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Auto Sector: monthly sales performance review Page 02
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Monday, 12 March, 2012
Ambassador of Oman at LCCI g
Pakistan is rich in resources, but needs to focus on its image LAHORE
P
STAFF REPORT
AkIsTAN is a resourcerich and great country, but its biggest impediment in way of foreign direct investment is its perception, which needs to been focused upon in order to change their image in front of the outer world. This was stated by the Ambassador of Oman Mohamed said Mohamed Al-Lawati while speaking at Lahore Chamber of Commerce and Industry (LCCI) on saturday. LCCI President Irfan Qaiser sheikh gave the welcome address, while LCCI Vice President saeeda Nazar gave a set of suggestions as to how the two-way trade volume could be enhanced. The ambassador said the government of Pakistan should evolve a well tailored marketing strategy to market its strengths in various sectors as a number of foreigners are desirous of putting their money here, but are unaware of the potential areas. “Had a little attention been given, the investment scenario in this part of the world would have been quite encouraging.” speaking on the occasion, LCCI President Irfan Qaiser sheikh emphasised the need to expand trade and business relations between Pakistan and Oman as there is great potential for it in a number of sectors, particularly energy development. LCCI president informed the Oman ambassador that despite a number of internal and external challenges being faced by the country, dynamism of the private sector has set Pakistan on a high growth trajectory. He said Pakistan is located at the confluence of three vital regions -
Project Syndicate
I
Dani Rodrik
wAs recently invited by two Harvard colleagues to make a guest appearance in their course on globalisation. “I have to tell you,” one of them warned me beforehand, “this is a pretty pro-globalisation crowd.” In the very first meeting, he had asked the students how many of them preferred free trade to import restrictions; the response was more than 90 per cent. And this was before the students had been instructed in the wonders of comparative advantage! we know that when the same question is asked in real surveys with representative samples – not just Harvard students – the outcome is quite different. In the United states, respondents favour trade restrictions by a two-toone margin. But the Harvard students’ response was not entirely surprising. Highly skilled and better-educated respondents tend to be considerably more pro-free trade than blue-collar workers are. Perhaps the Harvard students were simply voting with their own (future) wallets in mind. Or maybe they did not understand how trade really works. After all, when I met with them, I posed the same question in a different guise, emphasising the likely distributional effects of trade. This time, the free-trade consen-
south Asia, Central Asia, and west Asia - providing shortest access to the sea for all landlocked countries of Central Asia, as well as western China. Being close to Gwadar, Oman can hugely benefit from this unique opportunity and explore multiple corridors of cooperation with Central Asia and western China, especially in the fields of energy, trade, transportation and tourism, he said. Irfan Qaiser sheikh said Oman and Pakistan have a vital role to play for the cause of peace, harmony and development in this region. He said Oman
has a rich experience in oil exploration; therefore, Omani companies can go for joint venture in exploration of oil in Pakistan. Moreover, Pakistan can provide manpower services in sectors, like education, health, engineering, construction, telecommunication, etc. Both countries are moving ahead through various agreements on defence cooperation, business sectors, labour and manpower, etc. Pakistan-Oman Joint Investment
Company which was established in order to enhance trade between Oman and Pakistan has got a great role to play. Irfan Qaiser sheikh said the trend of total trade between the two countries has been inconsistent. some improvement in 2009 was witnessed, as our two-way trade figure grew from $393 to $417 million. But in 2010, it dropped to $297 million. The analysis of imports from Oman further confirms this inconsistency. From 2008 to 2010, the imports were recorded as
$101, $268 and $156 million, respectively. However, Pakistan’s exports to Oman are constantly dipping which is matter of concern. The exports stood $293 million in 2008 which fell to $149 million in 2009 and $141 million in 2010. Both Pakistan and Oman need to find out reasons of this decline in exports and at the same time should explore ways to improve the level of trade for bringing some consistency in growth of trade relations.
The government of Pakistan should evolve a well tailored marketing strategy to market its strengths in various sectors as a number of foreigners are desirous of putting their money here, but are unaware of the potential areas
Pakistan’s major exports to Oman are cereals, meat, machinery, nuclear reactors, boilers, electrical and electronic equipment, articles of textiles, organic chemicals, etc. whereas, Pakistan imports mineral fuels, oils, plastics, copper, organic chemicals, fertilisers, iron and steel, etc. speaking on the occasion, LCCI Vice President saeeda Nazar said the two-way trade volume could be enhanced through creating opportunities for the private sectors of both the countries to interact with each other on regular basis. By exchange of business delegations and holding of single country exhibitions on reciprocal basis, both countries can lead to cause a quantum leap in trade. LCCI former senior Vice President sheikh Mohammad Arshad, former Vice President Aftab Ahmad Vohra, EC Members Rehman Chan, sh Mohammad Ayub, Yousaf shah, Husnain Reza Mirza and Mahmood Ghaznavi were also present on the occasion.
FREE-TRADE BLINDERS sus evaporated – even more rapidly than I had anticipated. I began the class by asking students whether they would approve of my carrying out a particular magic experiment. I picked two volunteers, Nicholas and John, and told them that I was capable of making $200 disappear from Nicholas’s bank account – poof! – while adding $300 to John’s. This feat of social engineering would leave the class as a whole better off by $100. would they allow me to carry out this magic trick? Those who voted affirmatively were only a tiny minority. Many were uncertain. Even more opposed the change. Clearly the students were uncomfortable about condoning a significant redistribution of income, even if the economic pie grew as a result. How is it possible, I asked, that almost all of them had instinctively favoured free trade, which entails a similar – in fact, most likely greater – redistribution from losers to winners? They appeared taken aback. Let’s assume, I said next, that Nicholas and John own two small firms that compete with each other. suppose that John got richer by $300 because he worked harder, saved and invested
more, and created better products, driving Nicholas out of business and causing him a loss of $200. How many of the students now approved of the change? This time a vast majority did – in fact, everyone except Nicholas approved! I posed other hypotheticals, now directly related to international trade. suppose John had driven Nicholas out of business by importing higher-quality inputs from Germany? By outsourcing to China, where labor rights are not well protected? By hiring child workers in Indonesia? support for the proposed change dropped with each one of these alternatives. But what about technological innovation, which, like trade, often leaves some people worse off. Here, few students would condone blocking technological progress. Banning the light bulb because candle makers would lose their jobs strikes almost everyone as a silly idea. so the students were not necessarily against redistribution. They were against certain kinds of redistribution. Like most of us, they care about procedural fairness. To pass judgment on redistributive outcomes, we need to know about
the circumstances that cause them. we do not begrudge Bill Gates or warren Buffett their billions, even if some of their rivals have suffered along the way, presumably because they and their competitors operate according to the same ground rules and face pretty much the same opportunities and obstacles. we would think differently if Gates and Buffett had enriched themselves not through perspiration and inspiration, but by cheating, breaking labor laws, ravaging the environment, or taking advantage of government subsidies abroad. If we do not condone redistribution that violates widely shared moral codes at home, why should we accept it just because it involves transactions across political borders? similarly, when we expect redistributive effects to even out in the long run, so that everyone eventually comes out ahead, we are more likely to overlook reshufflings of income. That is a key reason why we believe that technological progress should run its course, despite its short-run destructive effects on some. when, on the other hand, the forces of trade repeatedly hit the same people – less educated, blue-collar
Pakistan exports grew by 4.15pc during Feb APP ISLAMABAD
Pakistan exports in February 2012 grew by 4.15 per cent over the previous month, however they decreased by five per cent over the same month of last fiscal year 2010-11. According to a statement of Trade Development Authority of Pakistan (TDAP) issued here, the latest trade figure showed that Pakistan’s exports during February 2012 were valued at $2.034 billion which was four per cent above than the level of $1.953 billion in January 2012 and five per cent lower than the level of $2.141 billion during February 2011. Imports during February 2012 were valued at $3.462 billion registering a growth of 134 per cent over the level of imports valued at $ 3.053 billion in February 2011. On the other hand cumulative trade figure shows that Pakistan’s exports during JulyFebruary 2011-12 were $15.189 billion, while in the corresponding period of the last year 2010-11 exports were $15.263 billion, which showed a negligible decline 0.5 per cent. Imports during July-February 2011-12 were $29.789 billion as compared to $25.599 billion during the same period of the year 2010-11, registered a 16.37 per cent growth.
workers – we may feel less sanguine about globalisation. Too many economists are tone-deaf to such distinctions. They are prone to attribute concerns about globalisation to crass protectionist motives or ignorance, even when there are genuine ethical issues at stake. By ignoring the fact that international trade sometimes – certainly not always – involves redistributive outcomes that we would consider problematic at home, they fail to engage the public debate properly. They also miss the opportunity to mount a more robust defense of trade when ethical concerns are less warranted. while globalisation occasionally raises difficult questions about the legitimacy of its redistributive effects, we should not respond automatically by restricting trade. There are many difficult trade-offs to consider, including the consequences for others around the world who may be made significantly poorer than those hurt at home. But democracies owe themselves a proper debate, so that they make such choices consciously and deliberately. Fetishising globalisation simply because it expands the economic pie is the surest way to delegitimise it in the long run. Dani Rodrik, Professor of International Political Economy at Harvard University, is the author of The Globalisation Paradox: Democracy and the Future of the world Economy.
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Monday, 12 March, 2012
02 debate Auto Sector: monthly sales performance review P SARfRAz AbbASi
AkIsTAN Automotive Manufacturers Association (PAMA) has just released local automobile industry’s sales and production numbers for the month of February ‘12. As per the data, Auto sales of the industry witnessed substantial growth of 17 per cent YoY to 111,552 units in 8MFY12 as against the sales of 95,635 units in the corresponding period last year. Conversely, on monthly basis, industry sales have posted a modest drop of 27 units to 14,940 units in the month of February ’12 in comparison of 14,967 units in the previous month. Overall industry sales were higher because of the low based effect improved agricultural income. Pak suzuki Motor Company Limited (PsMC) has witnessed a 35 per cent YoY growth to 70,162 units in 8MFY12 as
Greece averts immediate default, markets sceptical
The writer is senior research analyst at Summit Capital. For comments and queries, contact profit@pakistantoday.com.pk
Low-priced stocks support index to touch six-year high of 550m shares
ATHENS
APP
APP/Reuters
ISLAMABAD
Greece averted the immediate threat of an uncontrolled default when a sufficient number of private creditors agreed on a bond swap deal that will cut the country’s public debt and clear the way for a new bailout. with euro zone ministers set to approve the 130 billion euro ($172 billion) rescue, French President Nicolas sarkozy declared the Greek problem had been settled just as Germany said that any impression the crisis was over “would be a big mistake.” Financial markets sharply marked down the value of new Greek bonds to be issued to the creditors, reflecting the risk of paralysis after elections expected this spring and doubts about whether Athens can bring its debt to a more manageable level by 2020. sarkozy, who is trailing his socialist challenger for the presidency before France’s own elections in April and May, pronounced the Greek deal a major success. “Today the problem is solved,” he said in the southern French city of Nice. “A page in the financial crisis is turning.” Euro zone finance ministers held a teleconference call and were expected to declare Athens had met the tough terms of the bailout, its second since 2010, and to authorise the release of funds which the country needs to meet heavy debt repayments later this month and avoid a disorderly default. The International Monetary Fund’s Managing Director Christine Lagarde said the IMF board this week would discuss a four-year loan worth 28 billion euros ($36.7 billion) to support reforms in Greece as part of the bailout package.
City were lower by 29 per cent YoY to 4,243 units as against 5,998 units in the same period last year. The main reason behind the decline in the sales of was suspended operation from December 2011 to February 2012 on the back of unavailability of the parts owing to floods in Thailand from where the company imports CkD kits. As far as the market share is concerned, Pak suzuki Motor Company leads the market with 63 per cent market share followed by Indus motor company and Honda Atlas Cars with 31 per cent and 6 per cent market share in 8MFY12. Currently we recommend a HOLD stance on PsMC and INDU.
company with a gigantic 88 per centYoY to 2,561units as against 1,374 units in the same period last year. Toyota Corolla posted an upsurge in sales by six per cent YoY to 29,040 units as against 27,423 units in the same period last year. Cuore remained as the only segment of the company whose sales experienced a substantial decline of 34 per cent YoY to 2,765 units as against sales of 4,194 units in the same period last year. Honda Atlas Cars Pakistan Limited (HCAR) has posted a biggest decline in its sales of 33 per cent YoY to 7,024 units in 8MFY12 as against 10,444 units in the same period of previous year. The plunge in the sales of the Honda cars was primarily because of the substantially lower sales of its both brands Honda City and Civic. sales of Honda Civic were decline by a massive 37 per cent YoY to 2,781 units as against the sales of 4,446 units while sales of Honda
against the sales of 52,067 units in the same period last year. Highest growth was observed in the sales of suzuki swift of 86 per cent YoY to 4,500 units as against 2,420 units in the same period last year. suzuki Cultus under the domain of 1000cc segment witnessed a handsome 38 per cent YoY jump in its sales to 9,573 units in the comparison of 6,919 units in the same period last year, followed by suzuki Alto whose sales also experienced a massive 32 per cent growth to 9,854 units versus 7,438 units in the same period last year. Above all, suzuki Mehran and suzuki Bolan both segments posted growth of 37 per cent YoY and 47 per cent YoY respectively. Indus Motor Company Limited (INDU) witnessed a four per cent YoY growth in sales to 34,366 units in 8MFY12 as against 32,991 units in the same period last year. Hilux, under pick up segment led the growth in sales of the
Major buying in the low-priced stocks by local and foreign investors helped the local market to touch the six-year high of 550 million shares on the last trading day of the previous trading week. Talking to APP, stock Analyst, Zaheer Ahmed said that more than a half of total volume of the index was supported by low- priced scrips including NIB Bank, silk Bank, Js Bank, TRG Pakistan, Fauji Cement and many others. He said that the price of NIB bank was closed at Rs2.85 with an increase of Rs0.96 with volume of 86.58 m shares, silkBank at Rs.2.75 up by Rs0.43 with volume 22.04m shares and Js Bank closed at Rs6.74 with a rise of Rs1.00 with volume of 17.36m shares. “The price of TRG Pakistan was closed at Rs.3.62 with an increase of Rs0.97 with volume of 44.89 m shares and Fauji Cement at Rs5.52 up by 0.03 with volume of 34.70m shares”, he added. He said that the existing bullish
rally in the market would not end at this level but it would sustain in the future because the interest of foreign and local investors had been restored due to economic conditions of the country had showed improvement. Another stock Analyst said that the foreign investment has witnessed an increase of $7.57 million in the week ended on March 9, as compared to the previous week. He said that the positive corporate results of the stock-listed companies had also supported the markets and led the bullish rally since many consecutive days. “There are no negatives sentiments in the future and many other low-priced scrips are to expected to led the bullish rally in the future”, he added. stock Analyst, MM Hassan said that the enforcement of Capital Gain Tax (CGT) from April 1, 2012 would also create positive atmosphere for the investors in the future and it would also boost investment in the locals markets in the country.
FPCCI appreciates the SEZs Bill APP ISLAMABAD
President, Federation of Pakistan Chambers of Commerce and Industry (FPCCI), senator Haji Ghulam Ali, appreciated the decision adopted by the senate of Pakistan to pass the special Economic Zones (sEZs) Bill, 2011, which will devise a policy framework for setting up sEZs and to attract domestic as well as foreign direct investment in the country. A statement issued here by FPCCI said that they also applaud the effort made by Board of Investment (BOI) for preparing a framework for the establishment of sEZs throughout the country and this is indeed a right direction for boosting investment level in the country for which BOI’s efforts are appreciable. It was stated that this Bill is passed by the senate at a very appropriate time when the country is facing drastic decline in foreign investment. He said that incentives announced for the developers and entrepreneurs that would get one-time exemption from customs duties and taxes for all capital goods imported into Pakistan for the development of sEZs along with ten-year tax holiday both for sEZs developers and enterprises would encourage Investors to invest in the country on one hand and on the other hand this decision would raise the confidence of the foreign Investors. They further stated that the effectiveness of the sEZs model in promoting exports have created new dimension in the global trade arena. sEZs have played an important role in advancing economic reform in many emerging economies. A sEZ is a comprehensive laboratory in which fully fledged economic reforms can be piloted, while industrial parks are a supporting component of sEZs, but with an industrial focus. He said that FPCCI supported the sEZs Bill and FPCCI being apex body of trade and industry and the private arm of the Government will always favour such decisions for improving the investment environment of the country.
FATIMA fertiliser: Trend promises growth in dividends
F
HAmmAd mALik
ATIMA fertiliser company has performed exceptionally well since the initiation of its operations, managing to post an EPs of Rs2.06 for the FY2011, well in line with the expectations. The Board of Directors, showing their delight on this outstanding performance of the company, has announced a dividend of 15 per cent for the same period and this may instigate a rally in the scrip – the price expected to rise up to Rs32 till June 2012. The company enjoys certain benefits which strengthen its case for being the most attractive scrip in the current bullish trend that has impounded the karachi stock Exchange. Offering an upside of at least 32 per cent before June, FATIMA will prove to be a safe haven for investors if investments are to be based on fundamentals. Technicals, similarly, advocate the case for in-
vestment in FATIMA. The scrip has consolidated well between the levels of Rs23 and Rs25, opening room for a movement towards Rs27 – its previous high. Breaking that barrier will push the scrip closer to our target price for June. On the operational front, the company receives an incentivised gas tariff for feedstock gas – the main raw material for urea and other fertilisers. The current tariff of $0.77 per MMBTU is at least 78 per cent lower than the regular gas tariff of $3.44. FATIMA will continue to receive gas at this tariff till June 2021, ensuring multiplied gains in the future when capacity utilisation is expected to increase. The state-of-the-art production facility will provide the infrastructure to FATIMA to become the leading manufacturer of fertilisers in Pakistan sooner than later. Another salient feature for FATIMA is the uninterrupted gas supply
- FATIMA enjoys an incentivised gas tariff and with a projection of increased sales in the future, the company will enjoy multiplied benefits - The Board of Directors has announced a 15 per cent dividend in the AGM on March 9, 2012 - The share price has consolidated above the Rs23 mark and is now set to reach its previous high of Rs27 - surpassing that barrier will open room for the Rs30 mark, crossing which may force the scrip to soar past Rs32 that the plant receives from MARI gas network. while the gas curtailment scenario has hampered the profitability of other fertiliser manufacturers, FATIMA’s competitive edge has proven to be a decisive factor in the most competitive sector of the country. The equal sharing of debt-equity in the capital structure of FATIMA
has been one point of concern for investors, but increased percentage of cash sales and improved inventory turnover has stamped an expectation for the company to reduce the percentage of debt and hence restructure the capital formation. If this trend continues, dividends are expected to grow in the future.
Through DCF method: Target price till June, 2012: Rs. 34 Upside on offer: 32 per cent The writer is senior associate, First National Equities. For comments and queries, write to profit@pakistantoday.com.pk
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Monday, 12 March, 2012
Subtle toggling of inputs
EDITORIAL
Middle class and prices
S
UDDEN increase in prices of petrol, CNG, mutton, chicken and eggs is pretty much all it takes to choke the middle class, effectively the life and blood of a market economy. This is not to imply that upper and lower income groups are immune to price shocks, just that the middle group contributes more meaningfully to overall economic growth, and hence is most responsive to government policy. That prices of these items are on a concerning uptrend again is indicative of further price, spending, investment and saving pressures down the road. That we approach such a situation in times of already uncomfortable stagflation and unemployment implies the economy is likely to need a lot more aid than decision makers tend to acknowledge. There is little likelihood that PhDs in the finance ministry and planning commission are not aware that Pakistan’s only safe bet is to grow out of the present situation. There can be no other credible arrangement. Yet there seems little pressure on Islamabad’s
PREJUDICE AGAINST INDIA This is with regards to the article “Lawn-ing with the most favoured neighbour” published on Monday, 05/03/2012. The fact that the writer linked up the MFN debate with lawn exhibitions makes the article an entertaining read. And the way the writer showcased our mentality, as to how we customarily go head over heels over all things Indian, but still scrutinise everything coming from the East is another important case in point over the entire debate. No one has pointed this out in the entire MFN debate. It is funny, if nothing else, that it’s the textile industry that has been whining the most, while lawn brands use Bollywood actresses to
real power circles regarding a visible government posture that deters growth. In the money market, the government’s incessant borrowing has eroded credit market solvency for private sector expansion, with its subsequent negative spillover on employment and consumerism. On the fiscal side, Islamabad’s inability to move on the PsE issue – whether turnaround and strategic privatisation or improved management and cutting losses – continues to drain the national exchequer of approximately Rs400 billion annually. with growth chronically low and jobs scarce, whatever consumer activity remains will be sliced by high prices. There is also an interesting, non-economic angle to middle class disappointment. Being the biggest chunk in most democracies (developed ones anyway), they also form the largest vote bank, which is why most official policies are framed with the middle class as the predominant target market. The more it finds faults with government policy, the louder its sentiment will resonate come vote time.
endorse their brands. we need to come out of our prejudice against India and think about the long term future of our country. India is zooming ahead of us economically, and we would need to cooperate with them if we don’t want ourselves to lack further behind. The MFN debate has been blown out of proportion by the industrialists who realise that our products can not stand shoulder to shoulder with their Indian counterparts. It’s better to face competition – no matter how still it might be – than to run away from it.
Javed Gilani
A
n economy unable to reach its production possibility frontier will always remain vulnerable to exogenous shocks, as in the case of Pakistan. It would have been a different story if the last two-to-three years had seen some sort of visible improvement in handling deficits and improving growth. If we had produced, exported and grown more, we would have had a more stable support base, restricting damage from external shocks our economic and political managers have no control over. In the present circumstances, among Pakistan’s chief worries is rising energy and input cost, the demand-supply dynamics of which play out on a stage and involve actors far removed from Islamabad’s sphere of influence. with our deficits in uncomfortable zones, additional price pressure due to increasing inflation, predominantly higher energy and input costs, is putting unsustainable pressure on the country’s reserve situation. Therefore, even as relevant quarters and analysts calculate a few month elbow room for reserves, their value diminishes every time international pressures bid up oil. Things looked up in the immediate aftermath of the 18th amendment, which transferred increased power and responsibility to provincial governments. Yet with no proper revenue generation framework, and unable to get help from a largely defunct FBR, they have been unable to make any meaningful contribution so far. On the other hand, the federal machinery has not been able to introduce any form of value addition in the present export basket. This means that almost all traditional means of generating national revenue are compromised. That is why we
We are not without necessary ingredients for improved growth, we just need better handling
WALi LAhORE
Speaking of autonomy
I
Sakina Husain
t has been about a month since the IMF report on Pakistan ‘ingeniously’ highlighted the economy’s fragility. A sense of urgency was incumbent; the PM quickly and quite conveniently replaced the secretaries of finance and FBR. Very few questions were asked; the damage was covered. How and why would the public demand accountability and transparency, or an extenuating correction of seemingly portrayed fudged figures when it has been residing in blissful ignorance with regard to the
economy? Or maybe the silence was another extension of the disillusionment with the system. For the purpose of reminiscing, the IMF report in Feb-12 revealed that the (please note: expected) budget deficit communicated by the government for FY12 has been understated by Rs532 billion where in the revenue was overstated by Rs215 billion and expenditures were understated by Rs317 billion. This would imply that the budget deficit for the current fiscal year would arrive at about 6.6 per cent of GDP, instead of the government’s repeated assurances about realising the promised five per cent contingent on promised external inflows which even the sovereign would vouch by…but nevertheless. Given this back drop, the very act of changing secretaries signals that the government is capable of making only cosmetic changes in an effort to please the almighty IMF. The first contention questions why the IMF is so important that the government needs to replace qualified personnel who have served its
cause throughout the regime so far. Moreover, current deliberations by the ex-finance minister reveal that domestic debt has exceeded foreign debt, indicative of greater reliance on the domestic financial system instead of lenders abroad. so why is there a need to prove credibility in front of this iffy source of funds? The second contention challenges the autonomy of the ministry of finance as the government’s window into its accounts. If expenditures, especially the larger recurrent ones are being exceeded than the target, is the finance ministry really supposed to suffer blame? There are severe structural deficiencies in the collection and distribution of revenues between the federal and the provincial governments. For instance, the provincial government or the chief minister has the power to undertake expenditures without taking prior approval from the national assembly. This automatically results in a greater than expected deficit in provincial budgets as the latter have limited
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rely on international trends to facilitate our economic engine. we are always in need of improved remittances to defend deficits. we are always praying for international events that push down the price of oil so our own economic managers can breathe easy. And of course, we are always on the lookout of bailout and donor assistance. sadly, despite the obvious persistence of such trends, we have not moved in manner that the situation merits. It bears noting that persistent growth problems require solvency in credit markets to stimulate the only indigenous option to revive GDP. when the external situation exerts unbearable pressure, economies look inward, prompting private sector expansion which in turn attracts offshore investment. In this case, banks facilitate private sector investment, in some cases ably guided by the official machinery, in a way that the centre does not interfere in market mechanism, only facilitates it. This is where the Pakistani banking sector needs to step up to the plate. For some years now, a proactive lending regime, one that incorporates targeted needs of the time, has been conspicuous by its absence. whatever little scope the private sector has had has been compromised by heavy government borrowing. This equation requires urgent balancing. The last couple of years of private sector crowding out have left a vast investment field yet to be exploited. Ironically, the laxity of the past might even turn into an attractive opportunity for the present. If properly handled, private sector investment can create jobs, improve infrastructure, create employment and, most importantly, engineer second round market multiplier, with gains for all. we have now come to the point of no return. Both government and autonomous organs must finalise an action plan that will stimulate employment and growth. That means fine tuning both fiscal and monetary policies. Once the finance ministry initiates immaculately targeted fiscal expansion, and the central bank makes credit available to private investors, we may even see a domino effect strong enough to lure bulky foreign investors. Our problems are not existential, but their handling has made them acute. we have the necessary inputs, its just a little toggling of official policy that is required. The recent stock market optimism is an adequate indicator of productive potential across the economy. All that is needed is effective program management. The writer is Chief Manager SME bank and has been a leading banker in the industry for more than 30 years
Is the government only capable of making cosmetic changes to appease the IMF?
space to raise revenues, especially, post the 18th amendment which led to the devolution of many subjects that were earlier apart of the federal list. Third, the PM’s alacrity in reading international evaluations of the economy is commendable and therefore must be lauded. why should he pay heed to weekly caveats published by domestic analysts who have repeatedly tried to inform, challenge or at least warn the government regarding the same macro variables delineated by the IMF? The government is ready to cheer the FBR chairman when he reports higher than target revenue collection, but ever ready to replace the same person when the numbers are challenged by an international body! why are there no internal checks and balances? And moreover, is the 23membered IMF office in Pakistan better equipped to report federal collection of taxes and expenditures? Regardless of
whether the answer is in the affirmative, there is only a sense of embarrassment and shame that holds its ground. If the government is ever so concerned about accurate reporting of its accounts and more importantly meeting its target spending, ‘may be’ it needs to address the inefficiencies that exist in its very own government offices. supposedly, for the provision of government services annually, the government spends about Rs13,000 per capita, leaving out the amount that is assigned for expanding the scope of these services ie the PsDP. And to put an end note: there is little education, very little health and almost no security in the country. The writer is an economic analyst and freelance financial journalist. She can be reached at sakina.husain@gmail.com
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