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Pakistan’s financial sector is going through a major transition period

Pakistan’s financial sector is going through a major transition period

Govt has taken great opportunities to bring back economy on the right track
Google left-Tania Aidrus can play vital role in digital sector

Interview with Ms. Saima Zaidi — an economist

PAGE: Tell me something about yourself and your career, please?

Saima Zaidi: I did MA in Economics in the year 2000 since then I have been teaching Economy of Pakistan in different institutes. I also did MBA so that I can extend my area of research. I think the blend of Economics with Business and Management gives a complete overview about an organization and particularly about economy of a country.

PAGE: Could you give your views on the financial services in Pakistan?

Saima Zaidi: Unfortunately Pakistan has been ruled most of the time with incompetent finance ministers which has made GDP of Pakistan not more than three hundred billion dollars and the poor index of human development. Pakistan has potential to become an Asian Tiger. The banks have increased their loans to the government and the private sector credit has decreased in last few years. Though the banks’ investments in government securities are not as productive as lending to businesses and households, it has provided an avenue for banks for risk-free earnings and enabled them to post profits even in weak economic environment. The banking sector earnings continue to accumulate on the back of healthy returns on growing stocks of risk free government securities. In addition, the lower provisions also contribute towards build-up of profits. The financial sector in Pakistan is going through a major transition period. New groups are buying out Pakistan operations of foreign banks and the number of listed banks is also increasing. While the income from core banking activity is increasing due to higher business volume, earnings are also expected to further improve due to greater trends toward consumer finance, housing finance and enhanced lending to the agriculture sector.

PAGE: What benefit has the industry has got from the financial services offered in Pakistan?

Saima Zaidi: Pakistan’s economy has got benefits from the financial services in terms of business activities particularly over the period of last two decades. The enactment of six regulatory reforms has landed Pakistan among the world’s top 10 business climate improvers, according to the World Bank Group’s Doing Business 2020 study. Due to a concerted improvement in business regulation, Pakistan climbed 28 places and rose to a rank of 108 in the global ease of Doing Business rankings this year from 136 the previous year. This rise is significant and made possible by collective and coordinated actions of Federal Government and Provincial Governments of Sindh and Punjab over the past year. The accelerated reform agenda has many noteworthy features to improve quality of regulations, reduce time and streamline processes. This momentum needs to be sustained in the coming years for Pakistan to continue to make progress. The reforms that helped the country improve its ranking are significant. The country has made starting a business easier by expanding the functionalities of the online one-stop-shop. This reduced the number of procedures required to set up a business from 10 to five and improved the economy’s score for starting a business.

PAGE: What are your views on the financial services being offered globally?

Saima Zaidi: A digital transformation is taking place in the financial services industry, with a host of non-bank innovators offering both customer facing and back office financial technology products and services. This transformation includes emerging market economies, and in many places offers a viable digital alternative to traditional banks, which have left significant populations under banked. This note explores the challenges and opportunities that financial technology innovations present for banks in these nations.


PAGE: What is your opinion about the economy of Pakistan at present?

Saima Zaidi: Pakistan has made it easier to get electricity and register property. Karachi and Lahore have enforced service delivery time frames and launched an online portal for new applications. In addition, the country has increased the transparency of electricity tariff changes. Karachi has made property registration faster by making it easier to execute and register a deed at the Office of the Sub-Registrar. Lahore has increased the transparency of the land administration system by publishing its fee schedule online. Lastly, in the area of trading across borders, Pakistan enhanced the integration of various agencies in the Web-Based One Customs (WEBOC) electronic system and ensured coordination of joint physical inspections at the port.

Pakistan continues to perform best on the protecting minority investor’s indicator, earning the maximum possible points on the extent of ownership and control index, which measures governance safeguards protecting shareholders from undue board control.

Globally, Pakistan is in the top 30 economies on this measure. Going forward, Pakistan has other opportunities for improvement in the areas measured by Doing Business. For example, on enforcing contracts, the country ranks 156th. It takes 1,071 days to resolve a commercial dispute in Pakistan, almost twice the average among OCED high-income economies.

Pakistan is producing organic vegetables and fruits which are beneficial for human bodies and health. Pakistan must charge premium for the organic element.

However, Pakistan textile export is declining we need separate ministries for rice and textile. I believe make ministers and giving them target to achieve then our export will be manifold. Our total exports of all items is around 21 billion dollars, which less than only textile export of Bangladesh. Remember Bangladesh is not a cotton producing country but its textile export is more than Pakistan. We have to learn from Malaysia and Singapore but if we involve in our internal issues and concentrate on rebuking opposition parties the result will be even worse.

Tania Aidrus has left Google and is coming back to Pakistan to promote e-business and digital business which will be a positive sign because if we talk top 10 companies of USA we see Microsoft, Google, Facebook and other e-business oriented companies. Manufacturing companies are not in the top index of New York Stock Exchange. Tania’s presence in Pakistan will be a turning point for Pakistan stock change. Now the competition is in digital sector and we except Tania will play a vital role.

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