LSM continues to decline ahead weak demand, heavy load-shedding
Azhar Bukhari
The Large Scale Manufacturing (LSM) has recorded negative growth throughout fiscal year 2008-09, which is the longest period in production fall continuously.
Moreover, 21.2 percent (YoY) decline in the month of May 2009 is the highest ever fall in LSM production.
Weakness in domestic demand, worsening power shortages, structural problems and deterioration in law & order situation are some important factors responsible for the decline in LSM production.
According to the data released by the State Bank of Pakistan Large Scale Manufacturing registered negative growth of 7.7 percent during Jul-May FY09 compared with a 5.0 percent rise in the corresponding period of FY08. The persistent disappointing performance is a reflection of various adverse domestic and external developments.
However, this continuous fall in manufacturing sector has more domestic factors than the affects of global recession.
In particular, automobiles industry witnessed sharp slide mainly due to high cost of consumer financing continued upward prices of cars, tight liquidity position of the banks as well as risk averse behaviour after facing substantial Non Performing Loans (NPLs) in consumer finance.
Further, slow income growth and high inflation impaired consumers’ ability to spare funds for purchasing durables. While higher cost of consumer financing was an important reason for softer demand for household electronics, weaker demand for transformers and electric meters by the power distribution companies resulted in a poor performance by this industry.
Growth in cement production though helped contain free fall of LSM growth, weakened in recent months. Cement production rose by 4.8 percent during Jul- May FY09, the lowest growth in the last six years. A sustained double-digit growth in cement production was achieved by addition in production capacity and exploitation of export markets.
The impact of global recession on domestic LSM is most visible in the textile industry. Growth in textile industry fell by 0.1 percent over the same period last year. Textile sector was badly hit by power shortages and weak external demand. Both cotton yarn and cloth industries, which have the largest shares in the textile sector, posted negative growth of 0.27 percent and 0.33 percent respectively during Jul-Mar FY09.
With respect to exports promotion measures All Pakistan Textile Mills Association has proposed the federal government to make duty and tax remission schemes workable, easy to operate and manageable. It has also stressed on industry friendly anti-dumping laws with raw material relating provisions i.e. competing interests should be balanced.
On market access, the APTMA has stressed on trade diplomacy, image building of the country and compensation to the industry for losses being made out of present distort image.
Consequently, Pakistan Industrial and Traders Associations Front (PIAF) has also decried the six to eight hours suspension of electricity supply to Independent Feeders of Large Scale Manufacturing Units saying that it would hit the exports hard.
Talking to The Post, Chairman PIAF, Irfan Qaiser Sheikh said that the duration of suspension of electricity should be minimized to help Large Scale Manufacturing units that are major foreign exchange earners for the country.
The PIAF chairman maintained that there is a dire need to implement innovative ideas for the economic revival of the country at this point in time when the economic activity is already at its lowest ebb. He said that the government should intervene to avoid prolonged economic slow down that is bound to give birth ills like poverty and unemployment.
Sheikh said that the Large Scale Manufacturing units need facilitation as they are supplementing the government efforts aimed at economic prosperity but it seems that some circles are hell-bent to defame the government. He said that the electricity is one of the basic raw materials for the industry and the repeated increases in its prices even without proper consultation of business doing people are badly affecting the over all production.
Similarly, electronics sector is not only going through weak demand created by financing gap and increased prices of products, but also due to frequent power outages.
People are forced to spend on alternate power supply equipment (UPS and generators) to streamline electricity supply, which do not support a number of household electronic appliances.
As global textile demand declined, quantum of yarn exports shrank by 7.8 percent over the same period last year, and the average export unit value of yarn fell by 8.7 percent. Similarly, export unit value of cotton fabric dropped by 1.0 percent in this period. The combined impact of domestic and external factors has resulted in closure of about 20 percent spinning mills in the country.
In contrast to a declining trend in overall manufacturing activity, fertilizer production posted a significant growth of 20.7 percent in last 12 months after a dismal performance during the preceding two years.
In addition, a slower pace of decline in international prices of phosphatic rock (major input for DAP) squeezed the margins of the firm. While, current production of both phosphatic and nitrogenous fertilizer are insufficient to meet local demand, with the completion of plants by Fatima Fertilizer and Engro, shortage of urea is expected to turn into a surplus during FY11.
However, DAP shortage will continue due to lack of raw material in the country and large investment required to setup a new plant.
Similarly automobiles industry is facing significant contraction in demand (except for tractors where domestic production is low). In particular, jeeps & cars subsector is the worst hit by the sluggish demand due to three factors: continued increase in prices, (2) rise in cost of financing, as well as (3) lower availability of institutional financing given risk averse policy of banking sector amid increasing NPLs and liquidity problems with the banks.
The Explorers...
Tuesday, July 7, 2009
Scope for Islamic banking seen
Scope for Islamic banking seen
Financial soundness, solvency of Islamic banks remained strong despite global financial crisis
Azhar Bukhari
The promotion of Islamic banking and finance is the need of the hour.
Islamic finance is a system based on strong economic and social considerations, envisaging equitable distribution of rewards and risks among the stakeholders.
However, it is very encouraging that the Islamic finance is being practised by Muslims as well as a few non-Muslim countries. The United Kingdom had taken significant initiatives in the development of Islamic finance by adopting an open door policy.
The investors from Middle East, Far East and UK have shown keen interest in the establishment of Islamic banks in Pakistan. The total assets of Islamic banks in Pakistan are increased to Rs340 billion. There are 170 branches of six licenced Islamic banks and more than 13 commercial banks are also offering Islamic banking services.
Moreover, the financial soundness and solvency of the domestic Islamic banks remained strong despite constraints and global financial crisis as the total assets of the industry increased to Rs 340 billion during the third quarter of FY 2008-09.
From 01 January to June 2009, the deposits of the Islamic banks surged to Rs 140 billion, financing and investments mounted to Rs 176.4 respectively while the number of full-fledged Islamic bank branches including stand-alone branches of conventional banks extended to 341 as of end-FY 08-09.
A detailed performance review on Islamic banking revealed that Islamic banking in Pakistan has grown rapidly in the last few years. Keeping in view the small size of the industry and its evolutionary nature, the growth achieved so far has been impressive and has persistently outpaced its conventional counterparts.
The consistently high average growth rate is attributed to the entry of four new players in the market in FY07 and FY08. At present there are six Islamic Banks (IBs) operating in Pakistan with 238 branches.
Though the performance in terms of growth of assets is impressive, it has not translated into a proportionate increase in profitability as reflected in the ROA and ROE for Islamic banks. At 0.6 and 3.3 percent for CY07 respectively, these ratios for Islamic banks are below the overall banking sector average.
Notably, these indicators do not portray the actual picture due to the entry of four new banks in the market which started operations as recently as CY06 and 156 CY07, and are still in the process of establishing their business, expanding their deposit base and enhancing the scope of their operations.
It would normally take a new bank 3-4 years to become profitable and start operating efficiently, i.e. once the start-up costs and the expenditure on the development of management systems and related infrastructure, start to yield results.
This shows a higher ROA (2.6 percent) and ROE (16.3 percent) in CY05, when there were only 2 dedicated Islamic banks operating in the industry. Both indicators declined sharply in the subsequent year (with a marginal improvement in CY07) simply due to the enhanced capital and asset base effect: the new banks contributed a significant amount to the total capital and asset base of the Islamic banking industry, but the earnings are still largely concentrated in the two previously established banks in the sector. Both ROA and ROE for the industry are expected to increase in coming years, as the new banks establish themselves on a sound footing. That said the current strains on the macroeconomic environment might exacerbate this process.
A Brief History
Modern banking system was introduced into the Muslim countries at a time when they were politically and economically at a low ebb, in the late 19th century. The main banks in the home countries of the imperial powers established local branches in the capitals of the subject countries and they catered mainly to the import export requirements of the foreign businesses. The local trading community avoided the “foreign” banks both for nationalistic as well as religious reasons. However, as time went on it became difficult to engage in trade and other activities without making use of commercial banks.
With the passage of time, however, and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. As countries became independent the need to engage in banking activities became unavoidable and urgent. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals. The story of interest-free or Islamic banking begins here. Interest-free banking seems to be of very recent origin.
Financial soundness, solvency of Islamic banks remained strong despite global financial crisis
Azhar Bukhari
The promotion of Islamic banking and finance is the need of the hour.
Islamic finance is a system based on strong economic and social considerations, envisaging equitable distribution of rewards and risks among the stakeholders.
However, it is very encouraging that the Islamic finance is being practised by Muslims as well as a few non-Muslim countries. The United Kingdom had taken significant initiatives in the development of Islamic finance by adopting an open door policy.
The investors from Middle East, Far East and UK have shown keen interest in the establishment of Islamic banks in Pakistan. The total assets of Islamic banks in Pakistan are increased to Rs340 billion. There are 170 branches of six licenced Islamic banks and more than 13 commercial banks are also offering Islamic banking services.
Moreover, the financial soundness and solvency of the domestic Islamic banks remained strong despite constraints and global financial crisis as the total assets of the industry increased to Rs 340 billion during the third quarter of FY 2008-09.
From 01 January to June 2009, the deposits of the Islamic banks surged to Rs 140 billion, financing and investments mounted to Rs 176.4 respectively while the number of full-fledged Islamic bank branches including stand-alone branches of conventional banks extended to 341 as of end-FY 08-09.
A detailed performance review on Islamic banking revealed that Islamic banking in Pakistan has grown rapidly in the last few years. Keeping in view the small size of the industry and its evolutionary nature, the growth achieved so far has been impressive and has persistently outpaced its conventional counterparts.
The consistently high average growth rate is attributed to the entry of four new players in the market in FY07 and FY08. At present there are six Islamic Banks (IBs) operating in Pakistan with 238 branches.
Though the performance in terms of growth of assets is impressive, it has not translated into a proportionate increase in profitability as reflected in the ROA and ROE for Islamic banks. At 0.6 and 3.3 percent for CY07 respectively, these ratios for Islamic banks are below the overall banking sector average.
Notably, these indicators do not portray the actual picture due to the entry of four new banks in the market which started operations as recently as CY06 and 156 CY07, and are still in the process of establishing their business, expanding their deposit base and enhancing the scope of their operations.
It would normally take a new bank 3-4 years to become profitable and start operating efficiently, i.e. once the start-up costs and the expenditure on the development of management systems and related infrastructure, start to yield results.
This shows a higher ROA (2.6 percent) and ROE (16.3 percent) in CY05, when there were only 2 dedicated Islamic banks operating in the industry. Both indicators declined sharply in the subsequent year (with a marginal improvement in CY07) simply due to the enhanced capital and asset base effect: the new banks contributed a significant amount to the total capital and asset base of the Islamic banking industry, but the earnings are still largely concentrated in the two previously established banks in the sector. Both ROA and ROE for the industry are expected to increase in coming years, as the new banks establish themselves on a sound footing. That said the current strains on the macroeconomic environment might exacerbate this process.
A Brief History
Modern banking system was introduced into the Muslim countries at a time when they were politically and economically at a low ebb, in the late 19th century. The main banks in the home countries of the imperial powers established local branches in the capitals of the subject countries and they catered mainly to the import export requirements of the foreign businesses. The local trading community avoided the “foreign” banks both for nationalistic as well as religious reasons. However, as time went on it became difficult to engage in trade and other activities without making use of commercial banks.
With the passage of time, however, and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. As countries became independent the need to engage in banking activities became unavoidable and urgent. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals. The story of interest-free or Islamic banking begins here. Interest-free banking seems to be of very recent origin.
Renewable energy: only way to survive
Renewable energy: only way to survive
Azhar Bukhari
Summer has brought terrible news regarding energy availability and access to ordinary Pakistanis. While most Pakistanis have been aware for a while that their country faces long term energy shortages, they had not expected the problem to be as acute and severe as it demonstrated itself to be this summer.
There is a severe energy shortage in Pakistan, particularly in the urban areas, and most parts of the country are experiencing heavy load sheddings, i.e. periods with no electric power, designed to distribute load and conserve energy. Karachi, the major port city and industrial hub, is experiencing nearly 110 degree weather with 10-12 hours of load shedding a day in some parts.
The situation has turned bleak, and even the more skeptical are re-assessing their opinion on renewable, distributed, and localized energy generation for Pakistan major population centers.
When it comes to Pakistan, an entire gambit of renewable energy sources can be considered plausible. Solar (PV and concentrator PV/thermal) and (onshore-off-shore) wind appear to make most sense, primarily given the geography and climatic conditions as well as the maturity of the technology worldwide, but biofuels, coal-to-gas and coal to-liquid fuels, biowaste to syn-gas, tydal power and small hydro are all valid technologies to be researched and looked into. The biggest impediments, of course, remain rather similar to many other developing countries: lack of technological resources, lack of government incentives and support, mistrust of the financial sector for long term financing, inadequate infrastructure. It is no wonder that even when utility industry was deregulated, the only thing the population learned about the process was how contracts were awarded to foreign firms without proper financial due diligence.
India is fast gaining serious experience in renewable energy production not only for domestic consumption but also to become an international player in this area. India today has an installed capacity of over 6.27 GW of wind power.
As renewable energy technologies are getting better traction in the world, prices per KwH are coming down. Wind energy is now almost competitive with natural gas derived electricity, and solar is not that far behind as well. Germany and Spain have made huge inroads in both these sectors. But pakistan will be left behind if it doesn’t quickly start climbing the experience curve.
Technologies for renewable energy industry, from wind turbines to solar panels to power electronics and enzymes for cellulosic biofuel synthesis are being researched and implemented at pilot scale in countries whose problems are not too dissimilar to ours. While renewables will not provide the full answer to Pakistan’s energy crisis in the short term, a strong and committed push will set the right foot forward for the country’s future.
There are certainly individuals and organizations, researchers, policy-analysts, and entrepreneurs that are very interested in participating in the energy future of Pakistan. But the government will need to systematically remove blockages that have kept the real geniuses away from this industry. Financing/investing, funding, tax/rebate incentives, infrastructure upgrade, and energy buy-back contracts from independent energy providers on the national grid are among some of the things that government can do to promote energy entrepreneurship.
The wind energy projects in Pakistan have been run into snags and delays for more than a year following the government’s apathy in providing the assured subsidies to the higher tariff against the conventional gas/oil-fired power plants, a root cause hampering physical progress.
Wind power projects of total 100 mw capacity are being established, on BOOT (Build, Own, Operate and Transfer) basis, at Keti Bandar and Gharo in Sindh.
Pakistan has recently indicated its commitment to renewable energy sources, but realising these in practice could still be a long way off.
Pakistan is blessed with an abundance of renewable energy potential, but so far this remains unharnessed except for a few large hydroelectric projects.
The country, historically an energy importer, is facing serious energy shortages while global fossil fuel prices continue their upward spiral. The effects on the economy are marked: interruptions in energy supply to industry, for instance, have hit the country’s exports hard.
Many now believe that Pakistan needs to initiate a transition towards greater use of renewable energy as an indigenous, clean and abundant resource.
Azhar Bukhari
Summer has brought terrible news regarding energy availability and access to ordinary Pakistanis. While most Pakistanis have been aware for a while that their country faces long term energy shortages, they had not expected the problem to be as acute and severe as it demonstrated itself to be this summer.
There is a severe energy shortage in Pakistan, particularly in the urban areas, and most parts of the country are experiencing heavy load sheddings, i.e. periods with no electric power, designed to distribute load and conserve energy. Karachi, the major port city and industrial hub, is experiencing nearly 110 degree weather with 10-12 hours of load shedding a day in some parts.
The situation has turned bleak, and even the more skeptical are re-assessing their opinion on renewable, distributed, and localized energy generation for Pakistan major population centers.
When it comes to Pakistan, an entire gambit of renewable energy sources can be considered plausible. Solar (PV and concentrator PV/thermal) and (onshore-off-shore) wind appear to make most sense, primarily given the geography and climatic conditions as well as the maturity of the technology worldwide, but biofuels, coal-to-gas and coal to-liquid fuels, biowaste to syn-gas, tydal power and small hydro are all valid technologies to be researched and looked into. The biggest impediments, of course, remain rather similar to many other developing countries: lack of technological resources, lack of government incentives and support, mistrust of the financial sector for long term financing, inadequate infrastructure. It is no wonder that even when utility industry was deregulated, the only thing the population learned about the process was how contracts were awarded to foreign firms without proper financial due diligence.
India is fast gaining serious experience in renewable energy production not only for domestic consumption but also to become an international player in this area. India today has an installed capacity of over 6.27 GW of wind power.
As renewable energy technologies are getting better traction in the world, prices per KwH are coming down. Wind energy is now almost competitive with natural gas derived electricity, and solar is not that far behind as well. Germany and Spain have made huge inroads in both these sectors. But pakistan will be left behind if it doesn’t quickly start climbing the experience curve.
Technologies for renewable energy industry, from wind turbines to solar panels to power electronics and enzymes for cellulosic biofuel synthesis are being researched and implemented at pilot scale in countries whose problems are not too dissimilar to ours. While renewables will not provide the full answer to Pakistan’s energy crisis in the short term, a strong and committed push will set the right foot forward for the country’s future.
There are certainly individuals and organizations, researchers, policy-analysts, and entrepreneurs that are very interested in participating in the energy future of Pakistan. But the government will need to systematically remove blockages that have kept the real geniuses away from this industry. Financing/investing, funding, tax/rebate incentives, infrastructure upgrade, and energy buy-back contracts from independent energy providers on the national grid are among some of the things that government can do to promote energy entrepreneurship.
The wind energy projects in Pakistan have been run into snags and delays for more than a year following the government’s apathy in providing the assured subsidies to the higher tariff against the conventional gas/oil-fired power plants, a root cause hampering physical progress.
Wind power projects of total 100 mw capacity are being established, on BOOT (Build, Own, Operate and Transfer) basis, at Keti Bandar and Gharo in Sindh.
Pakistan has recently indicated its commitment to renewable energy sources, but realising these in practice could still be a long way off.
Pakistan is blessed with an abundance of renewable energy potential, but so far this remains unharnessed except for a few large hydroelectric projects.
The country, historically an energy importer, is facing serious energy shortages while global fossil fuel prices continue their upward spiral. The effects on the economy are marked: interruptions in energy supply to industry, for instance, have hit the country’s exports hard.
Many now believe that Pakistan needs to initiate a transition towards greater use of renewable energy as an indigenous, clean and abundant resource.
Solar Panels
Solar panels;
A way out of power crisis
Azhar Bukhari
CAN sunny Pakistan deal with its crippling energy crisis?
In fact, Pakistan is an exceptionally sunny country. If 0.25% of Balochistan was covered with solar panels with an efficiency of 20%, enough electricity would be generated to cover all of Pakistani demand.
Photo-voltaic solar power panels are often used for local and distributed power generation capability, such as on rooftops of homes and buildings. It is generally on-grid but it can be off-grid for remote places. Unlike the solar panel's relying on photo-voltaic cells, solar thermal power is centrally generated from thousands of curved mirrors in the desert focusing sun's light on to water pipes to generate superheated steam which is then used to generate electricity.
Solar energy makes much sense for Pakistan for several reasons, firstly, 70% of the population lives in 50,000 villages that are very far away from the national grid, according to a report by the Solar Energy Research Center (SERC). Besides, the country's creaky and outdated electricity infrastructure loses over 30 percent of generated power in transit, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south. Connecting these villages to the national grid would be very costly, thus giving each house a solar panel would be cost efficient and would empower people both economically and socially.
Pakistan has reported practical examples of the use of solar energy as seen in some villages of Pakistan where each house has been provided with a solar panel that’s sufficient to run an electric fan and two energy saving bulbs. Prior to this arrangement, the whole village used to be plunged in darkness at night. In Narian Khorian, a village about 50 kilometers from Islamabad, 100 solar panels have been installed by a local firm, free of cost, to promote the use of solar energy. With these panels, the residents of 100 households are enjoying light and fan facilities. This would not have happened for decades as the supply of electricity from the national grid would be difficult and costly due to the mountainous terrain.
In addition to renewable energy from the sun, Pakistan is also fortunate to have something many other countries do not, which are high wind speeds near major centers. Near Islamabad, the wind speed is anywhere from 6.2 to 7.4 meters per second (between 13.8 and 16.5 miles per hour). Near Karachi, the range is between 6.2 and 6.9 (between 13.8 and 15.4 miles per hour). In addition to Karachi and Islamabad, there are other areas in Pakistan that receive a significant amount of wind.
In only the Balochistan and Sindh provinces, sufficient wind exists to power every coastal village in the country. There also exists a corridor between Gharo and Keti Bandar that alone could produce between 40,000 and 50,000 megawatts of electricity, about twice the current installed capacity in Pakistan, says Mirian Katz who has studied and written about alternative energy potential in South Asia.
In recent years, the government has completed several projects to demonstrate that wind energy is viable in the country. In Mirpur Sakro, 85 micro turbines have been installed to power 356 homes. In Kund Malir, 40 turbines have been installed, which power 111 homes. The Alternative Energy Development Board (AEDB) has also acquired 18,000 acres for the installation of more wind turbines.
The village of Ghulam Muhammad Goth, north of Karachi with population of 800, about 10 km from the national power grid, now receives power from a small windfarm consisting of 18 wind turbines each capable of generating 500 watts of electricity. Installed by the state-run Pakistan Council for Renewable Energy and Technologies (PCRET), the farm produces enough to power for each home to have two low-energy bulbs, a fan and, most importantly, a television set.
In addition to high wind speeds near major centers as well as the Gharo and Keti Bandar corridor, Pakistan is also very fortunate to have many rivers and lakes. Wind turbines that are situated in or near water enjoy an uninterrupted flow of wind, which virtually guarantees that power will be available all the time. Within towns and cities, wind speeds can often change quickly due to the presence of buildings and other structures, which can damage wind turbines. In addition, many people do not wish for turbines to be sited near cities because of noise, though these problems are often exaggerated. Wind turbines make less noise than an office and people comfortably carry on conversations while standing near them.
As Pakistan grapples with its crippling Energy Crisis, it is important for the country to take advantage of its precious natural resources such as the high winds and the bright sunshine, and bio-fuels as byproducts of its sizable sugar-making industry. Such a strategy will lead to lower costs of generation by reducing the need to import oil. It'll also help reduce carbon emissions, a major environmental concern.
A way out of power crisis
Azhar Bukhari
CAN sunny Pakistan deal with its crippling energy crisis?
In fact, Pakistan is an exceptionally sunny country. If 0.25% of Balochistan was covered with solar panels with an efficiency of 20%, enough electricity would be generated to cover all of Pakistani demand.
Photo-voltaic solar power panels are often used for local and distributed power generation capability, such as on rooftops of homes and buildings. It is generally on-grid but it can be off-grid for remote places. Unlike the solar panel's relying on photo-voltaic cells, solar thermal power is centrally generated from thousands of curved mirrors in the desert focusing sun's light on to water pipes to generate superheated steam which is then used to generate electricity.
Solar energy makes much sense for Pakistan for several reasons, firstly, 70% of the population lives in 50,000 villages that are very far away from the national grid, according to a report by the Solar Energy Research Center (SERC). Besides, the country's creaky and outdated electricity infrastructure loses over 30 percent of generated power in transit, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south. Connecting these villages to the national grid would be very costly, thus giving each house a solar panel would be cost efficient and would empower people both economically and socially.
Pakistan has reported practical examples of the use of solar energy as seen in some villages of Pakistan where each house has been provided with a solar panel that’s sufficient to run an electric fan and two energy saving bulbs. Prior to this arrangement, the whole village used to be plunged in darkness at night. In Narian Khorian, a village about 50 kilometers from Islamabad, 100 solar panels have been installed by a local firm, free of cost, to promote the use of solar energy. With these panels, the residents of 100 households are enjoying light and fan facilities. This would not have happened for decades as the supply of electricity from the national grid would be difficult and costly due to the mountainous terrain.
In addition to renewable energy from the sun, Pakistan is also fortunate to have something many other countries do not, which are high wind speeds near major centers. Near Islamabad, the wind speed is anywhere from 6.2 to 7.4 meters per second (between 13.8 and 16.5 miles per hour). Near Karachi, the range is between 6.2 and 6.9 (between 13.8 and 15.4 miles per hour). In addition to Karachi and Islamabad, there are other areas in Pakistan that receive a significant amount of wind.
In only the Balochistan and Sindh provinces, sufficient wind exists to power every coastal village in the country. There also exists a corridor between Gharo and Keti Bandar that alone could produce between 40,000 and 50,000 megawatts of electricity, about twice the current installed capacity in Pakistan, says Mirian Katz who has studied and written about alternative energy potential in South Asia.
In recent years, the government has completed several projects to demonstrate that wind energy is viable in the country. In Mirpur Sakro, 85 micro turbines have been installed to power 356 homes. In Kund Malir, 40 turbines have been installed, which power 111 homes. The Alternative Energy Development Board (AEDB) has also acquired 18,000 acres for the installation of more wind turbines.
The village of Ghulam Muhammad Goth, north of Karachi with population of 800, about 10 km from the national power grid, now receives power from a small windfarm consisting of 18 wind turbines each capable of generating 500 watts of electricity. Installed by the state-run Pakistan Council for Renewable Energy and Technologies (PCRET), the farm produces enough to power for each home to have two low-energy bulbs, a fan and, most importantly, a television set.
In addition to high wind speeds near major centers as well as the Gharo and Keti Bandar corridor, Pakistan is also very fortunate to have many rivers and lakes. Wind turbines that are situated in or near water enjoy an uninterrupted flow of wind, which virtually guarantees that power will be available all the time. Within towns and cities, wind speeds can often change quickly due to the presence of buildings and other structures, which can damage wind turbines. In addition, many people do not wish for turbines to be sited near cities because of noise, though these problems are often exaggerated. Wind turbines make less noise than an office and people comfortably carry on conversations while standing near them.
As Pakistan grapples with its crippling Energy Crisis, it is important for the country to take advantage of its precious natural resources such as the high winds and the bright sunshine, and bio-fuels as byproducts of its sizable sugar-making industry. Such a strategy will lead to lower costs of generation by reducing the need to import oil. It'll also help reduce carbon emissions, a major environmental concern.
UBL Liquidity Plus Fund
UBL Liquidity Plus Fund;
A step towards prosperity
Farooq Ahmed, Head of UBL Retail Sales, discusses options to get rid of crisis
Says NPLs of banking system to stabilize soon
Azhar Bukhari
United Bank Ltd (UBL) has launched UBL Liquidity Plus Fund (UBLPF) as a money market fund to provide investors with tailored and need based investment solutions. The fund has a unique feature where a same day redemption can be honoured, subject to the fulfillment of certain conditions.
This was the upshot of the dialogue took place with UBL Head of Retail Sales, Farooq Ahmed here at its office.
“In continuation of our vision we are committed to provide our investors innovative, low cost investment solutions with safety of principal and liquidity as primary ingredients. Therefore the tradition continues and we are launching our new product UBLPF it’s a true money market fund”, Farooq maintained.
As far as the target audience goes, this product caters to the needs of individuals, SME’s and a large scale of corporate’s who are looking for low risk, liquidity, capital preservation and competitive but better market returns, he said.
Farooq revealed that minimum investment amount in UBLPF is as low as Rs 5,000 and there is no holding period which means an investor can liquidate his investment at any time and can completely take advantage of the Same Day Redemption Facility that the fund provides.
UBLPF is ideal for investors looking for placement of their savings or idol cash for less those 90 days (short-term) while they decide on their long-term financial decision, he added.
“UBLPF will try to provide its investors with competitive tax free returns which vary with money market but would generally be higher than bank deposits” Farooq said.
He maintained that UBL aim to be the first choice investment solution provider, renowned for quality, added value and innovative service at an affordable cost to its investors.
Therefore there are no charges in UBLPF, which means no charges are applied at the time of investment or withdrawal, he said.
Faroqq elaborated that the fund would be investing mostly in a combination of Government Securities and Tenor/PLS Placements with a minimum AA rated banks. The weighted average time for the maturity of fund assets will not exceed 90 days and the maximum time for the maturity of any single asset at the time of placement will not exceed six months.
Farooq said that the fund would mostly target investors looking at liquidity management solutions and who wanted to earn competitive after-tax returns on their surplus funds.
The portfolio would comprise mostly of an exposure to short-dated Treasury Bills which are also very liquid instruments from the entry / exit perspective. A certain part of the portfolio will be placed in other avenues such as reverse repos (against eligible Government Securities), tenor placements with high rated commercial banks and DFIs, he said adding that it would also be active in short tenor (overnight) placements with banks and DFIs, as and when opportunities of earning a spread over traditional bank account rates arise.
However, he maintained that the fund would be a low risk fund and would be providing quick liquidity to clients. Since the minimum credit rating of the underlying asset classes is quite high and weighted average time to maturity of the assets cannot exceed 90 days, the interest rate risk is somewhat mitigated, he added. He said that other risks such as the Re-investment Rate Risk, Credit Risk, Price Risk and Government Regulation Risk exist that are there in all investment avenues.
UBL Head of Retail Sales, Farooq Ahmed said that the allowable asset classes for this fund are relatively limited as compared to an income fund, which is for investors with a long-term holding period in mind. Investment in CFS and spread transactions would be prohibited in such a money market scheme (by regulation). The fund strategy would therefore be very different as investments would be made in shorter tenor assets as opposed to an income scheme, where the fund manager can invest in longer tenor assets, he added.
This is also evident from the allowable maximum weighted average maturity of four years permitted under the SECP categorisation for income schemes. The minimum rating criterion for income schemes is also more relaxed when compared to money market schemes where a minimum AA rating is required for entities with whom funds are being placed (generally, as placements are made with higher rated entities, the rate of return declines), said Farooq .
Responding to a question regarding current financial crisis, Farooq said that Non Performing Loans (NPLs) of country’s banking system are expected to stabilize with the improvement in macroeconomic fundamentals as the recent macroeconomic pressures, which eventually led to a slowdown in economic growth in FY09, indicate that the increase in NPLs of the banking system is as largely of a cyclical nature.
“The sensitivity analysis undertaken at SBP suggests that the banking sector is well placed to withstand credit risk shocks of a modest nature,” he said and added that the provisioning coverage ratio of around 70 percent at end March 2009 also showed a prudent and proactive approach towards credit risk management.
He said that in response to the emerging dynamics in the macro-financial environment, SBP had rationalized the Minimum Capital Requirement (MCR) and the time period in which it was to be implemented, thus providing the much required breathing space to the banking industry in this difficult macroeconomic environment.
“Pakistan is currently standing at a juncture where long-term investment in infrastructure is crucially needed to facilitate the process of economic growth,” he said.
Referring to sustainability of the banking sector, he observed that banks in Pakistan had been able to withstand the headwinds from the weakening macroeconomic fundamentals since FY07. “Now that the economy is poised for a remarkable turnaround, the banking sector has an even greater role to play in supporting the real sector by meeting its financing needs,” Farooq said.
A step towards prosperity
Farooq Ahmed, Head of UBL Retail Sales, discusses options to get rid of crisis
Says NPLs of banking system to stabilize soon
Azhar Bukhari
United Bank Ltd (UBL) has launched UBL Liquidity Plus Fund (UBLPF) as a money market fund to provide investors with tailored and need based investment solutions. The fund has a unique feature where a same day redemption can be honoured, subject to the fulfillment of certain conditions.
This was the upshot of the dialogue took place with UBL Head of Retail Sales, Farooq Ahmed here at its office.
“In continuation of our vision we are committed to provide our investors innovative, low cost investment solutions with safety of principal and liquidity as primary ingredients. Therefore the tradition continues and we are launching our new product UBLPF it’s a true money market fund”, Farooq maintained.
As far as the target audience goes, this product caters to the needs of individuals, SME’s and a large scale of corporate’s who are looking for low risk, liquidity, capital preservation and competitive but better market returns, he said.
Farooq revealed that minimum investment amount in UBLPF is as low as Rs 5,000 and there is no holding period which means an investor can liquidate his investment at any time and can completely take advantage of the Same Day Redemption Facility that the fund provides.
UBLPF is ideal for investors looking for placement of their savings or idol cash for less those 90 days (short-term) while they decide on their long-term financial decision, he added.
“UBLPF will try to provide its investors with competitive tax free returns which vary with money market but would generally be higher than bank deposits” Farooq said.
He maintained that UBL aim to be the first choice investment solution provider, renowned for quality, added value and innovative service at an affordable cost to its investors.
Therefore there are no charges in UBLPF, which means no charges are applied at the time of investment or withdrawal, he said.
Faroqq elaborated that the fund would be investing mostly in a combination of Government Securities and Tenor/PLS Placements with a minimum AA rated banks. The weighted average time for the maturity of fund assets will not exceed 90 days and the maximum time for the maturity of any single asset at the time of placement will not exceed six months.
Farooq said that the fund would mostly target investors looking at liquidity management solutions and who wanted to earn competitive after-tax returns on their surplus funds.
The portfolio would comprise mostly of an exposure to short-dated Treasury Bills which are also very liquid instruments from the entry / exit perspective. A certain part of the portfolio will be placed in other avenues such as reverse repos (against eligible Government Securities), tenor placements with high rated commercial banks and DFIs, he said adding that it would also be active in short tenor (overnight) placements with banks and DFIs, as and when opportunities of earning a spread over traditional bank account rates arise.
However, he maintained that the fund would be a low risk fund and would be providing quick liquidity to clients. Since the minimum credit rating of the underlying asset classes is quite high and weighted average time to maturity of the assets cannot exceed 90 days, the interest rate risk is somewhat mitigated, he added. He said that other risks such as the Re-investment Rate Risk, Credit Risk, Price Risk and Government Regulation Risk exist that are there in all investment avenues.
UBL Head of Retail Sales, Farooq Ahmed said that the allowable asset classes for this fund are relatively limited as compared to an income fund, which is for investors with a long-term holding period in mind. Investment in CFS and spread transactions would be prohibited in such a money market scheme (by regulation). The fund strategy would therefore be very different as investments would be made in shorter tenor assets as opposed to an income scheme, where the fund manager can invest in longer tenor assets, he added.
This is also evident from the allowable maximum weighted average maturity of four years permitted under the SECP categorisation for income schemes. The minimum rating criterion for income schemes is also more relaxed when compared to money market schemes where a minimum AA rating is required for entities with whom funds are being placed (generally, as placements are made with higher rated entities, the rate of return declines), said Farooq .
Responding to a question regarding current financial crisis, Farooq said that Non Performing Loans (NPLs) of country’s banking system are expected to stabilize with the improvement in macroeconomic fundamentals as the recent macroeconomic pressures, which eventually led to a slowdown in economic growth in FY09, indicate that the increase in NPLs of the banking system is as largely of a cyclical nature.
“The sensitivity analysis undertaken at SBP suggests that the banking sector is well placed to withstand credit risk shocks of a modest nature,” he said and added that the provisioning coverage ratio of around 70 percent at end March 2009 also showed a prudent and proactive approach towards credit risk management.
He said that in response to the emerging dynamics in the macro-financial environment, SBP had rationalized the Minimum Capital Requirement (MCR) and the time period in which it was to be implemented, thus providing the much required breathing space to the banking industry in this difficult macroeconomic environment.
“Pakistan is currently standing at a juncture where long-term investment in infrastructure is crucially needed to facilitate the process of economic growth,” he said.
Referring to sustainability of the banking sector, he observed that banks in Pakistan had been able to withstand the headwinds from the weakening macroeconomic fundamentals since FY07. “Now that the economy is poised for a remarkable turnaround, the banking sector has an even greater role to play in supporting the real sector by meeting its financing needs,” Farooq said.
Tuesday, June 23, 2009
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.
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.
Tuesday, June 16, 2009
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.
Monday, June 15, 2009
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.
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.
Monday, May 25, 2009
Promote LNG, LPG to end power crisis
Promote LNG, LPG to end power crisis
Azhar Bukhari discusses energy sector opportunities with Chairman Associated Group (AG) Iqbal Z. Ahmed
Iqbal says Pakistan has potential to achieve energy independence if govt focuses on out-of-box solutions
By Azhar Bukhari
To overcome the energy crisis, the federal government should be encouraged to take daring steps, in good faith, and then let the chips fall where they may. This was the upshot of the discussion that took place with Associated Group (AG) Chairman Iqbal Z. Ahmed at its office in Lahore.
A quite cool and calm Iqbal, who has command on energy-related issues being faced by the country, spoke at length on the energy crisis. He strongly believes that creating jobs and economic opportunities are an effective way to combat militancy. “Creating and providing employment will prevent alienation and give people a reason to ensure that the system runs smoothly,” said Iqbal. “Pakistan has the potential to achieve energy independence, but this requires focusing on out-of-box solutions and facilitating local and foreign investors by providing more incentives,” he said.
The energy landscape in Pakistan is evolving quickly against a background of fluctuating energy prices and significant supply shortages. The country’s industrial and population growth rates have led to forecasts that Pakistan’s energy demand over the next 15 years may grow at a rate of between 4.4% to 6.1% per annum, resulting in a large and growing energy deficit particularly in the power sector, he maintained.
Elaborating on possible solutions, Iqbal said that part of the answer lay in better utilizing Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG) and Pakistan’s indigenous coal reserves. He said Pakistan has the potential to almost double its local LPG production and attract billions of dollars in foreign investment. “This substantial, additional local LPG production is being held hostage to frivolous litigation,” said Iqbal. He said that the Iran-Pakistan natural gas pipeline and the two LNG import terminals, including the one being set up by his company, would help narrow the gap between gas demand and supply, but would not eliminate it. “The Gas Management Policy 2005, which causes industries to close down during winter months, is a deeply flawed policy and needs an extensive overhauling,” said Iqbal. Of coal, Iqbal said that Pakistan has the seventh largest coal reserves in the world, yet not a single example of a coal-fired power plant that is a going concern. “Compared to India, the contribution of coal to energy mix is almost negligible,” he said, adding that utilization of coal has been talked about by several governments but has not yielded concrete results.
He strongly criticized theories which are presented to the government citing alternate resources as high-cost ventures and a hard task to achieve. He said that the import of fossil fuels was taking a large chunk of the country’s revenues and resulting in an increasing trade deficit. Statistics indicate that Pakistan’s continued reliance on fossil fuels to meet a significant portion of its primary energy demand has made the situation critical in a carbon-constrained future. In this context, policymaking requires new strategic thinking in terms of the energy mix, Iqbal said. “All political parties could sign off on a comprehensive energy plan after due consultations with stakeholders and then hold this plan as sacrosanct,” he said. “We’ve seen an unprecedented degree of cooperation between the government and opposition, and there is no reason why such cooperation cannot be extended to the energy sector.”
He said that Pakistan offered high returns on investment and this was the reason that foreign companies were investing their capital and resources in the country, particularly in the energy sector. “The fact that the economy was largely impervious to the social turmoil of the last few years is evidence of the fact that our economy is far more resilient than we like to think,” said Iqbal. “There is nothing worse than Pakistanis talking down their economy and their country, which then becomes a self-fulfilling prophecy.” He said there was a mighty disconnect between the perception and reality of Pakistan as a place to do business in. “We have our problems, but we are better off than many, many countries,” said Iqbal, adding that criticism of Pakistan’s economy, society and government should only be done on facts.
In order to promote LPG as a safe and economical automobile fuel, the Government of Pakistan deregulated the sector in 2000 to attract investment and give the LPG market a much-needed boost. It worked. Since then, the number of LPG marketing companies shot up 250% resulting in brisk competition, the sector attracted over US$200 million in investments, and an estimated 30,000 jobs were created. He said LPG is currently being used as an automotive fuel as well as in households and industries. “LPG is the very definition of a multipurpose fuel,” said Iqbal.
He said AG has set up Pakistan’s first LPG Autogas Station to retail product to motorists in a safe and professional manner. However, he said that the license to commence operations and provide affordable product to end-users was still pending with the regulator. “LPG is being used as an automotive fuel in 10 million cars worldwide, including in the US and UK,” said Iqbal. “This is the quickest way to eliminate illegal LPG decanting and encourage use of a highly environment-friendly fuel.” He said that delays at the licensing stage were discouraging local and foreign investors from a very promising market segment. “We are wasting opportunities here and sending the wrong message at a very critical time for the economy,” he said.
Profile
Iqbal Z. Ahmed is the Chairman of Associated Group (AG), which was founded by Mr. Z.Z. Ahmed (1910-1989), former DIG Police, in 1965. At present, it is one of Pakistan’s premier business houses in the energy sector.
Its flagship company Jamshoro Joint Venture Ltd (JJVL) commenced commercial operations in March 2005. In late 2007, AG installed and commissioned its 136MW Bhikhi Power Plant in District Sheikhupura. AG’s Power Division is developing innovative and results-oriented plans to enhance Pakistan’s installed electricity capacity. AG has won the rights to set up a 192MW power plant at Multan and an 110MW power plant at Guddu.
To overcome the energy crisis, the federal government should be encouraged to take daring steps, in good faith, and then let the chips fall where they may. This was the upshot of the discussion that took place with Associated Group (AG) Chairman Iqbal Z. Ahmed at its office in Lahore.
A quite cool and calm Iqbal, who has command on energy-related issues being faced by the country, spoke at length on the energy crisis. He strongly believes that creating jobs and economic opportunities are an effective way to combat militancy. “Creating and providing employment will prevent alienation and give people a reason to ensure that the system runs smoothly,” said Iqbal. “Pakistan has the potential to achieve energy independence, but this requires focusing on out-of-box solutions and facilitating local and foreign investors by providing more incentives,” he said.
The energy landscape in Pakistan is evolving quickly against a background of fluctuating energy prices and significant supply shortages. The country’s industrial and population growth rates have led to forecasts that Pakistan’s energy demand over the next 15 years may grow at a rate of between 4.4% to 6.1% per annum, resulting in a large and growing energy deficit particularly in the power sector, he maintained.
Elaborating on possible solutions, Iqbal said that part of the answer lay in better utilizing Liquefied Petroleum Gas (LPG), Liquefied Natural Gas (LNG) and Pakistan’s indigenous coal reserves. He said Pakistan has the potential to almost double its local LPG production and attract billions of dollars in foreign investment. “This substantial, additional local LPG production is being held hostage to frivolous litigation,” said Iqbal. He said that the Iran-Pakistan natural gas pipeline and the two LNG import terminals, including the one being set up by his company, would help narrow the gap between gas demand and supply, but would not eliminate it. “The Gas Management Policy 2005, which causes industries to close down during winter months, is a deeply flawed policy and needs an extensive overhauling,” said Iqbal. Of coal, Iqbal said that Pakistan has the seventh largest coal reserves in the world, yet not a single example of a coal-fired power plant that is a going concern. “Compared to India, the contribution of coal to energy mix is almost negligible,” he said, adding that utilization of coal has been talked about by several governments but has not yielded concrete results.
He strongly criticized theories which are presented to the government citing alternate resources as high-cost ventures and a hard task to achieve. He said that the import of fossil fuels was taking a large chunk of the country’s revenues and resulting in an increasing trade deficit. Statistics indicate that Pakistan’s continued reliance on fossil fuels to meet a significant portion of its primary energy demand has made the situation critical in a carbon-constrained future. In this context, policymaking requires new strategic thinking in terms of the energy mix, Iqbal said. “All political parties could sign off on a comprehensive energy plan after due consultations with stakeholders and then hold this plan as sacrosanct,” he said. “We’ve seen an unprecedented degree of cooperation between the government and opposition, and there is no reason why such cooperation cannot be extended to the energy sector.”
He said that Pakistan offered high returns on investment and this was the reason that foreign companies were investing their capital and resources in the country, particularly in the energy sector. “The fact that the economy was largely impervious to the social turmoil of the last few years is evidence of the fact that our economy is far more resilient than we like to think,” said Iqbal. “There is nothing worse than Pakistanis talking down their economy and their country, which then becomes a self-fulfilling prophecy.” He said there was a mighty disconnect between the perception and reality of Pakistan as a place to do business in. “We have our problems, but we are better off than many, many countries,” said Iqbal, adding that criticism of Pakistan’s economy, society and government should only be done on facts.
In order to promote LPG as a safe and economical automobile fuel, the Government of Pakistan deregulated the sector in 2000 to attract investment and give the LPG market a much-needed boost. It worked. Since then, the number of LPG marketing companies shot up 250% resulting in brisk competition, the sector attracted over US$200 million in investments, and an estimated 30,000 jobs were created. He said LPG is currently being used as an automotive fuel as well as in households and industries. “LPG is the very definition of a multipurpose fuel,” said Iqbal.
He said AG has set up Pakistan’s first LPG Autogas Station to retail product to motorists in a safe and professional manner. However, he said that the license to commence operations and provide affordable product to end-users was still pending with the regulator. “LPG is being used as an automotive fuel in 10 million cars worldwide, including in the US and UK,” said Iqbal. “This is the quickest way to eliminate illegal LPG decanting and encourage use of a highly environment-friendly fuel.” He said that delays at the licensing stage were discouraging local and foreign investors from a very promising market segment. “We are wasting opportunities here and sending the wrong message at a very critical time for the economy,” he said.
Profile
Iqbal Z. Ahmed is the Chairman of Associated Group (AG), which was founded by Mr. Z.Z. Ahmed (1910-1989), former DIG Police, in 1965. At present, it is one of Pakistan’s premier business houses in the energy sector.
Its flagship company Jamshoro Joint Venture Ltd (JJVL) commenced commercial operations in March 2005. In late 2007, AG installed and commissioned its 136MW Bhikhi Power Plant in District Sheikhupura. AG’s Power Division is developing innovative and results-oriented plans to enhance Pakistan’s installed electricity capacity. AG has won the rights to set up a 192MW power plant at Multan and an 110MW power plant at Guddu.
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