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PRO 16-07-2012_Layout 1 7/16/2012 12:21 AM Page 1

Monday, 16 July, 2012

‘International market determines POL prices, not us’ Dr Asim Hussain says country has no option but to phase out CNG stations

ISLAMABAD

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dviser to the Prime Minister on Petroleum and Natural resources dr Asim Hussain said that the petroleum prices would be raised according to the international market rates. Talking to Pakistan Television (PTv), he said that there was a chance to raise the petroleum prices this time as per their rising trend in the international market. However, the final decision to change the prices will be taken by the Oil and Gas regulatory Authority (OGrA), he added. replying to a question about the closure of CNG stations, he said that the country had no capacity to provide gas to all the CNG stations. “There are two options: either we have to phase out the CNG

stations in few years or CNG will have to be provided just to the public transport while the private vehicles will be transferred to Liquified Petroleum Gas (LPG).” dr Asim said that the policy-makers and public should take this difficult decision to save industry, fertilizers and power sector because as “we have limited gas.” “We are not giving required gas to the power sector. in coming winter our industry can be closed due to shortage of gas and even it will be difficult for us to fulfill the domestic requirements,” he added. replying to a question about the Liquified Natural Gas (LNG) project, dr Asim Hussain said some anti-Pakistan forces were making propaganda against the project. However, the government was consciously working on this project. “We have nominated a partner for the LNG project and also discussed it in different meetings”.

BOI chairman hopes to attract foreign investment by getting bills approved ISLAMABAD: Board of investment Chairman saleem H Mandviwala says the approval of special economic Zone Bill by the parliament will attract foreign direct investment and encourage local investors. Addressing a press conference‚ he said the Bill has been enacted to meet the global challenge of competitiveness. He said the law will ensure consistency and transparency in economic policies and restore the confidence of investors. Mandviwala said the special economic zones would have exemption from custom duties and taxes for all capital goods imported for the development‚ operations and maintenance of a zone. He disclosed that some of the investor countries like Korea‚ China and Japan are expecting to benefit from the scheme as soon as it became operational. NNI

The good that Ramadan does to economy According to a recent study, on average, stock returns are 9 times higher during the holy month NEWS DESK For Muslims, ramadan means a break from the everyday. Along with the fasting, prayer and devotion, “the pace of life changes significantly during this month,” says Nader Hashemi, professor of Middle east and islamic Politics at the University of denver’s Josef Korbel school of international studies. “The time for entertainment and traveling is severely limited, you spend time with immediate family. They’re celebrating, gathering. Mosque attendance goes up. it’s a month of charity, of more giving to the downtrodden,” Bruce Kennedy of the daily Finance reports. in countries where islam is the majority religion, daily work schedules are often turned upside down during ramadan, which will start in a week’s time. “And what happens, by and large, is most government offices and most national businesses tend to slow down or almost shut down, so that people can basically rest during the hot daylight hours,” says riz Khan, a broadcast journalist who has worked with BBC, CNN and most recently Al Jazeera english in Washington dC. “everything comes to life in the evening after sunset.” On some stock markets, there is reportedly a “ramadan effect,” a monthlong rally. “during the Holy Month, we find that on average, stock returns are almost nine times higher in predominantly Muslim countries than during other times of the year,” finance professor Ahman etebari recently told the voice of America. But riz Khan notes that ramadan does not necessarily mean traders can take a holiday, especially during the current global economic downturn. “Talking to my friends in the financial world in places such as dubai…they are aware of the fact that they need to keep up with the West,” he says. “The Arab markets cannot lag behind so far that they end up being adversely affected.” RISING PURCHASING POWER: The holiday also means special foods. “Based on the example of the Prophet Mohammed (pbuh), Muslims are encouraged to break their [daily] fast with dates,” said Hashemi. “Probably these people don’t eat a lot of dates during the year, but date consumption skyrockets [during ramadan], as do certain special sweets eaten during the eid festivals.”

in the Us, the market for halal-certified foods (permitted by islam) has soared in the past decade. The islamic Food and Nutrition Council of America (iFNCA) recently estimated an 80 percent growth in the market for halal-certified ingredients and food products since 2005. “This increased interest for Us halal market ingredients and products,” according to the iFNCA statement, “may reflect the overall estimated $170 billion Us dollar purchasing power of American Muslims.” in the Muslim world, ramadan also brings with it new clothing and special entertainment. “Television scheduling is very much geared around that,” says Khan. “Programming for the ramadan month is specifically made for the huge

audiences that watch it. soap operas [and other] types of programming are very, very popular.” But like Christians who bemoan the commercialisation of Christmas, many within the Muslim community are concerned that ramadan is losing its meaning and becoming a commodity. “Many people fear the original reason of the fast has been lost,” says Khan. “These things have given away to, in some cases, overindulgence in the evening and overnight. People stay up all night and they overeat. in some places food consumption goes up two or three times...and people actually put on weight during ramadan, which defeats the purpose of it. People are inverting their days

and finding an easy way out and then overdoing it.” A TIME TO BUY: ramadan ends with eidul Fitr, a celebration of feasts and giftgiving. Like Hanukkah or Christmas, eid and other Muslim holidays have become major sales opportunities for retailers. in fact, Best Buy (BBY) came under criticism from some organisations last year for a line on one of its ad circulars wishing Muslims a “Happy eid al Adha.” A spokesman for the Council on Americanislamic relations (CAir) said the Best Buy ad “makes perfect business sense to acknowledge and celebrate a holiday that one out of four people celebrate.” Muslims parents in the Us, says

Hashemi, often see eidul Fitr as a way of compensating for their children celebrating a holiday other than Christmas. “They will use that as a way of reminding young Muslim-American kids that they will be able to exchange gifts. They’ll buy their young children the equivalent of what a Christian American family would buy their young children on Christmas day. so they won’t have a tree, but they’ll use that day to go buy significant gifts to make their children happy.” “You can think of it as parallel to Christmas,” says Khan, “in the sense that it is definitely families coming together, people hosting each other, the exchange of gifts. Kids love it because they get their presents, and they get a lot of attention.”


PRO 16-07-2012_Layout 1 7/16/2012 12:21 AM Page 2

Monday, 16 July, 2012

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NEWS DESK

ere are the top 7 reasons why businesses fail and tips for avoiding them. According to statistics published by the small Business Administration (sBA), seven out of ten new employer establishments survive at least two years and 51 percent survive at least five years. This is a far cry from the previous long-held belief that 50 percent of businesses fail in the first year and 95 percent fail within five years, Patricia schaefer of Business KnowHow reports. Better success rates notwithstanding, a significant percentage of new businesses do fail. expert opinions abound about what a business owner should and shouldn’t do to keep a new business afloat in the perilous waters of the entrepreneurial sea. There are, however, key factors that — if not avoided — will be certain to weigh down a business and possibly sink it forevermore. 1. YOU START YOUR BUSINESS FOR THE WRONG REASONS Would the sole reason you would be starting your own business be that you would want to make a lot of money? do you think that if you had your own business that you would have more time with your family? Or maybe that

you would not have to answer to anyone else? if so, you should better think again. 2. POOR MANAGEMENT Many a report on business failures cites poor management as the number one reason for failure. New business owners frequently lack relevant business and management expertise in areas such as finance, purchasing, selling, production, and hiring and managing employees. Unless they recognize what they don’t do well, and seek help, business owners may soon face disaster. They must also be educated and alert to fraud, and put into place measures to avoid it. A successful manager is also a good leader who creates a work climate that encourages productivity. He or she has a skill at hiring competent people, training them and is able to delegate. A good leader is also skilled at strategic thinking, able to make a vision a reality, and able to confront change, make transitions, and envision new possibilities for the future. 3. INSUFFICIENT CAPITAL A common fatal mistake for many failed businesses is having insufficient operating funds. Business owners underestimate how much money is needed and they are forced to close before they even have had a fair chance to succeed. They also may have an unrealistic expectation of incoming rev-

Grappling with the challenging Pakistani economy

KARACHI sTAFF rePOrT Pakistan, despite being an “impressive great country” for foreign investors from the multinational companies (MNCs) like PepsiCo international, has a “tough” business environment owing to the lingering problems ranging from energy crises to the absence of effective laws on intellectual property rights (iPrs) and a sky-high interest rate regime currently standing at 12 percent. PepsiCo is one such international brand which, since its arrival in Pakistan in 1967, has turned to be the biggest food and beverage retailer in Pakistan having invested over a billion dollars to set up 14 bottling plants, a concentrate plant and a snacks manufacturing plant across the country where over 20,000 Pakistanis are earning their livelihood in a respectable manner. in a recently-conducted detailed interview with Pakistan Today (PT), Qasim Khan, a Us-educated Pakistani who is PepsiCo’sgeneral manager and president for the North and south Asia Business Unit that, in its scope, ranges from Japan to Mongolia, talked at length about the immense potential as well as challenges the MNCs like his own are presently facing in Pakistan.

What is the current size and scope of your business in Pakistan? QASIM KHAN: PepsiCo international is intricately linked towards the development of the corporate sector in Pakistan as we were one of the first multinationals to start operations in Pakistan in 1967. Now we are the biggest Food and Beverage Company in terms of the retail turnover in Pakistan having seven beverages franchises across the country. We also brought in Foreign direct investment in the shape of a concentrate plant set up in Hattar. Today, Pakistan is the 6th largest market for Pi worldwide and we have three brands; Pepsi, dew and 7-UP which are bigger

enues from sales. it is imperative to ascertain how much money your business will require; not only the costs of starting, but the costs of staying in business. it is important to take into consideration that many businesses take a year or two to get going. This means you will need enough funds to cover all costs until sales can eventually pay for these costs. This business startup calculator will help you predict how much money you’ll need to launch your business. 4. LOCATION, LOCATION, LOCATION Your college professor was right — location is critical to the success of your business. Whereas a good business location may enable a struggling business to ultimately survive and thrive, a bad location could spell disaster to even the best-managed enterprise. Some factors to consider: Where your customers are Traffic, accessibility, parking and lighting Location of competitors Condition and safety of building Local incentive programs for business start-ups in specific targeted areas The history, community flavour and receptiveness to a new business at a prospective site 5. LACK OF PLANNING

Business 02

Anyone who has ever been in charge of a successful major event knows that were it not for their careful, methodical, strategic planning — and hard work — success would not have followed. The same could be said of most business successes. it is critical for all businesses to have a business plan. Many small businesses fail because of fundamental shortcomings in their business planning. it must be realistic and based on accurate, current information and educated projections for the future. Components may include: Description of the business, vision, goals, and keys to success Work force needs Potential problems and solutions Financial: capital equipment and supply list, balance sheet, income statement and cash flow analysis, sales and expense forecast Analysis of competition Marketing, advertising and promotional activities Budgeting and managing company growth In addition, most bankers request a business plan if you are seeking to secure addition capital for your company. 6. OVEREXPANSION

A leading cause of business failure, overexpansion often happens when business owners confuse success with how fast they can expand their business. A focus on slow and steady growth is optimum. Many a bankruptcy has been caused by rapidly expanding companies. if expansion is warranted after careful review, research and analysis, identify what and who you need to add in order for your business to grow. Then with the right systems and people in place, you can focus on the growth of your business, not on doing everything in it yourself. 7. NO WEBSITE simply put, if you have a business today, you need a website. Period. in the Us alone, the number of internet users (approximately 77 percent of the population) and e-commerce sales ($165.4 billion in 2010, according to the Us department of Commerce) continue to rise and are expected to increase with each passing year. At the very least, every business should have a professional looking and well-designed website that enables users to easily find out about their business and how to avail themselves of their products and services. Later, additional ways to generate revenue on the website can be added; ie selling ad space, drop-shipping products, or recommending affiliate products.

CORPORATE CORNER than our rivals in terms of volume contribution. Pepsi is ingrained as a household brand while our contributions towards the development of sport, specifically cricket and music industry is unparalleled. We have been the pioneers of developing both these industries while strengthening our beverages brands over the past many decades. since 2006 we also introduced the famous Lay’s potato chips brand in Pakistan by investing in a state-of-the-art plant which employs over a 1000 people. We have made strong investments in the agricultural sector of Punjab by introducing latest technologies for potato growers and are looking to expand potato growing into the country’s northern areas. We also plan to export potatoes to other countries around the world. Our snacks portfolio consists of leading global brands like Lays, Cheetos, Kurkure and Wavy.

How do you see the current business climate in Pakistan? QASIM KHAN: The business environment is tough. The energy shortage, high inflation and high interest rates for local partners are the biggest roadblock towards any company evaluating putting up a manufacturing facility in Pakistan. However in the same breath the potential that Pakistan presents is immense and multinationals who have been in Pakistan for some time understand this very well. An improvement in the investment environment will only make our job easier to convince investors to come to Pakistan.

The current challenges you are facing in Pakistan? QASIM KHAN: Like any industry, we have some food and beverage specific challenges and some general macroeconomic challenges. ABSENCE Of IPR LAWS: We have a lot of potential in Pakistan around agro based industries. However, Pakistan currently does not have any law around the iPr protection of seed varieties. This limits our ability to expand our agro program on the foods side as it has become difficult to introduce our own potato seed varieties. TAxATION: Pakistan has one of the highest taxes on beverages in the world. We are the only food category product to have an excise tax on it. in a high inflationary environment, this seriously inhibits our ability to invest and expand employment. NEED fOR LEvEL PLAYING fIELD: ensure that all companies pay the required taxes. in addition to discouraging further investments, this acts as a major public revenue loss for Pakistan. We recommend that Government of Pakistan form a task force to ensure all players comply with the quality and taxation laws in our industry. ENERGY SHORTAGE: This impacts our business significantly and limits further investments. PT: OK, now tell us what made PepsiCo invest in Pakistan? Qasim Khan: Pakistan’s opportunity is driven from the following facts: LARGE MARKET: it’s the 6th most populace country in the world with approximately 70 percent population under the age of 30. TRAINED WORKfORCE: A large trained and productive population represents a big opportunity to Pakistan to benefit from its demographic dividends. INvESTMENT POLICIES: Pakistan’s policy trends have been consistent with liberalization, de-regulation, privatization and facilitation being the cornerstones of its policy. LARGE AGRO BASE: The strong agriculture base presents a great opportunity for our food business to expand in the future. We realize that Pakistan is the 11th largest wheat producer, 12th largest rice producer and the 5th largest milk producer in the world. GEO-STRATEGIC LOCATION: it can be a gateway between the energy rich Central Asian states, the financiallyliquid Gulf states and technologically-advanced Far eastern countries. This alone makes Pakistan a market teeming with possibilities. INCOMES ON f&B: A significant amount of individual incomes (as high as 40 percent) are spent on food and beverage representing a huge opportunity for the industry. Financial Markets: The capital markets are being modernized, and reforms have resulted in development of improved infrastructure in the stock exchanges of the country. The securities and exchange Commission of Pakistan has improved the regulatory environment of the stock exchanges, corporate bond market and the leasing sector.

How PepsiCo succeeded in Pakistan? QASIM KHAN: Our success in Pakistan is a combination of multiple things like strong global brands, great brand building and execution. A product portfolio advantaged towards growing further in the future. very strong, focused

and competitive bottling partners and an extremely robust distribution network developed by the latter. Further, in Pakistan, people are extremely optimistic, extremely resilient, extremely ambitious, extremely hard working and strongly entrepreneurial in nature.

Unveiling the revolutionary ideas

Elaborate on the concept of Performance with Purpose and its implementation in Pakistan? QASIM KHAN: The Performance with Purpose means delivering sustainable growth by investing in a healthier future for people and our planet. As a global food and beverage company with brands that stand for quality and are respected household names—Quaker Oats, Tropicana, Gatorade, Lay’s and Pepsi-Cola, to name a few—we will con-

PepsiCo General Manager and President Qasim Khan talks to Pakistan Today on the challenges MNCs face in Pakistan tinue to build a portfolio of enjoyable and wholesome foods and beverages, find innovative ways to reduce the use of energy, water and packaging, and provide a great workplace for our associates. in Pakistan, we have taken innumerable initiatives which not only demonstrate our ideas around corporate citizenship but also how we can integrate performance with purpose in our daily operations: 1. We ran an extensive flood relief and rehabilitation program focusing on education, livestock provision and development of water infrastructure in the flood affected areas. some of the key achievements have been: a. A total of 17 schools have been reconstructed in the most impoverished of areas. 40 percent of the 700 children that will be impacted will be girls. b. Provision of Livestock is an important source of livelihood in rural Pakistan and our program has benefitted more than 650 poor households. c. drinking water and irrigation systems that we put up in swat are providing much needed relief to the people and have not only helped in managing water related diseases but have also developed irrigation infrastructure for farmers. 2. We have added juices, water and Quaker oats to our portfolio to give consumers a choice of healthy and wholesome products. 3. We have reduced our packaging weight which has eliminated 80 million plastic bottles from the system. An interesting fact on this is that these bottles put together would form a chain longer than the earth’s diameter. The amount of bottles saved could contain the entire exxon valdez oil spill in 1989. This has also prevented a significant amount of CO2 emissions (12,000MT). 4. We have been able to eliminate all waste to landfill from our snacks facility. This was achieved by partnering with feed manufacturers and developing processes that allowed Nutritional Waste from sundar to be used as a key ingredient for high quality cattle feed. The Bio-degradable waste was developed into organic fertilizer through composting. 5. Year on Year reduction of over 20 percent in energy and water consumption by more efficient usage. 6. Launch of a massive volunteer program named “Helping Hands” where we have been running regular volunteer programs with The Citizens Foundation. Over 100 of our employees are regularly volunteering in good causes to make this program a success.

What’s your advice for the firms seeking to invest internationally or Pakistan specifically? QASIM KHAN: i advise them to do two things: First, visit Pakistan yourself to see the passion of the workforce and the potential of this great country. secondly, get the experiences of other MNCs operating here. i am sure you will be impressed.

KARACHI: A revolutionary business plan competition that spanned over six months from January to July called ‘INVENT’ 2012 was held at IBA, Karachi. It attracted 137 Universities from all over Pakistan and more than 2500 students who went through six months of grueling business plan exercises. These exercises provided an enormous opportunity of learning for students through trainings, workshops and especially through mentoring provided by the industry personnel. Press releAse

HUM TV rocks Lux Style Awards 2012 KARACHI: HUM TV won five out of seven Lux Style Awards in the satellite plays categories last night, proving its place as the number one channel among the entertainment channels of Pakistan. Press releAse

RAWALPINDI: Students of the Cooking Class-2012 organized by Pearl Continental Hotel Rawalpindi along with Mr. Abdul Hayee Acting General Manager of the Hotel and Mr. Asad Shah Public Relations Manager of the Hotel.

Apple does not care about being green NEWS DESK For many, Apple seemed to be an ecoleader in consumer electronics, but its withdrawal from a leading green product registry is causing many to question the company’s motives. But the real reason may just be about dollars and cents, Barbara e Hernandez of NBC reports. Apple has bowed out of ePeAT, a nonprofit product rating group backed by manufacturers and the U.s. environmental Protection Agency, according to the san Jose Mercury News. The reason? Likely because its new MacBook Pros can’t be taken apart and recycled, which is a violation of the non profit’s green certification standards.


profitepaper pakistantoday 16th july, 2012