CONTENTS
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11 ARY vs. Daraz; Which 2021 ICC Men's T20 World Cup sponsorship deal is superior? 14 Summit Bank’s annual results three years later
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16 Why is NAB interested in Sadapay? 22 The need for farmer cooperatives in Pakistan Muhammad Ali Ilahi 24 The rishta aunty business playbook
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28 28 A guide to retirement benefits and how they work in Pakistan 31 The fall of a Chinese real estate giant could have far reaching consequences 32 Luxury EVs, forex, and why they could change Pakistan Zubair Khaliq
Profit
Executive Editor: Babar Nizami l Managing Editor: Farooq Tirmizi l Joint Editor: Yousaf Nizami Reporters: Ariba Shahid l Babar Khan Javed l Taimoor Hassan Abdullah Niazi l Meiryum Ali l Shahab Omer Chief of Staff & Product Manager: Muhammad Faran Bukhari Regional Heads of Marketing: Muddasir Alam (Khi) l Zulfiqar Butt (Lhr) l Mudassir Iqbal (Isl) Layout: Ahmad Salahuddin l Photographers: Zubair Mehfooz & Imran Gillani l Business, Economic & Financial news by 'Pakistan Today' Contact: profit@pakistantoday.com.pk
Readers Say Please don’t call them luxury. They are all standard clothing brands, except Armani. Apropos: Bangladeshi export leftovers are wreaking havoc on Pakistan’s fashion retail industry Awais Hussain, Facebook We have been left far far behind in this race and are going to continue to lag behind in this competition. The reason? The only reasonable and simple explanation is the dishonesty of our traders. There is nothing on face value about them and people don’t want to do business with them because of their attitude and consistent misdemeanors. When they are showing a sample to their client for what kind of product they will make, they will show them the best possible quality product and promise that every single piece is going to be that good. They will sing its virtues and convince the other person that they are capable of producing goods like that. However, the final product they deliver will be nothing like that initial sample that they shared with you. So why would customers come back to you if you are only in the mood for making a quick buck and not cultivating long term relationships with clients and making them come back again and again? Apropos: Bangladeshi export leftovers are wreaking havoc on Pakistan’s fashion retail industry Haseen Khan, Facebook
facebook.com/Profitpk twitter.com/Profitpk linkedin.com/showcase/13251020 profit.com.pk profit@pakistantoday.com.pk
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How is an industry expected to operate like this? Apropos: Bangladeshi export leftovers are wreaking havoc on Pakistan’s fashion retail industry Junaid Raza, Facebook This is not just the case with garments - all Pakistani manufacturers of most products operate in similarly inefficient ways which often makes imported products from countries close to us a cheaper alternative. Take Iran for example. Their products like glass, cement, tiles, and lots of other items - a lot of which are in high demand for home building - are all leagues ahead of the same Pakistani products, and are also much better in terms of pricing. Apropos: Bangladeshi export leftovers are wreaking havoc on Pakistan’s fashion retail industry M Rafiq Khan, Facebook
Please, I never want to hear the Pakistani industry crying foul about cheaper clothes coming in from other places just because they are ‘local’ or ‘Pakistani’ companies. None of these so-called ‘Pakistani’ businesses are for Pakistan - they are worthless family dynasties that are simply riding on trying to sell expensive things to people because nothing else is available. But the public has become savvy and this won’t work for much longer. Apropos: Bangladeshi export leftovers are wreaking havoc on Pakistan’s fashion retail industry Arqam Khan, Facebook
There seems to be no winning here for Pakistan. At one point in the story it says that “Pakistani made products are local and more readily available, but they are more expensive while the relatively unavailable Bangladeshi products are cheaper even though they have to be imported. If a Ralph Lauren shirt made in Pakistan costs between Rs 4500 – 6500, the same shirt brought in from Bangladesh will be as cheap as Rs 2000. This is largely because of the insistence of the local industry to price their products higher.” This is such a clear indication that the industry, especially in terms of retail, is not serious about building a business and is simply interested in keeping it as a side hustle which they do not want to put any effort into. At this rate, either the Bangladeshis are going to run the local industry out of business, and then all of these local mill owners will pack up and set up in Bangladesh to have a swell time selling us our own export leftovers as imports. What a lovely thought! Apropos: Bangladeshi export leftovers are wreaking havoc on Pakistan’s fashion retail industry Syed Rauf, Facebook
There are many garment manufacturers in Pakistan that were doing good work that have now shifted to Bangladesh to produce clothes. It is often those manufacturers, who were once here in Pakistan, that are now sending clothes over from Bangladesh to Pakistan. And all of this is because of silly decisions that different ministries have taken over the years. Every government knows how important textiles and garments are to Pakistan and the advantage we could have in them, but when push comes to shove, nothing is done about high power costs and that too power that regularly has outages.
The only beneficiaries of this devaluation are the export mafia, overseas Pakistanis whose support of Imran Khan is becoming very clear because of how his policies benefit them, and those that hold large businesses and have properties in the country. These overseas Pakistanis are happy to turn the people actually living here into a slave class while they enjoy the perks of being overseas, and Imran Khan is very happy being Prime Minister just for them. Apropos: Breaking the habit: will the government let the rupee go? Muhammad Usama, Facebook
COMMENTS
IN BRIEF Adviser to Prime Minister for Commerce and Investment, Abdul Razak Dawood on Thursday announced that the Pakistan Pavilion received 55,000 visitors in the opening week of the Dubai Expo 2020.
Finance Minister Shaukat Tarin, who has failed to become a member of parliament in the six months since his appointment to the ministry, will now be Adviser to Prime Minister on Finance. The change in designation is expected to be announced in a notification soon.
Petrol prices went soaring over the weekend as the federal government raised prices by Rs 10, bringing fuel to a near Rs 140 per liter mark. It is also perhaps the first time for which data is publicly available that all the four major petroleum products are being sold above Rs100 per litre in the country. The Federal Board of Revenue (FBR) has received 2.47 million income tax returns for the year 2021. According to the FBR spokesperson, the number of tax return filers has exceeded 2.3 million whereas a total of 2,350,000 people had filed their tax returns. The tax department revealed that it has collected Rs47.4 billion income tax for the current fiscal year (FY22). The rupee appreciated slightly against the US dollar in the inter-bank market on Friday, closing the day at Rs171.18. The local currency closed at an all-time low of Rs171.18 on Thursday as demand for the foreign currency stood higher compared to its supply.
President Dr Arif Alvi has stressed the need for promoting technical education and information technology so as to fulfil the requirements of the industrial sector and provide employment opportunities to the youth.
$31 million:
The foreign exchange reserves of the State Bank of Pakistan (SBP) fell further by $31 million to $19.138 billion during the week ended on Oct 8, the central bank announced. The overall reserves of the country were $25.969bn while the holdings of the commercial banks were $$6.831bn during the week.
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More taxes, less taxes this week in Pakistan’s business and economics twitterverse
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his week we are troubled with rising petrol prices that have pretty much taken over the entire social media discourse on the economy. We also talk about taxes, apps that fail, and corporations looking for more concessions. The rich just keep getting richer. All this and more by Ariba Shahid.
HBL questions
Tax concessions
It hasn’t been a good week for HBL considering their app has been down for quite some time. But hey the company is widely profitable. Maybe this money will be put to good use and they app might get a major overhaul? Then again, perhaps there will be other innovations that HBL spends this money on, like a second islamic POS machine. You never know with Pakistan’s largest and most prestigious bank they’re thinking outside the box and constantly wanting to surprise you with their ingenuity. Maybe a second app that also doesn’t work? Just to really shake things up.
Public transport Tax concessions for listing? Do we want more companies to list for the sake of benefits and have no regards for the shareholders? I don’t think so.
When chips taste better than usual
If we had decent public transportation, I doubt we’d care enough about petrol prices. This is why petrol prices are so debatable in this country. Because they impact everyone. Instead of subsidising petrol, what if we actually thought about subsidising the entire concept of transport, as has been done elsewhere in the world. What tastes better than chips? Subsidized chips from VC money! Everyone loves a bargain. So do we and clearly everyone else too.
SOCIAL MEDIA ROUNDUP
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Taxing cars
Perils of the gig economy
The gig economy is exploitive. There are no doubts about that. However, the very fact that these gig labor fuel the system often goes unnoticed and underappreciated. That is not cool. While our friend in the tweet seems to be on the edge of breaking out his hammer and sickle and singing the Internationale, and we are not on the same page in that regard, but the point he brings up is more than valid. Ideas are important, but you need people to run them.
Petrol bomb
This is debatable considering subsidizing fuel means more usage. However, in a country where public transport is virtually non existent one could say this is a plausible solution. After all, for years consumers have paid levies. Why not this? Remember, this is going to be a massive blow to the budgets of lower middle class salaried persons, because their paycheques are not going to see a 10 rupees per liter bump anytime soon.
Not that difficult
While one could say this is a means to incentivize bigger cars, the reality is that this is bringing more cars into the tax net. They register this year, they pay taxes every year. This is very important for an area where jeeps are widely unregistered.
Doesnt kill to do correct research. Just saying.
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SOCIAL MEDIA ROUNDUP
ARY vs. Daraz;
Which 2021 ICC Men’s T20 World Cup sponsorship deal is superior?
Having paid GroupM Pakistan roughly $1.5 million for the digital streaming rights of the 2021 ICC Men’s T20 World Cup, Alibaba-owned Daraz stands to earn $2 million from sponsorships alone and has floated a relatively superior proposal
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he heat is on and it’s between two unlikely rivals: Alibaba-owed Daraz vs the ARY Digital Network, representing conventional media and digital media respectively, including representing TV screens and mobile screens respectively. This week advertisers and agencies sat down to debate the merits and demerits of two vastly different sponsorship proposals around the upcoming 2021 ICC Men’s T20 World
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Cup, which is a week away. As reported by Profit, the first proposal floated in the market came from the ARY Digital Network, and the value of all six packages within the said proposal is Rs. 617.5 million ($3.625 million). The second proposal floated in the market came from Alibaba-owned Daraz and the value of 13 sponsorship slots - across three categories of presenting, main, and co-sponsor - is valued at Rs. 340.8 million ($2 million). On the one hand, the ARY Digital
Network proposal for the 2021 ICC Men’s T20 World Cup offers brand placement on two highly coveted channels: Ten Sports and A Sports. But since Ten Sports has been in a landing rights limbo, across the country, media agency executives tell their clients the following: it is neither legal nor illegal to work with Ten Sports as the decision as to whether the channel is a national security risk is still pending. Unlikely as it may be, should you desire your ads on this channel, and should
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I can only tell you what percentage of Daraz app users will watch the 2021 ICC Men’s T20 World Cup if I run an apple-to-apple comparison using something like the PSL and World Cup. This is my first stunt and thus there are no numbers Ammar Hassan, Daraz chief marketing officer
the ad spend be wasted because the channel is deemed illegal at some point, the fault and fallback are not on us. So clearly, there is a risk-reward decision to be made. The second channel offered by the ARY Digital Network proposal is its own sports channel known as “A Sports”, which is owned by Horizon Communications, a business with clear ties to the ARY Digital Network proposal, as exposed by Profit. This is a new channel and thus has no MediaLogic rating data to show. Some industry insiders allege that the recent rating spike for the ARY Digital Network proposal is an indication that the localities with PeopleMeters have been found, and could be exploited to spike ratings for A Sports on a level that took Ten Sports years to achieve. So clearly, a channel without ratings is offer number two in the same proposal. Yes, advertisers in this country will be forking out money at a proposal that offers one channel in a legal limbo and another that has no ratings to show, for now. As reported by Profit, numerous times, these two red flags will be conveniently ignored in the highly corrupt media industry of Pakistan, where rebates and kickbacks rule media planning decisions rather than data. For highly audited advertiser accounts, these red flags will matter but not for advertisers led by executives that use company resources for their own pissing contests. Keeping in mind that most of the final decision-makers are boomer uncles, sources at ARY are confident that they will secure the lion’s share of allocated sponsorship budgets for the 2021 ICC Men’s T20 World Cup arguing that Ten Sports and A Sport will be watched by households with an average of five inhabitants, whereas any digital streaming service
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will only reach one set of eyeballs. We’ll take “what is a smart TV?” for $999, Alex. The second highly debated proposal in the market is from Daraz, which Profit feels is a relatively better deal than the one from ARY Digital Network, with a few red flags of its own. Daraz chief marketing officer Ammar Hassan spoke to Profit about the red flags identified and shared his points of view, documented below. While Daraz is undoubtedly the market leader in Pakistan when it comes to gross merchandise value turned, the proposal makes a few tall claims that have nothing to do with each other. The proposal starts off by telling advertisers and agencies that the main reason to sponsor the 2021 ICC Men’s T20 World Cup on the Daraz app is that the game will be free to watch for whomever has the app while throwing subtle shade at bSports. Daraz chief marketing officer Ammar Hassan told Profit that the total monthly active users (MAU) of Daraz is 15 million, of which seven million are attributed to the app while the remaining eight million are attributable to the website. Sources told Profit that the daily active users (DAU) are 1.5 million. Both these numbers are missing from the proposal and are shared in 1-on-1 meetings with media planners. Industry sources shared that Daraz paid GroupM Pakistan roughly $1.5 million for the digital streaming rights of the 2021 ICC Men’s T20 World Cup and amid this proposal, will see a gross margin in excess of 30%. The production costs associated with managing the live programming, along with the labor costs associated with flagging cable operators and private groups that steal the broadcast feed - robbing Daraz of an audience it deserves - means the company has approached this
investment with the same lens as Tmall by the Alibaba Group. As reported by Profit, Daraz launched DarazMall and Daraz League to disrupt the influencer marketing industry by creating a solution that is at the bottom of the marketing funnel. The only other influencer ecosystem solution in Pakistan with a capability at the bottom of the funnel or a tracking mechanism around sales is INCA and Walee. The following claims, however, need examination:
Red flag 1 - using website traffic to imply that mobile app traffic is related
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he proposal uses Alexa data to demonstrate that Daraz is ranked in the 8th place for Pakistan with regards to high-traffic websites (which are web apps, not mobile apps) and compares itself to Tapmad, CricinGif, and bSports which rank in either the top 1,500 to top 100,000. The proposal says the 2021 ICC Men’s T20 World Cup will be streamed on the app, not the website. Daraz ought to have included attribution modeling data which shows what percentage of website visitors tend to become app users, in order to justifiably cite website traffic numbers. This is a slide that belongs in the proposal around advertising on Daraz, and maybe not for making the case why the Daraz app is superior overall. Furthermore, this section of the proposal implies that its shopping audience is comparable to a web and mobile-first cricket watching
audience, with Daraz offering no data on what percentage of its website visitors make purchases that implicate them as cricket enthusiasts, which could have possibly been used to infer that this audience will be retargeted for consuming the 2021 ICC Men’s T20 World Cup on the app itself. Speaking with Profit, Daraz chief marketing officer Ammar Hassan said that he disagrees with this point being a red flag, stating that regardless of shopping behaviors or purchasing habits, an app user or a site visitor from Pakistan will be a fan of cricket, adding that not all cricket fans purchase the merchandise. “Advertisers don’t care what percentage of a cricket-related audience is viewing their advertisement, they only care about the reach of the platform,” said Hassan. “I can only tell you what percentage of Daraz app users will watch the 2021 ICC Men’s T20 World Cup if I run an apple-to-apple comparison using something like the PSL and World Cup. This is my first stunt and thus there are no numbers.” Valid point. He said that with data from bSports on the audience numbers for cricket content versus noncricket content, he may have been able to derive an answer to this question, but cannot due to the data being inaccessible to him.
Red flag 2 butchering causation and correlation
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he proposal then says that since the annual 11/11 shopping festival by Daraz - which offers steep discounts for purchases made within the app leads to a surge in traffic and app downloads, the company expects a similar “unprecedented” surge this year as well. By the time 11/11 rolls around, there will only be three matches of note - the first (10th November) and second semi-final (11th November), and the final match (14th November). Across round 1 fixtures starting on the 17th October to group 1 of Super 12 on the 23rd October, and group 2 of Super 12 on the 24th of October, the lion’s share of matches will happen before the 11/11 shopping event from Daraz. “When we become the number one app on the App Store, it doesn’t just happen on 11/11,” said Hassan. “We start marketing from the 15th of October - that is when our Google, Facebook, performance marketing, influencer marketing, TV advertising, out of home, will commence. Once we start pumping in the money, app downloads and users spike. What we meant to infer to advertisers is that the largest eCommerce shopping event and the most important sporting event in Pakistan will
take place on the same app.” As reported by Profit, one of the factors creating hesitation for advertisers around the 2021 ICC Men’s T20 World Cup was the poor performance of the Pakistan Cricket Team on the field, coupled with data from both MediaLogic and Cricingif that shows that matches, where the Pakistan Cricket Team are playing, have higher views and ratings compared to matches where they are not present at all. Advertisers will more so be betting on a good athletic performance than they will be that somehow a discount and deal-hunting shopper might delay deleting an app just to watch a cricket match.
Red flag 3 - failing to define audience size
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he written proposal fails to mention the exact DAU and MAU, while also failing to disclose what percentage of its own audience falls into the “youth” segment it so confidently touts as a reason to buy these packages. Yes, 65% of Pakistan is under a certain age. Yes, this segment predominantly gravitates towards a mobile-first content consumption habit. Yes, they are “on the go” as they put it. None of this answers in a definite manner how many of said demographic is using your site or your app, or is even projected to do so. “After the 14th of November 2021, I will disclose what percentage of the MAUs gravitated towards watching the 2021 ICC Men’s T20 World Cup on Daraz Live,” said Hassan. “Right now, I don’t have any guesstimate, we are as naive as a person is with a new product. Citing the locations within the KLI cities where purchase orders come from, I have explained to advertisers and agencies that the audience of Daraz isn’t in the niche but rather the masses, which means Daraz is used by digital immigrants and digital natives that are everyday people which means that they have content consumption habits geared towards cricket.”
The pro’s
The good news is that this proposal gives us a glimpse into the Prime mirroring strategy of the Alibaba Group and of Daraz. One of the highlights of this proposal is the revelation that those watching the game will be served contextual ads for relevant products, as speculated last week by Profit. For all its red flags, a sponsorship channel that allows advertisers to activate their online shops - most likely only those that are on Daraz - coupled with sponsorship pricing that is 50% less than that of the ARY proposal, is what is making this eCommerce leader proposal win over results-driven marketers across
the country.
The ugly
While this will be the first experience for Daraz in live streaming a major sporting event such as the 2021 ICC Men’s T20 World Cup, it must expect to face off against white-collar criminals that seek to devalue the platform by robbing it of an audience and ergo, value for advertisers. Sources that spoke to Profit shared that bSports generated over 6.7 million views through its website for PSL 6 from the 1st to the 14th of March 2021. After the COVID-19 pandemic delayed the games and due to the issues created by former PCB chairman Ehsan Mani, the 15th to 34th matches generated a combined viewership of slightly more than 40 million through both Facebook and the website. The platform had committed to achieving 70 million views across both Facebook and its website, failing to do so due to a number of factors including - but not limited to - the absence of conditional access systems (CAS) encryption, which was avoided in favor of a Basic Interoperable Scrambling System (BISS) key. This would have prevented cable headends, fiber optic internet, and black-market direct-to-home operators from stealing clean feed due to a lack of up-linking that protects the feed. During the 6th season of PSL, a new frequency on PAKSAT called 3840V lacked a BISS Key which meant that anyone - whether it be an individual or a cable television headend - could see an advertising-free feed from the PSL production tea. The PCB also found that Optix, Transworld, and Stormfiber were distributing an ad-free clean feed to digital boxes by downlinking directly from PAKSAT. This could have been avoided by protecting the uplink feed but since prevention isn’t part of the common sense curriculum for Pakistan, this possibility that a nation of thieves would go about thieving was never even brought up. By using a proper CAS encryption system and an integrated receiver decoder, PCB could have authorized downlinks. In this way, the clean feed is never stolen and the fingerprinting in CAS allows it to pinpoint the IRD it was stolen from. Given that PCB failed to inform NETSAT and Tower Sports to protect the stream, millions of households received it directly and thus advertisers lost potential eyeballs for branding and recall goals. Given that Daraz views itself digitally streaming the 2021 ICC Men’s T20 World Cup as branding and recall exercise for advertisers across the country, the reality of stolen feeds and lost viewership including advertiser value is a reality they will need to accept. n
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Summit Bank’s annual results - three years later
The notifications tell us nothing new about the bank, so why all the secrecy?
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lot can happen in three years. As an example, three years ago, Asad Umar was still finance minister, the rupee was trading at Rs150 to a dollar, and the word ‘pandemic’ was confined strictly to the history books. But one entity stayed stuck in time - in limbo, as it were - and that would be Summit Bank. After essentially dodging the Pakistan Stock Exchange’s requests for financial results, and only releasing intermittent notifications
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here or there, in the space of just four days between October 11 and 14, the bank dumped 11 notifications on to the PSX, including the annual report for 2019. One almost fails to see what the secrecy was all about: the company recorded its greatest loss yet, at Rs9.4 billion. But it wasn't that far off from the preceding year’s loss of Rs8.7 billion. And the report did not reveal some untold mystery that people didn't already know about the bank. What was unusual was instead information in another notification from the same
time period: that Abdullah Hussein Lootah had sent an offer letter to Summit Bank asking for 51% voting shares, and new ordinary shares through fresh equity injection. The board agreed to handing over 5,976,000,000 ordinary shares without right to Lootah, and also increased the authorized capital from Rs28 billion to Rs90 billion. Does the name Lootah sound familiar? It should: it was mentioned in the ongoing fake accounts case of 2018, involving former president Asif Ali Zardari and his sister Faryal
Talpur. The fake accounts case involves alleged money laundering worth billions of rupees through 32 bank accounts, which were opened in five banks. Of those accounts, 15 were opened in Summit Bank. The FIA’s investigation report revealed a pattern of flouting the law against money laundering on the part of Summit Bank employees, who appeared to be operating under direct orders from the founding CEO Husain Lawai. Turns out, Lawai and Zardari are old friends, and Lawai spent a considerable portion of the 1990s and 2000s in exile, fighting charges of money laundering on behalf of Zardari. He was exonerated of those charges in the UAE in 2002 and the charges against him in Pakistan were dropped in 2008. The FIA alleged not only that Summit Bank failed to catch the money laundering going on through its accounts, but actively facilitated it through a procedure put in place by the bank’s CEO himself and one in which a large part of the bank’s staff was also involved. The FIA also alleged that bank’s majority shareholder, Abdulla Hussain Lootah, a mem-
ber of one of the oldest and wealthiest families in Dubai, may have been a beneficiary of the money laundering himself. As if this was not enough, the National Accountability Bureau went ahead and arrested Husain Lawai. For his part, Lawai maintained his innocence throughout. And just to be clear, these were Summit Bank’s worries post 2018. It is not lik pre-2018 the bank was sailing smoothly. In the decade that it has been in existence, Summit Bank has posted a profit in precisely two years and has otherwise continued to hemorrhage money. Those two years happened to be 2014 and 2015. After Lawai resigned in 2016, Mohamad Zahir Esmail was appointed as President and Chief Executive Officer. But the bank made massive losses in both 2016 and 2017 – Rs2.2 billion and Rs1.1 billion respectively. And in 2018, the bank made a shocking loss of Rs8.9 billion. The annual report finally gives an explanation for what happened: that the bank’s earning capacity has significantly depleted, because of volumetric reduction of earning
assets together with the substantial amount of non-performing loans held by the bank, which resulted in a major reduction of the bank’s interest income. “Due to the extraordinary situation faced by the Bank since July 2018, the Bank reduced its earning assets portfolio to meet the liquidity requirements. Moreover, the Bank’s interest expense registered an increase due to the increase in cost of funds, FX swap cost and finance cost of lease liability while there was reduction in the volume of interest bearing liabilities,” stated the report. There have been attempts to revive the bank since then. For instance, a new CEO was announced in March: Jawad Majid Khan, the previous group head of Emaan Islamic Banking at Silk Bank. Meanwhile, Summit Bank also recently decided to convert itself into a fully fledged Islamic Bank, and about 48 branches in 23 cities offer Islamic services. Perhaps the fresh equity injection will help the bank realize its goal. But turning over a new leaf as an Islamic Bank won’t hide the shoddy financial past, or the equally dodgy legal scandal.
BANKING
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COVER STORY
By Abdullah Niazi & Ahmad Ahmadani
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adaPay and TAG, the two leading lights of Pakistan’s fintech startup revolution, are at war. The ongoing tussle between the rival mobile wallet startups has seen the two young and hungry founders, Brandon Timinsky of SadaPay and Talal Gondal of TAG, engage in a mudslinging match that has left no one unsullied. Now, the rivalry is reaching a new crescendo as the National Accountability Bureau (NAB) has come knocking on the door of SadaPay, much to the delight of TAG. What makes the matter even more serious is that, according to sources close to the matter, SadaPay is only a few days away from closing another round of funding. While SadaPay has denied that they are about to announce a new round, industry rumours are adamant that the announcement is due any week now and NAB entering the picture has caused SadaPay to go into crisis mode. Embroiled in the middle of the case, either by chance or very much by design, are a former finance secretary that recently resigned as special assistant to the prime minister, and a Porsche dealership under investigation for swindling its high-end clients. So what in the world is going on? There are two documents at the center of the entire matter, both of which have been made available to Profit. The first is a request made by NAB to the State Bank of Pakistan (SBP) asking for access to the documents that SadaPay submitted when it was trying to gain its Electronic Money Institution (EMI) license, indicating that NAB is interested in SadaPay’s activities. The second is a dossier of unknown origins signed simply and dubiously by “a patriotic Pakistani” which details how Brandon Timinisky fails to meet the SBP’s “fit-and-proper” standards and without proof claims that SadaPay is being used to “send and receive huge sums of money to and from India.” And it gets even stranger. The NAB officer who requested that the SBP provide SadaPay’s license documentation asked for the documents in reference to a case against the former CEO of Porsche Pakistan, Abuzar Bokhari, who is accused of embezzling Rs 800 million of customers money. Seemingly, there is no connection between the cases. Timinsky has said SadaPay has nothing to do with Porsche Pakistan, and Abuzar Bokhari has also expressed confusion at the matter. Even the Director General of NAB in Lahore has told Profit he has “no idea” why the documents were requested, and the State Bank director who received the NAB letter was also not sure why SadaPay’s EMI license documents were requested by NAB in Porsche Pakistan inquiry.
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Meanwhile TAG, which has long been involved in a subtle, underground mudslinging match with SadaPay, stands to benefit from the letter sent by NAB to the SBP, and sources have alleged that TAG has been less than gracious in the wake of its competitor finding itself in this spot of bother, making sure to play a part in helping spread the documents among those working and investing in the startup ecosystem in Pakistan. Apparently they are only returning the favour. And why would they not? Even the mere possibility of an investigation might affect not just SadaPay’s upcoming fundraising round announcement by scaring off the investors, but also how quickly they will be able to get a permanent EMI license. Either way, the idea is to scare off the investors. Sources close to persons high up in both startups have said that the entire affair has been caused because of the egos of the two, young, founders of the rival companies - Brandon Timinsky and Talal Gondal. There are peacemakers on both sides that believe the market is large enough to have more than one player, but it seems for now that the two companies have locked their horns even tighter. What is the truth, and why has NAB inserted itself so strangely into the rivalry? This is a story of ego, malice, and two companies so bent on fighting the other, they do not care what it costs them.
SadaPay vs TAG
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here are two parts to this story. The first is the part about SadaPay and TAG and the animosity between the two, and the second part is about Porsche Pakistan and NAB.
All of this ties together, but to start off it is important to know that SadaPay and TAG have been at each other’s throats for a while now, and behind the animosity is the race to get an Electronic Money Institution license from the SBP. An EMI license basically allows you to open up an online bank. Once a company gets an EMI license it can provide services like allowing transactions, paying bills, and even issuing debit cards. Essentially, both of these companies are trying to make money easier, and whoever gets the EMI license first will get a massive head-start. Both companies have had in-principle approval from the SBP since last year. SadaPay got in-principle approval in April 2020 and TAG got it in November 2020. However, in-principle approval does not mean that the SBP is going to guarantee final approval. It is simply a nod of the head from the central bank that allows these prospective EMIs to beta-test their product with a select group of customers. With the stakes high and the competition clear, both SadaPay and TAG have been subtly trying to undermine each other from the beginning. That is natural, the two are competitors in a new field and there are bound to be some flares in relations. In fact, two different sources close to TAG alleged that when Profit published an article a few weeks ago that said TAG’s $100 million valuation was not accurate, Brandon Timinsky shared the article with TAG’s investors to try and deter them. This would indicate that while TAG seems to have the upper hand right now, this game of cat-and-mouse between the two companies has been ongoing for a while and it has only heated up in the
I have never heard of this company (SadaPay) before. We have no idea of who they are, what they do, and there is nothing about this company in any of our records. It is the first time we are hearing about this Abuzar Bokhari, Ex-ceo Porsche Pakistan
past couple of months. With this level of antagonism between the two companies, the documents that have been released add fuel to the fire, and even more naturally TAG will be looking to benefit from what could possibly be a setback for SadaPay. Nobody wants to be involved with the accountability bureau. It is a bloated, vain, arrogant, and deeply misguided institution that is hurting Pakistan on countless fronts and giving grief to innocent people. Their attention is something you wouldn’t wish upon your worst enemy. Except, according to the same source close to TAG, their animosity with SadaPay was bad enough that when the NAB letter was released, TAG along with other players and observers of the startup ecosystem were more than happy to pass along the news and forward copies of the letter. There is a malicious vibe to every single detail that is coming forward about this fight. A lot of these offhanded comments and often petty microaggressions went on in the background and under the books. No one is willing to take responsibility or acknowledge who dealt the first blow, but both sides are at a point where they are poised to pounce at any misstep from the other. As we mentioned earlier in the story, the fight goes this deep because of the severe dislike that the two CEOs have for each other. “Both of them are young and brilliant, and they are also very stubborn,” explains our source. “The market is big enough not just for two, but even for three or four competitors to work in. If they keep clashing like this, they will end up destroying each other in the process. And do you know what happens next? Nayapay, the third competitor in this race, sweeps away with the entire market because SadaPay and TAG have bled each other dry.” Nayapay, a third company trying to break into the mobile wallets category that also has an in-principle license, has been very quiet and passive this entire time. Our source claims that their CEO and founder, Danish Lakhani, is more experienced and mature than Timinsky and Gondal and has
thus wisely stayed out of the confrontation. There is a general perception about startup founders that while they are brilliant, their relative youth and inexperience makes them brash and at times not the most tactful operators. “They will destroy each other, meanwhile Nayapay will quietly keep doing its work and get the most from this entire mess,” says our source. According to another source, sane voices do prevail in both companies that want to see an end to the one-upping and showmanship that has dominated the competition, but these voices seem to be drowned out in the fury of the CEOS. As things stand, the documents relative to SadaPay, both the NAB letter and the dossier, undeniably exist and could deter investors as well. However, that still leaves many questions unanswered as to their origins.
The first problem NAB and Porsche
I
n February 2021, the world of Pakistani luxury car lovers was rocked. Syed Abuzar Bokhari, the CEO of Porsche Pakistan, was accused of taking orders for cars worth Rs 800 million, and running away with it without a trace. Naturally, people were outraged. The outraged parties being rich and influential, very quickly NAB launched an inquiry against him. Fast forward to six months later, and an officer of NAB Lahore asked the SBP to provide them with attested copies of the documents that SadaPay submitted to the central bank to get their EMI license. The problem? The request was made with the title “Provision of information u/s of NAO, 1999-Inquiry against Syed Abuzar Bukhari, Chief Executive Officer, Rehan Yaseen, Senior Manager M/s Performance Automotive (Pvt) Ltd and others.” That’s right, with a very straight face NAB asked the SBP to provide them details of the EMI license documentation of SadaPay in a case that involves a Porsche dealership in Lahore. What is the connection between the two?
Nothing so far as can be told. Profit contacted a host of senior NAB officials including their spokesperson and their Director General in Lahore, all of whom either had no idea what was going on or were dumbfounded by the request. The spokesperson refused to comment, while the DG Lahore said that he was unaware of the situation and that the relevant team investigating the case would know the details. “No idea,” said the DG in a Whatsapp message in response to the notification. “Only the team investigating would know.” Brandon Timinsky pleaded much the same. “I’m not sure who these people are,” he told Profit. “Why would Porsche be related to SadaPay? It’s funny to me and this is the first that I am hearing of it.” Meanwhile Abuzar Bokhari, the under investigation CEO of Porsche Pakistan, said much the same. “I have never heard of this company (SadaPay) before. We have no idea of who they are, what they do, and there is nothing about this company in any of our records. It is the first time we are hearing about this,” said Bokhari. He said that perhaps Brandon Timinsky or one of the directors of the company were customers of the Porsche dealership that is under accusation of fraud, but after a thorough check, Bokhari confirmed that none of them were customers. Even if that were the case, it makes no sense for NAB to need SadaPay’s EMI documents to investigate a car dealership. It is still entirely possible that there is an angle to this that is being missed and only NAB is privy to. However, Profit has reached out to everyone involved that could possibly know what is going on. While the NAB leadership and SadaPay are clueless. According to one source close to the company, even TAG, which has been trying to benefit from the news of the NAB letter, does not know why the documents have been requested in reference to the case against Porsche Pakistan. What is undoubted is that all of this commotion has caused some serious ruffled
feathers. According to one source close to the matter, “Foreign investors are worried about the fate of their investments due to spread of different speculations against M/s Sadatech Pakistan (Pvt) Ltd in the market following NAB’s letter.” “The final round of funds collection from investors is in its zenith right now, and SadaPay has been working hard to get it done. In fact, they are ready to announce it within a few days. However, their rivals have been striving hard to discourage the investors to invest with SadaPay,” said the source.
The second problem - the dossier and the SAPM
A
round the same time that the NAB letter began to circulate, two other documents also surfaced and started making the rounds on Whatsapp. The first one was the earlier mentioned dossier about Brandon Timinsky or sketchy origins, which made some ridiculous claims and other more relevant allegations. Then there are the tax returns
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No idea, only the team investigating would know Shahzad Saleem, DG NAB, Lahore of Dr Waqas Masood, which are also being used as proof that something shady is up at SadaPay. Let us look at both documents one by one, starting with the dossier. The dossier looks suspicious as soon as you open it. It is titled in aggressive all caps type with the subject line “PAKISTAN AT STAKE; BRANDON T.TIMINSKY AND M/S SADATECH PAKISTAN PVT LIMITED FACILITATING PAYMENTS TO INDIAN COMPANIES AND PERSONS THROUGH ITS PAYMENTS SERVICES.” Any time a random dossier appears peddling theories of any person or organization colluding with India, it is wise to ignore it. What makes the document even stranger is that it does not have an author or any attribution - it is simply signed as “Sincerely, A Patriotic Pakistani.” The document makes some wild assertions, the most significant of which is the very random claim that SadaPay is somehow involved in laundering money between India and Pakistan. But there are some other claims that are not as vague. For starters, there is the issue of Timinsky being “fit and proper” to be the CEO of an EMI. The SBP’s rules hold that the head of such an organization must be a qualified professional possessing relevant experience and a degree relating to the job. They must also be associated with any business that has had solvency issues or debts. Timinsky fails both tests, since he is a college dropout and has a pending bankruptcy case against him in the United States. Both of these objections are true, and while the relevance or logic of the
SBP’s rules can be debated, there is no doubt that SadaPay getting an in-principle license despite Timinsky not meeting the standards is strange, especially since getting such a license has been unbelievably difficult for local competitors trying to break into the market. Then there is the case of Dr Waqar Masood. A scholarly man by nature, Dr Masood has been finance secretary to multiple governments at multiple times and until recently was also serving as SAPM on revenue. His involvement with SadaPay is interesting, and it begins with Khan and Ali Law Associated, a law firm run by Masood and a man called Asim Imdad. The firm specialises in engaging in dialogue with opposing parties and believes in arbitration, and knows how to get things done outside of court. After working with them for a while, and seeing Dr Masood’ vast experience in finance and his understanding of the government’s financial machinery, hired Dr Masood as the company’s chairman as well. For this job, Dr Masood had both the right expertise and the right connections - which SadaPay made full use of. He was also given shares in SadaPay and a seat on the board of directors - a position he declared in his tax returns. However, things started to change when the Pandora Papers were released and it turned out that Dr Masood’s son, Abdullah Masood Khan, was found to co-own a company Linkquest Ltd in the BVI jurisdiction. Dr Masood said he knew nothing about his son’s company, which is why he had not declared it in his list of assets which he submitted upon assuming the position of SAPM. This bit of information was taken by SadaPay’s opponents and used as proof that something shady was up in SadaPay’s leadership. They also pointed towards the fact that Dr Masood was still special assistant to the prime minister when SadaPay was given its in-principle EMI license. All of this was made worse when it was also discovered that Dr Masood was a director of SadaPay’s parent company, which is registered in a special economic
TEXTILES
zone in Dubai. This directorship Dr Masood had not declared in the papers he submitted when he became SAPM. Now, there is a case to be made here for conflict of interest. He was in a ministerial position and also held a directorship in Dubai that he did not tell the government about. However, he did not in fact own shares in the parent company in Dubai and thus it was not an asset - the shares that he did own in SadaPay in Pakistan he declared in his assets. Dr Waqas Masood has declined to comment on the matter, but the discrepancy is still being spread around as rumours about SadaPay run rampant. According to his law partner, Asim Imdad, the directorship ended after the two years term expired and only the shares remain which Dr Masood declared as part of his assets. As for the undisclosed directorship in Dubai, that ended on the 10th of October, just this week. Whether that is a coincidence and his two year tenure just ended, or SadaPay is distancing itself from him is for anyone to guess. What is for sure is that Dr Waqar Masood’s footmark on SadaPay is still causing an after effect.
Analysis - War, what is it good for?
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ll of this has been very speculative. That can happen when two competitors in the same field are going off against each other not just within industry circles but to the media as well. The question, however, is why NAB made the request in the first place. Again, there might be something to it, but it is also possible that the documents have been requested maliciously. There seems to be no link between the two cases, and no one from NAB itself to TAG and SadaPay and even Abuzar Bokhari understand the connection. Despite this, people close to TAG are consistently trying to point towards the fact that SadaPay might be under investigation and the truth about NAB’s letter will soon come out in the open, while SadaPay is saying it makes no sense for their EMI application documents to be requested in a case about Porsche Pakistan and that their competitors (read TAG) are trying to brand them with the NAB name. There is no evidence that the letter has been planted by a competitor or that NAB has been nudged into this direction. However, the possibility can also not be discounted. Normally, competition between such startups is over cutting edge UX design, customer experience streamlining, or inno-
vative business models and creative marketing. Since this is a highly regulated industry in Pakistan, however, right now the competition is to see who can get the full license first. To this end, both companies have on board influential men that know the ins and outs of government institutions and are helping them make their case. TAG is founded by Talal Gondal, the scion of a Punjabi political family, and has on his team a recently retired, very senior, and very influential Lieutenant General of the Pakistan Army, as well as a former finance secretary, Tariq Bajwa, who served as the 19th governor of the State Bank of Pakistan between 2017 and 2019. Meanwhile SadaPay’s trump card is Waqar Masood, the earlier mentioned former federal finance secretary and special assistant to the prime minister, who is on the company’s board of directors. While these are people that know the ins and outs of governments and are thus useful to these companies, they can also act as sources of information against the competition. How long could it really take for these heavyweights in such an environment to stop using their connections for their own companies, and instead to attack their competitors? The hostile environment created between TAG and SadaPay is good for neither company. The simple fact is that TAG is trying to gain momentum using SadaPay’s NAB misfortune, and if the shoe were on the other foot, SadaPay would most likely not shy away from it. And while sane voices from both sides are saying that the feud is simply allowing their third competitor, Nayapay, to quietly chip away at the lead that these two companies have, it seems for now that the Mexican standoff between SadaPay and TAG might be on the brink of turning into a full blown shoot out. Both companies must be cautious, because the National Accountability Bureau, if anything becomes of the request letter, will not rest at just SadaPay. Once they have their teeth in an industry, it is a free for all and in NAB’s world there is no room for logic or reason. Doing the tango with the accountability bureau is like playing with fire - there is a high risk of getting burnt. Pakistan’s startup ecosystem has remained relatively away and thus unscathed from the unnecessary fury of the National Accountability Bureau. Whatever becomes of the tussle between SadaPay and TAG, it is our sincere hope that this does not open the door for NAB to come knocking at every startup’s door. n With additional reporting by Ariba Shahid and Taimoor Hassan
OPINION
Muhammad Ali Ilahi
The need for farmer cooperatives in Pakistan
groups is important in meeting the increased demand, while at the same time improving market linkages and input access for the local farming communities In the past 60 years, the share of agriculture in Pakistan's total GDP has decreased from ~43% in 1960 to almost 22% in 2019 (World Bank, 2019). However, despite the reduction in the GDP, the economic contribution of agriculture has increased, ~$1.6 billion in 1960 to $71.9 billion in 2019 (World Bank, 2019). Similarly, the proportion of the urban population in the country has been on an upward trajectory. The population in Pakistan has increased from 28.3% in 1981 to 36.38% in 2017 (Pakistan Bureau of Statistics, 2017). As a result, the average annual urban population growth over the past 20 years stands at 2.7%. akistan currently is in a stage of development where The agricultural labor force has been shifting its economy is transitioning from a primarily agricultowards the manufacturing and the services sector. tural base to that of value addition and services. Our The total population employed by agriculture has biggest problem has been our willingness to simply dropped from 44.81% in 1991 to 36.9% in 2019 (World sell our core products and allow others to use them Bank, 2019). This drop in the agricultural workforce to gain more profits from them, when we should have has been well captured by the country's services and been investing in our own resources. manufacturing sectors with a current share of 38.6% There are multiple national indicators that show an increase and 24%, respectively. in incomes and aggregate demand, and a push towards rural to Pakistan has also seen an increase in incomes urban migration. In this context, the role of farmers and farmer as GDP per capita has increased from $83 in 1960 to $1482 in 2018 (World Bank). The rising incomes have led to an increase in higher value agricultural and processed goods and have contributed towards diet transformation in the country. Euromonitor reports an increase of over 150% in conMuhammad Ali Ilahi sumption of packaged foods in Pakistan over the past decade. To meet this increased demand, there needs to be a reform in the agriculture sector to ensure sufficient and is a Research Support suitable supply. One way to achieve this is through the farmer cooperatives and FarmSpecialist at the er Producer Organizations (FPOs).
As the economy goes through a structural transformation, farmer cooperatives are more important than ever before
P
Tata-Cornell Institute
Agriculture sector growth and development remain critical for Pakistan’s economic growth. 68% of the farmers in the country own a farm size smaller than 2 hectares, and are classified as smallholders. Cooperatives and farmer groups provide these smallholder farmers the ability to pool resources, access credit, inputs and technology and obtain certifications. Since the bulk of farmers in Pakistan are smallholders, this model could prove to be an important linkage in empowering the rural populations,
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which predominantly comprise of people employed in the agriculture sector. The declining proportion of agriculture in the country's total GDP, rising rural to urban migration, greater employment in the manufacturing and services sector and a demographic transition with lower birth and death rates, referred to as structural transformation, are in line with theories of economic transformation. Despite this transformation, the role of the agriculture sector is still quite significant, and it still employs more than one third of Pakistan’s labor force. Considering such a situation, the agricultural sector in the country needs to undergo certain reforms to cater for the changes that are associated with structural transformation. Farmer organizations and cooperatives can help benefit the agriculture sector through better market linkages, access to credit and technical assistance for smallholder farmers, access to improved technology and input application. With an agriculture sector characterized with an increasing productivity per worker over time combined with a trend of rural to urban migration, farmer cooperatives could play a vital role in regulating farmer produce and ensuring quality standards that could help them tap profitable markets. Farmer cooperatives play an essential role in reforming the agriculture sector in several places such as India, Mexico, China and certain countries in Latin America and East Africa. There has been a renewed push for farmer organizations across the developed world since the 1990s, which has been stimulated by modernization and globalization of trade. In certain countries where coffee is a significant export, such as Mexico, Ethiopia, Kenya and Guatemala, and there are stringent certification requirements, farmer cooperatives have helped smallholder farmers get access to international certifications through splitting the costs. These costs would be too high if a smallholder farmer applied for certification on their own. In Pakistan’s case, textiles constitute the largest export of the country and often face tough competition in the international markets with regards to certification and quality control. Recently, there have been initiatives to promote organic cotton in the country, but this has happened through external stakeholders such as the World Wildlife Fund -Pakistan and apparel maker C&A Foundation (Ecotextile, 2017). Organic cotton demand is on the rise across the globe, with organic cotton being the largest non-food organic commodity in the United States. In the United States alone, the sales of organic cotton stood at $1.1 billion, up 18% since 2013 (Tong et al., 2018).
Farmer cooperatives also improve market linkages and reduce transaction costs. With commercialization, the transaction costs have increased for smallholder farmers as there are stricter quality standards. These high transaction costs deter the entry of small farmers into the domestic and international markets Farmer cooperatives can play an active role in obtaining organic cotton certification for smallholder farmers who wish to undertake organic cotton cultivation. Organic cotton presents a great potential for Pakistani cotton growers to diversify their market portfolio. Currently, Pakistan grows only 0.17% of the global organic cotton compared to 51% grown in neighboring India. Farmer cooperatives also improve market linkages and reduce transaction costs. With commercialization, the transaction costs have increased for smallholder farmers as there are stricter quality standards. These high transaction costs deter the entry of small farmers into the domestic and international markets . Farmer cooperatives can reduce transaction costs for small farmers by making agricultural and market information more widely available, giving farmers greater negotiating power, and reducing the monitoring and enforcement costs. The cooperatives allow the farmers to directly access the markets and get rid of the middlemen who often charge exorbitant fees and keep a wide margin. This is especially beneficial in the context of Pakistan, where small farmers face significant transaction costs. In certain countries like Honduras, farmer cooperatives are used to promote and market new crops like Rambutan Kano et al., 2013). In other countries like Malawi, farmer associations have lobbied for lower taxation from the government on smallholder agricultural produce (Shiferaw et al., 2011). Studies in India show incomes for citrus fruit (Malta) farmers triple when they became part of a cooperative in the state of Uttarakhand (Choudhary et al., 2015). In Tanzania, vegetable growers who were part of a farmer group were able to slash their transportation costs three times compared to farmers who were not (Aku et al., 2018). Cooperatives in Taiwan have helped smallholder farmers to procure food certification that fetches 20% more price than non-certified produce. While farmers around the developing world are organizing themselves in cooperatives and farmer producer organizations to take advantage of the changing market
linkages and international trade dynamics, Pakistan still lags in this regard. Farmer cooperatives have so far failed to take off in the country, with not a single cooperative that stands out nationally (Sandeela, 2019). Historically, there has been almost no presence of farmer cooperatives in Pakistan, and the government did not play any active role to promote them in its early years. In some of the countries where farmer cooperatives are prevalent, the government has played an active role in promoting cooperatives through legislation and policy, but in the case of Pakistan, there has been little effort made by the government to educate farmers about the cooperative model and its effectiveness. Smallholder farmers need education and knowledge regarding capacity-building to organize themselves effectively in the form of cooperatives. However, such initiatives have not taken any concrete shape due to bureaucratic delays. Despite being tested on a tiny scale, the cooperative model has successfully achieved its objectives. In a study conducted in Punjab, cash crop farmers who were part of a cooperative witnessed an increase in the yield and had a 38% higher benefit-cost ratio than non-cooperative farmers (Sabir et al., 2012). Similarly, a farming cooperative setup in Khairpur in Sindh saw farmers adopt modern techniques for growing vegetables and fruits. Cooperative also linked the farmers with vegetable exporters and supermarkets in Karachi and Lahore, thus helping their sales (Sandeela, 2012). Since Pakistan is undergoing a structural transformation, it requires an agricultural policy that increases market efficiency, farmer access to credit and technology, decreases transaction costs, increases bargaining power, and empowers smallholder farmers. There is also a need for information streamlining and awareness generation about effective farming techniques. It is only achievable through the introduction of farmer cooperatives and farmer producer organizations. To compete internationally, Pakistan needs to eliminate market inefficiencies and adopt the cooperative model in its agricultural sector. n
COMMENT
It isn’t quite a formal business sector yet, but in the near future it might be
T
By Ariba Shahid
he scene is a common one if not a familiar one. In a lavishly decorated drawing room, complete with paintings and gaudy golden furniture that belongs in a catalogue of Victorian antiques, two families sit opposite each other smiling politely. The room is a cacophony of spoons clanging onto plates, teeth munching soft food, tea being slurped, and trolley upon trolley loaded with food being carted in and out of the room. The conversation is polite but superficial. The conversation centers mainly around the weather, past events, and other mundane pleasantries that occupy the airwaves in a room when two groups of people first meeting each other are trying to keep the conversation going. The two families are, of course, meeting to decide the fate of their children - more specifically whether the son of one of the families is a good match for the daughter of the other. It is entirely possible that the children are not even present. But there is one presence that is usually even more vital to the proceedings than the prospective bride and the groom. That is the rishta aunty or uncle. This is the person that has arranged the meeting between the two families. It is usually a mutual friend, or a relative that knows the other people and is the bridge that allows the two families to interact and get to know each other. And even as both families exchange their inane drawls about what they do, where they come from, and what television they are thinking of buying - behind the scenes before the formal meeting, the matchmaker has already provided details like how rich the other family is, how much the boy makes,
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how many powerful friends the girl’s father has and so on and so forth. In the many drawing rooms where scenes like this are common, particularly those of the wealthy, the concept of the rishta aunty is fast changing. At a time, the rishta aunty used to be a member of the family or a well wisher and almost always a woman. Now, they are at times paid semi-professionals who charge at times exorbitant fees to get the rishtas for families that are looking for very specific qualities in their childrens’ spouses. Of course, much like the rest of the shaadi business in Pakistan this is highly unregulated and undocumented. Since this is a service that mixes social connections with money, it is even more difficult to track down. Which is why this is not a strictly business story, mostly because it is a mix of social capital and monetary interest. But if things keep going the way they are, Pakistan might not be far from having celebrity matchmakers like it does wedding dress designers. This is how the elusive world of matchmaking works in Pakistan.
The need for them
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he need for these services is actually not very funny. In the past weddings were seen as unions between families and communities. People were already close and connected and used these as a means to enforce that connection. However, in today’s world parents just aren’t as connected as their parents were. As for the young adults looking to get married (or pushed into it), finding someone on their own in Pakistan is not a walk in the park. If you have passed out of university, the chances of you finding someone for yourself is very slim. The next best hope for you would be someone at your workplace even though that is usually not recommended. Other than that, the options for dating or meeting people are very slim. With apps like tinder very much banned in Pakistan where one can meet someone. While Bumble is up and running, most of the users on it are not really there to meet “the one” and make meaningful connections. It’s for a good time, not a long time essentially. In times like these, a number of groups have popped up like Skip the Rishta Aunty, Lums Matchmaking, etc. In 2019, Areeba Atif created a facebook group called Skip the Ristha Aunty where people post their profiles, interested people comment below and then talk or meet. The group acts as a platform to connect. Another such platform is Two Rings set up by Fakiha Khan, an IBA grad. The group has more than 200 successful matches to its credit. Unlike STRA, two rings is more public and is often used by adults finding matches for their kids or siblings whereas STRA is more centric
to people finding matches for themselves. Both these groups are free.
The various business models
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usiness models differ from matchmaker to matchmaker. Some matchmakers charge nothing and do this as their social work. These are usually people that don’t just provide this service for their friends or relatives, but are retired and socially active and make use of their time by playing matchmaker. If they have a knack for it, families from far and wide might come to them seeking their help, and it is entirely possible that at this point they start charging money. But however one gets into the business, different matchmakers have different rates and different business models. Mrs Mumtaz, of Clifton Women Welfare Society has a business model that is mixed with social work. She says she used to do this for free, and sometimes if it were a particularly difficult rishta to broker she would ask for some money to cover the cost of her phone calls. However, as time went on, she started charging registration fees. The website says this is because they felt people would take the process more seriously if they paid a registration fee that could expire. Her website says, “When CWWS was established people were only charged Rs. 100 as charges for the CWWS services. The service charge was imposed for two reasons. Firstly to meet operational expenses such as salaries, telephones, advertisements etc. Secondly it was noticed that without charges the people did not take the service seriously.” However, what’s unique about this process is that she doesn’t request a picture. All you have to do is register either by visiting her office or over the phone all. After that, she sends you the number of the other party. You share details with them including pictures. If you find the one using her services, you can pay whatever you want to Mrs Mumtaz for her services. There is no fixed rate or expectation. At least, that is what she says. Her website says, “Its rate of success in finding suitable matches is very high, something like 65 percent. And the rate of successful marriages, marriages that continue, is 95 percent.” Similar to this, Mrs Asghar, new to the matchmaking circle, says she charges a flat fee of Rs 5000 for registration which is valid for a year. In that time she whatsapps profiles to the girl and boy’s families. If they both approve of a profile, she then arranges for them to speak over the phone and eventually meet. After a few meetings, if they feel it’s a suitable match and the “rishtas goes through”, she gets paid. In fact she gets paid half when the couple gets
engaged, and the remaining half when the couple gets married. Considering Mrs Asghar is starting out, she charges Rs 40,000 per rishtas unless the girl or boy is out of the park. Most of clients are people she already knows directly or indirectly, thus she doesn’t not have to worry about not being paid for her services. Mrs Asghar does not have a website. Her primary mode of operation is whatsapp and she incurs little to no expense for running her business other than the wifi connection she has at home. Mrs Siddiqui has a similar business model like Mrs Asghar. However, Mrs Siddiqui, has different rates. She charges more from the girl’s family than the boys. Rs 50,000 for a local boy, Rs 100,000 for a boy in the middle east, and Rs 150,000 for North America and Europe. Another such rishtas aunty is Mrs Rahim. She has a flat registration fee of Rs 5000 and charges Rs 75000 from both families once the rishtas is done. However, in her case, she also makes it a point to visit the families, assess their living situation and lifestyle before finding matches for them. This is a service people tend to appreciate, particularly because the house that the other family lives in and how much money they have are major considerations in arranged marriages. And while the field is dominated mostly by women, there are also so rishta uncles that find themselves playing matchmaker, and taking money for their services. Major Iqbal is one such name. After retiring from the Pakistan Army, he started his matchmaking services 25 years ago. His business model is fairly simple. Local families go to his office to register, international registrations are over the internet. He assesses the family during the meeting and decides whether he can find them a match or not. If he feels like he can, you have to pay him Rs 12,000 upfront and Rs 35,000 once they’re married. His charges are flat for all rishtas, doesn’t matter who it is for. Then there are also the online business models. Some of these are websites where you can find uploaded profiles for rishtas, and on others you can find matchmakers. Shaadi.org. pk is where we found Mrs Shah, a matchmaker based in Pakistan. If you want to look up potential matches leisurely on your own time and pace, you’re welcome to go through their free service on their website. However, if you want someone to match for you, all you have to do is get a personalized matchmaking service from them. The website says this service is for, “Paid Premium Matrimonial service is for those who are Busy Professionals OR looking for very Good Verified Proposals OR want to Meet Families Directly OR want Abroad/ Foreign Proposals OR are Highly Qualified and looking for same proposals OR have some Special/Specific Requirements OR looking for
SOCIETY
Quick Rishta OR want to meet only genuine proposals OR want to save their time and want to Get Married Soon.” Interestingly enough the website also says, “Please note that this paid service is for those who are mentioned in point 12 above. Low income / less educated people can use the free website services of an organization.” Once you pay and fill out your forms including your details and requirements, the matchmakers show you profiles as per your requirements. While their website doesn’t really mention rates, we tried finding out rates over call. The minimum rate for someone is Rs 40,000. She called these “normal locals”. You have to pay Half upfront and half at the time of the wedding. “The packages are differently priced based on whether you’re single, abroad, or divorced.” “For a rishtas in an elite family you could expect the package to be around Rs 500,000. If the elite match lives abroad, this could easily go to Rs 1 million.” “We add you to a whatsapp group with the matchmaker and show you 10 profiles a month for 3 months. That means 30 profiles in total out of which you have to pick 5 you like. Once agreed upon by both sides, numbers are shared. The families get to know each other. They can choose to meet at our offices or at their home.” It is important to note that when we asked Mrs Shah her credentials she refused to tell us more about herself. She did not sound old, in fact she sounded younger than me (25 years old). So Mrs Shah might be a pseudonym for a young business development executive whose job is to bring in clients and then pass on their profiles to matchmakers.
The fraud in success rates
M
ost matchmakers quote absurdly high success rates. These are usually lies. Other than Mrs Asghar and Mrs Mumtaz, every matchmaker we spoke to on record had the same concern that most of the time families ran away without paying once they found a match they like. Iqbal said, “80% run away. We don’t follow them because frankly I don’t have the time.” Major Iqbal says the success rate he has is approximately 40% based on the limited knowledge he has of weddings being done. In his opinion the rate is higher but because the marriage isn’t reported to him he doesn’t know. “This is a form of advertisement for me considering most of the registrations I get come in through word of mouth. So it makes no sense to chase after them,” says Iqbal.
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Most matchmakers quote absurdly high success rates. These are usually lies. Other than Mrs Asghar and Mrs Mumtaz, every matchmaker we spoke to on record had the same concern that most of the time families ran away without paying once they found a match they like “A family showed up to give me money after a couple had two kids. They said they didn’t like how they hadn’t paid and it was eating them up inside. They didn’t tell the details of which profile they were paying for and then left. What I’ve noticed is that the groom’s family forces the bride’s family to hide that they found a match through me so that they don’t have to pay. Some people are okay with that, some pay in discretion to get their conscience clear.” Smaller matchmakers like Mrs Asghar, Mrs Rahim, and Mrs Siddiqui often work in partnership. In case they get a profile and don’t have a suitable match, they contact another matchmaker, make a deal to share their final amount with them, and profiles are shared between different matchmakers. We’re introducing another breed, marriage brokers. Bantva memon usually have marriage brokers. Mrs Jabbar is one such broker. “A girl’s family calculates the amount of dowry they can give such as whether they can buy a house, the amount of gold, the gifts, appliances, etc. They put a cap on the money a girl’s family can provide.” These brokers are paid a fee as a percentage of the dowry that has been decided. They only charge the girl’s family. Considering how big these transactions are, a small percentage also leads to a big sum. Essentially, the groom’s family sells their sons. The more qualified the son, the more his worth. Girl’s families shop for a groom based on their budget, the cap that is decided.
Why are they able to charge so much?
I
t is funny though, how these rishtas are priced. You would think there is a science to it, but more often than not, the pricing is based on your future potential and how much you’re worth. One such 27 year old that was tired with the process said, “A matchmaker said she would charge Rs 300k from the girl’s family if she found a match for me. I feel Rs 300k is a bit low on the pricing scale if you do a DCF considering a typical M&A fee is between 3-4%.” “So effectively, she’s put the present value of my implied earnings at Rs 10 million. Rishta aunties should get into hardcore finance. Rishtas should happen on comparable
multiples. The pricing needs to be based on the earning potential.” As you can probably tell, the guy works at a major bank. However, while speaking to a couple that has found a match through Mrs Rahim, they say Rs 75000 is worth it and that one can’t really put a price to a successful marriage and finding the right person. However, it is interesting how these matchmakers are able to charge so much just for connecting families. It is rare for them to conduct any background information or verify profiles. You could essentially lie and fool someone with little to no chances of getting caught by the matchmakers. While most families run away with the final payment, they treat the registration fee as a solid source of income and leave the final payment on chance. These rishtas aunties are essentially charging a finder’s fee.
The next step?
S
ize of online matchmaking in India for 2017 was estimated to be worth INR 15 billion or $200 million. Their websites like Shadi.com Matrimony and BharatMatrimony are leading the market. In fact, Bumble, the infamous app we mentioned above is also marketed as a rishta app whereby families look through profiles and swipe. As per the Pakistan Demographic and Health Survey 2017-18, approximately 2.7 to 3 million people got married in 2018. Assuming the higher end of the range, that means 1.5 million weddings happen in a year. Considering a 2% growth rate in population, we’re going to assume that the number of weddings also increases by 2% in a year. That means approx. 1.6 million weddings happened in 2021. This means the potential for someone to actually disrupt this industry is huge. The websites we currently have are shoddy and look like you’re entering into a potential Ponzi scheme. If someone uses human centered design, and streamlines the process of finding the right one online which encourages communication and somehow also gets rid of the trolley culture, we feel GenZ and Millennial would be first to jump on board. However, while this is a business magazine, we feel it is important to point out that if the practice continues to remain patriarchal and predatory for the girl’s family, incumbents won’t be as successful with this generation. n
SOCIETY
There has never been a time when it was more important for employers and employees to know all their options
I
By Muhammad Faran Bukhari
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n the past year, the federal pension bill has increased from Rs 150 billion in 2020 to Rs 480 billion in 2021. Pensions in Pakistan, when most people think about them, are what you get after you retire from government service. Most private jobs do not offer pension plans in the first
place, and the ones that do usually provide very basic pension plans either along the lines of a provident fund or a simple post-retirement monthly payout. The lack of will to try out other kinds of pension plans is destructive. On a governmental level, it is projected that by 2023 the federal pension bill will rise to an alarming level of Rs 750 billion. On a private level, every year more than a million young Pakistanis
enter the job market, most of whom lack clarity on how retirement benefits work, which retirement benefits they should negotiate when accepting a job offer and how they can maximise their payout at retirement. There has never been a time where both employers and employees have needed to better understand the many retirement benefits options that they have at their disposal. Pakistan is also currently in the formative
stages of its startup ecosystem development. With these new cutting edge companies coming in and the government on the lookout for a more elegant solution to their pension bill woes, it is vital to better understand how different retirement benefits are structured and the legalities behind each retirement benefit scheme. Currently in Pakistan, three types of retirement benefits exist ranging from gratuity, provident fund to voluntary pension schemes (VPS). Each of them differ in terms of payout, how they are structured and whether they are obligatory to be paid by the employer. This is all you need to know about pension plans and retirement benefits in Pakistan.
Gratuity
I
n simple words, gratuity is strictly a cash lump sum payment made by the employer to the employee as a token of appreciation for the service they have performed for the employer. A golden handshake, popular in banking circles, for example is a kind of gratuity. The amount of the gratuity payment to each employee, in purely legal terms, is calculated as ‘thirty days wages for every completed year of service or any period in excess of six months’. Hence, any period of employment that exceeds six months is considered one year for the purpose of calculating gratuity payments. In numerical terms gratuity can be calculated by the following formula: Gross salary in last year of employment/26) x 30 x number of years worked in the company. Of the three existing retirement benefit schemes, gratuity is the only benefit the payment of which is a statutory obligation on some employers. However even in the case of gratuity, this obligation does not extend to all employers nor the entitlement to receive gratuity extends to all employees. Rather, gratuity is only obligatory to be paid by industrial or commercial establishments which employ a certain number of workers or in simpler terms employees who are not engaged in any managerial or administrative work. Similarly, the entitlement to receive gratuity only extends to those workers
While in theory, workers (employees not involved in managerial or administrative work) are entitled to receive gratuity or a substitute in lieu of gratuity, this does not always happen. In some instances employers have been reported to terminate employees at the end of the company’s financial year and reappoint them at the start of the next financial year who are not directly involved in managerial or administrative work. In Punjab, Sindh and Islamabad Capital Territory (ICT) the threshold is set at least 20 workers for an organisation to be required to pay gratuity to its employees. In case of industrial establishments an additional condition applies which states that at least 50 employees should have been employed by the employer on any given day within the last 12 months. Similarly, in Balochistan and Khyber Pakhtunkhwa (KPK) the obligation to pay gratuity only applies to employers employing at least 20 workers. Again, in case of industrial establishments an additional condition applies which states that at least 21 employees should have been employed by the employer within the last 12 months. Moreover, in cases where gratuity payments are obligatory on the employer, the employer can in theory only be relieved of this obligation if an employee is terminated for misconduct.
Provident Fund
T
he law in Pakistan also allows employers to offer provident funds as a substitute for gratuity. In terms of structure, while gratuity is a lump sum amount, provident fund on the other hand is an investment fund into which both the employee and the employer make contributions which are then invested on behalf of the employee. For the provident fund to qualify as a substitute for gratuity the employers must match the employees contribution in the fund.
In contrast, multinational companies and big local brands are often reported to go one step ahead when it comes to complying with the laws related to retirement benefits. For example, some companies offer gratuity, provident fund and a host of other allowances to their employees who are not even legally entitled to receive gratuity
While the federal law does not explicitly state any specific level of contribution into the provident fund, in Sindh and KPK, the law requires that the provident fund should at least provide a total benefit equal to what the employee would have made if the employer had offered a gratuity instead. However, such a requirement does not apply in Punjab, Balochistan or ICT. However, while a provident fund lets employees invest in a fund and earn a return on it, it’s a one fit for all solution in the sense that it does not take into account individual investing preferences or risk appetites. In simpler words, everyone in the organisation invests in the same portfolio and earns the same percentage return. Moreover, provident fund regulations also differentiate between workers (employees not involved in managerial or administrative work) and other employees. For example, workers are entitled to receive the amount present in their provident fund (including employers contributions) even in case they resign or are dismissed from work. However, in the case of other employees, since they are not entitled to receive gratuity or provident fund to begin with, provident fund trust deeds can contain certain clauses which allow employers to recover their contribution to the employees provident fund and the interest earned on it in case the employee is dismissed or leaves before the expiration of their contract for reasons other than unavoidable circumstances or illnesses. Furthermore, from an employer’s point of view provident funds are much costlier to set up and manage compared to both gratuity and VPS. The law requires provident funds to register themselves as separate trusts with the Securities and Exchange Commission of Pakistan (SECP) and the Federal Board of Revenue (FBR), have a seperate board of directors and get a separate audit from the rest of the company. Moreover, in case the amount invested in the fund reaches a certain threshold, provident funds are required to hire an investment advisor who usually charge a 0.5 per cent to 1 per cent of the total assets under management as their fee.
EXPLAIN-IT-LIKE-I’M-FIVE
Voluntary Pension Scheme (VPS)
A
VPS is similar to a provident fund to the extent that both the employee and the employer contribute to the VPS. However, unlike provident funds a VPS does not need to be registered, owned or managed by the employer directly. Rather both the employee and the employer can make contributions to a VPS fund managed by asset management companies which makes VPS a much more cost effective option for employers. Secondly, compared to a provident fund where all the employees invest in a single portfolio, VPS gives employees direct control over their account and the ability to choose their own investment portfolio. Hence VPS gives employees the option to choose portfolios which better match their risk appetite and financial goals. Take for example a young graduate who has just recently started their first job, and a 50 year old employee who is due to retire in 10 years. A provident fund will treat both these individuals in a similar manner with both having a similar portfolio of investments. However, in the case of VPS the young graduate who most probably has a higher risk appetite will have a portfolio with higher proportion invested in equities and other risky assets. On the other hand,
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the 50 years old employee will most probably have a lower risk appetite and invest in low risk assets like government bonds etc. In terms of taxation, a VPS also has significant tax benefits over a provident fund. In case of a provident fund, contributions, withdrawal on retirement and capital gains beyond 33% of annual income are fully taxable. On the other hand in case of a VPS capital gains, withdrawal on retirement and contributions up to 20 percent of annual gross income are exempted from taxation. However, while a VPS has significant advantages over provident funds in terms of cost, taxation, ease of set up and asset allocation, it also has some drawbacks at least for the employer. For example, since a VPS is managed and operated by an asset management company and not the employer themselves, the employers are hence unable to recover their contributions or any amount from the employees VPS account in case the employee is dismissed from the job. Moreover, In Punjab, Balochistan and the federal capital, Voluntary Pension Schemes are recognised as a substitute for gratuity. However, such a provision does not exist in Sindh and KPK which means that in these provinces a worker who is entitled to receive gratuity can legally ask for gratuity even in cases where the employer has already set up a VPS. In order to avoid such a scenario, employers in Sindh and KPK, offering a
VPS to such workers often include a clause in the employment contract waiving off their obligation to pay gratuity.
Theory vs Reality
W
hile in theory, workers (employees not involved in managerial or administrative work) are entitled to receive gratuity or a substitute in lieu of gratuity, this does not always happen. In some instances employers have been reported to terminate employees at the end of the company’s financial year and reappoint them at the start of the next financial year. Since gratuity is a function of the number of years worked in a company, this practice of terminating and reappointing employees at year end means that the total sum paid to employees as gratuity is lower than what they would have received if paid in full at the end of their actual tenure. Even worse in other instances, employers simply do not pay gratuity even when they are legally bound to do so. In contrast, multinational companies and big local brands are often reported to go one step ahead when it comes to complying with the laws related to retirement benefits. For example, some companies offer gratuity, provident fund and a host of other allowances to their employees who are not even legally entitled to receive gratuity. n
EXPLAIN-IT-LIKE-I’M-FIVE
The fall of a Chinese real estate giant
could have far reaching consequences This will lead to a fall in economic activities, which only hurts demand for scrap metal and copper
F
or a while a few weeks ago, it seemed you couldn't open a foreign business newsite without being inundated with news about Evergrande. The Chinese real estate saga is every developer’s worst nightmare come to life. In short: Evergrande Real Estate, started in 1996 owns more than 1,300 projects in more than 280 cities across China. It also borrowed $300 billion to become one of China’s largest companies. There was only one problem: the company began to struggle to make interest payments on all of the debt they had accumulated. This has spiraled out of control, to the point where now China’s central bank has to issue placatory statements like the spillover effect to the financial system is controllable (hint: it’s not). If Evergrande collapses, Chinese demand for international products, commodities and services would potentially fall, affecting markets everywhere. Alright, but what does this have to do with Pakistan? A fair bit, actually, according to Mohsin Ali, investment analyst at AKD Securities, an investment bank. In a note sent to clients on October 11, Ali argued that it is one of the factors leading to a fall in economic activity, which only hurts demand for scrap metal and copper. This makes sense: already in China, companies that did business with Evergrande - like construction firms and suppliers - may incur a great loss, triggering bankruptcy. This chilling in the property sphere has global ramifications. Couple that with the an enormous shortage of electricity in the world’ leading manufacturing nations because of floods, and other weather disruptions, its no wonder that international scrap prices have dipped 3.5% month-on-month in September to $483 a ton, while international copper prices have fallen1% month-on-month to $9289 a ton. Meanwhile, international aluminum prices have increased by 9.8% month-on-month in September 2021 to currently stand at $2961 a ton. “A partial closure of steel and metal manufacturing facilities are on the cards with
STEEL
looming power/energy shortage (in EU and China) could force countries to shut down or cut production of energy intensive industries,” noted Ali. He added that the current energy crunch could hurt the end-product metal supply chain (with international rebar prices up 5% month-on-month in September 2021). This could result in an ease-off in commodity prices in the coming months, assuming demand for raw materials slows in major steel producing countries. This would mean average scrap prices of $435 and $375 a ton in fiscal year 2022 and 2023, while average prices for copper of $9000 in 2022 and $8700 in 2021. Meanwhile in Pakistan, rebar prices have remained flat in September. This was after a 14% monthly increase in August, mostly due to higher freight costs, which went from around $40 a ton, to almost $80 a ton, the rupee devaluing by 3.9% since August, and higher electricity costs. Rebar costs could come down: after all, there is news that the duties on scrap might be, well, scrapped, but the federal government has yet to reach consensus. Currently, 5% regulatory and 2% additional custom duty are imposed on imported scrap. “However, we believe any benefit associ-
ated with the removal of duties will be passed on, resulting in the reduction of local rebar prices,” said Ali. What about the company Mughal Steel Industries? Interestingly, because Mughal had established a non-ferrous segment by venturing into copper ingots, it is actually set to benefit from the rising copper prices and rupee depreciation. Ali expects the sales of the non-ferrous segment to have a compound annual growth rate of 24% between 2021 and 2021, contributing around 44% of earnings in 2022. Yet here is the kicker: despite the higher rebar prices and the manufacturers’ ability to pass on the costs, the steel sector has underperformed, falling 11.9% in the fiscal year compared to the 6.1% fall of the KSE 100 benchmark. Mpost of that has to due with again, economic uncertainty and global geopolitical worries. Yet Ali seems optimistic for the future. Rebar prices are expected to rise 15.4% in the first quarter of fiscal year 2022, and that will inevitably benefit local manufacturers, who will pass on the costs of higher freight costs and rupee depreciation, ultimately leading to higher margins. Ali said to keep a lookout for Mughal Steel and Amreli Steels, whose stocks have been trading particularly well. n
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OPINION
Zubair Khaliq
Luxury EVs, forex, and why they could change Pakistan
a very particular segment, and any EV with a decent driving range is currently out of range for most people. And while this is the case as of now, and there is a long road ahead to go before EVs are able to provide cheap transportation solutions for the general public, there is no doubt that EVs are going to be the future of transport. It seems that Pakistan has caught onto this, and around two years ago the government made the very progressive move of giving import duty based incentives for EVs. The step was hailed as a good move in the right direction. Pakistan’s transportation sector is entirely dependent on imported oil and thus foreign exchange. Driving EVs can save oil, and even the small segment of luxury car buyers can help out in this regard by buying EV. The step by the government became quite successful ll over the world, Electric Vehicles (EVs) fall under and stirred enormous interest in the hearts and minds of the luxury category of automobiles. This is a probthousands of car lovers. More than 1000 Electric Vehicles lem because their biggest selling point is that they were imported, and many Pakistanis experienced the are cheap in terms of fuel (electricity) costs and are future of driving for the first time. environmentally friendly, but for them to get wider The apprehensions associated with these vehicles patronage they need to be cheaper. Currently, EV are slowly melting away. People are finding out that it batteries are such that being cheaper makes little sense. is practically possible to travel without using a drop of Tesla, Audi, Mercedes, BMW and several Chinese contenders petrol or diesel. The future looks good. Companies are are trying to convince luxury SUV and luxury car buyers to switch thinking of investing millions into charging infrastructo the clean EV variant. However, this is once again focused on ture in Pakistan. Investors are waiting for more detailed regulations to come out before giving final shape to their feasibilities for the EV charging network. To invest millions and create hundreds of jobs. The biggest apprehension that there has been in this regard is a lack of charging Zubair Khaliq stations in the country for these cars. The government in this regard has proposed that CNG Stations (which stand abandoned as of now) can become ideal locations for EV is a US qualified Electrical Charging stations. It made sense since the infrastructure such as appropriate electrical Engineer with over 25 years connection, transformer and back-up generator are already available at CNG stations. of experience in the field of This idea has also started materializing. A private company has invested millions of Rupees and converted CNG stations into fast EV charging stations as a pilot project. Now, power. Current he serves most EVs can travel on the motorway from Lahore to Islamabad with a charge break of 30 as the CEO of Multiline to 45 minutes. The abandoned sites have come to life. Everyday several EVs are charging Engineering. there and attendants and the managers in the waiting area have all started thriving again. Several OMCs (PSO, Attock and GO) have installed fast EV chargers on their petrol pumps as well. Many petrol pumps on the new motorways will now be equipped with
This is not just for the rich, it is a future investment opportunity that we must take now
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EV chargers from the time of construction to enable motorway travel of electric vehicles in all parts of the country. But how does all this help our struggling country and its poor people and even before this how does this fulfil the promise of saving imported oil? To understand this, let us make some assumptions. Let us say that 2000 Luxury EVs are on the road. It is acceptable to assume that these luxury SUV owners would otherwise drive luxury SUVs that are petrol driven and the most popular ones deliver no more than 6-7 kilometers on a liter of hi-octane. If we further assume that these are driven about 20,000 kms / year. A simple calculation will reveal that fuel worth about Rs 1 billion rupees is being saved. So what can this momentum do for us? More CNG stations and other locations will get converted to EV charging stations. Trained operators and technicians will be needed. Jobs will be created. We will soon have electric buses providing clean, cheap transport to the masses. The same charging places will serve them. By the time smaller and cheaper EVs become feasible, we will have an elaborate network of chargers. We will be a nation ready to welcome the change. The anticipated disruption. Now let us say that in another hurried move, in order to save the precious foreign exchange we decide to cut back on the incentives that have been given. First of all the charging infrastructure investors will shy away, the current fleet of EVs will get obsolete soon and if in future, if any other government would like to start such an incentive, there would be mistrust and the same cycle will have to be repeated which will then take many more years before adequate trust and charging infrastructure can be established. It would be fair for the government to ask the local car manufacturers to introduce EV variants and once those are readily available then they can draw back some of the incentives on fully imported vehicles. But if the incentives are withdrawn to the extent that the affluent luxury car buyers have other options with less hassle, then all will be lost. In the late 18th century when a railroads network between various European cities was being constructed, a plan was conceived to connect France and Italy via the Alps. Some of the gradients of the proposed railroad network were so steep that there was no locomotive in the world at that time which could carry a train up those hills. But the European engineers decided to construct the railroad anyway. Because they estimated that judging by the pace of progress in the field of automotive engineering, in ten years when the project is completed, there will be a locomotive powerful enough to pull the train up those slopes. But if they don’t do it, time will be lost.
It all boils down to a well proven theory summarized as Roger’s bell curve for diffusion of a new technology. The theory categorizes adopters as innovators (2.5%), early adopters (13.5%), early majority (34%), late majority (34%) and laggards (16%). It surely worked out. By the time the railroad link was completed there were locomotives powerful enough to carry the train up the Alps. Another relevant example is that of the telecom industry. When Mobilink and others started their networks, billions of rupees of cell site equipment was imported and installed. A mobile phone at that time cost more than a year’s salary of a common person. It was even more expensive to operate a mobile phone. It did not seem like a project for the common man. But then cheaper phones came and the network rates went down and the poorest of the poor started enjoying the benefits of this modern marvel. Had we delayed the project by calling it just another feather in the cap of rich people of Pakistan, then our telecom networks today would be far behind the times. It all boils down to a well proven theory summarized as Roger’s bell curve for diffusion of a new technology. The theory categorizes adopters as innovators (2.5%), early adopters (13.5%), early majority (34%), late majority (34%) and laggards (16%). It is simply impos-
sible to expect a non-luxury car user to pay a premium of around 70% over an equivalent fossil fuel vehicle (even with the incentivized duty/tax structure) for probably their primary vehicle, to embrace that they can never recover the premium they’ve spent in running/maintenance costs alone and to expect the concept to pick up, hope to have a charging infrastructure evolve and their asset to have a reasonable resale value. Every day there are breakthroughs in battery technology. The prices are going down. The range of EVs is going up. It is debatable whether it will take another 5 or 10 years before the price of battery comes down to the point where everyone will be able to benefit from the EV. But it will happen. And when that happens we will be ready. We will have hundreds of charging stations, trained technicians, our people will be confident that EV is an acceptable replacement for the fuel powered vehicle and then we will not only have cleaner air to breathe but we will save a lot of foreign exchange as well. If we roll back on this we will lose this precious time and lose the progress that has been made. n
COMMENT
Polytechnics to train youth for employment in emerging field of Getting Lied About: Zulfi Bukhari
P
By The Dependent
rime Minister Imran Khan’s former special assistant Zulfiqar “Zulfi” Bukhari has announced that the PTI government is going to start training at various polytechnic institutes in the emerging field of Getting Lied About. “We can earn a lot of foreign exchange through this sector,” he said, while speaking to reporters after having collected the £50,000 fine that Prime Minister Imran Khan’s former wife Reham Khan was ordered by the court to pay Bukhari over some slanderous allegations she had
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made about him. “We’re looking at Short Certificate in Getting Lied About, then Post-Grad Diploma and also the relatively more comprehensive Diploma in Associate Engineering (Being Lied About.)” “Course structure would include how to follow things up legally and also how to get someone to lie about you in the first place,” he said. By the filing of this report, the plan had been shelved after it was revealed that former Punjab caretaker Chief Minister Najam Sethi was planning to enroll in the course over the “35 painchurr” allegations made against him by Imran Khan.
SATIRE