Profit E-Magazine Issue 216

By Daniyal Ahmad

They’re

not the fanciest, nor the flashiest, and heck they sometimes don’t even have an air-conditioner. However, we all know that, regardless of how many Formula-1 races you watch, if you’re on a budget then a Suzuki is probably one of the first, if not the first, car that comes to your mind.

The thing is, a Suzuki has always been both an aspirational purchase and guilty pleasure for many. It’s the first car many of us buy

and also what we end up getting whenever our budgets are limited. And this is likely to not change anytime soon.

Why do we say this? Well, that’s because Suzukis have always been the most affordable if not the most reliable car company in Pakistan. Pak Suzuki Motor Company (PSMC) knows this, and they have milked itfor the better part of some four decades in Pakistan. So much so that customers now pay premiums to continue buying Suzukis unlike its category competition.

Profit looked at Road Prince’s Prince Pearl, United’s Alpha and Bravo, and the KIA

Picanto and compared them with the entirety of PSMC’s hatchback portfolio. What did we find? That these cars are retailing for discounts whereas PSMC’s portfolio is trading for a premium. Now, cars trading for discounts or ‘off-payments’ have steadily become ubiquitous in the current automotive market on account of the macroeconomic situation.

Read more: Why are some cars being sold for below showroom price

There is unfortunately no hard data available to show how many units of each car were sold. Unlike PSMC, which is part of the Pakistan Automotive Manufacturers

Association (PAMA), companies like KIA and Road Prince do not release their sales figures. In the absence of absolute figures, we can look at how these cars are selling on the secondary market relative to their invoice price – since these market rates signify how both investors in the automotive industry and customers in the automotive space value a vehicle.

Read more: The lopsided market structure of the automobile industry

We looked at 599 passenger cars in the used market with each model being subjected to a sample size of 30 at min imum wherever possible and compared the prices of those vehicles with their current ex-factory invoice prices. Profit found PSMC’s vehicles to be trading for Rs 138,079 above their invoice prices in the second-hand market whereas the non-PSMC vehicles were trading for Rs 196,786 below their invoice prices in the secondhand market. The difference in the clearing prices are colloquially referred to in the Pakistani automotive market as ‘on’ and ‘off’ respectively.

Why are these on and off indicators relevant? Shouldn’t customers be happy affordable vehicles have become more affordable? Why is anyone paying a premium for a Suzuki? What’s going on in general?

The struggling competitors

Here is the crux of the situation. PSMC is big. Very big. New entrants like Lucky Motors, United, and Road Prince sought to take it on in its home turf by launching similarly priced cars, but found that the market responded poorly. While the cars were in the same category, they had higher maintenance costs and fewer showrooms. This is what you would call a double whammy. It dampens demand whilst also restricting supply. The market did not bite, and Suzuki continued on its merry way.

Where it lacks in the media spotlight hogged by its Japanese brethren, it makes up for in total sales volume. How much does PSMC achieve in passenger car (specifically this segment) sales? Well, more than Honda Atlas Cars (HCAR) and Toyota Indus Motor (INDU) combined for the past 10 years. Looking at figures published by PAMA, INDU and HCAR combined sold 804,148 passenger cars from FY 2011-12 till FY 2021-22 whereas PSMC sold 1,003,003 in the same time span.

In a situation such as this, looking at the premium and discounts is actually a better metric as it acts as an indication of that model’s popularity irrespective of the scale of

its competitor. There are two reasons for this: PSMC’s inherent advantages and the mistakes made by competitors.

PSMC’s first inherent advantage is that customers that are on a budget are likely to want to ensure that their car’s maintenance is also budget-friendly. This may sound rather rudimentary, but it’s important. Profit spoke to dealerships for all the aforementioned manufacturers and there was one sentence that was consistently reiterated to us: “Sir, unees-bees (19-20) ka farak hai parts ki keemat mai’’. When asked as to which of the two was the 20 and which the 19, all of them highlighted how PSMC’s vehicles undercut theirs in terms of parts.

The thing is, parts are an active consid eration for any prospective vehicle buyer in Pakistan. Particularly one that is on a limited budget. Doesn’t make sense does it, to want to get an affordable vehicle and then pay premiums for its upkeep? Not to Profit, and surprisingly not to many customers. However,

the other companies ought to be given the benefit of the doubt. It’s unlikely anyone can compete with any of the ‘Big 3’ simply due to the sheer time they’ve operated for.

Time and volume have allowed PSMC alongside INDU and HCAR to create robust local supply chains. PSMC in particular boasts some of the highest levels of localisation based on the statistics shared by the Auto Industry Development and Export Policy (AIDEP) 202126. The rest are all newer entrants, and subse quently any expectation for them to achieve similar supply chains would be unfair. The fact that they are the 20 to PSMC 19 in terms of parts is alone an achievement. However, a customer is likely to make a decision based on his wallet and a company’s limitations.

A Road Prince and United dealership even highlighted how PSMC’s parts could be utilised for the maintenance of their respective vehicle to keep cost down if we were to commit to our purchase. Not the best way to advertise your budget friendly vehicle, now,

is it?

The second advantage that PSMC has is its ubiquity. This time, we don’t mean its sales volume but just sheer availability. In terms of dealerships, PSMC has 22 in just Lahore. In contrast, Lucky Motors’ KIA brand has six, Road Prince has four for its cars and United Autos only has one across all of Lahore. If we were to assume marketing budgets, it is likely that PSMC would reign supreme again, but disregarding that, people are generally more likely to buy a car that they can see that others have, is widely available, and can be easily bought. This is a somewhat of a chicken and egg problem: do you deploy capital first and wait for volume to pick up or do you spur sales and deploy capital afterwards?

Unlike Road Prince and United, Lucky Motors benefited from the success of its KIA Sportage and the Peugeot 2008. Road Prince, like Lucky Motors, and unlike United, also employs a corporate strategy to compete across multiple segments. However, unlike Lucky Motors, its DSKF brand does not enjoy the brand equity that Lucky Motors does on account of the aforementioned two models. What does all this mean? In a nutshell, even if someone did want a United Alpha and Bravo, a Prince Pearl, or a KIA Picanto, they’d have to go looking around to find one. And whilst they look for a showroom to get their prospective car, they will have to stave off their desire to pull the trigger and buy a Suzuki from the myriad of PSMC showrooms they run into whilst hunting for a singular one offered by the competitors.

The big mistake

Sohere’s where we are. Suzuki cars under the 1300cc segment are selling for more than their invoice price while new competitors that threatened to be

competition for Suzuki are seeing demand for their cars flounder in the market. One could perhaps forgive this mistake on account of how new some of these companies are, but there was also a sense of recklessness in how they decided to enter the market.

Look at it this way: Suzuki’s competitors sought to take on the largest player in a segment without the benefits of being an incumbent, and they did so with a weak hand. What does that mean? None of the aforemen tioned competitors is a cutting edge model by any means. Some are even redundant globally.

Let’s start with the KIA Picanto. The Picanto in Pakistan is the second generation model that was introduced in 2011, and was then phased out globally in 2017 when its third generation model was introduced. United’s Alpha is in a similar boat. Globally, it is known as the Chery QQ. The Alpha is the 2012 facelift variant of the first generation QQ that was unveiled in 2003. This model was globally phased out in 2015 with the introduction of the QQ’s second generation model. Similarly, the Prince Pearl is based off the 2017 Yika E7. Fi nally, in an aberration from the trend of famous outdated models, the United Bravo is based on the obscure Dahe DH350S. Its obscurity is an

aberration from the other renowned outdated models but that’s about all that United per haps thought with this.

However, it would be remiss to not highlight that the decision to bring these particular models may have to do with factors other than just the companies wanting to maximise their profit margins. “Introducing a choti gaari is not possible for everyone. The fixed cost for a bari gari and choti gari is similar but with a choti gaari you cannot charge a higher price like with a bari gaari. This is why companies gravitate towards the upmarket segment,” said Abdul Waheed Khan, Director General of PAMA. To expect any of the competitors to have economies of scale similar to PSMC would be to needlessly scrutinise them. They had to cut corners but it’s not like PSMC was going to let them get away with it.

The situation till now seems like this was always an uphill battle for the new entrants. And well, it was always going to be. “Suzuki is a household name in Pakistan. It established its market over decades. These competitors are new, it will take some time.” said Khan.

Price sensitive customers are likely to be less willing than their more spendthrift counterparts to try newer brands simply because of how much more costly that decision is for them. In business terminolo gy, this is known as the moral hazard problem. Road Prince and United may have the best vehicle ever but the custom er does not know that. The customer will likely never have complete information regarding the vehicle, and it is thus in the customer’s interest to minimise his risk based on available information. This is where PSMC’s ubiquity helps and where the lack of the competitor’s ubiquity undermines them.

Road Prince and United in particular find themselves in the precarious situation where

“Introducing a choti gaari is not possible for everyone. The fixed cost for a bari gari and choti gari is similar but with a choti gaari you cannot charge a higher price like with a bari gaari. This is why companies gravitate towards the upmarket segment”

Abdul Waheed Khan, Director General of the Pakistan Automotive Manufacturers Association

they are not particularly premium even in the motorcycle segment. Now where it is true that their reputation for reliability and afford ability in the two-wheeler market may have transferred into the four-wheeler market, it is also true that prospective car buyers may just think them to be lower quality. Whether this assumption is valid or not is debatable, but it does reflect itself in sales. There is a higher cost for a customer in this category to try these two brands than to stick to something reliable such as PSMC. That, however, does not hold true for the younger sibling of the KIA Sportage.

The KIA Picanto actually managed to make some initial strides, and then proceeded to shoot itself in the foot. The Picanto was able to benefit from the brand equity that its elder sibling had made for itself. In a price sensitive market, if customers can have a product that is associated with a larger premium brand then why wouldn’t they? And, people did flock to the Picanto. It almost seemed like it would do the impossible. Till Lucky Motors suspended bookings for the automatic variant entirely.

On account of parts issues, Lucky Mo tors suspended bookings for the Picanto from January till September of this year. Throughout this time the only way to acquire a Picanto for yourself was through the second-hand market. Investors had hoarded however many Picantos they could during this time as they became the exclusive point of sale for them.

Investors were hooked on the Picanto so much so that a large chunk of the Picantos that were delivered by Lucky Motors after it initiated delivery and restarted bookings were the ones investors had bought on old invoices. And this is where we have a problem. The demand for the Picanto went off a cliff when bookings for it had been closed for so long. Simultane ously, investors hoarded them. Eventually, you had a glut of Picantos that very few people wanted to buy.

The ramifications of this are easily visible to anyone who visits their nearest KIA dealership which has some form of lot or extra space available. That is where you will see lines upon lines of Picantos ready for the picking. Profit actually went to one KIA dealership where we were told that if we purchased the car via the regular booking then we’d have to wait a month and pay the invoice price of Rs 3,200,000. However, if we wanted to take it out of the showroom with us today then we’d only have to pay Rs 2,900,000.

We’re as shocked as you are. We were told that the showroom simply wanted to clear out all the stock investors had laddened them with. Whilst Profit tried rationalising how many Picantos must have been hoarded, the sales representative promptly texted us the next day to tell us that he’d lowered the rate to Rs 2,850,000 “just for us”. Quite a bargain, in all honesty. But not perhaps how you would

want to market a car.

Though the investors will make lucrative returns due to the difference between their purchase price and the current invoice price, the resale value for the Picanto tanks in the short-run. In a market where cars are treated as asset classes, this is a cardinal sin. One that KIA in particular is all too familiar with and one that Profit has already documented.

Read more: The KIA Sorento 101 – How not to price a car

To put it briefly, the competitors had fewer outlets, higher maintenance costs, outdated models or models based on obscure cars, suffered from a higher instance of moral hazard, and the one car that did avoid the moral hazard problem had its supply chain self-destruct for half a year. All whilst they went up against the biggest and oldest member of the Big 3. It’s not hard to see how PSMC dominated them the way that it did. The question then is how dominant is the incumbent? But is there more to PSMC’s imperiousness in this segment?

Looking at the affordable giant

We’ve established that PSMC is big but that’s just half the story. It’s big in specific ways or categories. The numbers

work out to PSMC having sold 18,078 more passenger cars on average than INDU and HCAR combined over the 10 year period. Now, the magic in that number is that PSMC primarily makes passenger cars (this is why we focused on this), and that too in the more affordable segment of the market compared to INDU and HCAR.

Breaking down PSMC’s numbers over the past decade, only 5% of its sales were for vehicles that can be deemed to be ‘premium’. The 5% sales that lay outside the affordable category include the now discontinued Suzuki Liana, and the Suzuki Swift.

Is there another metric other than just gross sales for PSMC’s dominance of the segment? Profit sought to use the Herfind ahl-Hirschman Index (HHI) as a metric. It is the most commonly used measure by regulatory agencies to assess the degree of competition in an industry. The lower the value of HHI the more intense the degree of competition. A threshold level of HHl adopted by regulatory agencies, including the Competition Commission of Pakistan (CCP), is 1,800, beyond which the market is considered as not meeting competitive norms.

How does PSMC rank based upon HHI? Almost a monopoly in its own segment. The 1000cc segment had an HHI of 9,090, 10,000, and 8,500 in 2010-11, 2014-15, and 2020-21 re spectively. What does that mean? That means

the segments are almost a monopoly, if not one in some years. Who is the monopolist in the market? PSMC.

Similarly, the 800cc segment had an HHI score of 6,924 in 2010-11 and 10,000 in 2014-15. Scores for 2020-21 could not be found. Who was the leader in the 800cc segment? Well, it was Daihatsu and Suzuki in 2010-11 and just Suzuki alone in 2014-15. These scores were a result of reports by International Growth Centre (IGC), Institute of Development and Economic Alternatives (IDEAS), and the Pakistan Institute of Development Economics (PIDE) respectively.

Looking at the HHI score, the 1000cc and 800cc market has been almost a monopoly for the better part of a decade. And in that monopolistic structure, PSMC has reigned with only Daihatsu managing to play stand up to Suzuki at one point. The question then one might ask is what happened to Daihatsu? It was, after all, a subsidiary of another member of the Big 3, INDU.

Well, sticking with the theme of PSMC’s opponents, they too took the segment very lightly and shot themselves in the foot.“When the Euro II fuel standards were introduced, Daihatsu failed to become compliant and was thus phased out.” Khan told Profit. When asked the official date of Daihatsu’s demise, i.e. when it was phased out and it ceased being a member of PAMA, Khan said 2012. This aligns adequately with the HHI findings in 2014-15 when PSMC had a field day with the segment.

Will this dominance ever change and is it intentional? Well these are different stories entirely.

Suzuki’s faustian bargain

The gist of the matter is that PSMC is unlikely to be beaten at their home turf anytime soon. However, at the same time, PSMC is also stuck inside their home turf. Of the 5% of sales attributable to the Suzuki Liana and the Suzuki Swift, the

Liana in particular comprised 0.08%. Therein lies the problem.

The Liana was eventually discontin ued because of the lack of demand for it. But it’s not like that was something PSMC was overjoyed about. The Suzuki Liana was the successor to the Margalla and the Baleno, and the predecessor to the Ciaz and Kizashi. There are two very clear commonalities here amongst all of them: they are sedans and they never caught on in Pakistan. PSMC’s domination of the affordable segment has in effect hampered its progress in the more premium segments. The Swift for all intents and purposes is still an affordable vehicle when compared to INDU and HCAR’s offerings.

PSMC’s supply chains and production methodology are just tuned to the affordable segment. In the instances that they did try to completely abandon their inherent advantages to make something premium, well their reputation acts as an impediment. Customers associate them with affordability and not luxury. It is hard for anyone to justify paying the same price for a Suzuki as a Toyota or Honda if

that vehicle is outside the affordable segment. Just look at PSMC’s own track record to see the gravity of the problem.

Is PSMC cognisant of the problem? Most likely. Hence why they continuously try to creep into the more expensive segments in the industry such as with their offerings at this year’s auto show. However, this does provide a lesson here for everyone. Particularly, if we look back at the aforementioned availability Picanto debacle.

Customers may be hesitant to move upwards in a brand’s portfolio if that brand is entrenched in a lower price segment such as with PSMC. However, the reverse does not hold, at least not as concretely. Lucky Motors’ KIA brand is, whether or not they like it, synonymous with the KIA Sportage. Therefore, customers that may not be able to afford a Sportage can still take comfort from the fact that they have a sibling of the Sportage. In their minds, they are getting a premium brand. This reduces the aforementioned search cost that is likely to be higher for more price sensitive clients.

So could PSMC be beaten if a compa ny entrenched in the upper price segments seeks to expand its product portfolio downwards? Hypothetically. Now if only all these companies had maybe read this before they did what they did. Or if the Picanto had actually managed to be available when people wanted to buy it.

However, till then the Alto will likely have smashed some new

Investors’ Picanto’s at KIA Showroom

Ramiz

By Abdullah Niazi

Raja may be the bravest man in world cricket right now, and not by choice but by necessity. In the past 15 years, the Pakistan Cricket Board (PCB) has pulled off a feat that no other cricket board would even dream of: financially thriving without a bilateral relationship with the Board of Control for Cricket in India (BCCI).

Which is why when the BCCI’s secretary Jay Shah, also the son of India’s home minister and Prime Minister Modi’s right-hand man Amit Shah, announced that India would not be travelling to Pakistan for the Asia Cup in 2023, the PCB responded with indignation but not with surprise. Fraught political relations between the two countries means that India has been snubbing Pakistan in the world of cricket for the last decade and a half. This is only the latest insult. The last time the two neighbours played a test series was in December 2007 in India. Since then, other than one short-format bilateral series hosted by India in 2012, the two arch-rivals have exclusively faced off in larger tournaments such as the cricket world cup.

And this has posed an existential threat to Pakistan cricket. India is the de-facto head honcho in world cricket, controlling the largest streams

of revenue in the game, and providing the International Cricket Council (ICC) with an overwhelming majority of its cash-flow. Thanks to this financial muscle, almost every cricket board in the world, including other big fish like England, Australia, and South Africa, depend heavily on the rich spoils that they get from bilateral series with India. On top of this, the BCCI also controls the Indian Premier League (IPL), the tournament that put cricket on the map as a money making sport and which recently sold its media rights for the 2023-27 cycle for a jaw-dropping $6 billion.

Pakistan’s players neither have invites to play at the IPL, nor have they played a bilateral series with India since 2012. Despite this, Pakistan cricket has persisted. Successive PCB ad ministrations have managed to galvanise efforts like the Pakistan Super League, earn profits, and easily become one of the biggest boards in world cricket after India, England, and Australia. What will be heartening for other boards to see is that Pakistan has proved that you can survive in world cricket without depending on the Indians for the big payout. But how did they do it, and could they be doing more? Profit spoke to sources within the PCB, cricket experts, and Osman Sammiuddin, senior editor of ESPN’s Cricinfo and author of The Unquiet Ones- A History of Pakistan cricket, to unearth the story.

How big is India

“India is big. And if I’m being honest, no one could really have imagined a world in which a cricket board could survive let alone thrive without play ing India if they hadn’t iced Pakistan out the way they did,” says one source close to the Pa kistan Cricket Board. Profit reached out to the PCB with a list of questions following Jay Shah’s statement, but the PCB declined to comment citing the sensitivity of the issue. And the issue is sensitive indeed. “This hasn’t been a conscious decision on the part of the PCB to grow without playing India. In fact, different administrations have tried very hard to mend ties and play India in a bilateral series but it has never panned out. That is why we have had to rely on other means to survive and thrive,” they continued.

They have a point. Playing India is usually the most important part of any cricketing nation’s calendar. According to a recent report published in The Guardian, India’s 10-match tour of South Africa last winter, for instance, was worth £80m to the hosts. Similarly, when India pulled out of a test match in England last year, it left the England Cricket Board (ECB) with a gaping £40 million hole in their finances. Even Australia depends on bilateral series with India, and the two countries play each other more often than any other two teams.

Some would argue that India has earned this position. Over the years, they have managed

to utilise their massive television audience well to turn profitable. Their biggest stroke of genius was the IPL, which pumped large amounts of money into cricket in India and perhaps more importantly proved that cricket as a game could be, as legendary Indian batter Rahul Dravid would put it, a four letter word that begins with S and ends with Y.

{Editor’s note: At a press conference talking about the bowling of the Pakistan team, Dravid described it as “a four letter word beginning in S and ending in Y. The word he was thinking, of course, was sexy.}

And to be fair it has been a system that works well for other cricket boards as well. Playing India is an easy way to make money. For the ICC as well, India is the biggest source of revenue, by some liberal estimates contributing as much as 80% of the ICC’s overall revenue. The way the financial side of cricket works has a lot to do with this.

There are two main sources of income for a cricket board. The first is the International Cricket Council (ICC). The ICC hosts international tournaments like the Cricket World Cup and the T20 World Cup or the Champions Trophy, which attract cricket fans from around the world. From these tournaments, through gate receipts, broadcasting rights, and spon sorship deals, the ICC makes billions. In the projections for ICC’s 2015-23 cycle, the council is supposed to make up to $3 billion, which is then distributed through the different cricket boards. Larger boards that bring in larger television audiences like India and Australia get larger shares.

In the current cycle for 2015-2023, the ICC has allotted $117 million for seven cricket boards including Pakistan and Australia. England gets $127 million while India takes the biggest slice of the pie with $371 million. And this is only scratching the surface. The share from the ICC is a drop in the bucket for the BCCI while it makes up for nearly half of the revenue that boards such as the PCB make. Af ter India’s mammoth $6.2 billion broadcasting rights deal for the IPL that made cricket a bigger sport than Major League Baseball and put it right behind America’s NFL. On top of this, in August this year, the ICC confirmed a new, four-year Indian market broadcast partnership with Disney Star. The new contract kicks off in 2024 and runs until the end of 2027. According to the Economic Times of India, Star will pay as much as US$3 billion in total over that period for the rights to ICC events.

Read more: How to turn the PCB into a lean, mean, business machine

The reality is that broadcast rights for matches involving India are so much more lucrative than anything else in the game that most boards rely on them to subsidise the costs of hosting all the other tours. And this is an empire

India has built very deliberately. “This is one area in which the BCCI has really set itself apart from the other boards. No matter who comes in as chairman or when the administration chang es, their focus has always been to maximise the money and that has clearly worked,” says Samiuddin.

With the recent record IPL deal and now the ICC’s broadcast deal for the Indian market, the BCCI will continue to become richer, giving it more ability to exert control over world cricket. It is that financial muscle that India flexes to pull stunts like refusing to come to Pakistan even for a tournament like the Asia Cup. While there are moral arguments to be made and there have been those that have vocally cautioned the India board for their hubris, Pakistan has clapped back against the Indian board and threatened their own presence in cricket’s grandest event, the 50-over world cup that is held every four years.

India’s ability to exert their will should be a red flag to other cricket boards as well, particularly the ones that are largely dependent on playing India for their revenue. Richer boards like England in particular have tried to replicate similar financial independence and power as India by introducing new innovative tournaments like the hotly debated ‘The Hundred’ which had its inaugural edition recently. However, our of sheer necessity, Pakistan seems to be the only board that has managed to make it work without India and carve its own space and independence in world cricket.

How did Pakistan do it?

To its fans, cricket is a beautiful, confusing, frustrating, but ultimately good force in the world. As a sport, its idiosyncrasies are what define it and make you fall in love with it. To the purists, talking about finances in cricket is distaste ful and the hold that money has on the game alarming. Yet it is this very money that will help cricket thrive, spread, and become a major world sport.

Boards such as the PCB are run as profit making organisations for a reason. They are supposed to make money so that this money can then be spent on the players. The more that is spent on player development, salaries, training and so on the better cricketers we will produce. This will be good for the game, good for the players, and good for the fans. Pakistan has always been a significant member of the global cricketing community, but ever since the terrorist attacks on the Sri Lankan team in 2009 it has been embattled. The incident saw Paki stan blacklisted as a cricket venue where teams like Australia had already been hesitant to visit before the attacks.

At the same time that Pakistan was serv ing its time as a pariah, India was embarking on its fairytale journey. A year before the attacks, the IPL was launched and became an instant hit. As India grew in the world of cricket, Pakistan fought for scraps waiting until 2015 to be able to host Zimbabwe. Yet even as all this was hap pening, Pakistan persisted and decided to form its own franchise league. The Pakistan Super League has been a massive boon for cricket in Pakistan, bringing in much-needed revenue and helping in player development.

Snubbed by India, Pakistan had no choice but to exert its independence and it has managed to do so with aplomb. And that is why with India pulling out of the Asia Cup that was supposed to happen in Pakistan next year is not as big of a deal financially as one might have thought initially. Yes, the ugliness of politics entering the game is always a bitter sight, but it is not the end of the world.

“Pakistan has been living this reality since 2008, so it isn’t that big of a deal anymore. The way I’ve started looking at it is that Pakistan has shown there is a way to thrive without playing against India. Most boards think you aren’t making money if you aren’t playing India. We aren’t one of the biggest boards in the world, but we are easily the fourth biggest and that is without any bilateral ties with India,” Samiuddin tells Profit. “During this time the PCB built the PSL. The board makes money off of it, and for a while now Pakistan’s accounts have been showing a net profit. This is the status quo for Pakistan and they’ve made it work.”

With the PSL, the board makes money not just through the broadcast, but also through the fees that franchise owners pay them. The PSL has become worth around $300 million to the PCB. Thanks to this, in 2021, the PCB declared an after tax profit of Rs 3.8 billion. The cricket board’s reserves back then stood at Rs.17.08 billion compared to PKR 13.28 billion in the 2018-19 financial year. Other than the net profit, the board also saw an increase in income of 108pc, bringing in Rs 10.696 billion through different sources this year compared to the year before..

Read more: Is the PSL good for business? For the PCB, yes. For the teams, not so much.

“I think the important part here is that this is not the be all and end all for Pakistan cricket. It has been proven that they can do it without India. Ramiz has referenced at different times that the ICC runs on BCCI money, and that Pakistan has remained aloof from this end.”

What more can we do?

This is a success story, and it is a story built off many different shoulders. The PSL was launched, built, and reorgan ised under three different chairmen

for example. During the course of that there were many issues. Games of musical chairs were regularly played with the spot of PCB Chair man, and some proved to be more professional commanders than others. The introduction of professional CEOs has also proven at different points to have made a significant impact on the operations of the board.

Yet while Pakistan Cricket has done well, there are still places it can continue to improve. “I don’t think the PCB has maximised the potential for monetization that the game has in Pakistan. This is a country of 220 to 240 million people and cricket is the only real sport that is followed avidly here. And we know what the real potential is. We saw the bump up when the PSL moved to Pakistan. There were far more sponsors coming in when the matches were at home. Once it moved out of the UAE, the PCB also started getting gate receipts, which might be a small amount but they’re still something and better than paying ground fees,” explains Samiuddin.

Currently also, the PCB is not working at its full potential particularly because it is stuck in a bad $200 million broadcasting deal with PTV. According to Samiuddin, the deal should be worth much more and the PCB should negotiate a better one when this cycle ends. “The last broadcast deal they had, well the major one before this current one with PTV at least, was worth $150 million and was signed with Ten Sports. And of course it did not come to that amount because the India series did not happen and that series was something like 70% of the whole deal, but that much money 10 years ago compared to the deal with the PTV now is a pretty big difference. If you had kept a normal trajectory, and the broadcast market had developed then a $250-250 million deal over five to six years would be a game changing amount. For all the money that the PCB is making, there is a lot more that can be made,” he explains.

“There is a lot more that can be done. I think the full potential of the PSL has not been tapped as of yet. Ramiz has overlooked that. He has focused a lot on the Pakistan Junior League for example, but you know that isn’t going to make you any money. And you really need to push that. The one big tragedy has again been the big series at home where they have not been able to maximise the broadcast value because of the PTV deal. Australia, England, whenever New Zealand comes over they were rich opportunities but haven’t quite been taken entirely because of this not so lucrative deal.”

Why we should still want to play India

“We have managed to not just keep afloat but do pretty well,” says the earlier mentioned

source close to the PCB who spoke on the condition of anonymity. “That does not mean we don’t want to play India. We may have proven that we are independent from the hold that India has on other boards, but it is still some level of handicap. We’ve developed strong pillars, but better ties with India will benefit our cricket at the end of the day.”

There is very little doubt about this. India is a massive market, but so is Pakistan. Combined, India-Pakistan matches are some of the most highly viewed events in global entertainment with television audiences of more than a billion people regularly tuning in and breaking television ratings records. Of course, some of this does have to do with the fact that there has been much less cricket between the two countries in the past 15 years, but the potential of regular Indo-Pak fixtures is astounding.

“I do remember distinctly that back in the day when they were playing more regularly there were voices saying that the two teams were playing each other too much and that it was getting tiring, but this is India and Paki stan at the end of the day. Ultimately, you want to play India. They got The Rock to do a promo for the most recent match for god’s sake. The most tangential of fans will also tune in for an India-Pakistan match. And when they do play that does happen and people make money off of it,” says Samiuddin.

Ultimately, you do want to play against India. It is good for the game and it is good for the coffers. And perhaps, even more importantly, with all major countries touring Paki stan, India is the only major hold-out in the complete return of cricket to Pakistan. While it is happening for political reasons outside of the control of the two cricketing bodies, it would be best for both sides to get on with it. “The PCB has never made a big deal out of this because they do not want this to be a permanent situation. They haven’t made a fuss at any ICC meetings and that is because you want to play them at the end of the day,” Samiuddin continues.

Playing India is important. As we’ve seen, it isn’t necessary. Not for Pakistan and definitely not for India. But mawkish as it may be to say this, Pakistan versus India is an essential component in what makes cricket the beautiful game that it is. At the centre of this game are the men and women who play it and those that spectate, watching on as the sport toys with their emotions. Dizzying jubilation one day and abysmal horrors on other days. For all of them — the fans and the players who make cricket what it is, it is best for India and Pakistan to play more and for all teams to have an equal opportunity. Such utopian dreams, of course, are just that — dreams. But a first step in the right direction is not the worst idea in the world. n

Ammar H. Khan OPINION

The futility of price caps

Afew days back, a few dozen milkmen were jailed because they were selling milk at a price which was higher than what was mandated by the district administration in Karachi. In a saga spanning the last few weeks, there has been a shortage of Panadol which is the most generic of medicines, triggering a potential healthcare delivery crisis.

The city pages of newspapers, and social media feeds are loaded with assistant, and district commissioners doing rounds of various markets to check whether prices at which products are being sold are at the mandated price or not. About a decade back, the Supreme Court gave a verdict regarding the price of a humble samosa. The government machinery, from the assistant commis sioner, right up to the federal cabinet, and the Supreme Court likes to have a say in how prices are set.

The incessant fetish with controlling prices has created a market structure wherein there is no market, because there is an expectation that some government body, or functionary somewhere will intervene and distort market structure. In such a scenario, it makes more sense to be a rentier, rather than be market competitive.

The underlying behavior of incessant intervention is rooted in the overconfidence of government functionaries of being able to control things. The overconfidence that the wisdom of administra tors is superior to the wisdom of markets has sadly been disproven time and again for thousands of years. But it is yet to be under stood by those who undermine the wisdom of markets, and cannot

fathom how supply chains are complex dynamics that can’t be fixed by administrative measures.

In the case of milk prices in Karachi, the increase in cost can largely be attributed to livestock losses due to floods re sulting in constrained supply, resulting in higher retail prices. Even higher input costs, and second-round effects of inflation results in a soaring cost of production, resulting in an inflated retail price. The inability of administrators to understand how supply chains work creates more problems instead of solving the ones that already exist. By mandating a predetermined fixed price, they create incentives for the development of a shadow market. To conserve margins, milkmen can simply dilute the quantity of milk, and load it up with various chem icals. The price certainly gets fixed, but the product quality goes down substantially. Similar results can be seen for prod ucts across the board, without fail, whenever the government tries to fix prices.

In the case of pharmaceuticals, an arbitrary decision now requires that the price of medicine be fixed by the federal cabinet – effectively micromanaging prices. Due to such distortionary pricing regimes, there has been an exodus of pharmaceutical companies from the country. As the exodus continues, the unintended consequences include a lack of knowledge transfer, and potential shortage of medicine, even tually leading to greater and more costly healthcare imports. A pricing policy driven by administrative whims has never served any economy well.

In the case of energy, price caps for decades have led to creation of such a distortionary market that efficient allocation of energy remains a distant dream. We have wasted previous domestic energy resources, while relying on high-cost imported energy. Even when we import high-cost energy, we provide ridiculous amounts of subsidies such that to not rock the boat, and continue to encourage inefficient resource allocation, and utilisation.

The writer is an independent macroeconomist and energy analyst.

The government and its functionaries instead of fixing prices should focus on developing and sustaining an enabling infrastructure: Policies that encourage investment, and more competition. As competition increases, prices eventually go down, and there is better value for the consumer. But such an infrastructure requires deliberate thought, and the ability to give up on administrative control, which at times is often a source of an ego boost. The decision is pretty clear; we can either enable growth of the economy, a competitive market, and welfare for consumers, or we can feed the egos of administrators that are a relic of the past, and can safely be described as a colonial hangover. n

Tea’s iron grip

Tea’s dark past can only be eclipsed by its very apparent potential

By Abdullah Niazi

Allyou can see for miles and miles is the thick, green, garden acreage grown on hilly terraced fields. The tea-gardens of Mansehra, much like tea-gardens all around the world, seem almost ahistorical. As if the plantations have been a part of the landscape since antiquity. Yet the breath-taking sights of tea-gardens hide a grim past, and a squandered opportunity.

Tea is not sown in the ground and harvested each year. Underneath the charming green leaves that make up these fields are thick, gnarled, trunks. In their natural state, tea trees have been known to grow to heights of 50 to 70 feet. When planted in the fields so close together, they rarely reach over four feet, making tea-gardens a vast forest of miniature trees. The average tea tree needs to be at least three years old before its leaves can be harvested, and lives up to the age of 30 to 40. Every year between March to December, these dwarfish trees sprout leaves that are then harvested by men and women wearing straw baskets on their backs. At the height that they stand, it is back-breaking work.

Behind the development and cultivation of these gardens is a painful history. These fields are not an ahistorical part of the landscape as they seem. And while the regions where tea is grown often become synonymous with the gardens, such as Mansehra in Pakistan or Assam and Darjeeling in India, tea gardens emerged at a particular historical moment.

Today, as a result of that historical moment steeped in a legacy of colonial gluttony and hubris, India is the second largest producer of tea in the world with an output of 0.94 million tonnes produced out of 0.389 million hectares (ha). Of the massive amounts of tea it produces, India consumes 70% of its tea itself. In comparison, according to a report of the Planning Commission, tea is cultivated at an area of about 100 ha only in promontories of District Mansehra under Unilever Brothers Sup port with production of about five tonnes. Yet Pakistan is also

the world’s largest importer of tea, spending Rs 90 billion every year to import tea, with Rs 89 billion spent on black tea and Rs 1 billion on green tea. Could we be growing more, and more importantly, should we?

A question of fate

As beautiful and eternal as they may seem, the tea-gardens of Mansehra are a relatively new set-up. Its origins go back to 1982, when a feasibility report was prepared by a team of Chinese experts, which declared more than 64000 ha land suitable for the desired purpose. This study found a number of areas suitable for tea cultivation, including some parts of Swat and Azad Kashmir. But the star of the study was the hilly terrain of Mansehra. It was after this that a government backed tea-growing initiative was launched in the district.

While these may be the origins of tea growing in Mansehra, the seeds for this were sown even earlier. In a speech delivered to the Indian Tea Association in London, Arnold Whittaker explained how tea had originated in China in the ninth century, where over the centuries an impressive volume of literature on the growth of the plant and the technique of tea drinking had been written. However, as he explained in his speech, the dominance of the China tea industry had two unfortunate effects on the development in India. The first and more important of the two is the fact that the East India Company had the monopoly of the tea trade with China which caused the compa ny to discourage any tea venture in India.

However, in 1813, parliament curtailed the company’s powers and started playing a more direct role in the administration of British interests in India. In 1834 Lord William Bentinck, who had been appointed Gover nor-General in 1827, appointed a committee to submit “a plan for the accomplishment of the introduction of tea culture into India and for the superintendence of its execution.This was just a few decades before the British would overthrow the 1857 War of Independence and annex India under crown rule. By the time this happened, the British realised that they had more direct control in India than in China and the growth of tea in the subcontinent grew exponentially so that the demand for the warm drink could be met back on the island.

Now, tea was already grown in India on a small scale by the time the British started. Whittaker in his speech mentions how “as early as 1815 a British officer named Colonel Latter had reported that certain of the hill tribes in North-East Assam made a drink from wild tea growing in the hills. In 1823 Major Robert Bruce took a trading expedition to Sibsagar and found wild tea, and in 1825 this Society of Arts offered a gold medal - or fifty guineas - “to

the person who shall grow and prepare 20 lb. of good quality.”

In the years that followed, the British were determined and empowered. Assam was the first area to be developed, and was fol lowed by planting in the Himalayan foothills in 1842, in the Surma valley in 1856, in Darjeeling during the next two years, and by 1874 in the Western Dooars. In South India commercial planting had begun in 1853, but development was slow here and nearly two-thirds of the total acreage under tea was planted after 1900. By 1949, two years after partition and at the time Whittaker gave his speech, India was producing a total crop of 600 million pounds annually, nearly half of which was being ex ported to England.

The rapid rise of India as a tea-growing country was a testament to the ingenuity and grit of the British colonists. However, they managed to achieve this at a great cost to local communities. According to Anirban Bhattarcharya, the formal abolition of slavery in the west was neatly replaced with the rise of plantation empires in the colonial peripheries of India, Ceylon, Malaysia, Sumatra and so on. “Entire plantation societies or plantocracies mushroomed in these areas, all more or less in the same period; spanning the latter half of the nineteenth century and becoming an insepa rable part of colonial economies by the turn of the century,” he writes.

The British approached the project with a vicious dedication. As early as 1840, ‘wastelands’ or ‘virgin lands’, were handed over ‘revenue-free’ to planters for tea in Assam, Darjeeling and eventually in the Duars. Yet the racist and belittling ideology behind the colonial project was apparent. Wasteland rules in Assam were made and amended with

the express purpose of encouraging foreign enterprise (read planters) to lease vast tracts of wasteland on exceptionally liberal terms. For instance, a clause was incorporated in the rules of 1838 to the effect that no grant was to be made of a lesser extent than a 100 acres. The objective behind fixing such a high minimum ‘was to keep off indigenous claimants.’ In fact the minimum eventually was raised from 100 to 500 acres. And as was desired, these concessions did lead to the utilisation of large tracts of land for the purposes of plantations.

There are tales of British ingenuity that made this transformation possible, but it was all tied to and propelled by the needs of the emerging tea industry. “Transformations in this region, for instance, involved its forests and its grazing lands – resources upon which depended the lives, customs and livelihood of the local population, particularly the indigenous tribes. Forest rights and grazing rights were especially affected which were bound to have far reaching implications for the region and its landscape. Ultimately they were in direct contravention of the subsistence needs of the local populace,” writes Bhattarcharya.

Pakistan’s tea

Overthe course of a century, from the 1850s all the way down to partition, tea thrived in India. It became a major source to send back home from the empire, and it also quickly became a popular drink in the subcontinent. While it was grown largely in Assam and other hilly areas as well as in South India, most tea plantations remained largely in what would be India after partition, with Pakistan getting none of the major tea plantations.

An ancient wild black-tea tree

However, a taste for tea had already been acquired in the areas that would become Pakistan, and that meant the new state would have to import tea from either India or Sri Lanka to make up for its demand. One of the many gifts of the partition was that there was suddenly a country with a very large appetite for tea but no capacity to grow tea. One of the major companies operating the tea business in Pakistan at the time was Lipton, owned by Unilever and Brooke Bond, another British tea company. The first major local tea company to start off in Pakistan was Tapal, which came to life shortly after Partition in Jodia Bazar in Karachi, where the Tapal family began their tea business: Importing tea from Sri Lanka and then selling it wholesale in the markets in Karachi. Jodia Bazar is, to this day, one of the largest wholesale markets in Pakistan. It helps that it is located just a few miles from Karachi Port and is located in the city that has the single largest concentration of the Pakistani urban middle class.

The hunger for tea was big in Pakistan. The store in Jodia Bazar soon grew as Karachi went from being a relatively minor city in British India to becoming the largest city in Pakistan. The tea business outgrew the store and began marketing itself far beyond the retailers and occasional consumer buyers who would come to the store. Tapal grew because the demand for tea grew, however the entire tea business in Pakistan was dependent complete ly on imports.

As the earlier mentioned report by the Planning Commission mentions, after the feasi bility study conducted by the Chinese experts, the government of Pakistan started tea cultivation in District Mansehra in 1986 through the establishment of Tea Research Station at Shinkiari. Simultaneously, the private sector and the provincial tea development cell of KP also started tea plantations in 2001 in District Swat. For processing black tea from the raw

material, a tea processing unit was installed at National Tea and High Value Crops Research Institute (NTHRI), Mansehra during 2001.

During the same year the private company Unilever Brother Pvt. Ltd also installed a black tea processing unit at Shinkiari, Mansehra.

The initial response was favourable. From 1998 to 2006 NTHRI, Unilever Brother Pvt. Ltd and the provincial Tea Development

Cell of KP made plantation of tea at an area of 869.97 ha in Mansehra, Battagram and Swat.

But continued support from the government was sparse; tea growers mostly uprooted their tea gardens in Swat, Batagram and Mansehra and some tea gardens were confined only to Mansehra at an area of 100 ha under Unilever Brother Support which is where Pakistan’s current tea cultivation status lies.

The issues that the farmers faced were typical. During the initial days when the government was promoting growing tea, farmers were interested because the federal and provincial agriculture departments were providing nursery plants free of cost along with inputs to the interested growers. As soon as these schemes ended, interest faded out as there was very little margin between growers’ production cost and revenue.

The growth of tea proved to not be profitable in Pakistan because the price of plucked leaves (raw material for black tea) at Rs 46/kg is much higher in Pakistan than

that in the international market i.e. between Rs 20-22 per kg (Unilever based at Mansehra). Pakistan could have become competitive with the international prices by bringing maximum area under tea cultivation (at least 10000 ha), introducing value addition and taking cost reducing measures at all the segments across the value chain. However, this would have required continued political patronage for a while which was missing.

Pakistan gets only 40% of the world average yield. Although the net price at farm gate is higher in Pakistan at Rs 46 per kg as compared to that in India and Bangladesh at Rs 22.90 and Rs 27.0 per kg, respectively but the net return per ha in Pakistan is low at US$1360 compared to international US$1600 due to low per ha productivity.

Last year in August, the government had announced its intention to pursue tea plantations on a commercial scale by planting tea on 1000 hectares in KP, particularly in Mansehra. The plan was launched on the recommendation of Chinese tea experts, the National Tea Research Institute (NTRI). The same body was set up on 50 acres of land in Shinkiari in 1986. Out of the proposed 25,000 acres of land, 10,000 are government-owned forests, 12,000 acres are private land where the Forest Department has planted forests while 3,000 acres of land have been identified in Azad Kashmir.

The plan is ambitious, and the govern ment pointed out how the country has 178,000 acres of tea cultivable land. However, getting even 1000 hectares of this land up and running for tea production would be a tall order. If successful, it could be a start to becoming self-reliant in terms of tea like India. Until that happens, however, every cup of tree we drink in this tea-obsessed country has to be sourced from outside its borders. n

Th gnarled stump of a tea tree in a plantation that has been half harvested

By Taimoor Hassan & Ariba Shahid

Forthe past two years, Dr Umar Saif of PITB fame has been sending out teams to recruit marriage consultants. The marriage bureaus or rishta aunties are told they will get a chance to reach a larger audience for their business and wil be able to work through an app. In these two years, Dr Saif’s team at Dil Ka Rishta, an up-and-coming matrimonial services app, estimates that there are nearly 33,000 marriage bureaus in 210 cities in Pakistan, of which at a certain time 13,000 to 14,000 bureaus are active. By recruiting many of these bureaus, to their app app, they have managed to put in a total of 520,000 profiles

This is the closest thing to a tech disruption in the wedding industry. For one second, step back and appreciate the size of the wedding industry. In Pakistan alone, a single wedding involves so many different sectors, trades, and smaller industries that it ends up taking a small army to manage two to three days of festivities. From wedding halls to jewel lers, caterers, card printers, florists, and tailors all the way to the little details like mehndi add up creating the dangerous, monstrous, wedding industrial complex.

In the United States, it is worth upwards of $60 billion. In India, a 2016 KPMG report titled Market Study of Online Matrimony and

Marriage Services in India estimated that the Indian wedding industry is worth about INR 3.68 trillion. Since it is largely informal and undocumented industry, there are no real estimations as to its size in Pakistan, but ballpark figures suggest it is worth hundreds of billions of rupees.

Yet this industry does not operate like others. It has no associations to protect its interests, yet it is surprisingly powerful. During the pandemic, wedding halls openly flouted government lockdown orders with half-baked measures with impunity. It is also one of those rare industries that does not go to the govern ment to promote their trade. Mostly because weddings are going to happen as surely as funerals, and people are going to spend on them.

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. The business is inextricably linked to a very common human experience (getting married) in a culture that places a high value on the ostentatiousness of weddings.

The scale of the industry is gargantuan. And whenever there is a big kahuna in town, the one thing you can bank on is that there is someone out there thinking they have the next great startup idea that will disrupt the indus try. And Dil Ka Rishta is not alone in this hope. Applications like Muzz, a UK based Muslim matrimonial website, has also found its way to Pakistan and has made quite the buzz. The question is, will these apps succeed?

They are targeting one very small segment of the wedding industry: the set-up. In one way, it is disruptive since the traditional idea of meeting a partner is to meet them through family. But on the other hand, matrimonial services have existed for a very long time. Since the late 17th century, advertisements for ‘mailorder-brides’ were a regular feature in American newspapers up until as recently as the 20th century. In Pakistan and India, matrimonial ads continue to appear in newspapers with families looking for rishtas for their children. And this trend shifted to the internet almost immediately with the advent of the internet.

Across the Rubicon, things are a little different. There are not matrimonial websites

but rather dating apps like Tinder and Bumble. In Pakistan, while Bumble is operational and Tinder is banned, these are mechanisms for casual dating and not matrimony.In India, JeevanSaathi.com, Shaadi.com and BharatMatrimony to name a few have been able to rake in millions of users and have ended up becoming multimillion dollar businesses, with more users than dating apps. For instance, Shaadi.com ad vertises that it has 35 million verified users on the platform, though the trend of dating apps is rapidly on the rise as well in India. Until July 2020, according to Hindustan Times, Bumble had crossed 4 million users in India.

Pakistan has the most cultural similari ties with India. And if matchmaking businesses have been able to grow in India, chances are that matchmaking apps in Pakistan will be able to grow rapidly here as well. Once again, it would be the old against the new. Two new players have entered the market. On the one hand there is Muzz and on the other there is Dil Ka Rishta. Both are matrimonials. Both claim to bring something different to the table. Both are grappling with religious, social, and cultural barriers. And both are hoping to tap into the massive pool of money the wedding industry is sloshing around. But will they succeed?

Those damn billboards.

Youwouldn’t think any company call ing itself a startup would be spending the big bucks on marketing these days. If anything, all of our startups have really had to tighten their belts on the marketing budget. Yet scores of billboards of matchmaking apps have started popping up in major cities like Lahore and Karachi. Commer cials are being aired on mainstream channels by one of these apps to create awareness - mostly unprecedented for the now (temporarily) bogged down startups and internet companies in Pakistan.

Yet for all the talk of disruption, the wedding industry is one place where these new entrants seem to be bowed, bent, and broken by the weight of cultural implications. On the one hand we have the presence of a number of dating apps which are majorly not focused on marriage thereby presenting a threat of disrup tion. On the other, we have the rising matchmaking apps focused on marriages in a culture that cherishes marriage over dating.

The two new entrants we have are Muzz and Dil Ka Rishta, both of them billed as mat rimonial apps not dating apps. Yet both of the companies have their own unique take on the proces. In a country like Pakistan, the search for a suitable candidate for marriage is your parent’s job to initiate. Muzz falls somewhere in the middle, that it allows individuals to initiate the search for finding potential marriage

partners, of which other family members can be chaperones in this search on the app, though it is optional for the persons using the app to allow any chaperones.

Dil Ka Rishta, on the other hand, is on the more traditional end of the spectrum. It is entirely focused on promoting the institution of marriage, promoting the way it is culturally done, with a touch of technology to create con venience and open it up for mass adoption. It is also that way less disruptive for the traditional business models of matchmaking.

So you want to find a partner

categories, ones that want to make this decision on their own and the ones that rely on family to do it for them, have either been finding someone in their own network or get to dating apps like Bumble in the case of the former, and marriage consultants in the case of the latter. Statistics with regards to matches leading to marriages on Bumble would be unavailable since the company focuses on connecting dates only.

“Dating

apps like Bumble have given rise to the hookup culture in Pakistan more than dating culture,” said a female candidate interviewed for this piece. The open unacceptability of these apps because of the culture they promote also leads to people not disclosing their marriage even if they happened on Bumble.

“Most of the people think that dating apps are all fun and games but they can be made to work in any way one wants. They can also end up in meaningful relationships. Women need to do their due diligence on these apps, which they should do anyway,” a female Bumble user on the app told Profit, requesting to stay anonymous.

While this points towards the willingness of users, particularly women, to use dating apps for the purpose of finding a partner for marriage, it particularly highlights an important issue in matchmaking: the issue of reliability, trust and security when it comes to finding a partner and hence the need to do due diligence. This is followed by a layer of considerations with regards to preferences for a partner, for instance their income and qualifications.

It is primarily because of issues related to reliability and trust that a culture of marriage consultants like rishta auntys or bureaus exist in a localised setting. These consultants have a network of families that would be looking for suitors for brides to be, or vice versa. These consultants, through their network and word of mouth, recommend suitable candidates for mar riages keeping in mind the cultural nuances and preferences of a family. In other words, these consultants would do the due diligence for the respective families first and then forward their recommendations based on their preferences.

It is because these consultants have to always keep a network and know people, they are very localised.

It is where candidates do not want to remain bound by the restrictions of culture and when they are financially empowered, they want to make the decision of finding a partner on their own. Till now, the options for both

Dil Ka Rishta, which has at its helm the very prolific Dr Umar Saif, who has previously founded market intelligence firm SurveyAuto and had remained the chief of Punjab Information Technology Board (PITB), started off by partnering up with the very marriage consul tants that some other apps are planning to disrupt. It is exactly because the overwhelming majority of weddings in Pakistan are under stood to be arranged marriages because of the religious and cultural nuances of the Pakistani society, the status quo has been personal networks or the marriage consultants, and dating apps have not really taken off.

Dil Ka Rishta, while it has now been creating the buzz with tall billboards and TV com mercials recently, had been silently recruiting the status quo on the app. For a conservative society, Dil Ka Rishta’s beginning is also very conservative. The process of signup on the app had been restricted to consultants until only recently and with consultants, the profiles are submitted by family members.

For the last two years, Dil Ka Rishta had been sending out teams to recruit these mar riage consultants and as Umar Saif tells Profit, there are nearly 33,000 marriage bureaus in 210 cities in Pakistan, of which at a certain time 13,000 to 14,000 bureaus are active. Of the total bureaus on the app, Umar Saif says that they have put in a total of 520,000 profiles of can didates looking to get married. In the last two years, the platform had over 1,000 successful marriages that were consummated through the Dil Ka Rishta platform.

“These weddings culminated under the B2B model of the business where consultants connect with consultants to connect people for marriage,” says Dr Umar Saif. The number of marriages, he says further, is small in the beginning because the app has been around for two years only for the B2B model and the process of getting married only starts with connecting through the Dil Ka Rishta app. From connect ing first to culminating into a marriage can be a very lengthy process.

Dil Ka Rishta has started accepting individual users to come on the app and find suitable matches for the intention of marrying. The matchmaking can be done with profiles of individual users or with profiles of marriage consultants. But it is really the protocols that make Dil ka Rishta a purely marriage app. It collects the information that are the considerations of families for any marriage: for instance

caste, religion and sect of the person looking to get married and matching with the caste religion and sect of potential partners are informa tions that even Muzz does not collect.

Individual users start off with a trial for a week during which Dil Ka Rishta sends rec ommendations and profiles to the user based on his/her preferences. The app has an automated recommendations setting whereby it tries to match users with candidates that should ideally be the right match based on the candidate’s profile. The algorithms behind the app would automatically recommend a graduate level male or female and not a PhD for someone who has a graduate degree only. While this can be over ridden on the app, the idea is to generally nudge candidates towards more realistic choices. Connects are initiated based on permissions - a feature of dating apps like Bumble as well that empowers a female to initiate a chat with a user and not males.

To clinch it completely, Dil Ka Rishta sends a verifier to the person’s house creating a profile for marriage to verify their credentials. All these protocols reduce the instances of Dil Ka Rishta being used as a dating app.

The UK-headquartered Muzz, which brands itself as an app for marriage, has also deployed some protocols to create a safe and respectful environment for finding a suitable partner for marriage. For instance, permissions are sought to connect, and chaperoning is allowed on the app albeit optionally. Preferences for a partner are asked and the app specifically asks when someone wants to get married.

“The heart of what we are trying to do is empower the young person, a single Muslim, to find a partner on their own terms. The Muslim faith is the foundation,” says Shahzad Younas, the founder and CEO of Muzz. But because these controls are loose, Muzz app has also been used for dating and not strictly marriage, according to Profit’s conversations with some of the Muzz users.

While Muzz acknowledges that startups are trying to disrupt in a good way, they say that Muzz is providing an affordable alterna tive to make marriages happen for Muslims. As mentioned above if you do not have a network and have to go to a marriage consultant, they can charge you a pretty penny for making a marriage happen with a suitable candidate, and wouldn’t be considerate of your financial health. Alternatively, Muzz, which follows a freemium model where you can use most of the service for free and pay for value added services, 90% of the users that have made it to the marriage stage have never paid a penny to Muzz.

“They come and find a partner and leave and don’t pay a penny. We are happy with that and that is the core principle of the company that you should never have to pay to find a

partner,” says Shahzad Younas.

In that way, Muzz is disruptive for traditional marriage consultants. And it has some numbers to prove that they have been able to present Muzz as an affordable alternative: they have had about 4,000 self reported marriages in Pakistan, between people for whom the journey towards getting married by connecting on Muzz. This also points towards a trend, which according to Shahzad is one that points towards the death of conventional businesses anyway.

Is Muzz really a great business too? Its not focused on making money just yet. And while, Muzz has been in existence for the last eight years, they have raised only $9 million so far in funding, but say that as a business, they

are financially very very sound.

On the other hand, Dil Ka Rishta is currently free for consultants and charges a small amount to individual users after a week of free trial, but is looking at an opportunity to make big money from the roughly Rs120 billion marriage consultancy market, by charging a cut of its own to users for providing the services of a marketplace for matchmaking. While it does not currently make much money in its initial days, it is backed by Khudi Ventures, which Umar Saif says is backed by people who have “patient capital” to deploy on big problems that can be solved through technology and is hence able to foot the bill of massive advertisements on billboards and TV commercials on mainstream channels.

Do we need to regulate these apps?

By Abrahim Zaka

To be clear about one thing, the halal dating/matrimonial apps market business follows a for profit business model. The way matrimonial apps make money is to initially allow prospective Romeos and Juliets to use some basic features of the app. To actually send messages or see photos they have to upgrade their accounts and subscribe to their premium service. There are customer benefits to paying, one is that if someone pays for the app he or she is most likely serious about using it and unlikely to be a fake account. For the app provider it is their revenue in addition to any in app advertising they might allow.

Furthermore, the halal matrimonial app market is not solely catered to by companies that are religiously motivated. As mentioned about Muzmatch, you can choose to be halal or not. Likewise, not all the popular Muslim matrimonial apps are owned by Muslims. Consider Muslima.com, an app with over 1 million downloads according to Google play store. Muslima.com is owned by Cupid Media which is in the business of dating apps. Their motive is purely profit and they do not have any greater ideological calling for being in the halal dating app market.

Online matrimony is a thing to stay and the trend is growing globally. According to PEW research about half of the US population has used an online dating site or application. This figure increases to 65% for unmarried Millennials. Moreover, about 12% of American marriages currently take place between people who met online. Furthermore, the PEW data shows that women receive more messages than men do.

There is, of course, a darker side to this whole thing. A few key issues are men tioned, namely, lying, fake profiles set up for scamming victims, harassment and data privacy concerns. Harassment includes stalking, name-calling, being sent inappropriate images and the threat of physical violence. To deal with the dark side of matrimonial/ dating apps there exists the FIA cybercrimes wing. But the PTA could also step in and closely work with app owners to control such incidents. Such incidents are not limited to non-halal dating apps but also have been documented by the Metro newspaper in the UK for halal matrimonial apps.

Overall, the PTA needs to regulate apps. However, a myopic vision and only focusing on the grey area of morality of content is probably not the best strategy given that there are more pressing issues. Possible fraud, fake profiles, and stalking are potentially more serious issues that need to be addressed with matrimonial app providers. In addition, the Pakistan constitution enshrines the sanctity of marriage, so blocking matrimonial apps that may have dual purpose uses is probably not the best strategy, after all if that were the case other dual purpose products such as kitchen knives would have been banned long ago in Pakistan.

By Shahab Omer

RiverEdge sounds like a serene place in England, nestled by a flowing blue river and on a land populated by forever green foliage. It isn’t. It is, in fact, a highly contested and controversial housing society located along the wide and very industrial-looking Multan Road, a little further from Thokar Niaz Baig. The object of much hope and some excitement, the project is not known as River Edge anymore, but has expanded onto the riverside, and on agricultural land owned by the government.

At the beginning of the 2000s, this area of Multan Road and Ferozepur Road was becoming very attractive for new housing societies. The population of Multan has been booming and people have been optimistic about moving to new housing societies and

have more space around their homes. The River Edge housing society was kickstarted as a project by a developer named Ammar Khan in 2004. Two years later he got approval from the Lahore Development Authority (LDA) to begin his work. At that time the total land owned by this society was approximately 765 kanal as per documents.

When questioned about the project, LDA officers are unwilling to talk about River Edge and are afraid to go on record because now the owner of the society is not Khan anymore. After much pressing, an LDA official who wishes to remain anonymous agreed to speak to Profit.

According to this official, a company named Vision Developers Private Limited, owned by Abdul Aleem Khan, bought River Edge in 2010 and immediately renamed it Park View Villas, another wonderfully evocative name.

“There’s no harm in changing the name

but for this it is necessary to take a legal procedure and get approval from the LDA. It is not that the LDA did not receive requests regarding the name change, the paperwork was complete but the said society could not get approval because it was the era of PML-N,” said the official.

He also added that Aleem Khan had a lot of influence in the LDA and that the officers were both eager to meet him and work for him in some capacity. “Aleem Khan… had been the provincial minister for information technology in the Musharraf regime, in 2008, he was also an unannounced and unwritten owner of an Urdu daily and he is a big name in the real estate world. Even today, if no officer in LDA speaks against Khan, one of the reasons is that his operatives fed LDA officers and clerks a lot.” The fact that despite being influential he was unable to get approval, is of course, testament to the lack of planning by Khan’s own people.

So then what is the official name of the project? Nobody seems to have any clarity. And if this was the only problem we could have moved on from here. But there is a lot more.

“If the issue was only about changing the name of the project, it might have been resolved 10 years ago, but here the issue was shifting the project to the riverside and on some government land which included agricultural land in the area. No government officer can help anyone in such cases,” said the official.

According to him and other sources in the industry, in 2012, Vision Developers requested the LDA to extend the project in the Revised Master Plan of the Authority. “Since the said housing project was also including agricultural land in the project area, the LDA refused to extend it.” Next, Park View Villas presented its case to the then Secretary Hous ing Punjab who also made it clear that the said project is being built on a green area according to the LDA master plan of 2004, which by virtue of being old and later revised cannot be allowed. “It should not be extended even an inch beyond 765 kanals,” he said.

Sources state that the LDA considered going to the police to file criminal cases against the project. Park View Villas bought and sold plots without the approval of the LDA and didn’t stop despite advertisements published by the authority in various newspapers against it in the year 2012. Now, 10 years later, the sto ry is still gaining momentum. In a recent press conference, Mian Aslam Iqbal, senior minister in Punjab also responsible for housing and urban development, said that stay orders were issued but despite these “Aleem Khan continued to develop his housing society illegally.” He added that “the LDA has issued 17 notices to his society from 2010 to 2022.”

Iqbal showed copies of these notices to journalists in the press conference and said that Aleem Khan continued undeterred, some times naming his project Park View Villas, sometimes Park View and sometimes Park View City.

“An LDA director, wishing to remain anonymous later wrote a detailed response which is still part of court proceedings, stating that Park View was selling land to

people and siphoning off money without having the authority to develop even an inch. In the year 2012, when LDA took action against Aleem Khan’s society, Khan’s people opened fire and at the same time a deputy director of LDA left the country out of fear. An FIR was also registered for the entire incident, which was later settled,” the minister added.

“There has been an overselling of 10 to 15 thousand plots in this society,” he said. “All constructions on such land are illegal. LDA has issued about 13 advertisements against them in newspapers from 2012 to 2022 saying that it is an illegal housing society and the investor will be responsible for his own loss,” he said, adding that “in this project, people have built houses inside the riverbed, which is a place where floods occur.”

It was also revealed during the press conference that previously, Aleem Khan had grabbed 55 kanals of the Irrigation Depart ment’s land and included it in the Park View project. This land has been retrieved though. Furthermore, despite the many legal challenges it has faced, the housing society has managed to operate with such impunity that it is now one of the major sponsors of the Pakistan cricket board. “Overseas Pakistanis are affected by such fraud and marketing stunts, and invest with such people. What will happen to the poor person who has taken a two-marla or three-marla plot in this housing scheme? This project is a scam of more than Rs 50 billion. Now that the area has come under the domain of Ravi Urban Development Au thority (RUDA) and when the authority took action against them, their armed men tortured government staff,” he revealed.

What happened between RUDA and Park View?

The spokesperson of RUDA said that on September 26, the authority had launched an operation to take action against all illegal housing

REAL ESTATE

Aleem Khan continued to develop his housing society illegally. The LDA has issued 17 notices to his society from 2010 to 2022

Mian Aslam Iqbal, senior minister in the Punjab Cabinet

According to RUDA’s Master Plan, housing societies which are illegal will not be approved. A case has been registered against the goons who attacked the RUDA employees and they will be dealt with iron hands.

Imran Amin, CEO RUDA

schemes within its limits.

“When our teams launched an operation against Park View in Mohalinwal area (which falls under RUDA’s domain), our teams were prevented from working. Later, the Park View management instructed their goon elements to attack our team; more than 100 people attacked the RUDA team and the assistant commissioner, took them hostage and then subjected them to severe torture,” he said, adding that 10 employees were serious ly injured while the driver of the assistant commissioner was rendered unconscious due to head injuries.

Despite these fear-inducing tactics, CEO RUDA, Imran Amin stays firm. He said that no individual would be allowed to challenge the government writ. “According to RUDA’s Master Plan, housing societies which are illegal will not be approved. A case has been registered against the goons who attacked the RUDA employees and they will be dealt with iron hands,” he said.

RUDA’s sudden action against illegal housing societies has been met with surprise. In recent meetings held by Profit, CEO RUDA has repeatedly said that illegal housing societies will be given opportunities to seek approval from the authority. No action was taken by RUDA against illegal housing societies for the last three years, and there are more than 74 illegal societies in its domain. Action should be taken against everyone but if operations against these societies are on the basis of political distinction, then nothing can

stop the cropping up of illegal societies.

An official of Park View Housing Society said on condition of anonymity that the action taken was purely political vendetta.

“The system of getting approvals for societies is outdated. Developers have to pay bribes worth millions of rupees to LDA. If this project was illegal then why wasn’t ac tion taken when Aleem Khan was part of PTI. PTI was in power in Punjab for more than three years, so why was such an operation not conducted against us,” he asks. “No one is questioning the credibility of those conducting this operation,” he lamented further.

Park View Society has remained silent throughout. No one officially seemed ready to comment on the issue, however, former member of the Punjab Assembly, Shoaib Siddiqui, held a press conference to explain the position of the Society and state that 762 kanals of land were approved by LDA. Siddiqui said that the first phase has been approved; the permission of the second phase is being sought and more than 4,000 homes have been constructed. “We will continue to develop Park View with our partners. It is being maligned because it is giving millions of rupees to the landlords. You [Aslam Iqbal and RUDA] cannot turn off Park View using these methods. We will protect every penny of Park View’s millions of members and fight in courts for the rights of landlords and farmers,” he stated emphatically.

Siddiqui said Iqbal started the operation illegally. “Iqbal sent the police in the

dead of night, cameras were broken and workers were abused. We have taken the matter to the court and will ask the High Court why this operation was done after the prohibition order.” Iqbal took the bulldozer on the request of a fitna [Imran Khan], said Siddiqui, and started demolishing the society. “This is political revenge and Imran Khan is worried about who will run his expenses?” he said.

Has the Park View Housing Society market petered out?

There is no doubt that the recent action of RUDA and the press conference of the provincial minister has had a profound impact on the housing society market. At the moment, sellers of Park View project files are hiding from customers. A property agent selling files for the project told Profit that he had been off work for the past week and was at home.

“I don’t know if the project was legal or not but I know for sure that whoever I sold the file to got the plot. Now people are talking about all kinds of things. They are asking us questions and many people want to get their files back. From the day RUDA took action on the project site, our files are closed for purchase and sale,” he said. n

Iqbal sent the police in the dead of night, cameras were broken and workers were abused. We have taken the matter to the court and will ask the High Court why this operation was done after the prohibition order

Shoaib Siddiqui, former member of the Punjab Assembly