INTERVIEW: MUNEER KAMAL, PRESIDENT & CEO KASB BANK

NEW CHALLENGING MEASURES NEEDED TO ADDRESS FOOD & OIL PRICES

AMANULLAH BASHAR
July 07 - 13, 2008

Muneer Kamal, President & CEO KASB Bank, who speaks on economic issue with a great deal of confidence has identified the factors currently disturbing the economy and need to be addressed more carefully by the economic managers.

Those perturbing areas he pin pointed were including food & oil prices, inflationary pressures and last but not least the current account deficit which are putting a lot of pressures on the economy in Pakistan.

While discussing past and present economic situation the KASB president said in an interview that the tightening of the monetary policy by Dr. Shamshad Akhtar, Governor State Bank of Pakistan was a right and timely step for correction of economic imbalances specially the mounting inflationary pressures.

Muneer Kamal having sharp views about political developments however denied of having any political affiliation with any party yet he has his own views about the important development including socio-political and economic developments in Pakistan

As far as the banking sector was concerned, Muneer was of the view it has done really well at the time when the economy was on the boom and everything went into favor of the banks hence the banks have shown a great deal of performance so far in Pakistan. Particularly, the large banks were enjoying the stable economic conditions and have harvested good margins and profitability in good days. One of the reasons why the profits of the banking sector were growing was due to impressive growth of the economy when the GDP touched over 7 percent growth in Pakistan . In fact it did not happen in Pakistan alone it was a global phenomenon that economies were growing, capitals were flowing and economic development was taking place all around and Pakistan too was not an exception to this global economic growth demonstrated by all economies of the world.

That all interesting happenings were going into favor of the banking sector as well as the economy of Pakistan as principally speaking when economy will perform well the interest rates would be on the lower side and all segments of the economy would respond positively, Kamal remarked. And contrary to that situation if your inflation rate is on the rise and interest rates were also increasing on the back of tightening of monetary policy initiated by Dr. Shamshad Akhtar, the governor of the State Bank of Pakistan she did the right thing from 2005-06 to contain the inflationary pressures as some body has to stand up and recognize those inflationary pressures and she adopted the right policy. He recalled that days when the interest rates were down to 7 percent in 2003-4 in lending while borrowing even at 2 percent. She addressed those issues very rightly and very timely which as a result contained the inflation to 6 percent last year but again the international oil prices played their role in pushing up the inflationary pressures all around.

Now the economic trends have again changed not only in Pakistan but elsewhere in the world, the current inflation is a global ill which has adversely affected the economies globally especially the food inflation as the international food prices have also shot up tremendously. The oil prices which were around 65 dollar a barrel last year has gone up more than double. The price spiral both in food and oil price has consequently badly affected our current account deficit in the face of stagnant exports and increasing imports.

It is because of the growing current account deficit which has brought our currency under pressure as you may have witnessed that rupee dollar parity moved up to Rs70 a dollar recently, however the element of speculation cannot be ruled in exchange rate problem yet even the currency depreciation is again a global phenomenon. Indian currency down by 4.4 percent in past three four months, while South Korea 11.75 percent while Australian dollar has also depreciated by 8.5 percent. So inflation, currency depression and food price hike all are internationally originated while current account deficit and factor factors have completely changed the economic environment and this issue is threatening to the economy in Pakistan . However to address these challenges, we have to initiate innovative and challenges measures to address all these issues.

As far as continuation of the economic policies was concerned, it was set in 90s when the then government has set a direction for the economy including openness of the economies and the privatization of the public sector entities. These policies of openness and privatization should continue but we have to look into new challenges of the economy and have to decide how to handle the current challenging environment. Muneer said for facing the new challenges we have to introduce new policies capable enough to respond to the new economic situation. He suggested that number one priority should be assigned to the agriculture sector. The economists of the world including London economist has forecast some six months back that the current food inflation was not an abrupt development but it is a ten year phenomenon. In fact the poor are the worst hit segment of the food, oil and other inflationary pressures especially in our society. Since 74 percent of our population surviving on meager resources of two dollar a day or even less than two dollars. He said for this huge segment of 74 percent population policies should come ensuring availability of food supplies to this economically suppressed class.

This adverse food situation can be turned into an opportunity as well. In a way it is good news that food demand is growing all around in the world while Pakistan being an agriculture economy is generally self sufficient in food supplies. We can take advantage of the situation by enhancing its export surplus by optimizing production of all agriculture resources. But before optimizing our output we have also to take care of the leakages as the food items especially wheat and rice are smuggled into the neighboring states like Afghanistan , Iran and India .

When asked to comment on the future of the Banking sector in Pakistan , he was quite confident that this is a temporary phase and Pakistan's economy was sure to bounce back and the banking sector which has attracted top financial players into this country would certainly enjoy a glorious future, he said with a sense of great confidence, Muneer remarked.

KASB BANK

The KASB Group, established by Khadim Ali Shah Bukhari in 1958, has a long-standing tradition of excellence in financial services in Pakistan , known primarily for investment banking, research/trading and asset management. In 1993, KASB became the local partner for the international investment banking firm, Merrill Lynch. Recently, Merrill Lynch acquired an equity stake in KASB Funds.

The Group is made up of KASB Securities, KASB Funds, KASB Capital, KASB Direct and KASB Bank, added in 2002, to complete its financial services portfolio. The group has also diversified its interest with investments in real estate, technology, and oil and gas, while solidifying its leadership in financial services. Our continued success and growth are a reflection of our innovative approach to business and commitment to customers and community.

KASB Bank Limited (the Bank) is a Pakistan-based bank engaged in commercial banking, consumer banking and related services through 35 branches operating in different cities. The Bank operates in three segments: trading and sales, which includes fixed income, equity, foreign exchanges, commodities, credit, funding, own position securities, lending and repose, brokerage debt and prime brokerage; retail banking, which includes retail lending and deposits, banking service, trust and estates, private lending and deposits, banking services and consumer assets, and commercial banking, which includes project finance, real estate, export finance, trade finance, leasing, lending, guarantees, bills of exchange and deposits. The Bank's subsidiaries include KASB Technology Services Limited and KASB Capital Services Limited. On November 31, 2007, International Housing Finance Limited (IHFL) merged into the Bank.

PROFESSIONAL EDUCATION FACING MANIFOLD CHALLENGES

EDUCATION BECOMES ONE OF THE DEFINING ENTERPRISES OF THE 21ST CENTURY

KANWAL SALEEM

Education has become one of the defining enterprises of the 21st century following emergence of globalisation with globalised competitive environment.

When Pakistan was founded in 1947 as a result of the partition with India, the country had only one institution of higher education i.e. the University of the Punjab. With the passage of time, many private and public schools and higher education institutions were established to help fuel the country's socio-economic development.

Link between the lower and higher education was week and there was a need to improve it by offering competitive salary package for teachers. Only improvement in teachers' salary structure would not serve the purpose, rather such handsome packages should be made subject to periodic performance evolution on the pattern which was pursued by the Higher Education Commission.

The government also needs to pay attention to promote quality educational institutions in the country so that capable human resources could be produced to face the stiff competition in times to come.

Most universities have their own faculty in various departments but many use senior faculty from the colleges to participate in the teaching program at the master's level as well as for supervising students at the doctorate level. The universities play a crucial role in undergraduate and professional education, although the actual teaching is imparted by colleges. Colleges are affiliated to the universities, which through the Boards of Studies in the various disciplines, prescribe the curriculum, conduct the final examinations, and award the baccalaureate degrees. The quality of education in colleges and most of the universities has come under much criticism.

Professional education in Pakistan is not at par with the standards set by other countries including India. The need of the hour is to bring the local standards of education at par with that of foreign education system. Although, with the setting up of institutes like LUMS, some change has been noticed but we are still far behind in professional approach as well as standard of education required for qualified people, educationists told PAGE.

Pakistan needs a pool of high quality human resource capable of innovation, forward thinking and professional quality management, they said, adding that knowledge, both an input and output, is seen a key source of long-term growth and job creation. However, education in the private educational institutes by poor students have become a dream for which room needs to be created for talented students, they added.

Higher education gained a significantly larger slice of the education budget in recent years; however the declining standards of education, violence on the campuses and limited resource availability for research continued to adversely affect college and university students.

They called for introducing fundamental reforms into lower level education sector to ensure quality education in the country. They said that Higher Education Commission (HEC) was going successfully with its projects which aimed at promoting quality education in the country and a big chuck of its budget was spent on faculty development. They also underlined the need for investing more resources into higher education sector and added that funds to the HEC should be released on time to successfully complete its projects. They said that students are the real wealth of the country and there is a need to invest more in exploring their latent talent to achieve the country's prosperity. About 54% of our young generation is below 19 years of age and the young segment of our population is our future, which should be developed through better education, they argued.

They said industry-academia linkage is necessary besides research in the educational institutes to meet the challenges.