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Oct 25, 1999

Emirates Announces Non-Stop Filights to Munich

Emirates Airlines has announced the commencement of non-stop flights from Dubai to Munich, Germany, from November 1, 1999.

Emirates will start with six non-stop flights a week between Dubai and Munich. From January 1, 2000, these will go up to daily operations. Munich flights will add to the daily operations to Frankfurt, and Emirates will then be offering a total of 14 flights a week into Germany from Dubai

All flights to Munich will be operated with Emirates' Airbus A310-300 configured in two classes of 18 Business Class and 177 Economy Class seats.

Shareef A Raheem, Emirates' Manager Pakistan, said: "Pakistan, one of Emirates' first destinations, is today one of the biggest stations in our network. Emirates' new service to Munich connects especially well with Emirates flights from Lahore to Dubai and from Islamabad to Dubai Residents in Pakistan will enjoy faster and more convenient access to the south German city."

Apart from Lahore, Emirates serves Karachi, Islamabad and Peshawar and operates a total of 30 flights a week from Dubai

Other new destinations to come online are: Stockholm, from November 12, in a codeshare with SriLankan Airlines, and Sydney, from March 26, 2000.

Szabist forum on Banking Challenges of the new millenium

By Mr. Zeeshan Ghani (BBA IV) SZABIST and Mr. Adeel Hassan (BBA IV) SZABIST

The importance of getting current knowledge and keeping oneself abreast with the latest developments in the world is essential to cope with the challenges of the new millenium. We are about to enter the 215t century and due to this reason it has become a must for every individual to be informed with the developments of the world.

Shaheed Zulfikar Ali Bhutto Institute of Science and Technology (SZABIST) in keeping pace with the latest developments in various fields has been continuously arranging seminars under the banner of the SZABIST FORUM. Various luminous personalities from diversified professions have been invited to speak at the SZABIST FORUM.

The latest addition to this was a seminar held under the title of "Banking Challenges of the New Millenium" on September 16, 1999. The speakers were Dr. Amjad Waheed, Head Asset Management, NIT; Mr. Raheel Ahmed, Vice President, Citibank N.A.; Mr. Intisar Alvi, General Manager, Orix Investment Bank (Pak) Ltd.; and Mr. Khalid Durrani, Senior Vice President, National Bank of Pakistan.

The purpose for holding this seminar was to inform the students about the latest trends that are prevailing in the Banking Sector and also about the future prospects of banking particularly in the next millenium.

Dr. Amjad Waheed briefed the audience about the prevailing macroeconomic situation of the country. He stressed that that the present problems attached with the country are due to the debt issue and lack of human infrastructure. Pakistan's debts have risen to the size of its Gross Domestic Product (GDP). Debt servicing is eating up all the Federal Government Revenues. This year the estimated revenues will be $320 billion while the debts alone are expected to be $280 billion. He also spoke about the economic threats Pakistan might be facing in the next millenium. He suggested that the government should make efforts to match the maturity of its assets with its liabilities. He said that there must be a trend of shifting income to equities, and stressed that there should be the element of professionalism in the banking sector.

The second speaker of the seminar was Mr. Raheel Ahmed from Citibank informed the audience about the opportunities that are existing in the wake of technological developments and also about the challenges and threats that might exist in future. He said that the banks must-keep abreast with technological changes that are taking place around the world. There are new developments taking place in the banking sector. He gave the example of identification procedure of customers in banks that involve by checking a person's retina. Computerized thumb impression system for identification has been developed. These days transactions can be done via mobile phones and one can access his or her bank account through the television set. Extreme sophistication will be the key features of the next millenium.

Talking about the opportunities he said, "The biggest opportunity is technology". Emerging middle claXss is another fastest growing area. They are inspired people and have needs and they are educated. If they are provided adequate and sufficient loans, they can start their own businesses, and thus, they can materialize their dreams. This is a big opportunity for consumer banking. Another factor that has become an opportunity is the changing standard of people and their lifestyles. The third factor is Global Distribution Capabilities. Due to Internet, banking boundaries will become extinct. The concept of borders and cross-borders has been eliminated.

The fourth opportunity that lies is the development of nontraditional products. Products of banks must and will not be related to Finance. Overlapping of service sector and finance sectors is taking place. For example, the submission of utility bills. In the coming millenium the banks will be taking an edge over each other partly due to their operations in the service sector.

Mr. Raheel Ahmed also spoke about the underlying threats for the banking sector in the coming millenium. He started by briefing the audience about the competition and price wars. He made a comparison between the Pakistani and the U.S credit card system and the consumer responses to them. He said there must be mechanism to keep a check on corruption and bankruptcies. He also stressed on the mismanagement of data and MIS, and said that with the computerization of banking comes the threat of hacking.

He spoke about the challenges that are existing for the banking sector. Information management must be at the micro and macro level. There must be credit bureaus. We need data mining capabilities. Banks must acquire economies of scale. Products become commodities due to development. We need economies of scale through rationalization, centralization, etc. Electronic distribution capabilities must be there. He said that another threat existing with this sector is fraud, e.g. credit cards that can be misused. He said that technology management is also very important. Banking sector must walk side by side with the technological developments. He then talked about the legal and regulatory framework. Legal processes and documentation of economic activities was the introduction of innovative products like utility bills, school fees, etc.

Mr Intisar Alvi shared his views about the future of leasing business in the coming millenium. He told the audience about the components of a leasing company and gave a brief history about the progress of leasing business in Pakistan follows. In 1980s government realized the importance of leasing for this country. As a result leasing business started in Pakistan in 1985. Throughout the world, leasing has been introduced in the form of 'Financial Leasing' and has been later followed by 'Operating Leasing'. The same fact holds true for Pakistan as well.

In the initial 5 years of operation there were only 5 leasing companies. But now businesses are being increasingly financed through this mode of financing. As a result the number of leasing companies have risen to 38 in just 10 years. The total net worth of all the leasing companies in Pakistan was Rs. 9 billion in 1993 and it has been growing at an average annual rate of 10 percent ever since.

In Pakistan lease financing has contributed to 8 percent of the total medium of financing (at the most), where as in a developed country it contributes to 35-40 percent of that country's total financing.

Mr Alvi highlighted the fact that despite being expensive leasing is an attractive mode of financing because of the following features:

It is exempted from tax where as other forms of financing aren't tax exempted. It has a comparatively faster processing than other means of financing. In leasing comparatively less collateral (securities) are required. Recovery (in the case of default) is comparatively easier in this form of financing.

Giving a brief history about the Orix Leasing Company Mr. Alvie said that the company started dealing in 'Operating Lease' 2 years ago. Before that it used to deal in 'Financial Lease' only.

Referring to the current state of Pakistani economy, he stated that leasing business is going through a slump due to global economic turmoil. But he was confident that this situation won't prevail for an extended period of time.

Commenting on the future of leasing business in Pakistan, he said that hopefully people would become more aware of this mode of financing. He showed his optimism by stating that technological advancements would lead to an increase in demand of high tech. equipments that would be financed through leasing.

In the context of the threats being faced by the leasing companies in this country, he showed his concerns by highlighting the fact that very few new industrial projects are being established in Pakistan. He stated bad debts to be the main impediment for investment in this country. He stressed on the development of regulatory framework and encouragement of 'Consumer Leasing'. He pointed out that this country can prosper only if investments are made in the developmental sector. He concluded his speech on the note that those nations that don't keep abreast of the technological advancements face a threat of extinction.

The fourth speaker of the session was Mr. Khalid Durrani. Mr. Durrani is an experienced banker and has a banking experience of 26 years and is currently the Senior Vice President of National Bank of Pakistan. He has also written numerous articles for various newspapers and magazines.

He said that technologically we are ages behind the West. He stressed that if we want to survive as a nation, we will have to compete with the developed nations; _ and that is only possible if we compete with them at an intellectual level.

Pointing at our national psychology he said, "We consider best speakers to be the best people". He shared with the audience his personal experience of working with Mr. Agha Hassan Abidi, and paid him homage by saying that he (Mr. Abidi) was a very committed person. He said that in 1972 he was asked to develop the most sophisticated banking system in Pakistan to meet the banking challenges of the coming century.

Reviewing the history he said that in the past Indus Valley had an influence on 9 civilized societies of that era. He envisioned the future by saying that our present conducts would become a history for the coming generations. Thus, 'Our conducts should be exemplary'.

Giving a brief history about the banking business he said, "Banking is based on trust. Our Holy Prophet (Peace Be Upon Him) was a banker and an excellent businessman. People used to trust on him and used to call him Ameen".

He emphasized that to remain alive as a nation we have to develop critical thinking. Because sound and logical thinking leads to the generation of innovative ideas that in turn translate into technological developments. He also stressed the importance of commitment at individual and national levels.

At the end of the seminar, Dr. Javaid Leghari Project Director, SZABIST, thanked and handed out tokens of appreciation to the honoured speakers of the day. The seminar was attended by about 150 students of Management Sciences and large number of bankers from Karachi.