PC manufacturers. During this formidable time
in Microsoft’s history, its frontrunner status was nearly unshakable and software and hardware partners supporting its ecosystem were rewarded with impressive return-oninvestments and growth opportunities. After the company lost its antitrust trial in 2002, its fortunes changed profoundly. Since then, its leadership team has struggled mightily to cope with new market realities, stunningly missing the social media and mobile computing trends, and arriving painfully late at the cloud-services-party. Its recent launch of Windows 8 would seem like a major step forward in reversing some of the failures and curing the misfortunes of the last decade: It’s a robust platform that brilliantly extends a visually stunning, uniform interface across desktop PCs, smartphones, tablets, notebooks, and even servers. With this design coup, the company changed the rules on competitors, and simultaneously broadened the hardware base for its operating systems. Long overdue—this bold new platform definitely has the potential to invigorate the ailing industry and eventually entice the Facebook generation to rediscover PCs. During its glory days, the company understood how profoundly indebted it was to its ecosystem, and the launch of Windows 8 should have benefitted first and foremost Microsoft’s hardware and
software partners. Instead, many of them now feel betrayed because the company continues to move away from the partnership model that has served the industry so well for so many years. In mimicking Apple it designed its own tablet, Surface Windows RT, which will soon be followed by the more powerful Surface Windows 8 Pro. For me, a distinct sign that Microsoft continues to grapple with its destiny to the detriment of its partners. The two billion dollar loan in regard to the Dell buyout further underlines how discriminatorily Microsoft picks winners and losers. At this critical juncture I expected the company to remember its roots, and once again lead in collaboration with its partners through innovative software DNA to energize and transform the industry. Instead the oracle coming from Redmond reminds me of: I am the resurrection and the life; he who believes in me will live even if he dies. Amen. Disturbed and disap-
pointed by Microsoft’s shift of direction, I agree with Rob Enderle, founder and principle analyst of the Enderle Group, that a rebirth of the PC will require a clever “better together” hardware design, working seamlessly with post-PC area mobile devices. Can Microsoft still change course and rise to the occasion or
does the industry have to patiently wait for the long-overdue, pundit-predicted earthquake, which will eventually shake up its executive suite? Joachim Kempin is former SVP of OEM Sales at Microsoft and author of Resolve and Fortitude.