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CONTENTS

09 How to get away with defying the Competition Commission 12 Pakistani policy is being made on faulty data: can we fix this?

16 16 Will retailers accept revamped PoS machines? Chikoo and Bank Alfalah seem to think so 19 Is the caretaker government about to compromise Pakistan’s agri exports? 23 Telenor finally packs up shop from Pakistan, what all will change?

25 Saudi Aramco acquires 40% stake in Gas & Oil Pakistan Ltd. (GO) but why?

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28 Maintaining a good Image

How to get away with defying the Competition Commission An energy drink manufacturer jolts the CCP with legalities, but this was not the first time the CCP is challenged

By Shahnawaz Ali

t all started with two bottles of energy drinks that looked kind of similar. Suspiciously similar, thought the makers of one of the bottles. Intentionally similar, in fact. With the intention of confusing shorton-time, unsuspecting consumers, enough for them to pick the other product up in a hurry. So the makers of Sting (Pepsico) went to the Competition Commission of Pakistan, against the makers of Storm (Mezan Beverages) and what followed was a five-year saga that still hasn’t ended. Stealing intellectual property such as design or packaging is a crime. It reflects poorly on the competitiveness of the market, and if proven, the accused can have to pay

heavy fines and strict punishments. But what if one can just kick the can down the road? Would they be reprimanded? Toying with the same idea is Mezan Beverages, whose story goes through the pits and falls of a legal war against the Competition Commission of Pakistan. Revealing, in process, the helplessness of the body responsible to ensure a competitive market in the country. In fact, we’re using the example of the aforementioned battling sodas just as a focal point to illustrate how a huge number of companies, across sectors, are using strategic stay orders from the courts against the CCP. At stake, other than general competitiveness of the markets, consumer rights, are also a whopping Rs. 68 billion rupees worth of CCP fines that aren’t being paid.

Har cheez Mezan mein!

he Mezan group is famous for its cooking oil and vanaspati ghee but in 2016, the company with its flagship drink called “Cola Next” ventured into the strictly guarded territory of carbonated beverages. In years to follow, Mezan Beverages would launch new fizzy drinks, some with novel flavours, while others with some “inspiration” from existing competition. Within its soft drink portfolio, Mezan came up with “Storm”. A red coloured drink claiming to give the drinker an electrifying energy. The idea isn’t unique. In fact most energy drinks claim to somehow manage to inculcate lightning, electricity or current into their marketing campaigns. However, according to one particular

competitor, not only was the idea not unique at all, it was a mimicry of the packaging of their famous energy drink brand.

The fight

his competitor was PepsiCo Pakistan and their drink was called “Sting”. When it comes to energy drinks within Pakistan, Sting is the undisputed market leader. With no considerable locally manufactured competition, Sting enjoys a significant pricing advantage. Not to mention its access to the best beverage supply chain network in Pakistan. In August 2018, PepsiCo filed a complaint against Mezan beverages with the CCP, accusing Mezan of deceptive marketing and mimicking Sting’s packaging. Prompted by the complaint, the CCP launched an inquiry into Mezan’s alleged involvement in deceptive marketing practices. On October 12, 2018, the company wielded its legal arsenal, filing a writ petition challenging the constitutionality of the Competition Act 2010 itself, under which Mezan was being investigated. This cast a two-year shadow over the CCP’s nascent investigation. What followed is a story similar to most of the cases against the CCP. Competing with the Competition Commission of Pakistan The Competition Commission of Pakistan was established as an independent regulatory body in 2007 under the Competition Act of 2010. Its primary mandate is to promote and sustain competition in economic activities for the benefit of consumers, ensuring a level playing field for businesses and preventing anti-competitive practices. Amongst its many duties is the enforcement of the Competition Act and investigations of any violations thereof. Ever since the CCP has started going after companies, there have been quite a few questions asked about the competence, jurisdiction and statutory powers of the independent regulator. Coming back to the Mezan case, the writ petition under which Mezan obtained its stay was different. Along with many existing petitions, it challenged the CCP’s jurisdiction

to regulate competition, extending to all inter-provincial as well as intra-provincial matters. This also means that the constitutionality of the Competition Act was being challenged in this case. Even though the stay was vacated by the Lahore High Court, later in 2018, the writ petition of Mezan Beverages was clubbed with other similar petitions, by the Lahore High Court in which the constitutionality of the Competition Act was challenged. On 26 October 2020, Lahore High Court passed its judgement upholding the constitutionality of the Competition Act. The three-member bench of the Lahore High Court upheld the Competition Act to be constitutionally valid. All three judges of LHC found that Parliament has the legislative competence to enact a law on competition.In the same judgement, the LHC allowed CCP to proceed with its enquiries. June 28, 2021, marked a critical juncture in this odyssey as the CCP concluded its exhaustive investigation, finally wielding a show cause notice on July 7, 2021 issuing it to Mezan Beverages. Mezan found itself at the precipice of regulatory action. But instead of explaining itself, Mezan chose to do what it had done earlier. Kick the can down the road.

Stalled Justice

ezan pivoted once again, securing yet another legal sanctuary from the LHC on August 3, 2021. It obtained a stay order not on the constitutionality of the Competition Act. This time Mezan challenged the “show cause” notice under the writ jurisdiction of the Lahore High Court and obtained another stay order. A different matter, pertaining to the jurisdiction of the CCP for issuing show cause. As the business community watched with bated breath, the Mezan-CCP saga slowly became a cautionary tale, a mere narrative etched on the walls of Pakistan’s corporate history. In this chronicle, the ultimate resolution remains elusive till date, an enigma waiting to unfold, as Mezan and the CCP continue their dance. This is not the first time justice has been delayed at the CCP. One such famous example is that of Dalda foods. When the CCP initiated

an inquiry seeking information from cooking oil and ghee companies regarding pricing. Dalda Foods challenged this enquiry in the Islamabad High Court (IHC), resulting in the IHC setting aside CCP’s call for information letters and initiation of the enquiry. The IHC also imposed stringent requirements on CCP’s regulatory and enquiry powers. In response to this setback, the CCP took the matter to the Supreme Court of Pakistan in September 2023. The apex court, in a historic and landmark judgement, unanimously upheld the statutory powers of the CCP related to the initiation of enquiries and gathering of information.

Trapping the CCP in a legal labyrinth

he playbook was simple. Spin a web of legalities around the CCP, so much so that the real matter at hand gets lost in the labyrinth of constitutionality and inefficiencies in the justice system. The same technique was employed by Dalda when it went after the CCP’s statutory powers and the same technique is being employed in this case. Unsurprisingly, this is not even the tip of the iceberg. According to the CCP, a total of 559 pending cases scattered across various courts remain unresolved in the last one decade. This includes cases of various natures. The CCP has attempted to curb cartels and mafias and promote competition in various sectors such as sugar, wheat, cement, poultry, automobile, cooking oil, agriculture, oil & gas, ports, shipping, power, insurance, steel, and aviation. However, all of them seem to be aware of the playbook. According to the CCP’s data, 68 billion rupees in penalties across various industries is ensnared in this web of stay orders, not to mention countless delays in rightful proceedings, similar to the aforementioned story. Fines worth Rs. 6.3 billion in the cement sector, over Rs 11 billion in the telecom sector, over Rs 1 billion in electronic goods sector, Rs. 140 million in automobile sector, Rs. 300 million in insurance sector, Rs. 75 million to flour mills associations, and Rs. 44 billion in the sugar sector remain uncollected. Among the 559 pending cases, 170 cases are pending in the Supreme Court, where the constitutionality of the Competition Act, 2010 has been challenged in various ways. 210 cases await resolution in the Competition Appellate Tribunal, which is dysfunctional due to lack of appointment of Chairman Appellate Tribunal. Even after the Supreme Court has started taking notice of the matter like in Dalda’s case, a long way is to be covered before the presumably “bigger” players start coming under the CCP’s ambit. n

Pakistani policy is being made on faulty data: can we fix this?

Pakistan’s National Statistical System is nowhere near where it should be – with consequences for the country’s development

By Meerub Amir

magine this: you are a policy maker who decides you want to draft a policy which supports and helps employment opportunities for disabled people in Punjab. It’s a great cause and you’re excited for the impact it will bring. But when you sit down to draft the policy you find out there’s no way to draft any policy for this group, let alone a policy targeting employment opportunities, because there is no accurate record of the total number of disabled people in Pakistan. The truth is, if you’re actually a policy maker in Pakistan dealing with census data, you probably don’t have to stretch your imagination too hard for this scenario. And the worst part is, you also will not know what government organization to blame, or even how to gather the data yourself. How can you run a country if you don’t have any data about it? That is the question underlying all of the research presented in the State Bank of Pakistan’s 23-page primer titled “Pakistan’s National Statistical System”, as part of its annual report for fiscal year 2023-2024. The word ‘primer’ is key here: as the authors themselves note, “Pakistan’s statistical system is an under-researched subject, hence this special chapter is entitled as a primer. It undertakes a broad assessment of the country’s statistical system, and is not intended to be exhaustive in nature.” This lack of research is reflected in a myriad of ways: statistical reform is not a topic of consideration within economic discourse in the country, either in economic policy publications of the last decade in Pakistan, or in the charters of economy proposed by various policy research and advocacy organisations. And yet, precisely because it is so under-researched, this is in fact, the most exhaustive document thus produced by a government institution on the state of Pakistan’s statistics. The consensus is sobering; on almost every indicator, Pakistan is lagging behind its peers in the region, and setting back its own development goals by decades.

Why are statistics important?

efore we dive into Pakistan’s current statistical system, and its problems, it's important to understand why the SBP is flagging this issue to begin with. The truth is, raw quantitative data is a crucial indicator of a country’s developmental standards, but it can be further transformed into a tool for deep comparative analysis and impactful policy making.

The primer identifies three distinct ways that statistics are utilized for effective governance and development. First, as key building blocks for evidence-based policymaking; data is often used for mid-course corrections, policy calibrations, and impact assessment. Second, to disseminate market information and reduce asymmetries that leads to greater market efficiency and optimization, which is helpful for businesses in the country. And third, to catalyze competition at a sub-national level by providing means for regional comparisons by tracking performance against quantifiable targets, such as economic growth and unemployment. If you have better statistics, for instance, you can more accurately compare unemployment levels between different districts in Sindh, and thus create targeted policy improvement. Remember that hypothetical struggling policy maker referred to in the introduction? Let's bring them back and illustrate a real-life scenario of why statistics are important. A 2014 British Council report revealed that in 2014 Pakistan lost almost 6.3% of its gross domestic product (GDP) owing to the exclusion of persons with disabilities. The loss was also quantified to be an economic cost of $33 million per day– almost Rs 9 billion under the current exchange rate. Just a few years later, in 2017, after a nine-year gap, the Pakistan Bureau of Statistics (PBS) carried out the sixth population and housing census. Yet despite the approximate cost of Rs 14 billion and the deployment of 200,000 army personnel, experts held the census to be inadequate due to the absence of vital data on indicators – including disabilities.

Pakistan is losing out on a vital contributor to the economy – all because of a lack of effort for pre-census preparatory operations.

What is Pakistan’s NSS?

here is really no set definition of a National Statistical System nor a global consensus on its structure. That being said, an NSS is largely understood to be an ensemble of public sector organizations, ministries and departments of a country that jointly or separately collect, process, and disseminate official statistics. It can be highly centralized, such as in Canada or China, or decentralized, such as in the United States and Germany. In Pakistan, the NSS takes an intermediate position divided between a centralized and decentralized statistical system. The PBS, headquartered in Islamabad, serves as the central agency of the country’s NSS, and is primarily mandated both to collect data and statistics, as well as to coordinate statistical activities at the national level. The PBS covers things like the population and housing census, livestock census, and the Pakistan demographic survey. The NSS also includes four Provincial Bureau of Statistics (PBoS), one in each province, and two statistical cells at Gilgit Baltistan and AJ&K that do not have full-fledged bureaus. Then, there is also the ‘Other Producers of Official Statistics’, some of which you will already be familiar with. These include the Federal Board of Revenue (FBR), the Security Exchange Commission of Pakistan (SECP), the State Bank of Pakistan (SBP), and registries

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like the National Database and Registration Authority (NADRA) and the Benazir Income Support Programme (BISP), The primer tests the effectiveness of the PNSS on three distinct fronts: independence, coordination within the statistical ecosystem, and the availability of administrative data. Unfortunately, the PNSS ranks lowly across all three metrics. With regards to its independence, the PBS continues to be an attached department of the Ministry of Planning Development and Special Initiatives. Similarly, the PBoS are also working as attached departments of the respective provincial planning and development departments. With regards to its coordination, the primer states, “coordination mechanism among and within the statistical organizations is weak. While there is some level of coordination within the NSS, such as for large census, surveys and key indicators, these interactions are on adhoc basis. There are no permanent institutional and legally mandated platforms for coordination.” And finally, with regards to administrative data, Pakistan also falls short with very limited access to and collection of admin data.

What is wrong with Pakistan’s statistics?

o a constrained, disorganized NSS, with the PBS and ‘Other Producers’ not coordinating efficiently with each other: what could possibly go wrong?

Quite a fair bit. While there is no global consensus on what an NSS can look like, there is a globally agreed standard for data dissemination, against which Pakistan’s official data is measured against. Specifically, one can look against the World Bank’s Statistical Performance Indicator (SPI), which is an indicator used to assess the maturity of a country's statistical system on an overarching framework across five pillars: data use, data

services, data products, data sources, and data infrastructure. Of the 186 countries ranked on the SPI, Pakistan is ranked 87th. The three pillars of SPI in which Pakistan performs well are data usage, data products and data infrastructure. Its lowest score, however, is for data sources which is attributed to the weaknesses in its utilization of geospatial and administrative data. Pakistan’s SPI score for data sources is 46.9– for comparison, the highest performing country has a score of 88.9 for the same measure. The primer then hones in specific issues in data collection. It is not that the country does not collect data: it is that it is so haphazard, that each sector of the economy has massive statistical gaps that need to be addressed. We will walk through each one in this section. Take for example the GDP. In a 2022 survey of 170 countries, Pakistan was one of the 26 nations that did not produce quarterly estimates of GDP. Meanwhile, according to the primer, sub-national or provincial GDP figures are also not reported, despite the 18th Constitutional Amendment that devolved several

policy areas to provinces. Pakistan’s small and medium enterprises (SMEs) contribute nearly 40% to the GDP and 25% to texports. Yet all data about SMEs comes from the Census of Economic Establishments of 2005, after which no census was conducted. This kind of lack of data leads to spillover effects, such as inadequate tax collection. The primer noted that in 2019, a lack of consensus between the tax authorities and the textile association over the domestic market size of textile products – a basic market statistics – led to resistance in the reversal of zero rating of general sales tax (GST) on the industry. Pakistan also does not collect data on high-frequency economic indicators (HFEI). These are often short term indicators that spot turning points in business cycles. Examples of non compiled data include federal taxes withheld, hotel occupancy, retail sales, comparable-store sales, highways tolls, building permits, domestic air passenger and cargo traffic, and indexes tracking online job market placements. The absence of such data hampers industries trying to enter new markets. According to the primer, “soft information suggests that prospective Chinese investors eyeing investment opportunities in various sectors under the China Pakistan Economic Corridor (CPEC) also face similar challenges.” On labour and employment data, Pakistan has conducted only 36 annual Labour Force Surveys and eight quarterly surveys since 1963. Compare that to India and Sri Lanka, where those surveys have been conducted quarterly since 2018 and 1990 respectively. So, imagine this: Pakistan’s policy makers are confronted with the mammoth task of drafting a basic unemployment benefit policy simply because there is a complete absence of key labour statistics, such as of total unemployment and average wage for each population quintile group. Although Pakistan does measure and release the Consumer Price Index (CPI) on a monthly basis, it does not do so on a quarterly basis nor does it report the Producer Price Index (PPI). The PPI can serve as an early indicator of inflation. Countries like Sri Lanka and Bangladesh regularly publish the PPI. Additionally, Pakistan's ranking in the category of crime and justice data is poor due to the unavailability of indicators on homicide rates, prison populations, and limited coverage of crime rate data. Interestingly, across all major data categories, the overarching problem seems to be a considerable time gap in data collection. As stated in the primer, “the last agriculture census in Pakistan was held in 2010, a notable time gap of more than 10 years, whereas

frequent floods, climate change and changing market dynamics warrant more frequency of such surveys.” Similarly, estimates of livestock, which contribute 14% of national GDP, are based on surveys conducted between 1996 and 2006. But perhaps the biggest indictment of the national statistical system is this: that we do not accurately know how many people in the country are born, or when they die. Civil Registration and Vital Statistics (CRVS) is the process of collecting information on vital events such as births, marriages, migrations, deaths, and causes of death. But this is limited in Pakistan. According to the primer, it is estimated that approximately 42% of children under five years old are officially registered, and only 36% possess a birth certificate. Similarly, less than 5% of deaths in the country are registered.

It’s not all doom and gloom (yet)

he primer’s authors offer some consolation. First, there has been some consideration by the PBS itself, which recently prepared the National Strategy for the Development of Statistics (NSDS) 2021-2030 The NSDS 20212030 lays out a road map for the development of official statistics in the country including areas of coordination, capacity building of statistical practitioners in the NSS, and improvements in data collection. Still, the document does not spell out detailed assessments of the challenge of coordination, or state of provincial bureaus of statistics. Besides, assessing and proposing reforms is not the main job of the PBS; its main job is to actually conduct census and surveys. So the primer points to examples in two countries. When India embarked on statistical reforms in 2000, it formed a National Statistical Commission with representation of key stakeholders across the country. This was the body that prepared reports on specific data deficiencies, and ended up covering nine broad categories of statistics including corporate sector statistics, national accounts, and infrastructure statistics. Similarly when the US undertook an assessment of its administrative data in 2016, it passed a law to form a Commission on Evidence-Based Policymaking. The commission had fifteen members, three each to be appointed by the president, speaker and minority leader of house of representatives, and majority and minority leader of senate. Perhaps Pakistan could form a body or commission that could then work and improve upon NSDS 2021-2030? The other option available to Pakistan

is to heavily ramp up its collection of administrative data. Traditional statistical sources include surveys and the census; but administrative is the kind of data that is derived from digitalization of government records, and increased computer usage generally in the government and public sector organizations. This could then provide the much needed shortcut to quality data. Administrative data is useful for three reasons: first it offers near-actual information rather than only estimates, on businesses, markets and individuals at the micro level; second, it is high frequency, ranging from quarterly and monthly to even weekly numbers; and third, it helps authorities to address informality via triangulation and corroboration of data. Pakistan already has rich sources of administrative data. These include NADRA (civil registry), BISP (social registry), SECP (company’s registry), education records at the Higher Education Commission and various education Boards, FBR (tax data), records of tax bodies that levy provincial GST on services, vehicle registration records, and automated land records in Sindh and Punjab. That is a minefield of data just waiting to be integrated into the NSS. As a helpful example, the primer suggests coordination between the PBS and tax authorities, particularly after the 7th Housing and Population census, which had been conducted digitally for the first time in the country’s history. “The tax authorities, the FBR and provincial tax bodies for GST on services, along with the SECP and district offices that hold records of Association of Persons and partnership firms can jointly maintain a business register. To this end, the PBS can provide guidance on data quality, industry classification, harmonization and standardization, while tax authorities, the SECP and district offices can provide their respective data.” the primer reads. According to the primer’s authors, this would help PBS with preparing its quarterly national accounts, and would help the FBR broaden their tax base. Still, it is only one example. Justifiably, the primer has not spared pointing fingers at Pakistan’s NSS, which it states falls behind in comparison to both best practices and peer economies in the region. Data on crucial subjects, such as GDP and unemployment, is either absent or insufficient in frequency. And the timely measurement and availability of these statistics is even more integral for a developing country like Pakistan, where these indicators are viable to change and often require immediate actions and solutions. Pakistan desperately needs to get its act together – and start counting some numbers. Our policymakers rely on it. n

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Will retailers accept revamped PoS machines?

Chikoo and Bank Alfalah seem to think so The startup has partnered with Bank Alfalah to digitise merchants; it might change the market in more ways than one

By Nisma Riaz and Taimoor Hassan

f you are a reader of Profit, you will know by now that everyone is taking the digitization of the economy very seriously. Much of the efforts for this digitization can be attributed to the adventures of technology companies – aka, the venture-funded startups. Some of them are taking small retailers online by helping them create online stores. Others are focused on digitising payments and procurement. The list goes on. And the regulators have noticed. The

State Bank of Pakistan (SBP) has rolled out numerous regulations to prop up fintech companies to digitise payments. Numerous directives from the central bank are focused on increasing the adoption of digital payments. And to that end, the instant payments system Raast was launched last year. The kicker here is that banks, too, now seem to be convinced that if they don’t propagate digitisation, someone else [read: startups] will, challenging the banks’ status quo. If you’re wondering how a tech startup, say in logistics, threatens banks, remember that payments are at the center of everything. In the words of Angela Strange of the storied venture capital firm Andreseen Horowitz, ‘every tech company is a fintech company’.

One bank has taken notice, as evidenced in the recent partnership announced in November 2023 between Bank Alfalah and Chikoo. The latter is a prominent technology company that provides an app-based digitisation to micro, small, and medium enterprises (MSMEs) in Pakistan. It is now set on providing the same digitization to Bank Alflah’s hardware devices. The Chikoo app can now be downloaded on Alfalah’s point-of-sale (PoS) devices, facilitating the digitisation of orders, payments, and customer management directly from the Bank Alfalah PoS device. Now, any offline retailer that records its inventory through the Chikoo app, can also immediately create an eCommerce site to sell goods online.

To get merchants to do this is going to require a lot of handholding. They have to see that they have to realise the benefits that are going to come out of this and this is going to require people on the ground Raza Matin, co-founder and CEO at Chikoo

Broadly speaking, both Bank Alfalah and Chikoo believe that digitizing small and medium scale businesses is a big opportunity: one that can bring big business and impact the entire economy. “Our aim at Bank Alfalah is to help merchants be able to increase sales and business through such digitisation,” says Ammar Naveed Ikhlas, head of retail payments solution at Bank Alfalah. Ikhlas is one of the key people behind this scheme. For a bank, it can bring in more payments revenue and financing opportunities in the long run. For a company like Chikoo, any partnership that helps it achieve greater scale brings more revenue in from fees collected from using the platform.

The opportunity

ogically, MSMEs is where the opportunity also exists. There are an estimated 5 million MSMEs in Pakistan that mostly have manual operations and use paper and pen to record transactions, which becomes time consuming and costly. If these operations are digitised, these businesses can become more efficient, grow their sales and make operations more profitable by making smart business decisions based on data collected through digitisation. One aspect of such digitisation is enabling small businesses to record inventory on a digital platform so that tracking inventory becomes easier. To illustrate with an example, let’s say that you are a home-based baker who sells cookies and doughnuts online. Every time you bake your products, you can record the quantity you have baked on the Chikoo platforms on either the phone or a computer so that when an order is processed, also via the Chikoo app, the quantity sold and the quantity remaining are automatically adjusted on the platform. If you use a website to sell your products, and the next time someone orders and you are out of stock, the product on the website will automatically reflect as out of stock. This way, inventory management improves and you as a seller do not have to worry

about manually recording how much you sold in a day, or getting on calls back and forth to inform customers that a certain product is no longer available. This is just one aspect of digitisation. Others could be digitisation of invoices and payments. The main end of such digitisation is to bring the focus of a small company towards growing the business by, say improving their products instead of wasting time and money on managing inventory and invoices or collecting payments and then reconciling them. Chikoo is already focused on such digitization at small retailers, but only through an app to give them inventory, sales management, payments and eCommerce functionalities. While Bank Alfalah is focused on increasing the penetration of PoS machines in the market for acceptance of digital payments. What if the two were combined? That is to make the Chikoo app available on the Bank Alfalah PoS. Rather than going at it alone, it’s better for both to do it together. A bank does not have either the technology capabilities or the mindset to build offerings such as inventory management and invoicing, so stands to gain if retailers have these options. Similarly, a company like Chikoo can perhaps never create its payments acceptance business, so it also will gain if it is able to accept payments through its platform. Raza Matin, chief executive officer and co-founder of Chikoo, says, “Our platform is available in a multitude of ways, so customers who are not currently utilising digital payments can still use their smartphones to access Chikoo’s services, while businesses with a certain volume of customers, who use digital payments or will benefit from digital payments will be eligible to get the PoS machine.”

Winners and losers

ut is this partnership really worth its salt? Consider that solutions like this already exist in the market. For example, retailers of sizable scale use their own PoS hardware on which Shopify provides the same inventory management tools.

What is so special about this partnership, and will retailers accept it? For starters, the size and scale of the business that matters. Ikhlas explains that firstly, their target market is not the retailers that have already digitized their retail operations. Take CarreFour, for example. The hypermarket giant has customized hardwares and softwares to digitize operations as per their scale. So targeting these retailers does not make sense either for Chikoo or Bank Alfalah. On the other hand, small businesses that need to be targeted would like to save as much as possible while carrying out such digitization. Any such digitisation will come with a hefty purchase of hardware, whether it’s a computer, a barcode scanner or a handheld tablet, along with accompanying software. Pains of the economy aside, these retailers are old fashioned and have been working in a set way for decades. They haven’t seen the benefits of such digitization and therefore they have less willingness to go for it. The best way to get them to digitise their operations is by giving them this digitisation at the lowest cost possible. Which is why, Ikhlas explains, the hardware costs in the case of Bank Alfalah are not charged to these retailers. “Instead, the cost of the machines are built into the transactions in the form of a fee charged every time a payment is processed on these machines,” says Ikhlas. These machines are currently only used to process card payments. But with the Chikoo app now built into these machines, retailers will now have access to Chikoo’s services such as inventory management, invoice generation and payments acceptance. This will serve the larger goal of eliminating inefficiencies, enabling the collection of reliable data, and providing context for business growth. These machines currently only accept card payments, but could do much more because of their android functionality. Bank Alfalah already has an estimated 15,000 PoS machines in the market. “All the functionalities have been

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Our aim at Bank Alfalah is to help merchants be able to increase sales and business through such digitisation Ammar Ikhlas, head of retail payments solution at Bank Alfalah

embedded into Bank Alfalah PoS,” says Matin. “It marries the payment experience and business management system. When you combine customer data, invoice data, and payment data, that is less paper and more information can be extracted from it, which can be used to make better business decisions and help merchants grow.” Some up and coming startups such as SnappRetail and Aladdin are also focused on such digitization, but achieve it through proprietary hardware and software, charging the merchant a monthly rental fee. Chikoo’s advantage is that it is not focused on such proprietary hardware. That being said, the arrangement is not exclusive: Bank Alfalah can later potentially make SnappRetail or Aladdin’s app available on their machines, leaving it to the merchant to decide which one they would like to use. Likewise, Chikoo is also free to partner with other banks and integrate its app with their PoS machines. On the other hand, Chikoo can help drive the adoption of the bank’s PoS machines and market them to merchants that currently use only the Chikoo app. But it is going to be a rough journey. Matin admits that training retailers – who are often rigid when it comes to changing their attitudes as they have been working in a set way for decades – is going to be a tough task. That is why Chikoo will have its own people on the ground, and will leverage the distribution network and sales teams at Bank Alfalah to educate merchants about the Chikoo

app and its benefits. “You can’t acquire these customers digitally,” Matin says. “To get merchants to do this is going to require a lot of handholding. They have to see that they have to realise the benefits that are going to come out of this and this is going to require people on the ground.” Boots on the ground has been a consistent focus of other startups as well. SnappRetail and Aladdin Informatics, for instance, have also deployed teams that acquire grocery merchants and then train them to use their hardware and software. How will Chikoo make money from this partnership? Matin explains there are multiple revenue streams for them. Any merchant that uses the app will pay a very small recurring fee of a few hundred rupees, a small transaction fee on orders that are processed on the app, a cut from the merchant discount rate, and income from providing value added services to merchants. The app on the PoS machine will also be able to integrate offerings from other players, such as lending services from other financial institutions, to give a holistic customer experience. This partnership is significant in one other way, explains Adeel Rasheed, co-founder at SnappRetail. Startups that are focused on such digitisation of grocery operations have been having a hard time explaining to investors that the need for such services existed. So if a tech company was able to partner with a major bank, this validates their idea and positions them better in front of relevant stakeholders. Rasheed sees this as a positive for

This is good news for the digitization of the economy and this will also open new avenues of partnerships Amer Pasha, CEO of Aladdin Informatics

Chikoo, and refutes the idea that it would be a competition in any sense. “The market is currently too big and multiple players can exist peacefully,” he said. Amer Pasha, the CEO of Aladdin Informatics also had a positive view about the partnership. “This is good news for the digitization of the economy and this will also open new avenues of partnerships.”

The documentation problem

here is still one problem that might outweigh all the positives of this partnership, that neither Bank Alfalah nor Chikoo will be able to solve by themselves. Small businesses historically have resisted becoming part of the documented economy, in an effort to avoid being taxed. Walk to a small breakfast place in your neighborhood’s commercial area today and you will most likely find no option for making a payment digitally. Ask the owner and he will very likely complain that either the charges (the MDR charged by banks) are too high for a small business like them to keep a PoS machine, or that they don’t even know what options they have to accept such payments. That is to say no bank has taken the initiative to go to these businesses and present their offerings. Ask a banker and he will tell you that it is an expensive endeavor and a futile one. This is because small businesses are often not registered, and SBP regulations prevent any bank from carrying out business with unregistered businesses. It could turn out to be very expensive for the bank to onboard unregistered merchants because of the heavy penalties imposed by regulators – in case they find out. So any mass adoption of such solutions for digitisation is going to require a consistent effort from the government to document businesses first, and then leave it to the banks to see such digitisation through. Perhaps then, this partnership will bear fruit. n

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Is the caretaker government about to

compromise Pakistan’s agri exports?

Importers of GMO oilseeds have started celebrating already. But they might just be jumping the gun By Ghulam Abbas

fter more than 18 months of consistent back-and-forth involving permissions and all kinds of bureaucratic red-taping the caretaker government is set to allow the import of Genetically Modified Organisms (GMO) oilseeds. This means trouble. As a direct result of this decision Pakistan’s food exporters might find it difficult to export their commodities to many different markets around the globe. So what exactly is the big deal?

The oilseed saga

t all started with a technicality — but a technicality that was being ignored for a few years. On October 20, last year, two shipments were stopped at Port Qasim in Karachi. The shipments contained GMO oilseeds worth some $100 million on board. And despite the very vocal protestations of the importers that had paid for the consignments, they stayed stuck at the port pending a single certification from the ministry of climate change. In the months that followed, more vessels joined the two stuck at Karachi and the value of the oilseeds piling up at the port grew over $300 million. The most important thing to

understand is one term — oilseeds. When most people hear the term oilseed, they think it is a seed that is to be sown in the ground and harvested for the production of edible oil. Oilseeds is actually a term for the seeds or ‘fruit’ that certain crops produce that are then pressed to get edible oil. So, for example, olives are an oilseed and so are the fruits produced by palm plants and soybeans since all of these are pressed and used to extract oil. Another example of an oilseed is cotton, the seeds from which are pressed and the oil extracted from them. Pakistan is heavily dependent on these oilseeds for its edible oil. According to a report of the central bank, Pakistan’s palm and soybean-related imports stood at US$ 4 billion in

FY21, rising by 47% year-on-year, compared to compound average growth of 12.3% in the last 20 years. And in addition to edible oil, these seeds fulfill another crucial purpose: providing feed for livestock including for chickens.

Why is everyone afraid of GMOs?

ow, it is worth pointing out here why the shipments of GMO oilseeds were stopped. Pakistan is party to the Cartagena Protocol on Biosafety to the Convention on Biological Diversity, signed in 2001 and rectified in 2009. The Cartagena Protocol is an international treaty governing the movements of living modified organisms (LMOs) resulting from modern biotechnology from one country to another. Its purpose is simple. One of the observations scientists had after genetically modifying different crops was that when certain modified plant varieties are introduced to new environments, the results can be disastrous for the local ecology. As a result, to make sure there is no unchecked introduction of GMOs to new environments, the Cartagena Protocol monitors this. And as part of the Pakistan Biosafety Rules of 2005, the ministry of climate change needs to give approval to any new GMO shipments coming into the country. For the past few years solvent extractors had been importing GMO soybean oilseeds mostly from the United States. However, they had been getting away with it since the climate change ministry had not been paying attention to the issue. In 2022 the ministry refused to grant the required approval triggering the crisis.

What you eat is what you are

hat is because beyond the Cartagena protocol people are also generally afraid of the concept of GMOs. Exactly a year ago in December 2022, the then food minister Tariq Bashir Cheema declared people should stop eating chicken as it was harmful to health. His reasoning? The poultry in the country was being fed with seeds that had been genetically modified. As a result, the meat from these birds was toxic. “The GMO soybeans are toxic, and any product coming from them is dangerous to health. They can cause serious diseases like cancer,” the minister thundered. “I don’t eat chicken anymore. In fact, I don’t eat meat at all. I only eat vegetables,” he explained. It’s funny when you think about it. Tall, domineering, and a seasoned political operator — one would think there isn’t much Cheema is afraid of. Particularly, not some bird. Yet when Cheema and others like him look at these chickens, they see a threat to the health of an entire nation.

So what inspires a government to tell its people what to eat and what not to eat? The answer is fear. The fear that there are certain foods that will affect the health and productivity of a nation. The fear of sickness and the unknown. At the core of a very basic evolutionary fear — that of poison. In some ways, it makes sense. There is a lot behind the maxim of “you are what you eat.” Food is the most basic fuel necessary for human survival. And more even than the air that we breathe, food has a direct relationship with culture, religion, and identity. What we consume, what we put in our bodies, has a singular, laser-focused relation to who we are as people and how we define ourselves. In its rawest form, food serves as the border between nature and culture, between human and non-human. And that is why there is so much anxiety about what we eat and the effects it has on us. Claims that crops that are Genetically Modified Organisms (GMOs) are a danger to human health have been rife globally for decades now. Time and again, scientific evidence has failed to prove that GMOs are cancerous or hazardous to health in any way. They have, however, played a vital role in helping agricultural productivity keep up with the rising global population.

Not bad for the health but possibly bad for exports?

et’s get a few things straight here. The GMOs that are being talked about here are not for sowing. The oilseeds being imported are simply pressed and their oil extracted. The mulch that is left behind is used to create ‘cakes’ that are then fed to poultry. So the Cartagena Protocol really doesn’t have any involvement here.For more details about GMOs and what they mean you can find more details in older pieces by Profit. READ MORE: Why is the government chickening away from chicken? What matters here is not so much whether GMOs are good or bad but what this means for Pakistan’s exports. You see the change being proposed by the caretaker government involves permitting the import of Genetically Modified Organism (GMO) – Living Modified Organisms (LMO) oil seeds for consumption and processing. This swift policy shift formally includes Pakistan in the GMO countries but lacks proper consultation and approval from the Technical Advisory Committee and National Biosafety Committee under the Ministry of Climate Change, as mandated by the Pakistan Biosafety Rules. This decision has raised concerns as it may undermine Pakistan's export of non-GMO

commodities to countries that do not accept GMO products. Moreover, it could potentially impact Pakistan's biodiversity, environment, and the health of both humans and animals. Because of all the suspicion surrounding GMOs, they are considered to have potential threats to agricultural products of a non-GMO territory. That is why due tests, inspection, and certification is needed to avoid such threats. Allowing these imports without implementing adequate biosafety and biosecurity measures is seen as risky. In this particular case the government seems to be allowing the import without particularly looking at the biosafety rules. This, of course, is because oil pressers and the poultry industry have been running from pillar to post complaining about their consignments being stopped. As we’ve mentioned, they have a point too. The GMO oilseeds are not to be sown in Pakistan and cannot have an effect on other crops in the country and hence shouldn’t affect our exports or status as a non-GMO country. In fact, Pakistan has been using GMO seeds for cotton since 2005 but since there is no cross-contamination with food it does not have any serious problems as a result of biodiversity. On top of this, as we’ve mentioned before, GMO seeds are also used to make cooking oil and feed livestock such as chicken so the population of the country already eats plenty of GMO products. The only problem here is that until last year even a government with the backing of parliament had simply allowed the stopped consignments to be released over a course of months. In this case a caretaker government is now taking a policy decision that may well go far beyond its mandate.

The right way to go about it

he situation demands thorough discussions involving the general public, researchers, universities, provincial governments, infrastructure, manpower, and regulations. Neglecting suitable biosafety and biosecurity measures could not only affect Pakistan's agricultural exports to over 70 non-GMO countries but also lead to contamination of Pakistan's biodiversity, environment, and public health. It's particularly surprising that the matter of a policy shift has bypassed the Technical Advisory Committee (TAC) and National Biosafety Committee (NBC) and has been forwarded directly to the Cabinet Committee for Disposal of Legislative Cases (CCLC). The Ministry of National Food Security and Research, which houses the relevant technical bodies encompassing representation from all relevant spheres, usually addresses discussions, formulates suggestions for biosafety measures, proposes amendments to the Pakistan Biosafe-

ty Rules 2005, and oversees the regulation of GMO/LMO import and release in Pakistan. Strangely, despite past reluctance from relevant ministries such as the Ministry of National Food Security and Research (NFS&R), Ministry of Climate Change, and the Federal Cabinet to authorize GMO/LMO deliberate release without adhering to proper procedures and biosafety measures, there appears to be a haste in granting approval for GMO/LMO import in Pakistan. Official sources confirmed that this is occurring without consultations with the TAC, NBC, or the general public, with the subsequent approval expected from CCLC and the cabinet. Notably, the beneficiaries—importers—recently published an elaborate advertisement in a leading newspaper, expressing gratitude to the concerned ministers for their support in approving the draft policy aimed at facilitating GMO Soybean imports. TAC and NBC are the main forum to deal with GMO. It recommends what needs to be done with imported GMO products. These bodies have representatives of all concerned officials, experts etc. The government, mainly the ministry, is bypassing such forums and directly trying to get the nod from the CCLC and cabinet.

A case of successfully lobbying?

eanwhile, other stakeholders in the name of “Sectoral Council for Meat, Poultry, Fish and Seafood, Milk and Dairy Products” has also published on December 4, 2023 thanking prime minister and ministers of food security, climate change and commerce for their role in allowing import of GM & LM Soybean in Pakistan exempting Biosafety and Biosecurity Measures. Interestingly, the Secretary NFS&R Captain (r) Muhammad Mahmood confirmed that the matter is now with CCLC and the importers were celebrating it in advance. Insiders suggest that influential importers might be using tactics to influence the process. However, it's crucial for Pakistan to approach this matter carefully, seeking input from the Technical Advisory Committee (TAC) and National Biosafety Committee (NBC). This consultation is essential as the decision could potentially harm the general public's health, biodiversity, local agriculture, environment, and natural resources. It might also affect Pakistan's limited exports of agricultural commodities to countries that only accept non-GMO products. Pakistan became a party to the Cartagena Protocol on Biosafety (CPB) to the Convention on Biological Diversity (CBD) on May 31, 2009. This agreement mandates the regulation of GMOs/LMOs and their related activities. Therefore, a cautious and consulta-

tive approach in line with these international obligations is necessary. Reliable sources informed that the pressure to ensure uninterrupted import of GMO Soybean into Pakistan stems from the substantial reliance on imports from the USA. Last year, concerns arose regarding GMO oilseed imports when relevant ministries, alerted by Customs, discovered that soybean imports were being misrepresented as non-GMO. This prompted intentions to test the commodities for GMO content and halted the release of imported GMO oilseeds until their compliance with non-GMO regulations was confirmed. Interestingly the draft recommendations prepared by concerned ministry and shared with CCLC are as following: 1. Implement a traceability record requirement for imported grains to prevent leakage. This will be a part of the license terms for biosafety clearance. 2. Importers/technology developers must present cases for deregulating genetic events related to imported grains to the NBC. These cases should be accompanied by comprehensive certified risk assessment reports from the country of origin. 3. Accept certified risk assessment reports for imported grains meant for Food, Feed, and processing, issued by relevant agencies in the country of origin. Avoid the need for re-testing in Pakistan. 4. Have PARC conduct GM testing by screening soybean candidate lines submitted in the national uniform yield trial. 5. Note that large-scale devitalization of soybean grains isn't currently feasible. This practice isn't observed in major exporting (USA, Brazil) or importing nations.

Analysis of the above recommendations

hen the recommendations were shared with experts and concerned stakeholders, it surprisingly came to know that the recommendations have neither been given by the Technical Advisory Committee (TAC) nor National Biosafety Committee (NBC) as mandatory in accordance with Rule 5 and 7 of Pakistan Biosafety Rules 2005 respectively. As the committee does not have authorization to give these recommendations, these recommendations neither have legal footing nor can be implemented as such without approval of the TAC and the NBC. As per experts, the grains are transported from port to the processing facilities across the country in open trucks that even could not pass the road test. Seeds pilferage and seed dispersal through birds is common and routine during transportation when they are transported in such open trucks. Thus, deliberate

release of GMO or LMO commodities arriving for consumption and processing in Pakistan cannot be hindered unless the grains or seeds are transported in closed containers from port to facilities, but the committee did not give any such recommendation either due to collusion or incompetency. Further, the traceability record maintained by the importer can not detect routine pilferage and seed dispersal by birds nor the importer will pay heed to it due to lack of regulation in this regard nor the regulator can check this kind of release because simply the importers shall submit the same quantity for biosafety clearance as they imported. Second and third recommendation appear suitable when the Environmental Protection Agency (EPA) Pakistan has no proper infrastructure, workforce, and system of risk assessment but it does not mean that the caretaker government should allow import of GMO or LMO oil seeds in Pakistan without establishment of prerequisite infrastructure, manpower, regulations for suitable biosafety measures to protect and securing local agriculture, biodiversity, ecosystem, environment, natural resources and trade benefit. Screening of GMO lines falls within the order of EPA Pakistan and the Ministry of Climate Change and not PARC and MNFSR and hence, it cannot be made without referral by the TAC and the NBC empowered for it. MNFSR aggressiveness and reliance more on import of oil seeds on the pity ground to control dearness by reducing prices of poultry meal, though, there is no big change in prices due to this reason, it is rather due to devaluation of rupees than to make policy and implement fitting measures to increase cultivation and production of local oil seeds crops in coordination with agriculture departments of the provinces mainly with Punjab and Sindh main ground to cultivate oil seed crops to fulfill native requirements and reduce over one billion dollar import bill. As per the industry sources, there is quite misunderstanding and misperception on the part of so-called technical experts sitting on higher posts in PARC due to deficiency of expertise in quarantine matters and non-technical bureaucratic bully that devitalization of grains is done for GMO – LMO commodities in order to avoid its release in the environment. Essentially, revitalization of grain or seed is a phytosanitary and biosecurity measure by which seeds or grains are made non-viable. It is not correct that the practice of devitalization of soybean grains does not exist currently in both major exporting nations (USA, Brazil) and importing nations. Devitalization of seeds and grains is done with heat treatment, irradiation, and fumigation and all these biosecurity measures exists in both USA and Brazil and they are signatory of International Plant Protection Convention (IPPC) and Inter-

AGRI

national Standards for Phytosanitary Measures (ISPMs) which provide devitalization as one of the biosecurity measures for import of agri. commodities to prevent insects, diseases, and weeds. Unfortunately, the top brass has made the fumigation of imported merchandise contentious in Pakistan just for personal gains and vested interests. The devitalization is implemented all over the world, particularly Australia, India, USA, Japan, Korea, China, Thailand, Russia, New Zealand, Mexico, Vietnam. Further, another argument is what if any biosecurity measure does not exist in the country of export to eradicate the associated pests with the commodities, it does not mean that Pakistan removes such conditions and allows freely aliens pests of exporting country to enter and spread in Pakistan and play havoc with local agriculture and biodiversity and elevate Pakistan’s import bill of pesticides to control such harmful organisms. Would the concerned ministries and departments like to place on record names of those just three countries including USA, Brazil who allowed Pakistani commodities to import in their by exempting their conditions because such measures were not available in Pakistan?

Post GMO saga

nsiders report that these importers are urging the ministry to allow imports without adhering to the required registration and testing mechanism of the TAC and the NBC for genetically or living modified seeds, as mandated by existing laws. At the behest of the importers, who are members of the All Pakistan Solvent Extractors Association (APSEA), the Ministry of National

Food Security recently convened a meeting of stakeholders to explore the possibilities of importing GMO seeds, claiming they are used in various parts of the world. However, insiders have noted that the Ministry of Climate Change was not invited to this meeting, even though the GMO subject falls under the domain of the Environmental Protection Agency (EPA), an attached department of the Ministry of Climate Change. Major catalyst, insiders claim, behind this meeting is an ex-chairman PARC who is consultant of APSEA as well as bridge between the APSEA and MNFSR for the move of this haste policy and facilitation deal. Nonetheless, the Food Ministry, in a statement released after the meeting, emphasized its commitment to upholding stringent regulations concerning seed imports. Caretaker Federal Minister Dr. Kausar Abdullah Malik reaffirmed that no seeds, including GMOs, would be permitted into the country without complying with prescribed Plant Quarantine Regulations and seed regulations. These regulations entail rigorous screening, adaptability trials, and registration processes to ensure the highest standards of safety and security for all imported seeds. Reports reveal that APSEA and the Poultry Association have been actively lobbying the Ministry of National Food Security and Research, advocating for GMO soybean and canola seed imports within Pakistan since 2014. Their representatives, sources inform, tried to convince the participants of the meeting that GMO seeds were being used worldwide, with no harm attached to the modified seeds. However, an official source claims that the importers' efforts aim to bypass the

required risk analysis for genetically modified and living modified organisms agricultural commodities, mandated by the National Food Safety Authority and the EPA of Pakistan, following Cartagena Protocol guidelines. In pursuit of their goal, APSEA has reportedly enlisted the services of the former Chairman of the Pakistan Agriculture Research Council (PARC) as a consultant, with significant consultancy fees. This move intends to secure approval for GMO and LMO soybean and canola seed imports for consumption and processing. Meanwhile, the US Department of Agriculture has written a letter through the US embassy in Islamabad stating that germination testing of Soybean for Export to Pakistan was not needed. However, experts in food safety and agriculture express concerns about importing GMO seeds without proper risk analysis. They argue that this practice may introduce invasive weeds, insect pests, health hazards, and negatively impact biodiversity and the environment. Allegations have surfaced that importers have misdeclared these seeds as non-GMO to circumvent regulations. Despite these challenges, APSEA persists in pushing for GMO soybean and canola seed imports in Pakistan. While their efforts have reportedly targeted the interim federal minister, the authority for such imports lies with the EPA under the Ministry of Climate Change. The Ministry of National Food Security and Research may recommend imports to the Ministry of Climate Change, provided they do not endanger domestic agriculture and natural resources.

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Telenor finally packs up shop from Pakistan, what all will change? With PTCL acquiring Telenor Pakistan, who is set to benefit the most from the deal? By Shahnawaz Ali

fter more than a year of looking for buyers, Telenor Pakistan has finally been sold to Pakistan Telecommunication Company Limited (PTCL). The acquisition marks a 100% transfer of Telenor Pakistan Pvt Limited’s equity to PTCL for an enterprise value of PKR 108 Billion on a cash free, debt free basis. The sale is part of Telenor’s strategy to exit the Asian markets where the operator has been lagging. It concludes the strategic review of the telco operations in Pakistan, which was announced in July 2022. The e& group (formerly Etisalat)-backed, Pakistan’s partially-state-owned PTCL group acquired Telenor Pakistan through a share purchase agreement which was signed between Telenor B.V. and PTCL group. The completion of the acquisition is subject to regulatory approvals and customary closing conditions. As per Sigve Brekke, CEO, Telenor Group, “Our decision to pursue the sale of our Pakistan operations follows 18 successful years of operations in the country, which started as a greenfield rollout. We are proud of the company Telenor Pakistan is today. It is an efficient and future-ready telco operator, with a strong distribution network and talented team serving 45 million customers. By selling to the country’s largest integrated ICT company, we believe this consolidation move would help strengthen Pakistan’s telecoms sector, creating opportunities in new areas of growth to the benefit of consumers in Pakistan.” The milestone will surely add to PTCL’s growth and market expansion, solidifying its position as a key player but what goes in the background? Why did telenor leave Pakistan? How and why did PTCL buy it and what does it all mean for the market and the consumers?

Telenor’s Exit?

elecom companies in Pakistan have one of the worst average revenue per user (ARPU) in the world, at $0.8/ month and for the Norwegian com-

pany, ARPU was a big concern, considering that other subsidiaries of the Telenor group in countries like Malaysia, Thailand and Bangladesh were doing much better. Telenor entered the Pakistani market in 2005 and over the years managed to amass a subscriber base of approximately 45 million customers. However, operating in a highly saturated market presents its own challenges. One such challenge is the steady decrease in ARPU, which is a concern for the entire industry. For Telenor, ARPU was also affected by its strategy of targeting the low-income rural population in order to quickly build a significant consumer base. However, a similar strategy in India did not yield the desired results. Telenor initially experienced significant growth in the Indian market but faced a legal obstacle that drastically reduced its operations in the country. As a result, the company restructured its operations to focus on low-value customers who primarily demanded voice and SMS services. With the rise of 3G/4G services and OTT apps like WhatsApp, Telenor began losing its stronghold in voice and SMS services and eventually exited the Indian market in 2017.

The events leading to Telenor’s decision to exit the Pakistani market closely resemble what happened in India. While the telco’s targeted market consisted of low-income customers, it opted to acquire the 850 MHz spectrum at a substantial cost of $395 million when it came to purchasing spectrum for its 3G/4G services. Unfortunately, this investment did not yield the expected returns, as the frequency was supported by relatively expensive smartphones that were beyond the affordability of Telenor’s primary user base. However, there are additional factors to consider. Telenor and other telecommunications companies in the market also faced challenges related to spectrum and licence fee rationalisation. For example, Telenor encountered difficulties with licence renewal fees, which it initially contested in the supreme court but received an unfavourable ruling. Alongside this, the worsening macroeconomic conditions played a role, leading Telenor ASA to write off $250 million of its Pakistani operations in the second quarter of the 2022 financial year. These challenges, coupled with an increased cost of capital resulting from interest

rate hikes and a deteriorating political climate, made it increasingly impractical for Telenor to sustain its operations in Pakistan. All of this culminated in Telenor announcing its intention to exit the market in November of last year. However, it took a year for Telenor to find a worthy buyer, a buyer with enough foothold in the domestic market to take on additional consumers, and backed by a group large enough to have the risk appetite.

Enters PTCL

the profitability, Ufone subsequently acquired high amounts of debt to finance capital expenditure including spectrum payments. This led to a surge in finance costs post the rapid interest rate hikes in the past two years. All of this translated into Ufone being a minnow in the country’s telecom space. Prior to the acquisition, Ufone’s consumer base was at around 25 million subscribers, almost half of Telenor’s. But the question remains, what does Ufone in particular and PTCL Group in general has to gain from this acquisition?

The Synergies

TCL has had a rough ride in terms of turning around its cellular mobile wing, Ufone (Wireless). While PTCL’s other group companies have been doing well, Ufone lags behind. As per the 2023 quarterly financial results for the group, the bottom line of the group remained negative dragged down by high operational and finance costs of Ufone.

Ufone’s abysmal performance over the past many years can be partially attributed to the strategic blunder of delayed entry into Pakistan’s 4G market. While other telecom operators like Zong, Jazz, and Telenor were quick to adopt 4G technology, Ufone remained the only company without 4G services for a significant period of time. This placed Ufone at a major disadvantage and resulted in a steep loss of market share. By the time Ufone finally launched its 4G services in August of 2019, other operators had already captured a large portion of the market, including Ufone’s high-paying customers. This late entry into the 4G arena proved to be too little, too late for Ufone users who were already enjoying the benefits of faster internet speeds and better connectivity. Furthermore, Ufone’s persistent reliance on 3G technology even after the widespread adoption of 4G by other operators negatively impacted its subscriber base. While the rest of the industry made a rapid shift towards 4G, Ufone still had a larger number of 3G subscribers compared to 4G subscribers. This inability to keep up with industry trends further contributed to Ufone’s decline. As if this was not enough of a drag on

and infrastructure network, not to mention the human capital and tech stack Telenor has developed over the years. “The recent strategic acquisition agreement with Telenor is set to propel Ufone toward substantial revenue expansion. Telenor Pakistan is a robust mobile operator and caters to approximately 45mn subscribers with reported revenue of Rs112 billion and an EBITDA margin of 43% based on last 12-month financials. Following the acquisition, Ufone’s subscriber base is expected to reach 70mn, bringing it on par with Jazz, which has been the largest player in Telecom sector. This strategic move also positions Ufone to leverage Telenor’s resources and expertise, fostering synergies that will further enhance its positive trajectory,” remarked Waqas Ghani, Deputy Head of Research at JS Global Capital. Apart from consumers, Ufone gains a significant competitive advantage from the assets and infrastructure inherited from Telenor. With Ufone’s own telecom tower network combined with Telenor’s, totaling over 20,000 towers, The CMO is on the verge of controlling nearly 50% of the country’s entire tower market. Further, PTCL holds the position of the largest market player in the fiber infrastructure

he acquisition, In terms of business, does wonders for the Group. Post merger, Ufone’s subscriber base is expected to cross 70 million, bringing it on par with Jazz, which currently is the largest player in the telecom sector. The move also leaves at Ufone’s disposal, the vast resources,

segment with its extensive 60,000 Km fiber network. This network plays a pivotal role in connecting the country’s telecom infrastructure, with PTCL serving all major CMOs. Coupled with the post merger tower network, the group is set to dominate the infrastructure segment. While explaining the operational benefits Aslam Hayat, the former Chief Strategy Officer at Telenor told Profit that, “The merger between Telenor and Ufone/PTCL is expected to bring numerous synergies for the merged company. Firstly, the spectrum of Telenor and Ufone in both 900 MHz and 1800 MHz are adjacent, which will provide a significant advantage to the merged company and better quality of service to their customers. The merged company will possess the largest telecom tower infrastructure in the country. After removing duplicates, the merged company can reuse the dismantled towers to further improve its coverage. Historically Telenor has better coverage in the rural areas of Pakistan, while Ufone has a stronger presence in urban centres. As a result, the merged company can benefit from improved coverage in both regions.” Spectrum is like an invisible highway that allows wireless devices to communicate with each other. It’s divided into different sections, just like lanes on a road. Each section is designated for different types of devices, such as cell phones, Wi-Fi, or television broadcasts. When we use our devices, they send and receive information through specific sections of the spectrum. It’s important for devices to use their assigned sections so they don’t interfere with each other’s signals. So, spectrum is like a carefully divided space that enables our devices to talk to each other wirelessly, ensuring smooth communication and avoiding any traffic jams. As per the former CEO of USF and ICT Policy & Regulation expert, Pervaiz Ifitikhar, “One of the key synergies resulting from the merger would be the utilisation of adjacent spectrums held by Ufone and Telenor. These spectrums offer numerous benefits to the company, such as increased bandwidth, improved network capacity, enhanced service coverage, and better interference management. Similarly, availability of infrastructure in rural as well as urban areas has its advantages. These advantages will enable the telco to deliver higher data speeds, accommodate more users, expand their coverage area, and minimise interference.” The acquisition’s financials also add up. As expounded by Mohammad Sohail from Topline Securities Research, “Assuming PTC raises debt of US$380mn at 18% (8% interest expense + 10% currency devaluation), the annual interest cost would be Rs19bn, compared to Telenor’s EBITDA of Rs112bn in the last 12 months. This along with the combined infrastructure of PTC, Ufone, and Telenor will

unlock synergies, we believe.” Editor’s Note: Topline Securities Research erroneously mentioned Rs 112bn as the EBITDA number. In fact, as earlier mentioned in the article, Rs 112bn is the revenue, while EBITDA is 43% of the revenue. He quotes the example of the Mobilink-Warid merger, reminding that in a press release from then, predicted Mobilink and Warid’s merger to create capital and operating expenditure synergies of about US$500mn. The combined revenue of both companies for the year leading to Sept 2015 was US$1.4bn. The PTCL CFO, when asked about the valuation of these synergies, did not quote a figure, and stated that it would only be revealed after the regulatory approvals but would definitely be more than Rs 108 billion (the acquisition cost). It is clear that Ufone not only wanted, but also needed telenor’s business, but it had a very fundamental problem. When telenor went up for sale, Ufone did not have the money to buy it. That was until October, the group was reported to have asked for a loan of $400 million from the International Finance Corporation, IFC. A bidding offer was made to telenor which was subsequently accepted. However when asked about the source of the financing, Group Chief Financial Officer PTCL, Nadeem Khan, did not disclose IFC’s name and stated that the financing channel was reliable enough for the Telenor Group to sign the SPA.

Industry’s Response

amal Ahmed, the newly appointed Secretary General of the Telecom Operators’ Association of Pakistan termed the announcement of PTCL’s acquisition of Telenor Pakistan an important development in Pakistan’s telecom sector. He emphasised that the resulting structural change will be beneficial for both the telecom sector and its customers. Talking to media at a Press conference, PTCL Group CEO, Hatem Bamatraf said that, “With 4 players the telecom market was not sustainable. If we compare Pakistan to neighbouring countries, we are far behind and one reason for that is the structure of the market because players are not in a healthy position. It will benefit the entire market to have stronger players.” He said that we are trying to attain the best of both worlds, increasing revenues and improving services.

A win for the consumers?

hen one predicts that the industry margins will improve and ARPU will go up, this automatically means an increase in prices. With less competition

and only 3 players now left in the market, one of the key takeaways for customers is an expected increase in prices, however, an increase does not necessarily mean a bad thing. With more profitability, more money gets invested in capital pertaining to technological advancement. In such circumstances consumers reap the benefits in the longer run. While talking to the press, the PTCL group leadership also revealed that the brand strategy for Telenor is yet to be decided upon by PTCL. Meaning that the company is yet to decide upon what brand name would be associated with the existing Telenor consumers’ sims. Pervaiz Iftikhar, Ex-Chairman USF also stated that “While the merger is good news for the industry as a whole, there is a lingering issue with the prevailing low average revenue per user (ARPU) that, if not addressed, can have detrimental effects on the remaining players. Additionally, Telenor’s departure signifies the departure of another reputable investor from the country, which has a negative impact on the overall perception of the Pakistani market.” Telecom sector experts suggest that policies like spectrum pricing in dollars, excessive taxation, high right of way charges are a major factor in driving out foreign investors. With Warid and Telenor gone, the government might need to look at a revision in its policy

around governing telcos. It is also important to note that 62% of PTCL is owned by the government of Pakistan. Which means that any loan that it acquires means additional exposure on the national exchequer.

What about Telenor Microfinance Bank and Easypaisa?

ontrary to some claims, it is also important to address that despite being closely integrated with Telenor Pakistan, the leadership and ownership of Telenor Microfinance Bank and, by extension, of Easypaisa remains the same. The bank as of now is jointly owned by Ant group (Alibaba) and Telenor’s Norwegian parent company. It was made clear by the PTCL leadership that the Share Purchase Agreement referred to the operations of Telenor, the telco alone. With the previous ownership structure, Telenor Microfinance Bank enjoyed cross-marketing and other preferential pricing like the SMS costs for transaction prompts on USSD supported easypaisa accounts. These are likely to be discontinued/ However, the Telenor Group will still retain its ownership of the digital bank unless announced otherwise. n

Saudi Aramco acquires 40% stake in Gas & Oil Pakistan Ltd. (GO) but why? Deal to bring much-needed FDI into Pakistan, but what is in it for Saudi Aramco?

By Ahmad Ahmadani

n a groundbreaking move, Saudi Aramco, one of the world’s leading integrated energy and chemicals companies, is set to enter Pakistan’s fuel retail market after it signed agreements to acquire a 40 % stake in Gas & Oil Pakistan Ltd. (GO) on Tuesday. Earlier this quarter, it was reported that Saudi Aramco is looking to buy the assets of Shell Pakistan. The deal did not go through and Saudi energy company Wafi Energy eventually bought off Shell’s assets in Pakistan. When Aramco passed on Shell,

no one would have thought that they would enter the Pakistani market much sooner through a completely different route. Saudi Aramco’s acquisition of GO, a diversified downstream fuels, lubricants, and convenience store operator, represents the company’s maiden venture into the Pakistani fuel retail sector.

What is the deal?

he strategic investment aims to strengthen Aramco’s downstream value chain internationally and provides GO with a significant boost in the competitive market.

GO is recognized as one of the largest retail and storage companies in Pakistan, offering a diversified portfolio of services. The deal is contingent upon customary conditions, including regulatory approvals, and aligns with Aramco’s strategy to expand its downstream operations globally. This move follows Aramco’s acquisition of Valvoline Inc.’s global products business in February 2023, and the planned acquisition of GO is expected to secure additional outlets for Aramco’s refined products and open new market opportunities for Valvoline-branded lubricants. Mohammed Y. Al Qahtani, Aramco Downstream President, expressed optimism about the acquisition, stating, “Our second planned retail acquisition this year aligns with Aramco’s downstream expansion strategy, with a clear path ahead for growing an integrated refining, marketing, lubricants, trading and chemicals portfolio worldwide. GO has a significant storage capacity, high-quality assets and growth potential, which will help launch the Aramco brand in Pakistan.” This marks Aramco’s second planned retail acquisition in 2023, aligning with the company’s downstream expansion strategy focused on refining, marketing, lubricants, trading, and chemicals.The strategic move by Aramco is expected to pave the way for additional investments in Pakistan’s downstream oil sector, emphasising the company’s commitment to international growth and impact. Experts are hopeful that this injection of FDI will also help Pakistan with its ongoing foreign reserves and balance of payments crises. Saudi Aramco’s foray into the Pakistani downstream oil sector is also expected to bring about transformative changes, introducing global expertise and innovative solutions to the market. The deal underscores the strategic importance of Pakistan in Aramco’s international growth trajectory.

A little about GO

ne thing that works largely, in GO’s favour is its spread. With more than 1200 retail outlets, GO is the largest retail outlet operator in Pakistan in the private sector. Its oil storage depots and terminals across the country can hold approximately 200,000 MTs of fuel. A 2nd upcountry storage network and a fleet of 800 tank trucks equipped with satellite tracking systems, ensure round-the-clock deliveries to its retail outlets. In 2020, GO also became the first OMC in Pakistan to introduce Electric Vehicle Chargers at its outlets. It has the largest network of Company Owned Company Operated (COCO) retail outlets in Pakistan and has a strong network of

fueling stations on the M4 and M5 motorways. It is relevant to note that GO’s retail market share in Pakistan has exhibited a consistent presence, standing at 7.0% in FY 2023, 8.9% in FY 2022, 9.3% in FY 2021, 9.1pc in FY 2020, 7.9percent in Financial Year (FY) 2019. Besides, GO is not a listed company.

Why GO?

question that has confounded many is that why did Aramco opt for GO, instead of other petroleum companies. Apart from a glaring Rs 45 billion in loans on its balance sheet, GO has found it difficult to get banks to open credit lines for it. So the question is, why would Saudi Aramco, a company that has one of the largest market shares in the world, buy a stake in a company that is losing market credibility and has high amounts of liabilities? Sources familiar with the deal indicate that Aramco plans to supply fuel to GO, introduce its Valvoline range of lubricants in Pakistan, and launch Aramco-branded retail outlets, enhancing GO’s standing in the market. According to senior energy analysts GO’s supply exclusivity and utilisation of storage capacity are reasons enough for Aramco to look at it. Any further conclusions can only be drawn after the terms of the agreement are made public. It is also important to note that despite being a company with a market cap greater than $2 trillion, it still has lesser retail presence than some of its global competitors. That is one of the reasons why Aramco is practising a downward expansion strategy. Downstream expansion strategy involves a company extending its operations toward end consumers in the supply chain. It includes activities like retailing, marketing, and customer engagement, adding value to products/ services. This would enhance Aramco’s brand visibility, allowing for direct market influence increasing the company’s profits in the longer run. A native brand will not only help aramco establish brand recognition, but also provide endless opportunities in an emerging market like that of Pakistan. It is also important to note that the terms of the deal, along with the amount for which Aramco bought 40% of GO

is undisclosed as of yet.

GO’s History

n 1967, Chaudhry Riaz Ahmed entered into the fuel retail business with sales in remote communities of Southern Punjab. He continued to grow the business with acquisition of various retail outlets. During 1979 to 2011, Khalid Riaz, son of Chaudhry Riaz Ahmed, joined the fuel business at an early age, further expanding the business and becoming one of the largest dealers of leading oil marketing companies in the country. Growing the family’s transport business, Riaz became one of the largest oil transporters in the country with approximately 5% of the entire volume of Pakistan’s fuel moved by Sitara Petroleum Service (Private) Limited’s fleet. In 2012, Khalid Riaz sought help from Tariq Kirmani, former Managing Director of Pakistan State Oil, to establish an Oil Marketing Company and obtained the licence in the name of Gas & Oil Pakistan Limited (GO). The company went on to construct its Sahiwal Depot to enable commercial operations on its commissioning. The company under the leadership of Tariq Kirmani and Khalid Riaz established itself as a force to reckon with, commissioning storage depots and retail outlets every year from 2015 onwards. The company made a name for itself as a reliable supplier of quality fuels and quickly became a company known for meeting its commitments. GO was awarded a Permanent License by Oil & Gas Regulatory Authority (OGRA) in 2019 making it the first company in more than a decade to achieve this accolade. In 2018, the company entered into a strategic partnership with one of the largest independent energy traders in the world, making it a shareholder and a major supplier to Pakistan. Following a period of economic upheaval following COVID-19 and headwinds facing the country and the industry, in 2023, GO bought its equity back from the international trader with a view to partnering with a company with leadership position in the downstream industry with a long term view. The company expects to deliver on this plan in early 2024 to embark on the next phase of its growth. n

Maintaining a good Image

From wholesale to retail to e-commerce, Image is growing!

By Nisma Riaz

or those of us born in the 1990s and early 2000s, the memory of tagging along with our mothers to Portia, where we would get lost between massive thaans (fabric rolls) of the best quality branded lawn fabric, along with three different counterfeit options adorning the store, seems like a fever dream now. Some of us can’t remember the last time we stood inside an almost claustrophobic little shop in Qurtaba market, dripping in our own sweat trying to find laces that would best compliment the fabric we just purchased. Even worrying about whether our tailor would be able to bring our vision for the outfit to life seems like a trouble from a past life. Today, the ritual of personally selecting fabrics is usually preserved for the wedding season. Instead, for everyday clothing, the focus has shifted to a singular, all-encompassing term: Pret. The word directly translates to ‘ready’ and more commonly called ready-made or ready-to-wear when referring to clothes. But there was a time when everything was not conveniently available on the racks for immediate trial. So, when did we go from selecting fabrics, laces and buttons to simply picking a kurta off a rack, trying it on and if

it fits, viola! The answer is: sometime around 2010. This new era of fashion, spearheaded by the advent of pret, forced everyone to adapt – buyers and manufacturers alike. Such is the story of Image, which started as an embroidered fabric manufacturer 30 years ago. In 1993, Asad Ahmed and Farnaz Ahmed founded Image, which sold high-quality embroidered fabric as wholesalers to clients, like Saleem Fabrics and Portia. It wasn’t until 1998, when the first Image store was established at Zamzama, which still exists today. With the launch of its first store, Image stepped into retailing its fabrics through its own stores, going onto expanding its network to 11 stores and it is paying off: this year, the company’s net profit stood at Rs 288.6 million. How did they do it? Let’s take a closer look at Image’s journey in the last 30 years, along with the changing landscape of fashion and the subsequent expectations of consumers in these last three decades.

Retail to the rescue

mage has evolved into a clothing brand that caters to a large majority of buyers, with its minimalistic designs and simple but trendy cuts. Profit sat down with

Marium Ahmad, Director at Image Pakistan Limited, to talk about the journey of the company her parents started. “Back in the 1990s, the patterns of buying were quite different from what they are now. The market was divided into two main categories, with 95% being unstitched fabric on the thaan and a culture of getting one’s clothes tailored, while only 5% of the market was for stitched ready-to-wear options,” Ahmad reminisces. It wasn’t until the early 2010s, when Pakistani retail saw a massive shift and the landscape tremendously changed. According to Ahmad, “This was mainly due to the growing presence of malls. When shopping became part of the country’s recreational culture, brands also started erupting. In the wake of this cultural shift, a ready-to-wear concept also emerged.” There is also another factor at play: the rise in the demand for work clothes. A 2023 study on the Patterns and Causes of Female Labor Force Participation: An Age–Period– Cohort Analysis for Pakistan reveals female participation in the labour force has grown by 9% in the last three decades. Faiza Ali, Associate Professor of Business Management at LUMS, noted that in an economic crisis like the current one, with monthly

inflation surging to 26.9% year-on-year as of October 2023, many women are left with no choice but to enter the workforce, as it it is becoming increasingly impossible to run a household with one income. So, there is not just an increased demand for semi-formal and work-friendly attire, but also decreased time on women’s hands to spend time designing and getting their clothes made from scratch. “My observations and numbers show that younger audiences, especially the growing Gen-Z demographic, are more involved with work and their role now not restricted to just being a housewife, has shifted priorities, so they have a greater demand for pret,” relays Ahmad. She believes this shift in overall consumption trends was driven by, “Young audiences, essentially urban women, such as office going girls, as well as, young and middle-aged mothers, who started looking for a hassle-free experience, without having to compromise on good designs and aesthetic, while at the same time not being charged an arm and leg for it.” Ahmad explains, “The concept of designers was there before but going to a designer boutique meant two things: firstly, it used to be order-based and secondly, going down this route was extremely expensive. Buying designer outfits back in the day meant you had to pay a lot of money.” Even before malls became mainstream, many clothing brands were already gearing to jump on the bandwagon of fashion retail, with Khaadi, Generation and Ideas by Gul Ahmed being at the forefront of the revolution and multiple stores across Pakistan. This was followed by brands that started dabbling with niche designs: think of Huma Adnan’s Fnkasia, Sefam’s Rang Ja and EGO, all of which cropped up between 2004 and 2012. This shift did not go unnoticed at Image. Ahmad shares that towards the end of 2016, Image was transformed from being just a fabric manufacturing company into a fashion house. “When we dabbled with fashion, we saw a good response and there on our journey took off. From having one store till the mid 2010s, to having eleven stores across the country, not to mention our e-commerce presence, we have come a long way,” Ahmad exclaims proudly. The brand is set to launch another store in Lahore soon. From the looks of it, the company is doing quite well financially too. Revenue growth over the last three years has been quite spectacular, with 149% increase in revenue from fiscal year 2020 to fiscal year 2021 and 72% revenue growth in fiscal year 2021 to 2022. Image recorded a 57% growth in revenue in the last financial year ending June 2023.

In the last fiscal year ending 2023, Image recorded a net profit of Rs 288.6 million, which was a 39% increase from the preceding financial year ending June 2022. The company’s net profit surged by a whopping 414% in fiscal year 2021 and 72% in fiscal year 2022.

Ahmad insists that the main focus of Image has always been to maintain the quality it is known to have, while catering to a large demographic. She explains why it is important to keep the old school loose fabric segment alive: “Despite pret getting preference from a large

Image’s trajectory of growth in terms of both revenues and net profits is evident and the trend seems to be continuing in the future. The financial year 2024 already looks promising, with a net profit of around Rs 132.7 million recorded in the last quarter ended September 2023.

segment of buyers, our unstitched segment is still popular because for a certain age and above, as well as for gifting purposes, people still like buying unstitched fabrics. I believe there are two kinds of women: those who have a vision and possess the ability to make trips to their tailor, explaining what they want and

getting the desired output. But then there are also those, who have absolutely no idea how to translate their vision for an outfit to a tailor and even the most beautiful fabric can’t save the outfit from looking like a disaster.” Even though Image has an array of categories, from daily wear to embroidered chikankari and raw silk,, Ahmad insists they are not a fast fashion pret brand. And this is what, according to her, sets Image apart from other clothing brands. “The concept of image is not that of fast fashion. Instead, we are everlasting fashion, we are giving you value for money, which is why our prices are also higher and we charge a premium. We get to have our prices because our product is not compromised in quality, our fabrics can be worn for the next five and would still look new after several washes– this is something you don’t see in other brands,” says Ahmad. The other factor that distinguishes Image from other fashion brands is their designs. “We make classic and evergreen designs, staying cognizant that Image’s identity and brand philosophy is to create products that are timeless and you are unlikely to get sick of it, unlike the fast fashion fad that would go out of fashion in less than three months,” explains Ahmad. She believes that every article of clothing you purchase from Image is an investment in your wardrobe.

The metaverse of fashion retail

e live in a society where phrases, such as “When things get hard, add it to the cart” have become part of the lingua franca of younger generations. Consumer behaviour did not just shift from getting clothes tailored to buying pret, but also witnessed a retail to e-commerce shift over the years. A 2021 report by Euromonitor International forecasts the sales performance of apparel and footwear retailers to dip by approximately 5% from 2022 to 2026. The same report, however, reveals a trend of growth in the retail value of e-commerce shares for Pakistani retailers, such as Gul Ahmed and Khaadi over the past five years. Despite a downturn in consumer spending in traditional retail due to a high inflation rate, year-on-year online shopping appears to have been resilient to inflationary pressures. According to an industry source from a major clothing retail brand, consumer research indicates a preference for the convenience of online shopping over the time-consuming experience of browsing through physical stores. This trend suggests a decline in the appeal of traditional retail stores and the creation of a metaverse of fashion retail. Some small businesses, most of which popped up during the pandemic, are turning into successful e-commerce stores, without the need for a brick and mortar presence. Stores like PELAGO, The Sassy

Store, Inclusivitee and Ayesha Accessories are a few examples. To cater to this new segment of online shoppers, Image has also developed an online presence, not just in Pakistan, but also overseas, targeting the growing diaspora market. “Our current focus is on targeting the international market,” says Ahmad. Because the company has only recently opened its doors to the international market, the local market makes up the larger chunk of Image’s revenue. Ahmad says that the international market makes up only 10% of the revenues, while the local market makes up the remaining 90%. Ahmad explains how overseas shipping comes with a myriad of challenges and delays, including high international shipping costs, long delivery periods, even longer delays in cases of exchange or refund and issues with international transactions. To combat these issues, in January 2022, they incorporated Tri-star Image (USA) Inc., which is an overseas subsidiary of Image Pakistan. The company has made arrangements for making delivered duty paid to enable scaling the company’s e-commerce volumes. “If you are in the US and shopping on US.image1993.com, you will not be paying international shipping prices because we have entailed extra costs to set up a fulfilment centre in America,” says Ahmad. With the establishment of the new fulfilment centre, here’s what you can expect as an Image customer in the US: you pay the regular delivery charges, you can opt for a free refund or get an item exchanged within four days, you won’t be paying import-adjusted prices or any custom duties and neither will you be required to go through the hassle of filling out know-your-customer forms. Similarly, in November 2021, the company established Image International Limited, another overseas subsidiary in the UK. “So, we’ve taken care of the import headache in the UK, as well. The subsidiary means buyers won’t be importing anything because they would be locally buying from our presence in the UK,” says Ahmad. The fact remains that with a rapidly depreciating rupee, the international market presents an opportunity to sell at better margins. Profit asked Ahmad whether the prices for overseas customers on their international e-commerce stores are different from the prices for Pakistani buyers. Ahmad said, “We are very competitive and our strategy for the international market is to keep the prices at a minimum but yes, we do have slightly higher prices for the international market. The current international prices are a 1.5 to 1.7 multiple of local prices, which gives us a margin, as well as covers the costs of setting up an international subsidiary and doing business overseas.”

Miss Image has made her debut

he fear of missing out, especially on creative experiments, is felt deeply at the Image headquarters. Perhaps that is why after Sapphire, Beechtree, Khaadi, ETHNiC, Gul Ahmed, Alkaram and many others, Image also launched a Western line called Miss Image on December 1, 2023. This collection mostly features matching separates, with an eastern spin, such as intricate desi embroidery on a co-ord set. “With Miss Image, you will see the same Image aesthetic translated into fresher cuts for younger audiences,” Ahmad expounds. Competition in this particular segment of ‘western’ outfits is fierce, with all pret players having their own collections of button-downs and peplum tops, bearing some semblance to eastern aesthetics through embellishments and bright prints. Image’s take on this segment is quite classic and minimalistic, complimenting the brand’s overall aesthetic. Image has a fashion institute of its own, called the Imperial Tutorial College. The institute operates in collaboration with a Turkish university known as Nisantasi University. “We are the only brand that has a fashion-concentrated college, therefore we are also playing a role in producing talent for not just our own business, but for the country,” Ahmad adds. “Students get the chance to go to Turkey and study at Nisantasi for a year or two, as well, for an associate degree program or a full graduate degree program,” she concludes. Ahmad has for too long felt that the country is in a desperate need for good resources and students in Pakistan lack proper education and training to work in fashion. Image’s fashion institute gives the company an inhouse platform to train and hire talent. Image doesn’t hire every graduate of their institute, so the school is also producing talent that goes on to work for other fashion houses. “Even though the programs we offer are in collaboration with Nisantasi, we stress over the fact that talent in fashion needs to know how to make clothes for the local market, keeping cultural values, as well as, stylistic preferences in mind. How many people in the country actually wear gowns and dresses?” Ahmad poses rhetorically. Success in fashion and clothing retail is not only limited to brands that have an impressive start and identify a niche early on, but also includes those who are quick to adapt to fast-changing trends, demands and the overall needs of a particular era. Image has proven to be just that, going from a fabric wholesaler, competing with the likes of Bareeze, to a fashion retailer that competes with prominent pret players and caters to the everyday needs of urban women today. n