VARIOUS FACETS OF ECONOMY
AHSAN A. SHAH, MBS-Marketing SZABIST
Apr 28 - May 11, 2008
The business sector in Pakistan for the year 2007-08 has been a bag of mixed emotions, confused strategies both at macro and micro level, and growth accompanied by intermittent periods of lethargy. It will be fair to say that few sectors have come a long way while few have ceased to nurture themselves to any concrete levels of growth. It is not very flabbergasting to point out which ones have done well and which ones have not. The few indicators of growth; in silhouette, are advertising expenditure of companies falling in lineage for a single sector, amount of recruitment done on behalf of various organizations within their habitat, dividends announced per quarter for each entity for the particular paradigm, so on and so forth, accumulating expansively to signify the growth of the fastidious sectors and also pointing towards the ones which have been unfortunate to make hefty progress in an environment where the political and economic fronts are seeing an indefinite period of turmoil.
There is no doubt that this sector has been very productive to the economy, and has been a sigh of relief as far as employment is concerned. However, this sector has grown to a sizeable degree of uncertainty. The uncertainty is due to the fact of a lot of competition existent within the sector and competition still pouring in from various other dimensions. But if viewed from a positive aspect then it has also moved the telecommunication sector radically from niche to masses. Services which were once so lucrative are becoming the needs of public at large, significantly required at work or even to blend socially. Mobilink being the concrete vendor to begin with has seen a lot of strong contenders coming in the shape of WARID, TELENOR, etc. A latest edition has been of ZONG and who knows who else might be joining in. The pleasant thing about this sector is the growth and the market share potential it has promised so far. This has kept the various organizations still in hunt.
The banking arena also looks quite solid. Although many hick ups have been experienced in this sector but the overall depiction still looks at equilibrium. The banking arena has been successful to generate a bulk of employment for the country. And what impresses one more than usual is its accelerated growth even in an uptight current scenario. More and more branches keep churning up and the rate at which acquisitions and mergers have occurred is worth appreciation. Even now there are more products and services which have yet to be launched in this developing market being worked upon by many banks as compared to some western countries and this surely means more growth and employment.
This is also a rapidly growing concern and is also a fruitful happening as far as the employment and other industries which work in an addendum are concerned. Construction arguably is the mother of all industries and surely if construction and infrastructure improvement are at a high at any given point in time then the rest of industries ought to experience growth. However the political situation is not so good and if that improves there will be further marked improvements in this sector which promises a lot of kinetics as far as profitability is concerned and growth of other related industries and includes colossal names such as EMAR which is emerging as a leader and is attracting huge international funds because of its global success and goodwill.
Cement sector although is closely associated with the constriction industry is worth considering separately because of its gaining popularity and growth. Even if the construction was not to pick as much as it did, cement sector arguably would have done better through exports. Recently the name which actually comes at mind is of Lucky Cement, which has been a major exporter of loose cement. And one name that does emerge from Lucky Cement in particular is of Mr. MEHBOOB-UR-REHMAN, Director Operations Lucky Cement, the sole man behind the productions setup and the ever increasing production lines. It is also worth noticing the man who has put a lot of trust and investment behind and that is Mr. M. A. TABBA, the C.E.O of Lucky Cement. Together these two have motored along in a robust fashion to take the Cement Industry to a new height. Cement Industry is an important aspect for any economy, but here it is even more significant and worth discussing as it has breathed a sigh of relief through other addendums and many various walks of life via creating employment and nurturing other small businesses.
What once was a backbone now has shown a certain decline. The reasons are simple the big names that were involved initially were minting money and were just not pumping it back into the resources and preparing for the future needs and demands of textiles required, as a result China capitalized and over time developed a better technology to produce a far superior quality at a cheaper price. The scenario is still not very bleak but having said this, lot has to be done so as to attain the lost comparative advantage back.
A sector, which is currently experiencing a bubble growth with so many channels popping up and without stiff regulations, has been beneficial in only generating concrete levels of employment. As far as quality is concerned only few bottle down to international standard of viewer ship. However since it's nature is analogous to a bubble it has to explode sooner than later. Meaning a lot of channels will shut down and with more regulation coming in it will be quite tough for certain channels to meet the criteria. Currently it is quite a clutter out there and it is difficult to differentiate between the positioning of various channels. This industry is clearly in its growth stages and has a long way to go. One of the channels has even gone a distance to be the pioneer English channel of Pakistan, only to import anchors and speakers who speak English but with a foreign accent.
Pharmaceutical industry is a very suave industry. This industry does generate a handsome sum of jobs, however mostly are at a top notch level, such is the nature of the industry. Pharmaceutical Industry in Pakistan is in its late growth stage and has done quite well even in times of extreme political situation. Few big names that form this industry are GSK, NOVARTIS, and AVENTIS. Pharmaceuticals have done well and there is no element of astonishment as this industry is a life saving one and is bound to do well in almost all circumstances, but there are always some glitches as nothing is perfect. With medications being imported and more importantly from India one of the cheap resources available there was some Government regulation brought in as a savior.
Most of the hotels in the country belong to the HASHWANI portfolio, so safe to say that there is a certain monopoly. However the case will not remain, for there are few big names that have actually come in and they include; ACCOR SOFITEL, HYATT, etc. The employment generation in this sector is good but with a very high turn over rate and this is due to the very evident organization politics existent at the top level and some stringent policies which drive the workforce dizzy not to realize that the most important element to run a sensitive industry such as this is the human resources. There is no skepticism as far as the chairman's vision is concerned; Mr. SADRUDDIN HASWANI, a brilliant man who actually stepped up in times of hotel industries restoration, only to leave it to those big fishes that coerce big salaries but are so insecure at top levels that they would not care any less for the overall vision.
The tourism industry in Pakistan has a huge potential but dejectedly has never been exploited adequately. The reasons are many but few that do take major share are the Government policies and the political front of the country. Tourism Industry has shown to have sufficient prospect to drive a country's economy specifically by Malaysia and India, both belonging to the same region. Pakistan too has to quickly realize the true worth and put things right on course as far as this industry is concerned.
The agricultural sector was also at one time the backbone of the country, but due to some superficial Government policies and lack of substantial subsidies the sector has stooped to a low. There is a definite need of wheat in the country and the prices of rice have also rocketed sky high. This sector which was doing well or at least promised a huge potential has actually rushed into obscurity. Even the banks and insurance industry rate this segment as quite parsimonious.
Electronic is more or less limited to huge imports and this is merely due to the fact that China again is a dominating force. The low prices set by Chinese have led their products to a huge success in this price sensitive market. Especially for a case in electronics which usually go obsolete in an year or two the Chinese manufacturers have brilliantly used this to their advantage by dumping less quality products at extremely low prices to make sure that people use and throw them in no time for them to get involved in a new purchase with better features. The growth of this industry locally seems very unlikely, but the growth through imports can be seen potentially strong if one arranges the countries resources in a way that complimentary advantage can be derived from and can prove productive.
Consumer durables include many household items like Tableware, Furniture, etc. these are essential part of a successful economy and it is with great regret that before this type of industry could pick up it was squashed by some stringent Chinese competition. Chinese products are not only superior in quality and design but they are also extremely competitive as far as price is concerned. Therefore most of the tableware factories and other consumer durable plants shut down their operations and few that remain intact actually are fighting hard only to find themselves to survive another day.
It's not easy to cover every sector and in a comprehensive detail too, but I tried to put a little of everything in a nutshell. However the overall growth could have been more prosperous if it was not for the political situation of the country. India has seen a far more growth particularly with Foreign Investment than us and this has been a major difference. The confidence of an investor in India is sky high as compared to in Pakistan. On the contrary a lot of foreign investment promised to the country was diverted due to the political situation and this has really put the country few years back. Although it will take some time to retrieve the political stability and the lost confidence one wonder where those starts would spark from.