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CONTENTS

10 The fall of Pakistan’s textiles

16 Inside PIA’s second coming 20 Futures markets are the stock market’s equivalent of having your cake and eating it too

24 How big is Pakistan’s YouTube industry?

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The fall of Pakistan’s textiles

I The problems are well identified. But how did a once proud and strong industry come to its current state?

By Abdullah Niazi

n 2002, archeologists excavating a neolithic burial site in Mehrgarh Balochistan discovered among the dust and bones of a six-thousand year old grave a few copper beads. Trapped within one of the beads were wispy white strands. Metallurgical analysis proved the suspicions of the archaeologists: the strands were cotton. They had been preserved by a unique occurrence of mineralisation of the copper that had trapped the strands of cotton in place. The discovery was monumental, and an article published in the Journal of Archeological Science published later that year announced this was the earliest proven existence of spun cotton in any ancient civilization. The area we know today as Pakistan has been growing, spinning, weaving, wearing, and exporting cotton for thousands of years. By some estimates the Indus Valley civilization introduced cotton and its uses to the ancient world more than three thousand years ago. The arc of history tells us that Pakistan is a textile country. It is a fact written into the genetic code of this nation. Cotton fields from Patoki to Rahim Yar Khan in Punjab and all the way down to Sanghar in Sindh have for thousands of years provided raw materials to the world’s oldest textile producer. Which is why it was no surprise that, after Partition, textiles emerged as one of the leading industries in Pakistan. Over the decades, it has developed into Pakistan’s largest export oriented sector. In any given year 50-60% of Pakistan’s exports are textiles. Everything from thread, to yarn, as well as bed sheets and jeans are produced, packaged, are made in Pakistan and sold to the world. But Pakistan’s textile industry is also in the middle of a severe crisis. “There was a time when our organisation had more than 400 members. Today we have fewer than 200 members,” says Kamran Arshad. Mr Arshad’s family has been in the textiles business since the 1980s. They have two spinning and one weaving units by the name of Ghazi Fabrics. For the past year, he has also been serving as chairman of the All Pakistan Textile Mills Association (APTMA) — one of Pakistan’s oldest and most well known lobbying groups. “This is an industry that provides more than half of our exports, but we’re fighting a losing battle. Our regional competitors like Bangladesh, Vietnam, India, China and others all have cheaper electricity, they have cheaper gas, and lower tax rates compared to us,” he says. “If we had simply been given some consistency in policy from the federal government so many of our members would not have had

to shut down their factories and units.” The reservations raised by Mr Arshad are quite familiar. Not only has the textile industry been saying these things for years, but other industries have similar concerns: inconsistency in government policies, fluctuating energy and tax rates have all left them uncompetitive on the global market. In the case of textiles, the impact in the past 20 years has been stark. Here is a sobering statistic: In 2003, when Pakistan’s textile exports were $8.3 billion, Vietnam’s textile exports were $3.87 billion, Bangladesh’s were at $5.5 billion. Now Vietnam is at $46.68 billion and Bangladesh is at $47.96 billion, while Pakistan has failed to cross the $20 billion mark in the past five years. This downfall has been the result of a combination of factors. By their own measure, stakeholders in the textile industry estimate that they have been slow to move towards value addition and to adopt modern materials such as synthetic fibres. However, they claim further investment in the textile business has been made impossible by fluctuating government policies. Their issues are clear and well documented: shortage of raw materials in the form of domestically grown cotton, the highest energy costs among competitor countries, and taxation measures that have left them crippled with a deadly cash flow crunch. But what is behind these issues and is there a way out of them? Profit spoke to industrialists, cotton farmers, and textile stakeholders from weavers and spinners to massive retail fashion brands. A combination of their opinions presents a much clearer picture. The historic success of textiles in Pakistan has had to do with a complete value chain that starts in the cotton field, moves towards ginning, is spun into thread, woven into cloth, and then coloured, dyed, knitted into bedsheets, shirts, pants and all manner of other cotton products that can then either be sold locally or exported. All along this value chain there are different problems but they combine to culminate in an industry that has been around for more than 10,000 years, but might be standing on its last legs.

The cotton tale

“T

here was a time when I could say with great pride that Kapas talks to me. I have conversations with my cotton fields,” says Khalid Khokhar. Middle-aged with grey hair, he talks about cotton with affection you would normally expect to be reserved for people. Mr Khokhar began farming in 1992 and is currently President of the Kissan Ittehad. The first crop he grew was cotton. He claims he could tell just by looking at his crop whether it needed more, pesticide, or fertilizer.

COVER STORY

This is an industry that provides more than half of our exports, but we’re fighting a losing battle. Our regional competitors like Bangladesh, Vietnam, India, China and others all have cheaper electricity, they have cheaper gas, and lower tax rates compared to us. If we had simply been given some consistency in policy from the federal government so many of our members would not have had to shut down their factories and units Kamran Arshad, Chairman APTMA

“Now unfortunately I cannot say the same thing. The kapas has turned away from me. It has stopped talking to me. It is upset that he has stopped growing white gold and is instead promoting white poison.” He is referring to the replacement of the cotton crop in large areas of Punjab and Sindh by sugarcane and rice. It is an issue that is deeply critical to Pakistan’s agriculture. Cotton was for the longest time a very safe cash crop, but a lack of investment in seeds and research has meant Pakistan’s cotton is not disease resistant. The loss of the crop year after year has led farmers to plant sugarcane and rice instead. Both of these are water intensive crops, unlike cotton. As Mr Khokhar explains, when you export sugarcane and rice, you are not actually exporting a crop, you are exporting water — and that is a resource you are not going to get back any time soon. “In 1992, in my hometown in Zilla Khanewal, ground water could be found at 20-24 feet. Today you cannot find ground water at 65-70

feet sometimes. In this entire area sugarcane and rice has taken over. And when you plant sugarcane, it is like you’re planting a tubewell. It sucks water and potash out of the ground which leaves the land completely barren in time,” he says. Cotton is the core component that has been holding Pakistan’s textile industry together all these years. Over the past two decades, the cotton crop in Pakistan has fallen out of demand, has become internationally uncompetitive, and output has fallen by a whopping 65% from 14 million bales being produced in 2005 to 5 million bales being produced last year. This is despite the fact that Pakistan has actually decreased the weight of its bales. Once the darling of farmers and agriculturalists, the area dedicated to cotton farming has also been shrinking significantly since the late 2000s while competitor countries like Egypt have increased the area they are dedicating to growing cotton.

Textile Exports in 2003:

Textile Exports in 2024:

Pakistan =

$8.3 billion

$17.4 billion

Bangladesh =

$5.5 billion

$47.96 billion

Vietnam =

$3.87 billion 12

$46.88 billion

In 1991, cotton was grown on around 6.6 million acres of land all over Pakistan. It grew to a peak area-under-cultivation level of 7.9 million acres in 2005 but stood at a mere 2 million hectares in 2020 showing a serious backwards trend. Changing climatic conditions have made the cotton seed in Pakistan less resistant and more likely to fail — which means growing it has become a bad business decision for a number of agriculturalists. This decline has had two main factors. For decades, farmers grew cotton because they knew the textile industry would buy the raw materials and they would get a good price. However, there was a shocking lack of research on cotton. No new seed varieties were introduced, at most there were strains that were disease resistant but not disease free. The cotton crop had its issues, but low yields were made up for by higher areas under cultivation because the demand was high. Then came the crisis of 2008. That was the year energy shortages in Pakistan crippled both industrial and domestic consumers with massive power cuts. The textile industry is energy intensive, and the shortages meant the business was in a massive slump. In a single year, more than 90 mills shut down. The ones that did not wrap up kept their machinery off. Cotton was suddenly not a sure shot crop. In the years to come, farmers shifted away from cotton and the industry began importing cotton, particularly from the Americas, to make up for the shortage. This combination of factors has led to a decimation of the crop, and serious implications for the textile industry. “The one advantage Pakistan has in its cotton chain is cheap labour, but you need to have a streamlined chain. For us to utilize this advantage, we need to encourage local cotton growth even if it takes supporting farmers for a few years, and we need to give cheap energy to spinners and weavers,” says Kamran Arshad. And that brings us to the next and possibly biggest problem — energy.

The ready-made business in Pakistan is thriving, and the export of these value-added garments is crucial for the growth of our economy. However, our continued success depends on upstream industries being able to avail cheaper energy, consistent policies, and better support for the entire value chain Asad Shafi, owner of Cross Stitch

Spinning a web

t is important to understand the process by which textiles are made. Briefly, cotton is grown on farms, picked by farmers either by hand or machine, and then sold to cotton ginning mills. Nearly the entirety of Pakistan’s cotton ginning industry is located in South Punjab. Ginning involves removing the cotton seed from the cotton. It is a labour-intensive, low margin business, so even the owners of cotton gins are not particularly rich people. That ginned cotton is then bought by textile spinning companies, who use spindles to turn that ginned cotton into cotton yarn. The yarn is then woven into cloth, the cloth is then dyed and printed, and after that comes the stitching phase. This is, again, a labour intensive part of the process, but it is a bit further up the value chain, so the margins are a little bit better. And here is where a big strategic decision needs to be made by the person who owns a textile factory. See, textile spinning, weaving, and dyeing are big mechanical processes where large machines run by semi-skilled labourers and engineers do most of the work. After that, your ability to go further up the value chain involves how many people you can have in a factory literally just sitting at a sewing machine and sewing up the items you are trying

to manufacture. And the margins you will earn at this stage are determined by one decision: do you want to earn higher margins by having people sew smaller, more complex stitches, or do you accept lower margins, but potentially higher volumes by doing simpler stitches that you can probably churn out faster? A bedsheet, for example, involves a small number of straight lines that can be stitched very quickly. A pair of jeans, however, involves pockets, zippers, and curved stitches that can be significantly more complex. Your factory would earn a lot more for the jeans, but it will also take longer. The bedsheet could probably be done in seconds by a skilled labourer. The second part of this chain, spinning and weaving, is where a lot of the cost is added. Since it is done primarily through machines, it is very energy intensive. Energy has been a consistent bane for the industry. “Spinning is very energy intensive. Cotton is spun and turned into thread. Around 40-45% of the inputs are dependent on electricity and as a result its economics are dependent on the energy costs. When you come to stitching and other parts the electricity inputs go down to around 5% but the basic industry depends highly on this. And if it works the rest of the industry will work as well,” explains Tahir Basharat Cheem, an energy advisor to the industry and former managing director of PEPCO.

When you export sugarcane and rice, you aren’t actually exporting a crop, you’re exporting water — and that is a resource you’re not going to get back any time soon Khalid Khokhar, Chairman Kissan Ittehad Council

“The export industry competes with other countries, not other cities or factories. We need to look at comparative economies to see what our advantage is and what our disadvantage is. We compete with India, Bangladesh, Sri Lanka, Thailand, Vietnam, and China. If electricity rates there are low, then naturally the industry here will be at a disadvantage. We cannot export at those rates. We need to digest those. At these rates we are not competitive at all. At most the prices are 6-9 cents per unit of electricity. In Pakistan we are getting electric at around 12.5 cents per unit. And the entire chain needs to move along to get the downstream benefits.” The history of how this happened is long and unfortunate, and has to do with how Pakistan’s energy management system has been run since the 1980s. From the 1950s onwards, Pakistan had most of its electricity generated through hydroelectric energy stored in Mangla and Tarbela dams. But as demands grew in the 1980s and water shortages became regular, in the 1980s, the government began setting up oil-fired power plants, but the vast majority of Pakistan’s electricity came from water until at least the early 1990s. At that point, with international financing difficult to procure owing to Pakistan’s poor relations with the United States, the government instituted a policy that allowed for more private sector players to set up independent power plants (IPPs) that were reliant mainly on oil. Over the next decade, this increased Pakistan’s reliance on imported oil as a fuel for its electricity generation. In the early 2000s, the Musharraf Administration decided to convert at least some of that thermal power generation capacity from imported oil to domestic natural gas, under the assumption that Pakistan had abundant domestic reserves. This, as has been pointed out in this publication on many previous occasions, was a very faulty assumption. As of 2005, the height of the Musharrafera economic boom, Pakistan derived more than 84% of its electricity generation from entirely domestic fuel sources, according to Profit’s analysis of data from the National Electric Power Regulatory Authority (NEPRA). That meant

COVER STORY

Spinning is very energy intensive. Cotton is spun and turned into thread. Around 40-45% of the inputs are dependent on electricity and as a result its economics are dependent on the energy costs. When you come to stitching and other parts the electricity inputs go down to around 5% but the basic industry depends highly on this Tahir Basharat Cheema, former MD PEPCO

of this, the government also has tariffs and cesses on energy that make it more expensive compared to energy in other countries. Not only this, the government has also shown stubbornness when it comes to renewables. For example, the government only offers solar net metering to commercial customers for 1MW, even though the industry wants to expand their solar capacities. “We have some serious legacy costs here. The government was told the private sector needed to be brought into the electricity generation. This was the birth of the IPPs. However, there was no regulatory control on them nor any legal controls. They get very high rates. Because we were always considering them in US cents and dollars, our currency devaluation also was a big blow. It has gone from Rs105 to over Rs300 in recent years. If the currency falls this much, that cent which was Rs6 has become Rs18-20. Perhaps not a lot of attention was given to this at the time. Similarly, we were not able to use indigenous fuel sources at the time. So not only are we import reliant, the cost is also increasing because of currency devaluation. Similarly even with RLNG the prices were pegged to the price of oil. Customer categories have also been a big issue. We have not been able to deal with these legacy costs,” says Mr Cheema. Energy is by far the biggest problem Pakistan’s Cotton cultivation in Pakistan textile industry faces. It has meant costs have increased, and with fast changing government policies, the industry claims it is impossible to keep up. “As long as our policy makers do not give prolonged policy framework industrialisation will not happen. As long as they keep focusing on T Bills the environment for growth just won’t develop. We don’t know what our rate of taxation, energy, gas or anything else will be. When we have this uncertainty, the boom times will be less and bust

that even as the Iraq War of 2003 drove up global oil prices, Pakistani consumers of electricity remained largely unaffected. Unfortunately, there was a limit to just how much natural gas was available in Pakistan and around the end of the Musharraf years, Pakistan went from being a gas-surplus country to having a shortage. That shortage, in turn, meant that the thermal power plants that could run on either natural gas or furnace oil ended up having to run on oil almost all of the time as the government scrambled – and failed – to keep the lights on. The sharp rise in reliance on oil coincided with a dramatic rise in oil prices themselves (late 2007 and again in early 2009). Oh, and the rupee’s value collapsed at the same time, which created a perfect storm for the incoming Pakistan Peoples Party (PPP) led government, which tried to keep consumers insulated by increasing government subsidies, but the government did not have the money to do so. What happened after this is a sordid tale that has led us to our current woes. The relevant part to our story is that Pakistan’s energy mix today is majority dominated by imports. For an energy intensive industry like spinning and weaving, that makes it very expensive. On top

Area under yield (1991) =

6.6 million hectares Area under yield (2005) =

7.7 million hectares Area under yield (2004) =

2.2 million hectares

periods will keep getting longer,” says Kamran Arshad, Chairman of APTMA. The heat has been felt by everyone including large players that have been in the industry for a very long time. Adil Bashir is the third generation of his family that has been involved in the textile industry. He currently runs Suraj Textile Mills, but he is also troubled by the massive electricity costs. “Spinning yarn and fabric is the most energy intensive. We have to measure conversion costs. My biggest cost around 3035% is utilities. Today we are almost touching 60%. If my input cost of utilities whether it is WAPDA or gas has gone up and almost doubled how does the govt expect us to survive. Mills are closing, especially the upstream and in the world there is a glut,” he says. “That is why we have fallen behind.”

Taxes, taxes, taxes!

n addition to skyrocketing energy prices, Pakistan’s textile industry faces an oppressive tax regime that exacerbates its challenges. Exporters in the textile sector are subjected to a range of taxes that make it increasingly difficult to remain competitive. The dual taxation system—where exporters are taxed both under the normal income tax regime and a fixed tax on export proceeds—has created a heavy financial burden for textile manufacturers. The effective tax rate for exporters can reach as high as 135% of profits, undermining the profitability of textile exports and making it more attractive for businesses to focus on domestic markets instead. “Pakistan’s biggest issue is tax collection compared to our GDP. Our ratio does not go over 10%. There are ways to expand the take base. We have unfortunately taken the easier way of squeezing those already in the tax base,” explains Raza Baqir, a former member of FBR and Secretary General of APTMA. “The main problem is that all over the world most places are free from export taxes. If there is a tax, they should be refunded. Exporters run around trying to get tax refunds but it

TEXTILES

doesn’t happen and creates serious tax refund issues.” The imposition of new taxes, such as the recent re-imposition of electricity duties by the Punjab government, has only added to the industry’s woes. These taxes increase operational costs for manufacturers, further eroding their ability to compete in the global market. Many other countries have adopted tax policies that incentivize export growth, offering tax breaks, rebates, and other support measures to bolster the competitiveness of their textile sectors. Pakistan, on the other hand, seems to have adopted a more punitive approach, which disincentivizes expansion and investment in the textile sector. “No one believes in giving rise to industry. No one in the government. That is the most frustrating part of dealing with the government. Our members are losing interest. No other industry is as affected by core issues such as interest rate. Taxation, and energy as us. We are directly impacted by this deadly trifecta,” says Kamra Arshad. The lack of consistency in tax policies only adds to the instability. Exporters face the constant threat of new taxes or changes to existing tax structures, making it difficult to plan for the future. This uncertainty, combined with high taxes, has made Pakistan’s textile industry less competitive compared to other nations, which have more stable and supportive tax environments for exporters.

Retail woes

he issue of taxation goes beyond just the export industry. Asad Shafi, a third-generation textile businessman, is the proud owner of Cross Stitch, a leading fashion retail brand in Pakistan. His company, which specializes in ready-made garments, has successfully captured the domestic market while also exporting its products to international markets. Shafi sees immense potential for Pakistan’s textile industry to thrive in the ready-made garments (RMG) sector, with value-added products like apparel having

Cotton yield in Pakistan

Production in 2005 =

14 million bales

Production in 2024 =

5 million bales

The main problem is that all over the world most places are free from export taxes. If there is a tax, they should be refunded. Exporters run around trying to get tax refunds but it doesn’t happen and creates serious tax refund issues Raza Baqir, secretary general of APTMA

a substantial market abroad. However, Shafi is quick to point out that the current challenges facing the domestic textile industry must be addressed before the potential for growth can be fully realized. “The ready-made business in Pakistan is thriving, and the export of these value-added garments is crucial for the growth of our economy,” says Shafi. “However, our continued success depends on upstream industries being able to avail cheaper energy, consistent policies, and better support for the entire value chain.” The government’s lack of stability in policies, particularly regarding energy prices, is a major concern for businesses like Cross Stitch, which relies on a well-functioning, competitive supply chain to thrive both locally and internationally. Yet, the problems do not end at the energy costs or the upstream sector. Shafi is particularly concerned about the taxation system, which, in his view, severely hampers the growth of the industry, especially for registered businesses. “In Pakistan, small-scale retailers often operate cash-based businesses and evade taxes. This puts companies like Cross Stitch, which are fully registered, at a disadvantage. We are paying high taxes while these smaller players avoid the burden. This creates an uneven playing field that harms legitimate businesses and discourages investment,” he explains. Shafi believes that Pakistan’s fashion retail sector could grow exponentially if the government provides a more consistent and supportive taxation system that levels the playing field. The discrepancy between small, informal retailers and large, formal ones like Cross Stitch is evident in the business landscape. Small players often operate on margins that are not subject to the same regulations, allowing them to thrive in ways that larger companies simply cannot. The lack of enforcement of tax laws for informal businesses creates an additional layer of complexity for large textile retailers. Shafi argues that the government must prioritize formalizing the sector and ensuring that every player contributes fairly to the economy. “This disparity in tax compliance is not only frustrating for businesses like ours, but it also impedes the overall growth of the industry,” he states.

Despite these challenges, Shafi remains optimistic about the future of Pakistan’s textile sector. He highlights the growing demand for Pakistani garments abroad, which could be the key to unlocking the sector’s full potential. “If we can overcome the issues in the upstream sector, streamline our supply chains, and create a stable taxation environment, Pakistan can become a powerhouse in the global ready-made garment market,” he says. Cross Stitch, with its focus on high-quality production and design, is already making its mark internationally, but Shafi believes that more support from the government is necessary to enable others to follow suit. The growth of Pakistan’s textile sector is not just about increasing exports; it’s also about empowering domestic retailers to compete on an equal footing. To do so, the country needs to address the deep-rooted issues of taxation, energy costs, and policy instability. Asad Shafi’s insights underscore a crucial point: the textile industry can thrive, but only if the right measures are put in place to support all segments of the value chain, from cotton farming to ready-made garment manufacturing. The textile industry in Pakistan is at a crossroads. On one hand, it has the potential to reclaim its historical dominance as a global textile producer and exporter, particularly in value-added products like ready-made garments. On the other hand, the industry is grappling with numerous challenges that are stifling its growth. The lack of consistency in government policies, energy shortages, and the taxation disparities between formal and informal businesses all contribute to the current crisis. However, as highlighted by industry leaders like Asad Shafi and Kamran Arshad, there is still some hope if the government and other stakeholders can come together to fix each stage of problems in what was once a robust chain. n This story is the first in a two-part feature focusing on Pakistan’s textile industry. With unprecedented access and interviews across the entire textile supply chain from cotton field to foreign markets, the first part has focused on what the core issues of Pakistan’s biggest export oriented sector have been. To understand what can be done about this, read the second part in next week’s issue.

COVER STORY

After decades of losses and failed attempts, Pakistan finally privatizes its national carrier in a landmark $482 million deal

By Ahtasam Ahmad

n a December afternoon in Islamabad, history was made in a five-star hotel ballroom. Three consortiums sat across a televised auction table, bidding for what was once the pride of South Asian aviation, Pakistan International Airlines. After ninety minutes of competitive bidding, the gavel fell at Rs 135 billion ($482 million), marking the end of a seven-decade era of state ownership and the beginning of what many hope will be a new chapter for the beleaguered national carrier. The winning bid came from a consortium led by Arif Habib Corporation, a Karachi-based securities brokerage, alongside Fatima Fertilizer, private school network City Schools, and real estate firm Lake City Holdings. Fauji Fertilizer Company, a military-backed conglomerate that had withdrawn from the bidding just days earlier, has also joined the consortium as a partner, a development that adds both intrigue and a measure of institutional backing to the transaction.

Why privatization became inevitable

he story of PIA’s decline is a cautionary tale of political interference, chronic mismanagement, and institutional decay. Decades of political patronage transformed the airline into a bloated bureaucracy. At its worst, PIA employed approximately 300 workers per aircraft, compared to the international benchmark of fewer than 200. Successive governments treated it as an employment agency rather than a commercial enterprise. From 2016 to 2024 alone, the airline accumulated losses of Rs 500 billion, requiring annual government subsidies of billions simply to stay operational. The 2020 Karachi crash, which killed 97 people, proved to be a turning point. Investigations revealed that nearly a third of the airline’s pilots held fake or dubious licences, prompting the European Union Aviation Safety Agency to ban PIA from European skies. The reputational damage was devastating, and the ban persisted until November 2024, when EASA finally lifted it after the airline demonstrated compliance with international safety standards. The International Monetary Fund had long demanded privatization as a condition of Pakistan’s bailout programmes. Under the current $7 billion IMF package, the government had committed to completing the sale by year’s end. This time, unlike previous failed attempts, there was no turning back.

Engineering an attractive deal

he key to this successful privatization lay in the government’s willingness to absorb PIA’s toxic legacy. Before moving forward with the deal, the government undertook a comprehensive restructuring programme. A new holding company, PIA Holding Company Limited, was created to absorb the airline’s bad assets and legacy debt. Of the airline’s total liabilities of Rs 825 billion, more than Rs 650 billion, including Rs 268.7 billion in bank debt, Rs 170 billion in government debt, and Rs 188.3 billion in legacy operating liabilities, were transferred to this holding entity. The restructuring transformed PIA’s balance sheet dramatically. The airline’s negative equity fell from Rs 698 billion to Rs 45 billion. Banks agreed to extend debt maturities to ten years and reduce interest rates from approximately 23.5 percent to a maximum of 12 percent, conditional on privatization proceeding by 2027. The first privatization attempt post restructuring in 2024 had collapsed spectacularly when the only bid received, a paltry $36 million from a real estate company, fell far short of the $305 million reserve price. Potential investors had cited the airline’s crushing debt burden and unresolved tax liabilities as insurmountable obstacles alongside the negative equity of the entity being offered. Post that setback, the government further transferred Rs 21 billion in net liabilities to the holding company to turnaround the company’s equity to Rs 9 billion in the green. The operational turnaround was equally significant. Loss-making routes were discontinued, costs were reduced, and limited reforms were introduced. The result was remarkable: PIA reported its first annual profit in 21 years for fiscal year 2024, posting an operational profit of Rs 3.9 billion and a net profit of Rs 2.26 billion. While critics noted that much of this profit derived from the debt restructuring rather than operational excellence, the optics were undeniably improved.

What was PIA really sold for?

he government set a reserve price of Rs 100 billion for a 75 percent stake in the restructured airline. “To assess the bid value for this auction, we employed four valuation methods. First, we conducted a discounted cash flow analysis based on projected future cash flows and a terminal growth rate of 5%. Second, we benchmarked against comparable global airline multiples to determine relative valuation. Third, we analyzed precedent transaction values from similar global airline deals. Finally, we recalculat-

ed PIA’s net asset value by adjusting the balance sheet for market values. After running multiple simulations and weighting each methodology appropriately, we determined a fair valuation of Rs. 100 billion for the airline,” stated Muhammad Ali, Chairman Privatisation Commission. The auction, broadcast live on state television, attracted three pre-qualified consortiums. Arif Habib opened with Rs 115 billion, followed by Lucky Cement at Rs 101.5 billion, while local carrier Airblue offered Rs 26.5 billion. After a second round, Arif Habib emerged victorious at Rs 135 billion. However, the headline figure tells only part of the story, and understanding the true transaction value requires careful unpacking. Under the deal structure, only 7.5 percent of the bid amount, approximately Rs 10 billion, flows directly to the government treasury. The remaining 92.5 percent, or Rs 125 billion, is to be invested back into the airline for fleet modernization, operational improvements, and service enhancements. “The most difficult task in this transaction was to ensure that while selling PIA, we ensure that the new buyer invests money back into the company. So, we had to achieve both objectives.” Muhammad Ali, the Prime Minister’s adviser on privatization, defended the valuation methodology at a press briefing. “So our structuring was such that we get Rs 10 billion in cash and the value of our equities is Rs 45 billion. So the government will get a value of Rs 55 billion in total, and Rs 125 billion will flow back into PIA,” he explained. The government retains a 25 percent stake valued at approximately Rs 45 billion post-money. Financial analysts have offered more nuanced assessments. In pre-money terms, the enterprise value of PIA stands at just Rs 13.5 billion, calculated by dividing the Rs 10.125 billion cash payment by the 75 percent stake. The post-money enterprise value, after the capital injection, rises to Rs 180 billion. The acquisition price, what the government actually realizes from the transaction, can be calculated as Rs 10.125 billion in cash plus Rs 31.25 billion representing the government’s proportionate share of the capital injection into its retained 25 percent stake, totaling approximately Rs 41.4 billion for the 75 percent stake, or Rs 55 billion for the entire stake. Critics argue that with the government absorbing the bulk of PIA’s legacy debt before the sale, taxpayers continue to bear that burden regardless of the sale price. Supporters counter that without debt removal, no investor would have shown interest whatsoever, as the failed 2024 auction demonstrated. The book value of the operating entity, after restructuring, stood at negative Rs 16 billion. Even the Rs 10 billion cash payment exceeds what the balance sheet would dictate.

PRIVATISATION

The call option and investor protections

he transaction structure includes a call option that allows the winning consortium to acquire the government’s remaining 25 percent stake. The call option of a balance of 25 percent, can be exercised in 90 days. The payment can be made within a year with a 12 percent per annum premium. This call option reflects careful structuring by the government. By requiring the decision on the remaining stake only after the initial capital has been deployed, the government ensures that investors cannot simply walk away if performance deteriorates, while retaining upside if the airline’s prospects improve. The 12 percent premium represents a deferment charge for the delayed payment, not an increase in the underlying valuation. To secure investor confidence, the government offered substantial additional protections. The new owners receive GST exemptions and protection against new taxes, levies, or surcharges on airline operations. They are also shielded from certain tax liabilities and ongoing litigation claims that predated the restructuring. The government rejected bidders’ requests to spread payments for the 75 percent stake over a full year, citing the risk of downside exposure if PIA’s performance deteriorates while allowing bidders to benefit if performance improved. Employee protections were also built into the deal. No layoffs are permitted for at least one year, and all existing pay, perks, and compensation structures must remain unchanged during this period. This was a politically sensitive requirement, given that PIA’s workforce has historically been a source of resistance to privatization efforts.

Institutional backing or state by another name?

erhaps the most intriguing aspect of the transaction is the involvement of Fauji Fertilizer Company. Having withdrawn from the bidding just days before the auction, FFC announced the day after that it intended to join the winning consortium. Columnist Khurram Husain, writing in Dawn, offered a more pointed interpretation. FFC, he noted, can be considered a stateowned company even though technically it is not classified as such. “The winning bidder’s plan to rope in a military-owned fertilizer company, which had bowed out of the competition only days back, seems less for its capital needs than its desire for institutional backing to hedge against unpredictability,” he observed.

This analysis cuts to the heart of Pakistan’s privatization challenge. Past privatizations have been marked by political victimisation of buyers, frequent policy reversals, transparency issues, and judicial interventions. The Arif Habib consortium’s eagerness to bring FFC on board, despite already winning the auction, suggests a pragmatic calculation: in Pakistan’s volatile business environment, having the military establishment as a partner provides a degree of institutional protection that no contractual guarantee can match. What has emerged from this process is something quite distinct from a conventional privatization. With continuing state-owned stakes, military-linked institutional backing, and a transaction structured more around revival than revenue, the PIA deal may well represent a new template, one that blurs the traditional boundaries between public and private ownership. If successful, it could usher in a new era of state-business partnerships across Pakistan’s struggling portfolio of public enterprises.

Global precedents and lessons

IA’s privatization follows a well-established global pattern. British Airways’ privatization under the Thatcher government in the 1980s established the template for airline denationalization, demonstrating that state-owned carriers could be transformed into profitable private enterprises through a combination of restructuring and share issuance. Perhaps more relevant is the experience of Kenya Airways, which in 1996 became the first African flag carrier to be successfully privatized. Like PIA, Kenya Airways had accumulated significant losses and debts due to mismanagement and political interference. The government absorbed approximately $90 million in debts and converted loans into equity before attracting KLM as a strategic partner with a 26 percent stake. The results were transformative. Within six years of privatization, Kenya Airways’ flight frequency grew by 61 percent, and Nairobi developed into a regional hub. The airline became profitable and was cross-listed on multiple African stock exchanges. However, Kenya Airways also illustrates the fragility of such turnarounds, the airline later encountered financial difficulties and currently remains under partial state ownership.

The road ahead

he privatization process now moves to final approvals by the Privatisation Commission board and cabinet, expected within days. Contract

signing is anticipated in the coming weeks, with financial close following a 90-day period to meet regulatory and legal conditions. If all proceeds according to plan, new ownership will take operational control by April 2026. The challenges facing the new owners are substantial. PIA’s fleet requires modernization, currently only 18 aircraft are operational out of a total fleet of 34. The workforce remains oversized by international standards, and the airline’s reputation will take years to fully restore. The European ban has been lifted, but rebuilding trust with international passengers demands sustained improvement in safety and service standards. Yet there is cautious optimism. Arif Habib has publicly committed to expanding the fleet to 38 aircraft in the first phase, then to 65 aircraft depending on demand. The resumption of European flights in January 2025, beginning with Paris, signals that PIA is returning to international respectability. The injection of private capital and management expertise offers hope that the airline can recapture some of its former glory. For Pakistan, the successful sale represents more than just the privatization of an airline. It signals commitment to structural reforms demanded by international lenders and establishes a precedent for divesting other loss-making state-owned enterprises. The government has indicated that a pipeline of future transactions will follow once PIA closes. The Asian Development Bank has already approved a $400 million loan specifically designed to support state-owned enterprise reforms, underscoring international confidence in Pakistan’s reform trajectory. Whether PIA can truly soar again remains to be seen. The new owners inherit an airline that once helped establish Emirates and served as a training ground for pilots across Asia and the Middle East. They inherit landing slots at premium airports, a recognizable brand, and a loyal customer base among the Pakistani diaspora. But they also inherit decades of institutional decay, a workforce that remains skeptical of change, and competitors who have surged ahead while PIA stagnated. After seven decades of state ownership and two decades of decline, the airline that was once the pride of a nation has been given a second chance. The question now is whether private hands, with military-backed institutional support, can accomplish what governments could not: restoring Pakistan International Airlines to the skies where it once belonged. For millions of Pakistanis at home and abroad, the answer to that question matters deeply, not merely as a matter of economics, but as a question of national identity and renewed possibility. n

PRIVATISATION

Futures markets are the stock market’s equivalent of having your cake and eating it too

The future market is utilized by shareholders to keep ownership of their assets while unlocking funds 20

By Zain Naeem

hen one thinks of the stock market, the idea that comes to mind is a group of brokers shouting in a pit looking for the best price to get an asset. The concept of the trading pit has been replaced by a computer screen,however, the concept still holds that it is seen as a market where only shares are traded. There is a complex web of financial products that are built on top of this basic structure which is used by the market participants for different purposes. Essentially, the role of the market is to facilitate trading to take place which allows certain parties to sell away their risk to someone who is willing to take on additional risk for an additional return. In order to facilitate this transfer of risk, a whole range of financial products have been developed in order to make this possible. The concept of financial alchemy has been developed over time which allows for financial products to be designed which help one person to shift their exposure to risk to someone who is willing to take on the additional risk in order to make an additional gain. Derivatives have been developed which offer a different risk and return outlook to an investor as they derive their value from underlying assets. The difference is that rather than investing directly in the underlying asset, the investor is able to invest in a product whose value is linked to the asset. An example that can be considered here are the future contracts. Rather than buying a share of a company, the investor buys or makes a promise that he will purchase the share at a future date and will take ownership of the share later. This allows the investor to be able to put up a smaller amount of investment currently and have an interest or an exposure to the profit that the share will earn. Once the basic tenets are set, these futures are used to create a synthetic position by shareholders where they are able to sell their shareholding in the market and then buy the shares in the future market. This tool is now being used extensively by companies and their shareholders to be able to get the funds now and then commit a smaller amount to buy the shares in the future market. In this manner, they are able to stake a claim to these shares while being able to sell them. The last layer of complexity that is added on top of this is that these shareholders are able to roll over their position ad infinitum allowing them to virtually own the shares while getting access to funds by selling their shares. Confused? Let Profit break down each element of this transaction

What is the futures market?

n order to understand the financial alchemy at play, there needs to be an understanding of the futures market. Usually when shares are bought and sold in the stock exchange, the understanding is that these shares are being traded in the de facto regular market. Any shares bought and sold are settled in a period of two days where the buyer gets his shares and the seller gets his funds. The futures market runs parallel to the regular market and these are contracts that are traded on a daily basis. The understanding behind the futures contract is that the buyer is making a commitment right now that he will buy the shares sometime in the future. The price of these contracts is tied to the value of the underlying asset. As the price of the asset moves, so does the

price of the future contract. These contracts were developed in the commodities market which allowed a seller to be able to lock in a price months in advance. A farmer can sell his produce six months in advance rather than having to face an uncertain situation in the future when the harvest season comes. The risk that the farmer was exposed to would be limited as he can sell at a certain price right now. The risk would be transferred to the buyer who is willing to buy the produce at a given price. The buyer will make a profit if the prevailing price is higher than his purchase price while is exposed to the losses if the price falls below that level as well. The goal of the capital markets is to allow risk to be transferred from one party to another. The farmer has been able to hedge his risk while the buyer is speculating that the price will increase in the future. The biggest advantage a buyer has of investing in a future contract is that he is able to buy a contract for a fraction of the price of the asset itself. This allows the buyer to leverage his position and magnify the profit or loss that he will make from the investment. The futures market is also beneficial as it allows for contracts to be rolled over. What this means is that an investor can buy a futures contract in January. Before the contract expires and has to be settled, the investor can sell this contract and then buy a contract for February. They can keep doing this as it means that they do not have to pay for the settlement to be carried out and can keep rolling their position forward as much as they want. The investment required for this rolling over is much lower than settling the contract and can be used if the investor feels that the price will eventually end up increasing in the future. In commodities, the seller is looking to lock in a price while the buyer is looking to make a profit. When the stock market is considered, the situation changes as the buyer is expecting the price to rise while the seller is expecting the price to fall. Based on these contrasting views, the shares are traded as both sides have opposing views. The usual participants of the future markets, as stated before, are speculators and hedgers. At one end are the hedgers who are looking to limit their risk by selling beforehand which limits their profit or return but also reduces the risk that they are exposed to. On the other end are the speculators who are expecting that they will get a better price in the future and are willing to buy at a given price right now. But now it seems that there is a third party that is also looking to use the futures market.

The futures market in Pakistan

he futures market in Pakistan has been running parallel to the regular market for years and now the contracts have been expanded. In the past, only one future contract used to trade which has now been expanded to three month future contracts. This means that an investor can either buy the share in the regular market in January or choose to invest in its derivative January, February or March contract which are running parallel in the futures market. Based on the functionality of the futures market, the shareholders of companies are using the futures market in order to liquidate their investment and use the funds from the sale for different purposes that they have set out for themselves. Two prominent companies that have used this transaction are TPL Corporation and Waves Corporation.

PSX

TPL Corporation owns the shares of TPL Properties while Waves Corporation owns the shares of Waves Appliances. The senior management at both of these companies sold their shareholding in the regular market and bought the shares in the futures market. As each month starts now, both these corporations roll over their position from one future contract to the next like clockwork. This allows them to be able to own the shares of the company while also getting to avail the funds that they received by selling their shares. What is actually being done here is an open ended repurchase agreement also known as a repo. In a repo transaction, an asset is sold by the company in the present and then can be repurchased by them at a later date. This allows them to make sure that the asset remains loosely in their hands and control while being able to utilize the funds for other uses. Rather than locking the investment in an illiquid asset, the company is able to liquidate this investment and use the money raised for more productive uses. The future market is able to help create a synthetic repo for companies like TPL and Waves Corporation as it is fulfilling the same purpose. Rather than having to draw up paperwork and find a buyer for its assets, the liquidity and depth of the futures market is used to achieve the same objective. This allows the management at both these companies to be able to maintain their shareholding while utilizing its funds for more revenue generation. We can put both these transactions under the microscope.

Future market vs repurchase agreement

t the core of both these transactions is the idea that the company will have an exposure to the value of the assets over time. Rather than putting up the total investment, these allow the economic benefit of owning the asset rather than actually owning the assets. When the future market is used for rolling over, the company is able to maintain an economic exposure to the asset while putting up a smaller amount of funds. This allows them to get all the benefits from the assets while not looking to own it outright. In terms of investment, only a margin needs to be deposited rather than the notional value and daily mark to market losses have to be paid for. In the case of a repurchase agreement, the company would have to buy the asset initially and then get it financed by entering into a repo agreement. This would entail for the asset to be sold for cash and an agreement being made to buy it back at a later date. The

issue with such a transaction is that the asset has to be bought which requires funds in the present which is then sold later. The difference between the two is that futures contracts are standardized agreements that are traded on the stock market on a daily basis and are settled at a future date. In order to buy a contract, a margin deposit has to be made which is complemented by subsequent deposits for the profit or losses made by the contract until it reaches maturity. These deposits are called mark to market deposits. Due to the standardization of the contracts, they can be traded easily and the market has liquidity and depth. In the case of a repurchase agreement, the asset is being sold currently and then a commitment is made where the asset will be purchased back at a future date. Banks and other institutions use it to sell any security or asset that they have on their books and then buy back the assets when they have the funds or resources to do so. This technically becomes like a secured loan that is taken by the asset seller and is paid back when the asset is repurchased. In the case of the futures market, the ownership of the asset is not required which makes this market much more attractive compared to repo transactions.

The act of creating a synthetic position

he old view of investing used to be that the shares had to be owned in order to gain the economic benefit from the,. Own the shares of the company and hold them for a period of time before selling them and pocketing a neat profit. If you want to gain from the increase in oil prices, buy the barrels of oil and store them until they can be sold at a later date. Finance has moved on from those days. There are financial products being developed rapidly which are able to strip the aspects of share ownership into smaller segments. Investors are then able to buy the part of the asset that they feel is relevant to them while discarding the rest. Take the example of normal share ownership in Pakistan. A seth would set up a company and then see his business grow. As he held the shares, his economic standing would be tied to the company. As he would sell his shares in the stock market, he was able to realize some of the value that he had added to the company. Given a choice between retaining his control and getting access to additional funds by selling his share, he would always choose the first option. Now, it seems that this binary choice has been eliminated. TPL and Waves Corporation have started to use the futures market for their

own benefit by not making a choice between the either and or. The senior management at these two companies have found a way to raise funds by selling their shares. In addition to that, they are also able to retain the shareholding and control over the company by utilizing the rollover market to their advantage. The genius of this system is that the repo market in Pakistan is mostly populated by banks which are using this window to meet their financing and regulatory needs. Due to this, the repo market for shares is almost non-existent. Even if such a transaction had to be carried out, it would require the corporations to look for a counter party who would be willing to be part of the transaction. Rather than going through such a long hassle, these corporations are using the futures market to effectively do something similar. They are selling the shares that they own while committing to buy back the shares down the line. The benefit of this market is that it is highly liquid and trades on a daily basis. Compared to the repo market, the futures market has a lot more liquidity and allows the flexibility where the repurchase can be triggered when both corporations feel that their objective has been achieved. Does this transaction only have upsides? Just like anything involved in the stock market, there are inherent risks that are present in this transaction. In case the market starts to fall, there can be excessive mark to market deposit calls that will be made which need to be fulfilled. If the company has used the sales proceeds, it can find itself walking a thin wire if the market starts to fall. This risk is magnified in the market today as the lower and upper locks have been increased to 10% which means that the exposure deposit and mark to market losses can become large within a few days of trading. If these assets were owned, there would be no such risk. Another risk that was seen recently in terms of TPL Properties was the fact that the company was put on the defaulter segment by the stock exchange for failing to hold its Annual General Meeting. Due to the non-compliance, the stock market might feel that the company no longer qualifies to be traded in the future market. This would lead to a sudden settlement taking place in the share which will have to be paid for by the corporation. Something similar was seen last year when Pakistan International Airlines (PIA) was broken into PIA Holding Company which led to its future contracts being settled much earlier than their designated dates. This led to a crash in the future market as investors rushed to close out their open positions. Something similar could have taken place at TPL Properties if the non-compliances had not been addressed. n

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How big is Pakistan’s YouTube industry? Recent data shared by YouTube reveals what sells in Pakistan and what doesn’t

By Usama Liaqat

ecently, a YouTuber called Ducky Bhai was released from custody by the National Cyber Crime Investigation Agency (NCCIA). Ducky Bhai, whose real name is Saadur Rehman, had been arrested allegedly on the grounds that he had been promoting gambling and betting apps through his YouTube channel, which currently has 9.81 million subscribers. A serious charge in a serious society (at least in these matters). Ducky Bhai was kept in custody for over three months. Upon his release, he released a video, over 50 minutes long, and which has been viewed over 15 million times. Here he alleged that he had been subjected to physical abuse by certain NICCIA officials during custody, who also defrauded him of hundreds of thousands of dollars from his Binance account. Talking to his followers on YouTube was a way not only to present his side of the story, but also to draw attention to the harm he had suffered and urge some support which there was no shortage of. There was widespread condemnation of this treatment. YouTube, which was alleged to be the site of Ducky Bhai’s supposed crimes, also became the platform where he could highlight the inexcusable overreaches he had been subject to. The double-edgedness of social media platforms aside, the case of Ducky Bhai illustrates the power YouTube has of reaching audiences and forming communities. Although short-form content like YouTube shorts has also taken over the platform, they are not a very good match for the longer format videos which allow for deeper interactions than the reels you barely spend half a minute on, and then scroll on to the next. Independent YouTubers – those who are not TV or Entertainment or official channels of institutes like the PCB or the ISPR – work a lot to carefully curate and create these communities. They have a logic of their own, a community and politics to match that. But perhaps most important of all is the fact that these ecosystems allow people who don’t have much more than a smartphone and a software to edit videos to earn money from what they create. The content varies in quality, but whatever it is, more of it is being produced, and people are consuming more of it. However, Pakistan’s relationship with YouTube – on the whole – has been fraught with state censorship which has often derailed the population’s access to the website and its contents. Despite that, the rising number of YouTube users and independent content creators in Pakistan has spawned its own economies and rapidly changed the way the platform has been viewed and used.

YouTube and Pakistan

ouTube was founded in 2005 in the United States by three former PayPal employees, Jawed Karim, Chad Hurley, and Steve Chen. As a video sharing platform in an era

where the internet was rapidly becoming current, YouTube’s potential was great, and Google bought it the next year for 1.65 billion USD. Since then, YouTube has grown and grown and never looked back. Currently, it’s the second most visited site after Google, with estimates of more than 2.5 billion active users. Over 20 billion videos have been uploaded on YouTube, with an average of 20 million being added daily to the platform. YouTube Shorts, short-video content, are averaging over 70 billion daily views. This is a lot, but that is the fact: YouTube is everywhere. In Pakistan, as well. Yet, as YouTube in Pakistan arrived – as part of the broader web – its presence in Pakistan soon became subject to controversy. The first came with a ban on the video-sharing platform in 2008, when the government blocked access to YouTube on the pretext of the presence of content that was blasphemous, and restored it not until it had been removed. The same thing happened in 2010. In 2012, the mechanics of this biyearly pantomime changed. Again, there was blasphemous content on the platform, this time in the form of a short film called “Innocence of Muslims”. The Pakistani government, again, as was its wont, went to YouTube, and asked for the removal of this video. This time, however, YouTube refused to entertain these concerns. Pakistan refused to entertain this refusal. And, suddenly, YouTube was no more in Pakistan. Of course, people still found a way around with proxies and VPNs and whatnot to access this content. Censorship in a sense was no longer as absolute as it might have been in the past. Yet, the fact remains that this did bar a great many people from accessing the platform, especially in an age, and stymie the integration of this platform within local imaginaries of what internet could mean in their context, and how they could make it their own. The impasse continued for over three years, until in 2016, YouTube launched a Pakistan-specific version of its platform. This was a thaw, which represented a reconciliation of both claims. The Pakistan government had a say in what type of content was allowed on YouTube in Pakistan, while YouTube gained its market back. There have been occasions where the state has tried to curtail content on the website, as part of its general tendency for censorship. Earlier this year in June, the state sought to ban YouTube channels of figures critical of the government for being “anti-state,” which included charges of allegedly criticizing both state institutions and officials. This chosen band included not only the jailed ex-Prime Minister Imran Khan, but also a slew of other journalists who did little to be in the good books of the government. But the government’s genetic tendency towards restricting material aside, the rise of Pakistan YouTube, since its reintroduction, has been meteoric. Accompanied by the increased accessibility and affordability of internet, as well as the flooding of smartphones in the local markets, where it has

DIGITAL ECONOMY

become increasingly commonplace for people, especially the younger generations –not an inconsiderable part of Pakistan’s population – to own one, this rise was not too surprising.

Money, Content, and Money-Content

ow, there are two major reasons why anyone would put a video up on YouTube. First, they want to show what they have produced to the world, for whatever reason. The other reason is to make money off of the first. And the peculiar attraction of YouTube is that it allows for both. In fact, monetization was introduced quite early in YouTube’s history, allowing content creators, through the YouTube Partner Program (YPP), to earn a portion of the advertising revenue from the ads they ran on their videos. It was aimed at encouraging “original and authentic” creation, with only specific types of content being allowed to be monetized. Content which, on the other hand, doesn’t have much input from the ‘creator’ and is essentially just copying or simple collation is generally not allowed to be monetized. To understand the way this money is handled, we must know two terms. The first is the cost per mille, or CPM, as it is commonly known. This is the price advertisers pay for 1000 impressions on their ads. The second term is rate per mille, or RPM, and this is what the YouTuber gets paid for 1000 views on their videos running the ad. In general, the RPM is 55% of the CPM, i.e., the content creator gets paid 55% of what the advertiser pays, while YouTube keeps the remaining 45%. Running ads is by far the major way to make money from YouTube, but not the only way. One can earn money by shopping brands through links one posts, either for one’s own products, or someone else’s. It is also possible to earn money from premium subscriptions to one’s channel, which allow some subscribers access to limited, restricted content. Other features such as Super Chat, Super Stickers, and Super Thanks, allow fans to pay to have their comments or animations highlighted in the content, allowing YouTubers another way to earn off of their content. Another thing to understand about this economy of payments is that the CPM (what advertisers pay for 1000 impressions) and, consequently RPMs (the payment content creators get for 1000 views or impressions) varies according to various factors. The first of these is geography, of course. If you are based in the US, the CPM might be over in tens of USD. If, on the other hand, you are based in Pakistan, this can range from 0.18 to 0.69 USD, a much lower figure. Considering that what the creators get paid is just over half of that, it doesn’t appear to be too much for

local content creators. Advertising budgets in countries like Pakistan aren’t staggeringly high, so this disparity makes sense. The second major factor influencing the CPM rates is the type of content being produced. Certain niches, such as technology, educational content, and digital marketing can fetch higher rates compared to more common forms of entertainment content like music, vlogs, gaming. These latter usually bring lower payment rates for the content producers. Another factor is the locations where the videos are being viewed. Even if the content creator is based in Pakistan, views from abroad will bring in more money than local views. There is another determinant: how the viewers find the video. Those which YouTube users find through the search function are more lucrative than the ones which they encounter either through the ‘suggested’ or ‘browse’ features. Similarly, YouTube videos bring in more money per 1000 views than a YouTube short, and so do the videos containing un-skippable ads. But it is not simply a matter of gaining views and earning money. Certain conditions must be met in order for monetization to take place. Other than adhering to YouTube’s policies regarding content, one hoping to make some of that YouTube cash must meet the following conditions. To monetize views from fan funding and certain shopping features, the channel must have at least 500 subscribers and three valid uploads in the past 90 days. On top of this, it must also have either 3000 valid public watch hours in the past year or 3 million valid public Shorts views in the past 90 days. If one wants to earn revenue through ads – the most popular way – then one must have 1000 subscribers at least and either 4000 valid public watch hours in the past year or 10 million valid public Shorts views in the past 90 days. Once monetization has been approved, it’s game on. A race to produce content starts, and generally the production quality improves to attract and keep the attention of bored YouTube users, whether looking for something particular, or just to spend their time.

PakistanTube

ith the monetization mechanisms in place, it is no wonder that people have increasingly flocked to YouTube to make, or if it is already made, increase their reach, and put some cash in their purse. Currently, Pakistan has over 54 million YouTube users, who are looking not only for content that is high quality, but also reflects and engages with who they are, their issues,

and their real normal lives. The potential, driven by the rising population, is massive. A recent report by Google paints a picture of the current state of the platform’s usage in the country. As of 2025, over 95,000 Pakistani channels have amassed more than 10,000 subscribers. More than 13,000 channels have over 100,000 subscribers. And, as for channels with over a million subscribers, they number upwards of a thousand. This includes YouTube accounts for major TV channels, who of course came in to take their part in this pie which essentially has no borders. We have major news channels being livestreamed 24/7 on YouTube, perfect for older generations who can carry the news in their pocket, and blare it at full volume whenever and wherever they desire. Similarly, major TV production houses like Hum TV and ARY Digital have also been uploading their popular soap operas on YouTube racking up over a hundred billion views, making YouTube one of their biggest sources of revenue, competing with traditional broadcasting. For Hum TV, for example, the revenue from YouTube has ranged, in recent years, from just under a fifth to around a quarter of percentage of the total revenue. All this is well and good, but what is more remarkable is the rise of the independent YouTubers, who have quickly built niches and fandoms of their own. In a context, where creativity often means making peace with privation, this has offered them a way out. We saw around a decade ago how YouTubers like Zaid Ali T and Shahveer Jafry made a name for themselves by producing content that was relatable for local people, and poked fun in their own manner at various aspects of the desi culture. It was mostly harmless fun, but immensely popular, considering what stage YouTube’s usage was at that time in Pakistan. Since then the market of content has been flooded with newer, rising content-makers, who are building not only of the general trends, but also carving niches of their own. The biggest of these is perhaps the lifestyle, vlog, and entertainment category. In fact, the independent channel with most subscribers after the news and entertainment behemoths, falls into this category. It is called ‘Brothers Vlog’ and has 25.2 million subscribers. Yes, indeed. On top of that, it has amassed over 17 billion views. As far as the content is concerned, it is two brothers, Madni and Mairaj, sometimes accompanied by their father, who play out different skits, try out new challenges, and document parts of their lives. The videos are transparent. Not a thought is suggested that then is not spelled out. The pace is fast. There is not a silent moment. These are designed to

hook, and it appears to be working. A notable thing about this channel is that although the channel has over 2200 videos, the videos with over a million views number a measly ten. For a channel with so many subscribers, their most popular video has been viewed a relatively low 6.9 million times. This trend is reflected in other creators as well. Lucky Sayed, who has over 7 million subscribers, has uploaded videos that have been viewed over 2.6 billion times. However, his most-viewed video has gained 2.8 million views, and only three out of the total 1800 videos on his channel have been viewed more than a million times. Similar is the case for many other creators. What they lose in views for a single video, they make up in numbers. At the same time, older videos keep racking up views, and leading to a situation where even if individual videos do not gather ridiculous amounts of views, the cumulative effect offsets the lack. As for the content in these channels, it is broadly geared toward entertainment, and features the different kinds highlighted in the banner of Lucky Sayed’s channel: “Funny Video, Lesson Video, Emotional, Suspense”. In fact, the second and third categories are massive on Pakistani YouTube. One channel, named “Moosa Tv Info” deals almost exclusively in short videos of feelgood moments made by someone else or simply caught on a camera somewhere. The channel description proclaims the channel’s purpose: “It is a way for me to spread HUMANITY, PEACE, and LOVE, and I upload inspiring videos for all those who believe in it”. You wouldn’t guess how many subscribers it has. 5 million? More. 10? 15? More. 20? Even more. 25? Close, it is 24.2 million. Yes. Some content creators go a step further and produce and act in videos that have a moral or a social message. These include the aforementioned Lucky Sayed, and a host of other creators. One of the more interesting of these is “Bwp Production”. It doesn’t have as many subscribers as some of the ones mentioned before, but still has a substantial following of 842,000. The production value of these is better – you can see they have invested in it. What’s interesting is that in some of their videos they have collaborated with the local police to produce skits that aim to encourage people to follow the law, speak out against any wrong they see, and be peaceable. Such videos also feature props such as a police station, police cars, apparently real policemen, and even have a short message by a police officer at the end summing up the message in the video. The actors in such videos are people, often estranged from the urban metropoles, either the channel owner, their friends, families,

or even what appear to be random strangers, not one of them even close to being called a celebrity. There is a quaint charm to this cast and a local flavour that accounts, perhaps, for their popularity. These are real people, who because they aren’t well-versed in the sophistications of a performance art school, feel unbound by the elementary scripts, and perhaps remind people of something vital that has been lost from our TV screens. There are also YouTube celebrities like Ducky Bhai (9.82 million subscribers) and Shahveer Jafry (3.88 million subscribers), famous for the pranks they run, though they are also diversifying their content to catch up with the changing preferences of the Pakistani market. Shifting to more ‘challenge’ or ‘situational’ scenarios, sometimes vlogging parts of their lives and careers, these channels show how creators are modifying their content according to the changes in the local taste, brought about by access to international creators and a desire to produce something like that with a local flavour.

Diverse Topics, Many Channels

here are other categories as well. Sports influencers, sometimes ex-cricketers like Shoaib Akhtar and Shahid Afridi, or people close to international cricketers such as Faisal Azam (the brother of Babar Azam) have strong followings both locally and internationally. Another category is videos of local tape-ball tournaments (which have made celebrities of cricketers such as Taimoor Mirza, a local legend). There are multiple channels catering to this niche with millions of followers combined. An emerging subcategory is of GoPro videos of hardball matches, which take viewers right in the middle of action. Then there are podcasts, of course. Channels like Shahzad Ghias Sheikh’s “The Pakistan Experience” (331 thousand subscribers) and Muzammil Hasan’s “TBT Podcast” (367 thousand subscribers) provide local versions of what has become a global phenomenon in the personal entertainment industry, talking about local issues and placing them in local contexts, or just simply yapping and chattering the time away. The range of conversation is wide: politics, history, cricket, economics, entertainment, literature, religion, and so on. The conversations, as shown by their popularity, evidently have a market of listeners, hungry to enrich their conceptions of their own realities, or simply to while away a boring stretch of time. There are also YouTubers, such as Engineer Muhammad Ali Mirza (3.16 million subscribers) and Tariq Jameel (8.83 million) who speak about religion. They have massive

followings, though as the recent blasphemy case against Engineer Mirza shows, it is a slippery category to really make one’s name in. One is never too far away from a controversy, which could have real life consequences. Different in category though similar in kind, is the case of political YouTubers. Often fiercely partisan, these often become pawns in broader political games. Criticising the wrong sort can get you disappeared. It is not to say that these political commentators don’t have any influence; rather, these are also celebrities of their own, with people attached to some as they might be to anyone, and often wield real street power. Yet, they are only as strong as the reach of their content, and the state holds the jugular of this reach. A category of finance and investment influencers have also been quietly making a mark on Pakistan’s YouTube landscape. The two prominent names here – Mashal Khan (70 thousand subscribers) and Abdul Rehman Najam (88 thousand subscribers) don’t have massive followings yet, though people, considering the state of financial literacy in Pakistan, are rapidly getting interested in this sort. A previous story by Profit (https://profit.pakistantoday.com.pk/2025/09/29/can-pakistansrising-corp-of-investment-influencers-do-thetrick/) covered this crop of influencers, and its potential to change how people thought about money in Pakistan’s context. Female creators are also claiming their own in this growing market. Catering mostly to interests of the fairer sex which find not a voice elsewhere, a rising crop of influencers have been making their mark. Some of them fall in the category of lifestyle influencers, who simply vlog parts of their lives – there’s no shortage of that. On the other hand, there are some which fill in a genuine void. One of these is “Humna’s Gram” (435 thousand subscribers), whose videos feature her going to local markets and trying to find out cheaper alternatives to the wildly expensive designer clothes, and offering advice on how to build a wardrobe. Others like “Glow Up With Mahnoor” (353 thousand subscribers) offer makeup tutorials and skincare advice, tailored to the contingencies of local skin and weather as well as taking into account the availability and accessibility of products in Pakistani markets. Food influencers have made a space for themselves as well. Other than the major food bloggers who review food joints such as Rana Hamza Saif (1.59 million subscribers), there are chefs as well, offering in depth recipes for the delicacies of South Asian food. Two major names in this are Chef Afzaal Arshad’s “Kun Foods” (3.26 million subscribers) and Chef Amna’s “Kitchen With Amna” (4.4 million subscribers).

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Another type of food niche is made up of content creators who are highlighting types of cuisine often missing from the urban consciousness, though versions of these have of course seeped into the cosmopolitan pantry. One of these is called “Village Food Secrets” (4.37 million subscribers) where food recipes as carried out in villages are presented, giving viewers a chance to gain knowledge of a way of living that is gradually vanishing. These are some of the major types of content being produced and consumed on Pakistani YouTube. There are others too. Travel focused content, though mostly dominated by foreign vloggers who come to Pakistan to comment on the population’s generosity also has local players like “WildLens” by Abrar,” a channel with 2.17 million subscibers. There is a charming cast of wildlife focused content-makers such as “Wild Rush” (211 thousand subscibers) and “Wildlife with Dr. Waseem” wih (298 thousand subscribers), who explore local wildlife and educate people regarding the forms of life that surround them and populate the same lands they live in.

Rise of Long Form Content and Smart TVs

ne of the major factors in the increase in YouTube viewership is, of course, increased access to internet and devices where one can access it. There are smartphones which provide portable access, but it is particularly suited to shorter durations of viewing. Smart TVs (or connected TVs) allow for easier, more communal viewing of longer videos. There’s nothing like bigger screens for bigger content. Smart TVs, also known as connected TVs (CTV), are televisions with integrated internet, allowing users to stream music and videos, view photos and essentially browse the internet on their television set. While these TVs grant viewers access to streaming services and other ways of accessing content, YouTube remains one of the top used apps on TVs. This is, first of all, because YouTube is free (unless you’re paying for the premium plan). At the same time, the fact that the kinds of stuff people used to watch on pre-internet TVs (news, soap operas, etc) can now be viewed on YouTube, along with newer types of content referred to above, means most of what you need can be found here. One, in many cases, doesn’t even need cable, since YouTube is like a mega app for whatever one wants to watch. A recent report by the Wall Street Journal covering what Americans watched on their TVs reveals that YouTube became in 2025 the most-watched video provider in the country.

At the same time, the report mentions that people were watching YouTube on their TVs more than on any other type of device. As YouTube keeps improving its TV app, influencers are pitching in producing longer, more family-friendly content. A study by Tubular Labs also analysed the length of YouTube videos and their correlation with viewing time. It revealed that longer videos made up the greatest percentage of the total time spent on YouTube, with videos over 20 minutes long making up 57% of the total watch time. Longer videos also have an added advantage for content creators, in that YouTube allows for the insertion of multiple ads into videos which are over 8 minutes long. More ads mean more impressions mean more money potentially for the content creators. One form of longer content that has been becoming popular is gameshow type content, which often involves a lot of money. People – sometimes regular, sometimes masters of their craft, sometimes both against each other – are put into situations that pit them against one another. The winner gets a big prize. The viewers vicariously share in the celebration. The undoubted king of this sort of content is MrBeast, the most followed YouTuber with over 457 million subscribers. Staggeringly popular, the 933 videos he has uploaded on his channel have garnered over 105 billion views combined. Mostly these videos are productions covering a challenge (“Last to Leave Circle Wins $500,000” or “50 YouTubers fight for $1,000,000”, etc). The videos certainly are on the longer side, usually between 10 and 20 minutes long, sometimes even longer: a duration that is on the sweet side – one episode isn’t too short, can stand on its own, can even last you the duration of your mean, and if there’s a desire for more it can be satisfied without falling into an hour-long ditch, as you might with many TV episodes. And, as mentioned, they allow the content creator to make more money by running in more ads. This trend of content is already gaining a foothold in Pakistan, and might point to the changing preferences of Pakistani audience. A local content creator going by the name of “Zalmi” produces content modelled on MrBeast, and has even collaborated with him on multiple videos, trying to complete challenges MrBeast has set, going to visit his production set, and so on. Zalmi has over 3.92 million subscribers and his 221 videos have collectively been viewed over 881 million times. What is noteworthy about these videos (mostly) of two brothers is that they bring in a lot of views. It is quite likely that the number of videos they have that have amassed

over a million views, which currently stands at 156, far outstrips the number by any other Pakistani YouTube content creator. There is certainly a big market for this type of content, and other YouTubers like Shahveer Jafry are also branching into similar sort of content. At the same time, the rise in the spread of smart TVs in Pakistan has aided the creation and popularity of such content, not to mention the myriad TV channels who now air their content directly on YouTube in addition to the traditional broadcast streams. The number of smart TVs in Pakistan continues to rise, and the manufacturers and importers are keen to keep a steady supply of these TVs. Earlier this year, Pakistan Electron Limited (PEL) announced a strategic partnership with Panasonic “to introduce premium smart LED TVs and display solutions to the local market”. The Chinese tech company Xiaomi, which it appears is on a mission to produce every type of consumer electronic device, also entered a partnership this year with Air Link Communications to locally assemble its line of smart TVs. Xiaomi, through its wholly owned subsidiary, Selected Technologies, is also seeking to expand its reach in the Pakistani market. At the same time, already present Chinese brands like TCL and Haier continue to dominate the local market, accounting combined for 62% of the total market in 2024, TCL accounting for 44%, while Haier making up 18%. Local players like Eco Star and PEL account for most of the rest. With the increased popularity of such TV sets, and trends in other countries which point to YouTube’s popularity on these devices, it would not be a stretch to say that YouTube might become a key focal point in the evolution of Pakistan’s entertainment landscape. In fact, it might be argued that it is already halfway there – as shown by the popularity of TV channel content on the website. Where its greatest potential probably lies is in allowing local content creators to exercise their creativity and encouraging them to make money from what they produce. The quality of the content doesn’t matter at this stage. As people aim to both bring their real lives in a bid to make more ‘relatable’ content, as resources to improve production quality become more accessible, as more people start using YouTube locally demanding whatever content they might have come to prefer, it would help steer the course the content creators will choose to make. Yet, with the occasional government snatch of censorship, it remains to be seen, how well it encouraged – or discourages – this one way for people to tell stories of who they are, where they live, and what they believe in. n

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Arif Habib Group’s first meeting with PIA management delayed; moved to 2:30 AM Thursday

By Profit The first formal meeting between newly appointed owners Arif Habib Group and the senior management of Pakistan International Airlines was officially delayed on Wednesday afternoon and rescheduled for 2:30 AM Thursday, according to a joint statement issued by both parties citing “unavoidable operational factors.” The meeting, originally scheduled for 11:00 AM at PIA’s Karachi headquarters, was postponed after several members of the airline’s executive committee failed to arrive on time due to a combination of “fleet optimization reviews,” “urgent legacy matters,” and what one internal memo described as “the normal flow of things.” Officials from Arif Habib Group, who finalized the Rs 135 billion acquisition of the national carrier earlier this week, confirmed that they were informed of the delay via an email received at 4:17 PM marked High Priority, followed by a WhatsApp message

reading, “Sir thora delay ho jaye ga.” “We fully respect the institutional processes of PIA,” said one senior Arif Habib executive while waiting in the lobby for a fourth consecutive hour. “We are learning a great deal about the airline’s operational culture already.” Sources inside PIA management, speaking on condition of anonymity, said the postponement was necessary because several directors were still finalizing briefing documents originally commissioned in 2016, while others were unavailable due to overlapping committee memberships, advisory sub-committees, steering groups, and “miscellaneous responsibilities of unclear purpose.” By early evening, the meeting was formally rescheduled for 2:30 AM Thursday — a time officials described as “realistic” and “in line with historical performance.” When asked whether this marked an early challenge for the new ownership, a PIA spokesperson rejected the characterization. “This is not a delay,” the spokesperson

said. “This is an adjustment.” The spokesperson further clarified that refreshments would be provided, the boardroom would be unlocked shortly before the meeting, and that several participants had already indicated they might join virtually, depending on “network conditions and personal energy levels.” Industry analysts said the incident highlighted the scale of the operational transformation now facing Arif Habib Group. “Privatization transfers ownership,” said aviation consultant Farooq Siddiqui, “but culture is a long-haul flight.” As of press time, Arif Habib Group officials were still seated in the conference room, reviewing PIA’s organizational chart, which spans 87 pages and contains at least six departments whose responsibilities remain “under active discussion.” The meeting was last reported as on schedule for 2:30 AM, though insiders cautioned that further updates should be expected.

SATIRE