By Syed M. Aslam
Jan 06 - 12, 2003



EHTESHAM ALBARI is the Marketing Manager of Samsung Electronics, a leading Korean multinational engaged in marketing home appliances in Pakistan. Born and raised in Karachi, Ehtesham completed his Bachelors in Science from the DJ Science College from where he also did his Intermediate. After the graduation he decided to get a professional degree and did MBA from the prestigious Institute of Business Administration Karachi. He started his career in 1996 as Marketing Manager with LG Electronics, another Korean electronics giant and later joined Crescent Leasing as Head of Consumer Financing.

PAGE: You have been engaged with consumer financing throughout your career. How do you view the potential of consumer financing in Pakistan?

EHTESHAM ALBARI: Pakistan's huge population offers an immense potential for consumer financing, particularly as it remains an untapped market still. The government has realised the important role it can play to improve the quality of life in a country reeling from low per capita income and declining purchasing power. The central bank, the State Bank of Pakistan, has recently asked the financial institutions and banks to earmark a substantial portion of their funds towards consumer financing. It has also allowed the leasing companies to get engage in consumer financing. The measures aim to provide people an easy access to financing.

PAGE: How easy access to consumer financing benefit the economy?

EHTESHAM ALBARI: It will help the economy in a number of ways. The easy access to financing would help the salaried and middle-income segments of the society to buy home appliances and electronics goods on affordable installments. This in turn will help the industry and trade to find new sales avenues to develop economies of scale. It will help the government to earn additional revenues. It would also help in the documentation of the economy as bank statements and verification will be a prerequisite for the approval of financing. It will help develop a new consumer culture in the country.

PAGE: How?

EHTESHAM ALBARI: There has always been huge potential for the growth of consumer financing but till recently it was just not available. It will help induct a personal credit culture on the one hand and the development of financing in the organized sector on the other to offer easy access to fuel industrial and trade activities. Home financing also allows the bank find a market which is extremely receptive in particularly at a time when they have substantial funds to provide and shortage of mega projects.

PAGE: How big is the market of home appliances in the country?

EHTESHAM ALBARI: We estimate the demand for television sets in the country at 650,000 unit per annum. The demand for refrigerators is around 350,000 units per annum, washing machines around 30,000 units per annum, vacuum cleaners around 20,000 units per annum and microwave ovens around 50,000 units per annum. The annual demand for window-type air-conditioners is around 60,000 units per annum while that for the split air-conditioners stand at around 40,000 units per annum. While in term of quantity the television is the largest selling electronic item in the country, in term of value the air-conditioner is the biggest revenue earner. Thus all the companies marketing consumer appliances in the country view air-conditioners as core product.



PAGE: How reasonable are the mark-up rates?

EHTESHAM ALBARI: They are reasonable. For instance, we finance our products through three different financial institutions- Crescent Leasing, Habib Bank and PICIC. The first is offered through a network of 12 designated dealers in Karachi and we will be introducing the scheme in Islamabad also later this month. We have agreements with the Habib Bank and PICIC to finance our products through the designated branches of their wide network nationwide. The mark-up rates for all these three schemes, in general, range between reasonable 9 to 10 per cent. In addition, the prices of consumer appliances usually register an average increase of about 10-15 per cent every year and this affordable mark-up, thus, neutralises the impact of any and all such increase.

PAGE: The Afghan Transit Trade took a heavy toll on the consumer appliances and electronics goods in the country in not too distant a past. How are the things at present?

EHTESHAM ALBARI: The tightening of the border has brought smuggling to a trickle for the benefit of the legal imports and trade. It has also helped the government to increase its revenue due to substantial increase in the import and local manufacture of home appliances and electronics goods. The legal trade is the beneficiary. The situation is much better and end of the illegal activities has helped the legal trade to regain a substantial portion of the market which it had lost to smuggling in not too distant a past. This will also benefit the people as the companies marketing these products would help to offer competitive prices with the opening up of the market.