Area-yield index insurance was first developed in Sweden in the early 1950s and has been enforced in India since 1979 and in the United States since 1993. There have been numerous attempts to establish crop insurance programmes in developing countries. Some of them have succeeded in laying the foundation for a sustainable risk management service. But there have also been failures. Most of such programs that did not prove durable were set up on the base of unrealistic prospects. Risk management is of pivotal importance in the investment and financing decisions of growers in developing countries and in transition economies. Agrarian…
Author: Ahsan Nisar
Pakistan used to be one of the most often overlooked countries when it comes to fintech investments but now it is one of the countries with the most potential. The world’s fifth-most populous nation is seeing record money flow into its startups with more than $305 million this year, higher than the past six years combined. Similarly, ‘Buy Now, Pay Later’ (BNPL) model is also heating up around the globe since the start of the year. Following the hype and the scale witnessed globally, local startups have also started coming up with their own BNPL offerings. That includes QisstPay from…
There is a common saying that “cut your coat according to your cloth”. While this proverb gives a clear message to live within our available means, it also allows us to arrange a bigger piece of cloth to cut the coat according to the desired size. It is basically a call of an individual or a nation to go for i) exploiting extra resources to enjoy better living standards, ii) spend time in managing the existing resources or otherwise, and iii) start living beyond means by hook or by crook. Since the known resources are scarce with seemingly uneven distribution,…
While the economies of the world are expected to gather momentum as more and more people get vaccinated, one of the biggest cautions to consider is whether supply chains will be able to keep up with growing demand. Companies need to review critical areas to address concerns about disruptions to supply chains and shortages that have occurred during the pandemic. A major example is semiconductors. But even before pandemic, the US and China have been engaged in a trade war for over three years now. This has impacted the semiconductor industry which has a global supply chain. The intensity of…
Startups The ongoing year has been a phenomenal year for Pakistani startups as far as investments are concerned. Pakistani startups had received an investment of $77 million throughout 2020 whereas, in just 8 months of 2021, investments in Pakistani startups have crossed $228 million. That is a growth of about 3 times over 2020 with another 4 months still to go. Annual investments in Pakistani startups can reach billion dollars by 2025 if the momentum continues like this for the next couple of years. Over the last five years or more, government, academia, and industry have launched many incubators which…
The year 2021 has been even harsh for those who couldn’t recover from the shocks of 2020 due to job loss or salary cuts. Those who could stay at home and enjoy a steady stream of income should consider themselves lucky. There are many families who had to dig in their safety stock with whatever little savings they had considering the savings trend in Pakistan. While saving for uncertain times is always advisable, it is investing that will help in the long run. The first and the foremost thing is that how much cash is available at hand. One must…
Globally, fast rising trend of both external and domestic debt, emerging in 2008 and onwards due to economic recession has engulfed the entire financial world in a whirlpool of fiscal deficit both in developed and developing economies. Some of the high-income developing countries had taken radical measures to recapture their lost ground and luckily came out of quandary. However, the onslaught of Covid-19 factor has drastically damaged their economies and put them in a negative growth rate situation. The problem has, however, aggravated in case of low-income developing countries. Pakistan, in particular, where slow penetrations of aftereffects of global recession…
More than one year has passed but the battle against pandemic still continues. Governments and businesses are struggling hard to reduce the damages caused by the on-going Covid-19 pandemic to the socio-economic fabric across the world without any discrimination of rich or poor. While the analysts and medical scientists are busy in categorizing its spell into wave-1, wave-2 and at some places even wave-3, the arrival of the vaccine and marathon campaign to administer it, fortunately faded away the looming dark clouds of fears and uncertainties to a great extent. With the approval and rollout of the long awaited coronavirus…
Pakistan has been experiencing an acute shortage of energy right across all sectors especially industry and through energy disruption to domestic users. These shortages have highlighted the necessity for reliable, cost realistic and effective sources of energy and an improvement in the distribution of energy to facilitate development of the country. Pakistan currently relies disproportionately on thermal power generation from local gas fields and expensive imported oil to fuel both government and privately owned and rented power plants. Still the poor communities of Pakistan depend on wood and dried dung to heat their homes and in food preparation. Solar energy…
The overall impact of Covid-19 on food security and agricultural food systems was not known in the initial phases of Covid-19. However, during the last five months of unfolding of the diseases in Pakistan, Covid-19’s effect on lives and livelihoods, more so for the poor, is gradually making economic access to food for masses difficult. As per World Bank Group, South Asian countries may face food security challenges both in terms of supply and demand if not properly managed especially for marginalized sections in the society and Pakistan is no exception to it. Already it is understood that food insecurity…
Pakistan was somewhat unusual compared to other countries as regards the unexpected pickup in officially recorded remittances during 2020, particularly in the latter part of the year. Earlier surveys of remittance receipts suggested that remittances were falling during the pandemic. Given the massive displacement of migrants as they faced unemployment in host countries in April and May, earlier forecast expected a drop in remittances in Pakistan during 2020-21. However, despite GDP decline in sender countries due to the pandemic, Pakistan registered growth by end of 2020. Pakistan saw a growth in remittance of 17.4 per cent year-on-year in 2020. Regarding…
We created state of art platforms for flawless experience to customers Interview with Mr. Danyal Khan Afridi – Head of Operations, M A Fast Move Ltd UK (Shpun Remit) PAGE: Tell us something about yourself Danyal Khan Afridi: I started my career as a manager in hospitality and then drifted my focus to help those people who were struggling to send their hard earned money to their loved ones hence why I decided to take part in the remittances business. PAGE: Tell us something about your product and your key initiatives till date? Danyal Khan Afridi: The story starts with a few…
Commercial banks around the globe have designed and utilized Islamic financial instruments according to the rules of Shariah. Section 5(b) of Banking Companies Ordinance-1962 defines the business of banking as “banking means the accepting, for the purpose of lending or investment, of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise.” By analyzing both sides of the balance sheet of any Islamic bank, it is quite clear that like conventional banks, Islamic banks can also efficiently provide most of the banking services. However, the assets-side of the balance sheet looks…
The complexity and influx of data in healthcare means that Artificial Intelligence (AI) will increasingly be applied within the health sector. Several types of AI are already being employed by providers of care and life sciences companies. The key categories of applications involve diagnosis and treatment recommendations, patient engagement and adherence, and administrative activities. Although there are many situations during which AI can perform healthcare tasks better than humans, implementation factors will prevent large-scale automation of healthcare professional jobs for a considerable period due to ethical issues. Artificial Intelligence (AI) and related technologies are increasingly prevalent in business and society,…
Human health has become a major growing concern worldwide due to infectious diseases. Biotechnology has played a dynamic role in improving the challenges regarding human health because it has flexibility to scale back global health differences through provision of promising technologies. Health, life quality and expectancy of life are increased worldwide through the services provided by biotechnology. Malnutrition mainly arises due to the lack of essential nutrients and vitamins in food and ultimately results in death. Biotechnology has played a major role in eliminating these problems by producing nutrients enriched food such as golden rice, maize, potato and soybean etc.…
State Bank of Pakistan in collaboration with Karandaaz and Bill & Melinda Gates Foundation, marked the beginning of 2021 with a digital leap forward following the launch of Raast — Pakistan’s first instant payment system that permits end-to-end digital payments among general public, businesses and government entities. The initiative is part of ‘Digital Pakistan Vision’ aimed at financial inclusion of poor segments and women of our society in the formal economy and improving tax collection. Raast is not an application or a product, rather it is a back-end payment system similar to 1link, which intends to take all banks of…
Over time, the real estate sector has marked significant economic importance. As large as the real estate sector is, it is considered equally sophisticated. Despite being one of the latest sectors to adopt innovation, technology has undoubtedly added a new dimension to the industry. The introduction of Artificial Intelligence (AI) technology revolutionized the whole industry, bringing real estate properties, innumerable housing societies, diverse housing types, changing market trends, different agents, and distinctive pricings at one’s fingertips. The history of AI, defined as of today, spans no more than a century, with the idea being roughly discussed in the 1940s and…
Collectively, financial sector’s risk indicators have significantly strengthened since the last financial crisis of 2008. In terms of capitalization, the industry boasts of a CAR of 18.7% , ADR of 46.3% and about 53% of the asset base is liquid as of June 2020. These ratios are indicative of strong loss absorption buffers while the excess liquidity available with the banks should allow them to sail through the crises. Private sector lending, which is expected to be most affected during pandemic stood at Rs. 5.8 trillion as of June 2020 out of which 8.1% was outstanding against the SME sector.…
Things finally seem to be looking good for the automobile industry, especially after the downfall caused by Covid-19. Domestic car production grew at a cumulative growth rate of 10% approx. over the past six years while weak demand due to challenging macroeconomic environment lead to a sharp decline in production in FY-20. Due to continuous slowdown in demand, all local auto manufacturers observed several non-production days in order to rationalize operational costs and maintain optimum inventory levels. Given stringent import policies being pursued by the government, car imports have declined considerably over the last two years while share of imported…
Al-Hajj to launch proton variants Malaysian auto giant Proton, which has collaborated with Al-Haj Automobile, the assembler of FAW automobiles in Pakistan, will be launching its SUV crossover X70 soon along with a sedan named Saga. The company has confirmed that it will initially launch two vehicles and will offer variants in CBU condition. Proton has received a green-field status under the Auto Development Policy 2016-21. Under the status, new companies like Proton, Kia, Hyundai, and Changan etc. will be paying less duties compared to firms already operating in Pakistan like Toyota, Honda and Suzuki. Chinese passenger car to be…
*Mera Pakistan Mera Ghar buzzword a three-pronged benefits for country’s homeless population Poor access to affordable housing results in unequal home ownership: proprietorship remains concentrated in the top income bracket, leaving a limited supply of housing for low-income households. Housing insecurity among the lower income strata of Pakistan has therefore become a pressing public policy issue. And now affordable housing has become a buzzword in Pakistan. Pakistan’s Prime Minister, Imran Khan, has promised to provide five million new affordable houses to the people in his term. Mera Pakistan Mera Ghar is a low-cost housing scheme offering affordable house financing to…
Looking at global GDP at constant prices of 2017 adjusted for cost of living/purchasing power, China was the biggest economy in the world in 2019 with an adjusted GDP of more than USD 22.5 trillion according to World Bank. While the Chinese economy is projected by IMF to grow by a low of 1.2% in 2020 due to pandemic, the US in second rank is expected to see its USD 20.6 trillion GDP decrease by 6%. Asian countries, on the other hand, exhibit best growth prospects even during the coronavirus pandemic. European economies like Germany and the UK are expected…
The outbreak of Covid-19 has been accompanied by widespread decline in global commodity prices. The pandemic presents a unique shock that has a major impact on both demand and supply of commodities. Oil markets have been most affected given the travel restrictions arising from mitigation measures and have witnessed the steepest one month decline on record. Metal prices have also fallen, albeit less than oil, while agricultural prices have been much less affected so far given their indirect relationship with economic activity. Over the short-term, in addition to weaker demand, disruptions to supply chains could cause dislocations in commodity markets,…
Digitization has become a part of everyday life with the introduction of smartphones and availability of social media. This has brought the banking industry at the verge of possibly the greatest revolution in history as it is more of a matter of life and death for this industry to get the digital banking right. Banks are already at a crossroad with the adoption of digitalization as can be seen prominently. The banks or any other financial institutions still struggle hard to maintain banking relations through physical and more traditional channels such as the physical bank building itself. However, this process…
A recent report of World Bank titled Digital Pakistan in Covid-19 Environment advocates for IT and IT enabled services, automation and artificial intelligence, which can play a more prominent role to put the economy of Pakistan back on track. In this regard, Telenor International Research Report emphasizes use of artificial intelligence and digitization for all times to come, in view of the large number of workforce, both in public and private sector working from home, resulting in saving of commuting time and less traffic on the roads, which has reduced pollution. Undoubtedly, the return of overseas workers to their countries…
State Bank of Pakistan (SBP) through its recent initiatives and actions has focused its attention on finance-deficient areas such as financial inclusion, low cost housing facility, agricultural credit, SME finance and most importantly, the Green Banking phenomenon. In accordance with its strategic policy, given the importance of SMEs being attached to our economic development, SBP is playing a facilitator’s role, aimed to increase the orderly flow of financing to SMEs. It has set the principal targets to be achieved in SME financing till 2020 for increasing SME’s share from existing 8 percent private sector credit to 17 percent by 2020…
Automotive assemblers/manufacturers The automobile industry in Pakistan includes companies involved within the production/assembling of passenger cars, light commercial vehicles, trucks, buses, tractors and motorcycles. The current market structure of the industry is concentrated. It is largely dominated by Japanese players: Toyota, Suzuki and Honda. The three players have deep rooted presence in Pakistan. FAW is a new addition to the sector. In Pakistani market, Suzuki Motors enjoys largest share of over 55% followed by Toyota (25%) & Honda (20%). New assemblers have already started their production activities, especially within the car segment. However, these newcomers as well as the incumbents…
In the global fight against financial crime, Pakistan faces complex challenges. It is not the first time that Pakistan has been placed on the grey list. In 2008 and thereafter from 2012 to 2015 Pakistan has been grey listed. In June 2018, Pakistan was again placed under the watch-list due to the gaps in its Anti Money Laundering (AML)/Counter Terrorist Financing (CTF) compliance regimes. Pakistan – as a member of the Asia Pacific Group on money laundering (APG) – has demonstrated that it takes financial crime seriously and is committed to implementing the Financial Action Task Force (FATF) 27-point plan.…
Basic mindset of any type of investor is to manage the risk and maximize the returns. The common phenomenon in managing the risk is diversification or, in other words, not putting all the eggs in one basket. The diversification requires choosing right basket to put your eggs in; and most importantly how much? The article is a compilation of tried and tested investment opportunities in Pakistan that require little investment but the returns are significant. Real Estate Investing in real estate is one of the most famous and widely practiced investment ideas in Pakistan. People buy property, especially land, and…
Pakistan is a country with limitless growth opportunity in almost all sectors, construction being one of them. The government is providing subsidy to sectors that have high positive cyclical effects. However, malpractices in the real estate sector prevent it from flourishing beyond a point that was reached decades ago. In other words, things are stagnant. For quite some time, the image of the industry is tarnished by fraudulent realtors and malpractices. People engaged in the real estate sector perceive investors as cash cows. Instead of executing a good deal that will attract potential investors, the agents wish to make maximum…
Rising urbanization and growing middle class are key drivers of FMCG business in the country In Pakistan, a large middle-class section, some 60 per cent of which is young, has been emerging and it looks for quality products and services with an expectation for value for money. In major cities like Karachi, Lahore and Islamabad, Pakistan’s rising middle class consumers are driving sales of international brand name products and services. New mega shopping malls are being opened by real estate developers and retailers. Although Fast-Moving Consumer Goods (FMCG) sector is mainly dominated by MNCs, there are a few local players…
Bykea, a four-year-old ride-hailing and delivery service, today has more than 500,000 bikes registered on its platform. It operates in some of Pakistan’s most populated cities, such as Karachi, Lahore and Islamabad. The three cities Bykea operates in have a combined population of 30 million people. Public transportation is underserved in all three cities, but these urban centers drive the economy of the 5th most populous country in the world. Auto-rickshaws are some of the most popular mode of transportation in South Asian nations. Two-wheelers are more popular in Pakistan as motorbikes are the rails for distributors, couriers, e-commerce retailers…
In Pakistan, marble and granite sector despite having abundant reserves of 30 billion tons have been operating in an unorganized manner, while primitive quarrying and processing methods are the reasons sector that could not reap its true export potential. There are over 3,000 processing units and 1,500 quarries across the country. The sector employs over 200,000 people but could only fetch US$61 million (2017) mostly through export of raw marbles and granites. Though efforts have been made in the past to uplift the sector and State Bank of Pakistan (SBP) also offered refinance facilities, however, all these efforts have not…
There are signs of business activity picking up in Pakistan at a faster pace as worries about new coronavirus (COVID-19) infections fade in the country. Pakistan is adding fewer active cases as population is fast approaching herd immunity. The economic growth is now being led by an aggregate demand push. Some of the sectors that are showing signs of pickup are as under: Construction Cement sales rose 38% from a year ago to 4.8 million tons in July, and near a record level seen in October. The government program to give amnesty to tax evaders, provided they fund construction projects,…
Real sector Agriculture: Out of Rs 1,240 billion fiscal package on COVID-19, Rs 100 billion is allocated for the agriculture and Small and Medium-size Enterprises (SME) sector. An amount of Rs 15.7 billion was initially allocated for nitrogenous fertilizers that now has been diverted to phosphate and potash fertilizers. A subsidy of Rs 1.5 billion for tractors and markup of Rs 6.8 billion on all loans for land holdings up to 12.5 acres has been disbursed by Zarai Taraqiati Bank Limited (ZTBL). Manufacturing: LSM sector (Large Scale Manufacturers) has started to rebound after the damage inflicted by COVID-19 outbreak. The monthly snapshot…
According to a recent World Bank report, remittances to low and middle-income countries are projected to fall by nearly 20 percent. In order to prevent further damage, the government must do everything to keep remittances flowing in times of COVID-19 and beyond. Following are a few actionable measures to keep remittances and development financing flowing: The remittances should be deemed as an essential financial service so that they can continue operations amidst the pandemic, allowing migrants to continue sending funds. Given the health risks, hygiene and social distancing measures must be in place at agent outlets to ensure that safety…
As the economy moves towards the end of FY20, it continues to face high uncertainty owing to the challenges posed by the COVID-19 pandemic on several economic fronts. High levels of uncertainty are also reflected in recent State Bank of Pakistan (SBP) surveys. The Consumer Confidence Survey of May 2020 recorded a sharp deterioration in both consumer confidence and expected economic conditions following their improvement in March 2020. Similarly, the Business Confidence Survey of April 2020 registered its lowest historical level for overall business confidence. Importantly, Pakistan is not an outlier in this regard, as the global economic uncertainty index…
Remittances are seeing a global boost in digital payments even while the physical ones decreased as the pandemic set in. Remitly, focused on remittances, raised $85 million for its business, while other companies like MoneyGram and Western Union are readying themselves for what could be a major, permanent shift in how money moves across borders. Digital payments have been favored as of late, as people avoid going out to public spaces due to the coronavirus. More and more fintech firms are trying to catch the digital wave and new alliances are being formed some of which are as under: UK-based…
With the world battling the novel coronavirus pandemic, the impact has been felt on every sector and everyday life. Perhaps one of the biggest effects of this pandemic has been on the financial services industry and the insurance industry. In many cases, insurers have already started taking the necessary action for protecting their businesses, which have left many consumers in the lurch in this challenging time. On the other hand, the overall reputation of insurers is taking a further battering as consumers and businesses come to terms with the fact that most insurance policies do not cover pandemics. With a…
Recently, Prime Minister Imran Khan said that rising pension bill is a far more serious problem for the government than the power sector debt. It is a fact that unfunded pension liabilities are ballooning and will become financially untenable if not contained. In a limited budget, it is already crowding out development. The pension bill in Pakistan is big but its impression of being overblown is said to be overstated. Presently, there is a lot of confusion regarding pension reforms and changes made in Directory Retirement Rules due to which many civil servants are contemplating early retirement. The pension bill…
Pakistan received workers’ remittances worth $19.62 billion in FY18 and $21.74 billion in FY19. They grew to a record high of $23.10 billion in FY20 with an increase of 7.8% during the March-June 2020 pandemic period compared with the corresponding period of 2019. The significant increase in remittances during June 2020 could be attributed to a number of factors. Since many of the countries eased lockdown in June, overseas Pakistanis were able to transfer accumulative funds, which they were unable to send earlier. Further, it is also believed that they sent remittances to support extended families and friends due to…
The coronavirus (COVID-19) pandemic will have a huge and lasting negative effect on the global economy; 2020 and 2021 will be lost years in terms of growth, and it is expected that the global economy will recover to pre-coronavirus levels only in 2022. However, this global forecast masks big disparities between countries. Some members of the G7 and BRICS groupings will recover quickly, whereas others will take up to four years to return to pre-coronavirus GDP levels depending on the level of economic shock experienced in the second quarter of a year. China will be an exception, as the country…
State Bank of Pakistan (SBP) has introduced a temporary refinance scheme for payment of wages and salaries to the workers and employees of the business concerns. SBP has extended the Rozgar Scheme for supporting employment for another three months and widens its scope in collaboration with Government of Pakistan. Rozgar Scheme This scheme provides concessional loans to businesses for wages and salaries expenses provided they commit not lay off their employees for the period of the loan. SBP has decided to extend the validity of this scheme by another three months to end September, 2020. Businesses will now be able…
The health, geopolitical and socioeconomic impacts of COVID-19 crisis are significant and catastrophic. Organizations are finding way to understand, react, and learn lessons from the rapidly unfolding events. While the effects of the exponential impact of the virus have proved to be disastrous for many organizations, it is also providing opportunities to other businesses to flourish. Following and keep continuing the Corporate Social Responsibility (CSR) of any of the organizations during the difficult time of COVID-19 may badly affected in some way. Automobile & auto part manufacturers The automobile sector was already challenged by weak demand and lower sales pre-pandemic,…
As people have embraced social distancing as a way to slow the spread of the pandemic, there has naturally been a drop-off in brick-and-mortar shopping. That would seem to mean there would likely be an increase in online shopping as people turn to e-commerce to purchase the items they might have otherwise purchased in person. In reality, e-commerce sales are not higher across the board, although some industries are seeing significant upticks. This is especially true for online sellers of household goods and groceries. A survey found out that people are spending on average 10-30% more online. While people in…
The coronavirus pandemic has lasted just over four months across Pakistan and the main question that has arisen is: Will the coronavirus accelerate the market penetration rate of e-commerce in Pakistan and get more Pakistanis comfortable with the idea of shopping online? Everyone has been saying since the last decade that the future is online: from grocery shopping to education but the way this change has been enforced has caught everyone unaware. But as the demand for online deliveries increase, and innovations such as contactless delivery become the new norm, companies are not just ramping up their efforts but actually…
The federal budget for 2020-21 is set in difficult circumstances with an exceptional degree of uncertainty generated by COVID-19. The economy was already reeling under the sharp slowdown brought on by the macroeconomic adjustment that began last July with accession to an IMF program when the COVID-19 pandemic hit in March 2020. The impact of the pandemic on countries is via three overlapping channels: – The ‘external’ economic disruption caused by the pandemic (upended supply chains, halted global transportation and logistics links, interrupted flow of goods, people, investment and capital). – The ‘internal’ economic disruption caused in response to the…
The recently released Economic Survey paints a bleak picture of Pakistani economy. Since the period covered by the data includes mostly the first nine months of the fiscal year, meaning July 2019 to March 2020, much of what is portrayed cannot be attributed to the disruptions from COVID-19. Private credit off-take Credit to the private sector fell sharply from Rs554.7 billion last year to Rs187.3 billion this year in the July to March period. This is a marked decline and shows a sharp deceleration underway in private sector activity due to “crowding out effect” as government emerged as a major…
Central banks around the world have slashed interest rates, though perhaps none as aggressively as State Bank of Pakistan (SBP). According to a recent report by Bloomberg, Pakistan has cut its interest rates the most this year, out of a survey of nine countries, including the US, Peru, South Africa, Turkey and Ukraine. Coronavirus has created ‘unique’ challenges for a monetary policy due to its non-economic origin. In last three months, SBP has slashed the policy rate four times. In the space between March 17 and May 15, the SBP has cut the policy rate by a whopping 525 basis…
There are different barriers to financial inclusion, one of these is the voluntary exclusion due to religious reasons and the other is the high cost of interest charged to small borrowers. Islamic banking seems to offer reasonable solution to these challenges where the interest is replaced with other tools based on partnerships and social cooperation. However, banks might be facing different type of challenges such as the regulation and customer reach in absence of profitable margins. The other factors impacting adoption will be to offer an economic access to the service without heavy investments from the banks, and maintain high…
Akhuwat Foundation is a non-profit company established in 2001 and registered with SECP. Akhuwat aims to alleviate poverty by creating a bond of solidarity between the affluent and the marginalized. Their goal is to develop and sustain a social system based on mutual support. They extend a helping hand to the poverty-stricken by providing interest-free loans so they can start a business and become self-reliant. Other than having more than 700 branches in almost all cities of Pakistan to conduct its operations of distributing Qarz-e-Hasna – interest-free loans – Akhuwat also uses places of worships, like mosques and churches to…
The world today is dealing with a crisis of monumental proportions. The vicious, novel coronavirus is wreaking havoc across the globe, destroying lives and ruining livelihoods. The primary cost of the pandemic as seen in the loss of human lives is distressing, but the secondary effects on the global economy, on livelihoods and on sustainable development prospects are even more alarming. The International Monetary Fund estimates that the world has entered into a recession, and while the full economic impact of the crisis is difficult to predict, the costs of the pandemic will no doubt be astronomical, with preliminary estimates…
Coronavirus is going to present unique challenges to the financial sector. Hundreds of millions of people are facing restricted movement and with them, commerce will — and is already — slowing. The financial sector needs to do two things: get money to the people who need it as fast as they can, and keep as much money in their hands as possible. Getting money to people quickly is critical. To the degree that government and private institutions are able, they should keep lending and processing stimulus payouts. Banks and agent networks need to maintain liquidity throughout their networks so households…
The New World Order implemented after the events of 9/11/2001 has changed after the COVID-19 pandemic outbreak. The details of what the world might actually look like is still being determined, however, it is safe to assume that if there was a Before Covid (BC) world, then we are actually living in an After Covid (AC) world. The following will give the readers a glimpse as to how the AC times would look like: In games of great power rivalries, we may expect China to be more assertive and US to be more belligerent. Possible dismantling of global institutions. Economically,…
Provision of disinfected currency notes by banks Recognizing the need for issuance of fit, authenticated and disinfected cash by the banks, detailed instructions have been provided by State Bank of Pakistan (SBP) to ensure to clean, disinfect, seal and quarantine all cash being collected from hospitals and clinics and to block circulation of such cash in the market. The banks shall report daily collection of cash from hospitals to SBP, which shall credit bank’s accounts for the amounts so quarantined by them. Further, arrangements are being made to provide sufficient fresh or disinfected cash to banks enabling them to issue…
Presently, Pakistan seems to be suffering from ‘Stockholm Syndrome’ – a psychological condition wherein a captive begins to identify closely with his or her captors, as well as with their agenda and demands. The obsession and the unwavering trust in multilateral agencies, including IMF, and the traditional foreign bilateral partners, particularly Saudi Arabia and the strings attached with the helping-hand ever extended by them in the past bears testimony to the fact. The first issue is that they follow their own template to address our economic challenges whilst our issues are very unique (like a typical emerging market country) and it…
The monetary policy is the key to influence trade/ current account of any country. The extent and the effectiveness of that, however, vary from country to country, given country’s own political and economic dynamics and other realities on the ground. These elements must not be used as ‘one-size, fits-all’ as part of the template to manage the economy, particularly the external account. The effectiveness of monetary policy is already under debate these days, particularly due to the outward flight of ‘hot money’. If one looks at the relationship strength between interest rate and currency in the context of Pakistan, the convention says…
The cyber security is still a challenging and diverse field and it has been evolving due to constant technology transformation and enhancement as per changing business environments, needs and practices. In the earlier stage of protecting IT systems or digital assets, primary focus was on ‘perimeter security defense’ against outside threats as lots of capital and investment was made on perimeter controls like firewalls, intrusion detection systems, proxy servers, etc. to avoid the cyber criminals. Recognizing that perimeter defense alone is insufficient, now ‘layered defense’ is being adapted to confront insider threats as well because nowadays and in future most…
The coronavirus has presently affected more than 100,000 persons worldwide. This fast widespread of the virus impacts several business sectors including that of insurance. The pandemic won’t be affecting life insurance in 2020 and as per Moody’s agency estimates, the impact of the pandemic on global reinsurers will be limited, i.e. the consequences will only be significant only at very high levels of gravity. For property and casualty insurance, the impact of coronavirus will be minimal since standard insurance policies do not cover communicable diseases. However, insurers covering the cancellation of high magnitude events e.g. the Olympic Games are more…
The present government is striving to improve its citizens’ quality of life and economic well-being by ensuring availability of accessible, affordable, reliable, universal and high-quality Information and Telecommunications Technology (ICT) services. It believes in mass adoption of emerging digital technologies and innovative applications to enable cross-sector socio-economic development and transformation of economic activities, governance models, social interaction, and achievement of sustainable development goals. It was in this backdrop that Digital Pakistan Policy was announced. The aim is to make Pakistan more digitally inclusive and use technology for the greater public good. Based on five strategic pillars (which include access and…
Foreign direct investment in telecom The telecom sector has been a star performer lately when it comes to foreign direct investment. The sudden rise in telecom FDI this fiscal, however, owes mainly to the license renewal. Telecom companies have made partial payments to renew their right to operate in Pakistan. The government, meanwhile, pocketed valuable non-tax revenues to meet IMF targets. There have been rounds of inflows and outflows in the telecom sector but since the ministry is vacant, the government needs to come up with some ideas for sustaining high level telecom FDI as there are plenty of avenues.…
The new digital economy has redefined the business landscape. Successful traditional businesses are at a huge risk of not only losing their dominant position but going out of business. Technical advancements, ubiquitous connectivity, proliferation of mobile devices combined with our understanding of how humans interact with machines and software has allowed creation of not just new businesses, but increased process efficiency within all industries. Today, we have the convenience of getting what we need through online marketplaces and highly usable mobile applications that essentially serve as remote controllers, to perform most tasks in both our personal and professional lives. While…
One of the key policy objectives of Digital Pakistan Policy is promotion of innovation, entrepreneurship and incubators/start-ups in IT sector through: Generation of sustainable innovation, entrepreneurship and employment opportunities for the country’s rapidly growing technology savvy and entrepreneurial youth. Conducting digital skills programs for the human resource development in current and emerging technology domains. Collaboration with international partners to boost innovation. Setting up venture capital funds to hold national level competitions on regular basis in all key emerging technologies and applications. Establishment and building a framework for setting-up incubation centers in provincial capitals and major secondary cities facilitating IT startups…
Logistics companies are facing an era of unprecedented change as digitization takes hold and customer expectations evolve. New technologies are enabling greater efficiency and more collaborative operating models; they are also re-shaping the marketplace in ways that are only just beginning to become apparent. New entrants, whether they be start-ups or the industry’s own customers and suppliers, are also shaking up the sector. For the logistics industry, we start by taking a closer look at some of the key disrupting factors: changing customer expectations, technological breakthroughs, new entrants to the industry, and new ways to compete or collaborate. These disruptions…
Today’s businesses have increasingly become fast-paced. Highly demanding customers seek instant gratification on one side, and businesses, in a quest to do more with the finite resources on hand, try to optimize and accelerate their supply chain, on the other side. All this means not just larger volumes to process, but also a significant increase in the number of issues warehouse and logistics management needs to deal within a day. Side-by-side, competitive pressures means squeezed margins, leaving warehouses without the luxury of spending more to cater to the increased workload. Logistics is a precision business, where success depends on making…
State Bank of Pakistan (SBP) has been actively engaged in development and promotion of Islamic banking in the country through various policy and regulatory initiatives. In continuation of earlier efforts to augment the industry’s progress, State Bank of Pakistan has developed detailed guidelines for conversion of existing conventional banks into full-fledged Islamic banks. Eligibility criteria The eligibility criteria for conversion of conventional bank into Islamic bank shall be as follows: All banks having Islamic banking division/branches can apply for conversion into full-fledged Islamic bank. The bank which has not yet been granted approval by SBP for Islamic banking division shall…
Doing business in Islamic way requires Muslims to undertake transactions free of Riba (interest), Gharar (uncertainty), Maisir (gambling) and non-Halal (prohibited) activities. Islamic banks are, therefore, forbidden from taking or offering interest or usury. Unlike in conventional banking, a lender in Islamic finance should shares the risk of the project with the borrower, as neither the borrower nor lender controls the outcome of the venture. This risk sharing in financial contracting by replacing ex-ante fixed return, with an ex-post uncertain return based on a profit-sharing principle, differentiates Islamic from conventional banking. Under this profit and loss sharing (PLS) paradigm, only…
The much debated Electric Vehicle Policy will be integrated as a part of Auto Development Policy (ADP 2016-2021), which would comprise of investment plans, standardization of equipment, the promotion of localization, generating exports in the long run to have a positive impact on the national economy. But the EV policy seems to have more problems than solutions and agreements. The uncertainty of the policy is also making the investors of ADP 2016-2021 take a backseat. Meanwhile, the auto sector faces recession each day as the policy gets delayed. The Ministry of Climate Change is putting in its best efforts to…
Mass production of Hyundai Porter H-100 pickup Hyundai Nishat Motor (Private) Limited announced its mass production at the assembly plant in Faisalabad. With an annual production capacity of up to 15,000 units per annum in its initial phase, Hyundai’s manufacturing plant is now fully operational. The HNMPL plant is the new production home for Hyundai’s first ‘Make in Pakistan’ product, the Porter H-100 Pickup, with other exciting range of models to follow in near future. The new plant allows them to serve the transportation requirements of Pakistan’s market, with world class Hyundai’s product line that enjoys a strong legacy in…
Power The regulatory actions in power sector space remained dominated by IMF directions. The government injected Rs. 200 billion into the energy chain in Mar’19 to bring down the overall stock of circular debt (Rs. 800 billion in Jan’19), where bulk of payments was directed to E&Ps and OMCs (PSO), financed through Energy Sukuk I. This was followed by an announcement of another Rs. 200-300 billion of cash injection by Jun’19. However, IMF’s restriction to keep government sovereign guarantees at 2 percent of GDP in any fiscal year caused a delay in its materialization. The IMF later relaxed this restriction…
Dealing with the current difficult situation of energy supply-demand gap and for uniformity in the management system this scribe has some suggestions and solutions in the major sectors which are mean for support power sector growth and development in the country, these solutions are: Natural gas Increase the tariff for slabs consuming gas greater than 3.55 million cubic feet per month, in order to discourage the excessive and misuse of gas Promote the use of solar water heaters and solar geysers In the power sector, energy conservation and good practices will have to manage demand side issues. The industry should…
While the property market might have seen downtimes since the last 2 to 3 years due to the unstable political and economic conditions of the country, this time real estate sector is expected to see a rise in investments in 2020. Pakistan’s real estate market has evolved into a vital source of economic growth in the country. The combined direct contribution of construction and housing sectors to the country’s GDP has been consistently higher than 9 percent over the past decade. The real estate sector not only generates high level of direct employment, it also stimulates demand in more than…
Sales tax regime change for steel The government has changed the sales tax regime for long steel manufacturers from sales tax special procedure rules 2007 to sales tax-style FED. The regime change has no direct impact on long steel manufacturers. It holds mixed implications for the end consumer. For the retail base (approx. 60% of the total offtake), the regime change raises the cost basis for retail clients (17% sales tax – style FED now vs. approx. 14% effective sales tax in the previous regime), as they are largely nontax filers. For corporates (36% of the total sales), the sales…
The economy of Pakistan experienced adjustments during fiscal year 2019, which includes — the exchange rate was realigned with the market fundamentals; interest rates were sharply increased; Public Sector Development Expenditure was significantly curtailed and energy prices were raised. These measures were taken to manage the twin deficit crisis, caused by the consumption-led growth of the past few years. The policy actions helped contain demand pressures and contributed to import compression, which led to a significant reduction in the Current Account Deficit. However, in the process, Large-Scale Manufacturing contracted and inflation rose above its target after four years. Meanwhile, high…
Globally, the tourism industry generates nearly 10% of the world GDP, while in Pakistan its share is merely 2.7%. In many countries, this share is around 30% with almost similar opportunities for attracting tourists. Malaysia with its ‘Malaysia Truly Asia’ brand earns roughly $20 billion annually through tourism while Turkey earns $40 billion. India under the slogan of ‘Incredible India’ continues to attract more and more tourists despite its not so impressive infrastructure and transportation system. Pakistan’s tourism potential is unlimited. Trekking, mountaineering, white water rafting, wild boar hunting, desert jeep safaris, skiing, are some of the attractions for adventurous…
Pakistan International Airlines (PIA) and Etihad Airways has recently re-launched codeshare partnership to access un-serviced markets and provide customers with clearer routing. The arrangement will provide customers with access to both airlines’ trunk routes between the UAE and Pakistan, and on Etihad services across its global network. The partnership would see Etihad Airways place its ‘EY’ code on PIA services to and from Abu Dhabi to Lahore, Islamabad and Peshawar. PIA would place its ‘PK’ code on Etihad services from Karachi, Islamabad and Lahore to Abu Dhabi and vice versa, and also onwards from the UAE capital to Amsterdam, Bahrain,…
Digital transformation has eroded traditional loyalty of the customers with banks. Customer loyalty has turned out to be a world of moving targets. Sentiment of the banking consumer is shifting regularly on the advent of fintech and digital innovations. So, for members of the banking industry, it is very hard to stay on top. The balance of power in the banking sector has changed in favor of the customer. With the available panorama of digital solutions, the customer expectations have sky rocketed. Banking customers are now in a position to dictate terms; what they expect, how they would like to…
Globally, 69% of adults – 3.8 billion people – now have an account with a bank or mobile money provider, according to the World Bank’s Global Findex database. While in some economies account ownership has surged, progress has been slower in some countries often held back by large disparities between men and women and between the rich and poor. The financial sector is witnessing a significant transformation due to technological progress and the role it has played. Over a span of decades, various technological innovations have lead to new business models and products including new methodologies to conduct financial transactions…
Pakistan suffered the largest cyber-attack on its banking system when in the last week of October 2018, over 19,000 debit cards worth US$2.6 million from some 22 Pakistani banks have been found to be stolen by certain unknown outside hackers. After cashing out US$2.6 million via ATM and POS at various international locations including Russia and US, the cyber outlaws dumped these cards for sale at prices ranging from US$100 to US$135 each on Dark Web under the title “WORLD-EU-MIX 01”. Thus, the cyber criminals succeeded in getting illicit access to customers’ accounts. An opinion is that local criminals served…
The Gulf Cooperation Council (GCC) countries have positioned themselves as the highest remitters in the world, collectively beating the United States, the traditional top remitter. The GCC and the wider Middle East, is a vital and rising economic hub bringing people together from across Europe, Africa and Asia. International migrants working and living across the region represent a large part of the population. In the UAE, international migrants account for 88 percent of the population, followed by Kuwait at 72 percent, Bahrain at 51 percent, Oman at 41 percent. The large expatriate workforce in the region means that there is…
In June 2017, Saudi Arabia, the UAE, Bahrain and Egypt broke off diplomatic and transportation links with Qatar over its support for extremist groups. They imposed bans on shipping, trade, direct flights, overflights and land crossings with Qatar. After two years, Qatar appears economically to be the most resilient state in the Gulf in 2019, its links to the West and Washington in particular and remain strong and its reputation widely untarnished. Doha is projected to generate a sizable surplus this year despite the blockade and could potentially provide financial support and confidence to Saudi’s struggling economy. For Qatar, the…
The world is fast moving towards an electric mobility revolution. Some countries have gone as far as to announce plans to completely halt the sale of Fossil Fuel Vehicles (FFVs). Norway plans to ban sale of all FFVs by 2025, Netherlands plans to ban such sales by 2030, while France and UK plan to do the same by 2040. Other countries such as China, Germany, Sweden and many US States have announced ambitious plans for Electric Vehicle (EV) penetration in their respective domains. Pakistan has been lagging behind in EVs as India rolled out its first fleet last October, while…
The banking industry in Pakistan is growing leaps and bounds in almost all aspects. Presently, there are 45 banks with a network of 15,549 branches spread all across Pakistan hosting some 53.11 million accounts. Out of 45, eleven banks are defined as microfinance banks. Number of ATMs has also risen which is a good sign. The banking industry is offering a wide range of products and services which cater to almost all segments of the population. However, the latest figures reveal that a lot needs to be done as only 26 percent of the total population is in the fold…
Recently, the government has been touting reduction in current account deficit as one of its achievements but in my opinion, the fiscal and monetary policy tools used to manage the external account are operational and temporary in nature. Only structural changes and reforms could bring long term and sustainable solutions. These changes are hard to implement as they require phenomenal political-will and an extremely committed and competent executive team for execution and delivery. But unfortunately there are no shortcuts to these structural reforms anymore and as the time is passing by the need for them is escalating given that other…
Presently, US-China trade war is the single most important factor that is governing oil demand and hence its international price. Even global economic growth hinges upon striking a deal between the two power houses. The markets appear to have turned bearish with supply/demand imbalances. Adding fuel to the fire, Saudi Aramco drone attacks was an epic event that led to the biggest supply disruption in history and provides temporary support for higher oil prices. Although the current environment may not be conducive for higher oil prices but there are certain factors that support upward price trajectory. Higher oil prices will…
It was six years ago that China launched the Belt and Road Initiative (BRI), the largest, most ambitious, pan-Eurasian infrastructure project of the 21st century. Since then, Beijing has been blamed for everything from plunging poor nations into a “debt trap” to evil designs of world domination. Now finally comes what might be described as the institutional American response to Belt and Road: the Blue Dot Network. Blue Dot is described, officially, as promoting global, multi-stakeholder sustainable infrastructure development in the Indo-Pacific region and around the world. It is a joint project of the US Overseas Private Investment Corporation, in partnership…
The significance of human capital in the development and expansion of economy could not be emphasized further. Its status could be gauged in any economy by education and health indicators as their main parameters. Productivity could be boosted if healthy people are inducted in work force as they could work efficiently and effectively. Fundamental health indicators have been on a positive path for the past few years. However, despite this advancement, the pace of progress is far low, when evaluated with the improvement recorded by regional countries. State of education sector, on the other hand, is also poor. Education sector…
Training Pakistan is the fifth most populous and one of the youngest countries in the world. Currently, it has the largest generation of young people ever recorded in national history. Sixty-four percent (64%) of Pakistanis are below the age of 30, and 29% are aged between 15-29 years. Majority of our youth is living in an environment of multidimensional and intersectional vulnerability to socio-economic disparities, educational inequality, food insecurity, unprotected rights, and weakened rule of law. Youth illiteracy stands at 30%, majority of youth do not have access to recreational facilities (libraries, cinemas, parks etc.) in their localities. Roughly 44%…
Agriculture is undoubtedly the backbone of Pakistan’s economy as 45% of the labor force depends on this sector for livelihood. However, growth rates have been poor owing to bad policy decisions and poor implementation. Farm input costs are rising, our agriculture produce markets are monopolized, access to finance is dismal, bad practices are depleting our natural endowment, climate change is adversely affecting our ecosystem, value-addition of crops is weak and agriculture related exports are far below potential. This gross neglect of the agriculture sector, especially small farmers, will hamper Pakistan’s GDP growth rate if left unattended and an aggressive turnaround…
Punjab According to National Nutrition Survey 2018-19, 40 percent of children up to five years of age in Pakistan have different physical and mental health issues, and according to the survey conducted by the United Nations Children’s Fund (UNICEF), Pakistan ranks third in this menace. The government has launched ‘Backyard poultry initiative’ under the Prime Minister’s National Agriculture Emergency Program under which five million pre-vaccinated desi (local) chickens will be distributed among public across the country at subsidized rates which aims to provide adequate animal protein to undernourished population and alleviate poverty. The total cost of the project is Rs…