High energy prices, a root cause of economic turmoil

High energy prices, a root cause of economic turmoil

Mian Kashif Ashfaq, Managing Director ChenOne highlights issues facing business community

Says govt should announce incentive packages for manufacturing, textile industries to compete in international market

By Azhar Bukhari

AFTER the recession in the world economy, problems are escalating with every passing day for exporters of Pakistan particularly in textile sector.
Ever increasing rates of Oil, gas and electricity as well as the less availability of these energy resources, are pushing the local exporters to the corner in the international market.
It was the viewpoint of renowned business man and Managing Director ChenOne, Mian Kashif Ashfaq, which he expressed this in a meeting with The Post.
“In my opinion, the federal government should announce incentive package for industrialists related to export sector without any further delay to get the economy back to rails. The prolonging power crisis and high fuel prices have already damaged the local manufacturing industry, which could only be restored if government take some practical steps in this regard,” Mian Kashif observed.
He maintained that the most dangerous factor facing by the business community is the law and order situation and the terrorist activities in country.
These activities disturbing the both national and international businesses as no foreign company ready to invest in Pakistan.
“A fund should be announced to explore the more international markets especially TDAP and ministry of Industry should apply the serious efforts to branding of Pakistan in the world and promote the industrial and commercial image,” MD ChenOne said.
However, the federal government would have to give priority to continuity of electricity supply as well, he maintained. “In the absence of proper policy planning, no package would work,” he added.
He stressed the need for identification of the areas for the guidance of the foreign investors besides only focusing on manufacturing sector.
An energetic business activist, Mian Kashif said that there is no need for being pessimistic as every crisis has in its fold some opportunities as well. “The country is facing severe energy crisis, from electricity shortage to high fuel prices, problems and hurdles are everywhere, but it is also an opportunity for businessmen to put their money in power projects,” he elaborated.
Mian suggested the government to fix the electricity and fuel prices for at least 5 years for the revival of economy.
“I have always been of the opinion that commerce related policies should be fixed for a certain period of time.”
He was of the view that a strong liaison between the policy makers and the stakeholders could also be helpful in bringing the country out of mire.
He said that the incentives being offered to the foreign investors by the Board of Investment should also be given to the local businessmen so that they could be able to put their money in new ventures.
He maintained that drastic cut in government expenditures and enhanced productivity were the answers to the liquidity crunch. He urged the State Bank of Pakistan to announce cut in interest rates without any further delay as it is a prerequisite to enhance industrial production. At a time when the whole industry is badly suffering due to high cost of doing business and complaining of being uncompetitive in the global market, the SBP has taken a totally otherwise step, he added.
He was of the view that imbalances in the economy such as increasing trade deficit, current account deficit, high saving and investment gap, huge government borrowing and persistent high inflation including food inflation would leave a very negative impact on the national economy.
Renowned industrialist Mian Kashif said that the government should evolve long-term and short term plans to enhance electricity production in consultation with real stakeholders. He stated that long term plan include utilizing all hydel resources by building big water reservoirs and power generation units which is a cheaper way to produce energy. He said that government should also go for alternative energy resources like other countries. He mentioned that Germans are producing more than 21000 MW and while India are producing more than 7000 MW power through wind energy.
Furthermore, Mian strongly criticized NEPRA decision to allow power distribution companies to increase in power tariff. He said that this decision would be last nail in the coffin of industrial sector.
He said that only because of huge undiscovered potentials in Pakistan and for having a unique food basket, a number of foreign investors are ready to come to Pakistan.
He called for revival of freight subsidy to give boost to exports as the freight subsidy was making Pakistani exports uncompetitive in the global market which has a huge potential for Pakistani goods, particularly chicken meat.
He was of the view that compliance to all international norms and standards is a must to get competitiveness and only those organizations would be able to get a respectable space in the global market that are world standards compliant.
He said that industrialists training through such seminars and training sessions would help them meet the challenges of 21st century.



Profile

Mian Muhammad Kashif Ashfaq is Managing Director/Head of ChenOne Stores Ltd and ChenOne WorldWide Travels.
ChenOne is a subsidiary of Chenab Limited, formerly Chenab Fabrics and Processing Mills Ltd.
Chenab Group is one of the largest exporters of home textiles, apparel & value added products from Pakistan.

In 1997, ChenOne opened its first branch in Jinnah super, Islamabad. At present ChenOne has opened its branches in Karachi Park Tower, Tariq Road, Lahore Gulberg, DHA, Islamabad, Rawalpindi, Peshawar, Abbottabad, PC Bhurbun, Faisalabad, Multan, Sialkot, Gujrat & Rahim Yar Khan.
With the target of opening 50 stores in Pakistan by 2015, ChenOne will maintain its status of largest Chain of Stores in Pakistan.

Talent needs mentorship

Talent needs mentorship

Interview By Azhar Bukhari
TALENT alone is not enough, it needs mentorship, which Pakistan lacks, stresses Brig (r) Zubair Rehan, Managing Director of Creative Junction, a noted ad agency.
In an exclusive interview, Rehan disdains the rise of mediocrity and compromise on quality, particularly in the advertising industry.
As the Managing Director of Creative Junction, he observes, mediocrity on single factor – the dearth of leadership, saying “The lack of leadership in fact the acute absence of guidance has restricted the growth of advertising to an institution despite availability of immense talents and resources.”
He observed that most of the people dealing in the ad industry inherited running advertising agencies from their ancestors here in our country, though they are incapable of seeing beyond their noses to realise that they have to return something to the system they got benefit.
“There has been no attempt to make an investment in people. To develop, nurture and groom the raw talent that we have in abundance,” Rehan maintained.
These concerns need to be taken seriously by the advertising industry, or what passes for it, as Rehan has worked his way up since he started his career in advertising “by an accident” even before his past belongs to such a profession where following the strict discipline is only way to survive. He also explains why he feels that it gives his “un-inherited” agency a “professional edge.”
Besides the lack of leadership another major deterrent to groom the talents is the economic reality itself, adds Rehan. “It is not that there is a dearth of talents. This is obvious from one simple fact: Despite jobs being in short supply everybody seems to be looking out for quality employees. And yet the search remain futile as while advertising is all about common sense, I myself did not know anything about it when I started my career with Creative Junction, there are no venues to find, develop and groom the inherent talents.
There are no schools specialising in advertising to groom the natural-born talent for advertising.
“Merit did not matter, what matters more are the connections. Things are being definitely changed for better due to wider penetration of airwaves by the satellite channels changing the way the consumers think. They have become more educated and informed to become more demanding in turn. The exposure has made advertising companies, and for that matter their clients, more sensitive to the needs of consumers realizing that old formulae would not work anymore.”
“Advertising in Pakistan still keeps reeling from the creative flair and the execution it requires. An advertising agency is good if it is sincere with its client. If a client is good agency would also be good and vice versa. However, don’t expect an advertising company to turn a concept into an affective commercial if the client is not willing to provide the environment, the people, the frame-work and the last but not the least the appropriate funds? Demanding quality output without providing quality input can hardly be expected to work. Quality has a price.”
He maintained that it is also important to understand that unlike many other countries, including India, lack of professionalism and creativity in the Pakistani advertising industry can also be attributed to dearth of technical skills. It is an established fact that advertising industry draws its strength from the film industry. We are all aware of the lack of professionalism and technical know-how in our film industry and thus our ad-industry is unable to draw the needed technical backup, Rehan said.
MD creative Junction observed that restricted growth of the ad-industry could also be attributed to the ground realities of the Pakistani market. The industry’s performance depends heavily on the performance of the other sectors of the economy and the reason for the changing role of the advertising agencies from that of mere providers of traditional services as print and audio-visuals. In the digital world of today, they have to provide a range of services like marketing, event manager and brand builder all wrapped up in one.
While the expansion has helped many advertising agencies to diversify their business to find alternative sources of revenue to achieve economies of scale it has also put an enormous burden on work on them, Rehan expressed his concerns over clients’ attitude, as they try to take an advantage of this situation by pressing the advertising agencies to do the consumer research as of it is part of the job. Is consumer research a part and parcel of an advertising campaign, he said candidly.
“Consumer research is a specialized job which requires money. Asking the ad-companies to carryout consumer research is unfair indeed. We at Creative Junction have done such researches but it’s just not fair for a client to expect an advertising agency to do it without paying for it,” he maintained.
Answering the question regarding future of advertising industry in Pakistan, Rehan observed that it belongs to ‘brand development.’ We must realize that advertising is just a part of brand building and not the other way around. Look around; even war is brand development today. ‘Shock and Awe’ and ‘Operation Liberation Iraq’ are brand building advertising campaigns. However, it must also be realized that advertising can-not sell a bad product. In fact, advertising would do increased damage to a bad product.”
“I strongly believe that the future of brand marketing lies well beyond the traditional advertising form that revolves primarily around TV spot and print ads at present. Definitely advertising will change its shape and form in the future.”
However, Rehan said that the future would be about the unusual, not the usual. Brands in the future would need liberating, re-defining brand ideas, which would matter more than the form in which they appear.
To be a successful brand in the future, Rehan believed that it is important to embrace this “beyond advertising” attitude as a marketing mantra. However, he urged the government to promote the ad-industry by giving it ads purely on the basis on merit.

Profile

Brig (r) Zubair Rehan is Managing Director of Creative Junction, a premier full-service ad agency operating from Lahore.
It has a range of services with operations running all across Pakistan.

Baverage, Shandy Cola

Take vertical actions to arrest inflation

MD Shandy Cola, Ahmed Arif expresses his concerns over negative growth of LSM


By Azhar Bukhari


The country’s economy direly needs wholesome measures to arrest fast increasing inflation as surge in inflation has eroded the purchasing power of masses.
Everyday rise in the inflation could only be controlled by enhancing productivity and by putting curbs on undue expenditures.
Ahmed Arif, Managing Director, Shandy Cola expressed these views in an exclusive interview with The Post.
Ahmed said that the situation had turned so bad that industry has no money to pay the salaries and utility bills, as the steps should be taken on war-footing to avert mass lay-offs. He added that a large number of industrial units had already closed down their operations due to acute shortage of electricity and gas while the remaining were on the verge of closure.
The MD Shandy Cola expressed his grave concern over negative growth in Large Scale Manufacturing Sector (LSM) saying that rationalization of duties are the steps to bring the LSM sector out of mire but despite repeated request no attention was given.
He added that the decline in LSM sector that has shown a negative 7.7 per cent growth is an eye opener and there is a dire need to identify the root cause of this meltdown.
He said that the most worrying factor in the overall scenario is that the growth rate of 2 per cent is the lowest in the region, as Bangladesh had a growth rate of 5 percent, India 4.5 percent and even Sri Lanka experienced a growth rate of 2.2 percent.
He maintained that there was nothing wrong with the policies but the poor level of implementation deteriorated the industrial production. “Had a little attention been given towards the proper implementation of policies the situation would have not been so bad.”
He urged the government to take immediate and concrete measures to control deteriorating law and order situation which is hurting the whole business atmosphere and nobody would be ready to put money in any new venture if the situation remains the same.
Ahmed also suggested the government to take steps to cut rate of markup, ensure continuous supply of energy to the industrial sector, wear off inflationary pressure, improve law and order situation and above all steps need to be taken to bring political and economic stability.
Elaborating his suggestions, he said that the existing high markup rate was not only hitting the country’s competitiveness in the global market but was also coming in the way of industrialization which is a prerequisite to progress and prosperity.
He added that at the moment when the rate of interest was showing downward trend in most of the developed and developing countries including US (0.25 per cent), UK (1.5 per cent), Canada (1.5 per cent), Australia (4.25 per cent), Japan (0.1 per cent), China (5.58 per cent), India (5.5 per cent)and Bangladesh (7.61 per cent), the interest rate in Pakistan has jumped to 13 per cent in November 2008 to 15 per cent plus banking spread up to 8.3 per cent that is putting a very negative impact on industrial sector.
While quoting the example of GDP growth in China and India, Ahmed Arif said that the government should provide level-playing field to Pakistani manufacturers so that they could be able to earn much needed foreign exchange for the country.
“If immediate measures are not taken the situation would get out of hands and economic turnaround would become a dream,” he observed.
“There is no doubt in it that the government is seriously monitoring the economic situation and taking appropriate measures but it should convene a meeting of representatives of all trade bodies to ensure proper implementation of its policies,” he added.
He stressed the need for strengthening of institutions for being a prerequisite to economic stability, progress and prosperity. He maintained that only strong institutions could guarantee good governance. He cited the example of the United Sates where the economy is still on the wheels despite unprecedented economic recession and credit goes to a strong institutional framework over there.
“Had their institutions been not strong enough, the American economy would have not sustained the shocks it has received.” He said that weak institutions mean weak system and no country could achieve its targets with weak system.
“High inflation has chopped down the purchasing power of even middle class, as the crisis would not be over until and unless the government would introduce trade friendly policies to decrease cost of doing business,” Ahmed observed.
However, he strongly condemned increase in power tariff adding that it would be an anti-trade step and could add to economic woes.
“Another hike in power rates means more troubles for the common man and the industry,” he observed.
He said that it was beyond the understanding of the businessmen that despite cut in oil prices in the international market, why the government was reluctant to pass on the benefit to the people while the electricity shortage was going up with every passing day.
Such decisions, he said, would not only create unrest among the masses but would also hit the entire industrial sector even harder.
“Things would hardly take any positive turn unless and until both short term and long term policies are evolved,” he maintained.
He said that trade sector already passing through a very critical period. Power shortage has broken the backbone of industry, thousands industries have been closed leaving a large number of workers jobless.
He said that electricity prices in Pakistan are already very high and posing several challenges for businessmen and economy.
He urged upon the government to come out of the influence of International Financial Institutions, stop following their orders and make efforts to enhance the cheap electricity production.

Lift ban on new cooperative societies

Lift ban on new cooperative societies


PPCBL President Maqsood Qadir Shah highlights problems facing its organization
Says the bank entering arena of e-banking very soon


By Azhar Bukhari


TO facilitate the poor working class in its true sprit, Punjab government will have to lift ban on registration of new cooperative societies.
President Punjab Provincial Cooperative Bank Ltd (PPCBL) and Registrar Cooperatives, Maqsood Qadir Shah said this in an exclusive talk with The Post.
He maintained that cooperative societies were pivotal to provide relief to the laborers particularly women working class at small and medium industry. He added that the PPCBL had requested Punjab Government to revive the policy granting the permission for new cooperation societies.
Maqsood Shah has joined PPCBL in December 2008, at a time when the organization was at its merge. But Shah worked hard to get the organization back on rail. Shah informed that at present, the bank is providing loans of Rs 5 billions annually to the low-class workers and has outstretched its role as a micro-finance institution within its existing cooperative fold and Scheduled Bank character, quite successfully. He added that the bank has extensive network of 159 Branches spread all over Punjab at grass root level.
The PPCBL president determined to improve socio-economics conditions of persons of humble means through the principles of cooperative and to promote Self-help and mutual aid.
He was very candid when he said, “I have joined the bank accepting the challenge to get it back on rails, and I will continue to take each and every step in this regard”.
He said, in line with the directions of State Bank of Pakistan (SBP) and policy of the Government of the Punjab, the PPCBL is entering the arena of e-banking facilities for their clients. Much awaited task is near completion after that PPCBL will serve its clients in a better way, he added.
Shah said that the PPCBL is providing interest free loan for purchase of tractors to the members of cooperative societies in ‘Barani’ areas. He told that the bank is disbursing more than Rs 5 billion per annum to small farmer members of cooperative societies, adding that the bank has provided loans of Rs 2500 million for kharif crop 2009.
He said that the issuance of loans, Cooperative department is also playing a vital role for providing residential facilities to its members in housing sector.
Shah said that utmost efforts were made for protection of the benefits of the members of cooperative societies so that more and more people may enter in cooperative movement to improve individual and national economic conditions.
He told that the PPCBL has disbursement Rs 2.396 billion loans to 107,002 small farmers for Rabi 2008-09 across the province. Registrar Cooperatives Maqsood Q Shah said that the loans have been disbursement among small farmers following the direction from the government and the State Bank of Pakistan.
He maintained that the bank has shown 90 per cent recovery which is a record itself. He said that it had provided loans of Rs 20,000 to Rs 200,000 to women in cooperative societies. The bank give due priority and facilitate women willing to establish industrial homes, Bakeries, Poultry farms, Livestock and Beauty Parlors.
Shah said that PPCBL has also disbursed loans to the industry workers for low-cost housing units.


Profile:
Maqsood Qadir Shah is known as a very quite and cool administrator. Prior to taking charge as President Punjab Provincial Cooperative Bank Ltd, Shah has served in Lahore Tourism department at the key post. He started his professional career in 1987 after passing his PCS Executive examination when he was appointed Magistrate class 1 in Sheikhopura.