Tuesday, April 28, 2009

Pakistani Entrepreneurs Survive Economic Downturn

A new class of entrepreneurs has emerged in Pakistan during this decade who, in small but significant ways, have challenged the religious orthodoxy. They present a sharp contrast to the rising wave of Islamic radicalism that the U.S. and others view as an existential threat to Pakistan. And with many well-traveled Pakistanis importing ideas from abroad, they are contributing to Pakistan's 21st-century search for itself.

The new entrepreneurial outfits range from fashion apparel and cosmetics to upscale restaurants, personal fitness clubs and places offering men's hair transplants.

The consumer-driven growth during Musharraf years has fueled the spread of a middle class in Pakistan's biggest cities. For decades after independence in 1947, a handful of extremely wealthy industrial families dominated the economy. In the 1970s, nationalization of important industries gave the government a major economic role. In recent years, a privatization program has sought to shrink the state's hand, while introducing more investment and competition. In an effort to promote small businesses, President Musharraf's government eased credit availability for entrepreneurs in the country.

While most of the entrepreneurs cater to Pakistan's young, urban consumers, there are a few who have found highly unusual niches for export markets. For example, Integrated Dynamics of Karachi designs, builds and exports unmanned aerial vehicles used by the US for border patrol duty on its southern border with Mexico. Recently highlighted by the New York Times, AQTH offers a more shocking example of a small, entrepreneurial Karachi company that caters to the $3 billion a year bondage and fetish industry in the United States and Europe. AQTH's mom-and-pop-style garment business earns more than $1 million a year manufacturing 2,000 fetish and bondage products, including the Mistress Flogger, and exporting them to the United States and Europe.

The company sells its products to online and brick-and-mortar shops, and to individuals via eBay. The company's market research shows that 70 percent of its customers are middle- to upper-class Americans, and a majority of them Democrats. The Netherlands and Germany account for the bulk of their European sales. Company workers who assemble the handmade items — gag balls, lime-green corsets, thonged spanking skirts — have no idea what the items are used for. Even the owners’ wives, and their conservative Muslim mother, have not been informed.

Overall, the entrepreneurial class remains a sliver, just over a million people by some estimates., according to the Wall Street Journal. In addition to small export niches, much of the business is confined to pockets of urban wealth that most Pakistanis won't experience in their lifetimes. And yet, the brief business careers of many entrepreneurs show how rapidly dramatic change can unfold in Pakistan.

Related Links:

Pakistan's Foreign Visitors Pleasantly Surprised

Start-ups Drive a Boom in Pakistan

Pakistan Conducting Research in Antartica

Pakistan's Telecom Boom

ITU Internet Data

NEDUET Progress Report 2008

Pakistani Entrepreneurs in Silicon Valley

Musharraf's Economic Legacy

Should Pakistanis be Proud of Their Country?

19 comments:

Anonymous said...

http://www.nytimes.com/2009/04/28/world/asia/28fetish.html?pagewanted=1&_r=2&sq=pakistan&st=cse&scp=4

"Since President Asif Ali Zardari took office, Adnan said, trade unions have been legalized and prices of some raw materials, including leather, have shot up, as have interest rates. The result: a 15 percent dip in AQTH’s profits."

"Still, word of the business has at times escaped. Last year four “powerful guys” from a conservative Muslim group threatened to burn down the factory if it was not closed within a week. The brothers calmly explained that it was merely a business, and that the items were not used in Pakistan. The next day they bribed a local Islamic political organization to ensure their safety. "

Above statements are self explanatory and the risk of business in pakistan.

Riaz Haq said...

Anon: "Above statements are self explanatory and the risk of business in pakistan."

While the nature of risks varies from place to place, entrepreneurship is considered synonymous with risk-taking everywhere. But encouraging entrepreneurship should be a part of every growing economy to fuel innovation, provide growth opportunities and create jobs.

Captain03 said...

yea musharraf's era was great, and about that company lol i was laughing my @$$ off!!! we sure know how to make business off of other people's wasteful needs!!! LMAO
once again great post

Riaz Haq said...

Here's a ranking of ease of doing business in South Asia that puts Pakistan well ahead of India:

Bangalore: The business environment in Pakistan and Bangladesh is far better than in India. According to the latest 'Doing Business Index', India's business environment has become tougher during the years compared to other nations.

Economies are ranked from one to 183 on the basis of their regulatory environment being conducive to business operations. All of India's neighbors except Afghanistan have been ranked better. While India is ranked 133, Pakistan is ranked 85th followed by Sri Lanka (105), Bangladesh (119) and Nepal (123).

"India is a consistent reformer for the past many years. A country's rank in the index is an average of 10 indicators, each with 10 percent weight in the index. India increased the number of judges in the specialized debt recovery tribunals, which led to a major removal of blockages. While India reformed in the area of insolvency, other countries reformed in more than one area," World Bank's Senior Strategy Advisor, Dahlia Khalifa told Economic Times explaining why India has been overtaken by other nations.

The 2010 Doing Business Report prepared by World Bank and the International Finance Corporation averages a country's percentile ranking on 10 topics, made up of a variety of indicators. This includes examining a country's business environment in terms of starting a business, dealing with construction permit, employing workers, registering property, getting credit, protecting investors, paying taxes, trading across borders, enforcing contracts and closing a business.

The first place is occupied by Singapore, which is followed by New Zealand, Hong Kong and the U.S.

To see complete rankings and report, click here: http://www.doingbusiness.org/EconomyRankings/"

Riaz Haq said...

Excerpts from Knowledge at Wharton website:

Ibrahim received a master's degree in economics, an MBA and a PhD in geopolitical strategy at Cambridge University. He is currently a research scholar at Harvard University's Kennedy School of Government, and has been named an "emerging global leader" by Yale University's World Fellows Program and an "ideas scholar" at the recent Aspen Ideas Festival. He also was a paratrooper in the British Army and speaks four languages --- English, Arabic, Punjabi and Urdu.

An edited transcript of the conversation follows.

Arabic Knowledge@Wharton: What did Pakistan's government ask you to do in terms of economic strategy?

Azeem Ibrahim: My friend, Dr. Nadeem-Ul-Haq, who was a key economist at the International Monetary Fund (IMF), asked me to help him out. We were talking about setting up the first think tank in Pakistan, specifically to concentrate on economic development. We had a number of discussions about it before he left for Pakistan. A few days later, he called me [in May] and said, "Listen, I've just been appointed head of the Planning Commission and I'd like you to be a key adviser." We had a couple more discussions about it, and we thought the focus should be to encourage a more entrepreneurial and innovative environment in Pakistan. I thought I would give him some advice and that would be it, but what he had in mind was a little more ambitious. He said, "We have to write a whole new national economic strategy from a blank slate."
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Arabic Knowledge@Wharton: You mentioned in other interviews six main points you envision for Pakistan's economic recovery, including identifying people with business acumen. Can you expand on that point and tell me about the other points?

Ibrahim: I believe entrepreneurs are people who have the imagination to recognize a new product, process or service, and possess the ability to make their ideas happen. Entrepreneurs, and the new businesses they create, are the engines of economic growth and job creation, which in turn underpin political stability and the growth of a civil society.

To that end, we can identify experienced and potential entrepreneurs through schools, colleges, science and technology institutes, and civic organizations. We would seek entrepreneurs from "no-tech" and "low-tech" businesses, like agriculture, handicrafts and tourism, as well as high-tech businesses. We would work closely with development agencies, which have access to many "feeder" organizations to identify entrepreneurs.

The second point is to train and encourage entrepreneurs through domestic and international programs, varying from two-week boot camps to multi-month immersion programs. Third, we want to help develop networking, mentoring, incubation and acceleration programs. One example would be to establish an entrepreneur-in-residence program, which would include entrepreneurs from the diaspora who are familiar with Pakistani language, culture and business. Also, we'd like to establish a web-based backbone, with mentor-mentee matching as well as a contacts list for services, similar to Craigslist.

Funding, of course, is important, and that is my fourth point. We want to engage private sources of finance to provide funding for start-up ventures, including the creation of angel investor networks. We want to find the best possible partners to mentor young entrepreneurs and help them develop funding strategies and learn how to make the best possible presentations to potential funders or investors.

My fifth point is to combine diplomatic advocacy and foreign assistance to reform financial, legal, policy and regulatory impediments to private-sector development, and help entrepreneurs get access to early-stage capital.

Lastly, we want to promote the accomplishments of local entrepreneurs, who can be role models. .....

Riaz Haq said...

The Lahore-based Pepper.pk and Five Rivers Technologies made it to the number one spot across all categories on BlackBerry’s AppWorld on August 3 with their game Ninja Fruit Bash, developed for BlackBerry smartphones, according to a report in Express Tribune:

This was the third BlackBerry app developed by the local company to make it to number one on BlackBerry AppWorld.

Their other apps to reach number one include Photo Editor, an app that allows users to edit photographs from their hand-held devices, and LED Notifier, an app that blinks different colored LED for different contacts.

Mahe Zehra Husain, the Head of Operations and Product Management said “We are thrilled at this achievement. We already have two world number one utilities on BlackBerry AppWorld and adding a game to our family shows that not only can good code be developed for software utilities in Pakistan we can actually make amazing games as well!”

Ninja Fruit Bash Storyline

Ninja Fruit Bash follows the quest of a Ninja as he travels across China slicing tainted and poisoned fruit in order to save humanity.

The fruit is poisoned by the evil spirit of Orochi and is fatal if eaten. Orochi has turned fertile fruit gardens all over China into poisonous wasteland and our Ninja is on a mission – to return all the fruit gardens to their former glory.

http://tribune.com.pk/story/224923/pakistan-it-firm-tops-world-ranking-with-blackberry-game/

Here's more from Blackberrycool.com:

There’s a growing trend of taking iOS successes and porting them over to BlackBerry. We believe the trend was started by Smarter-Apps and from a strictly business perspective it makes a lot of sense. Sure, you could spend a long time working on a risky app that may or may not be a success, or you could take something that obviously makes money on another platform and bring it to the 40 million or so BlackBerry users. Considering the huge success of this strategy, as proved by Angry Farm, it makes you realize that a lot of these iOS developers are listening to the analysts more than the users.

Ninja Fruit Bash is the latest in this strategy and they’ve taken the success of Fruit Ninja to BlackBerry users. The app isn’t 100% of the fun you get on the iOS version and there are some limitations on the BlackBerry side such as the fact that not all devices have OpenGL support for 3D graphics. Ninja Fruit Bash on the Torch was a pretty smooth experience and it’s definitely a good start. The company will have to work a little harder to bring more of the user experience and graphics to the game but as a start it’s awesome.

http://www.blackberrycool.com/2011/07/21/ninja-fruit-bash-is-the-latest-ios-success-to-blackberry-clone/

Riaz Haq said...

Here's a UKPA story of a Pakistani innovators harnessing the Internet for the poor:

One of the world's top young technology innovators is working to bring internet-style networking to millions of Pakistanis who don't have access to the web.

Umar Saif's efforts, which centre around giving ordinary citizens new ways to use a basic mobile phone, recently earned him recognition by the Massachusetts Institute of Technology.

The trigger for his research was a 2005 earthquake in Pakistani-controlled Kashmir that killed 80,000 people and caused widespread destruction. The disaster coincided with his return to Pakistan after getting a PhD in computer science from the University of Cambridge.

Realising that rescue workers were having trouble co-ordinating, Saif, 32, devised a computer program that allowed people to send a text message - or SMS - to thousands of people at once. Users send a text to a specific phone number to sign up for the program, and then can message all the subscribers, allowing users to engage in the kind of social networking possible on the internet.

It has since blossomed into a commercial enterprise called SMS-all that is used by at least 2.5 million people who have sent nearly four billion text messages.

"You can do the sorts of things that we do on Facebook and Twitter," said Saif, now an associate professor at the Lahore University of Management Sciences.

The company generates revenue by charging a small amount for each message. Saif has expanded the service to Iraq and Nigeria by working with telecommunication companies there.

Roughly 20 million Pakistanis use the internet, about 11% of the country's total population of 187 million. But there are more than 108 million Pakistani mobile phone subscribers.

"The thing to do is to bring whatever you have on the internet on the phone lines, because that is what gets used the most," said Saif.


http://www.google.com/hostednews/ukpress/article/ALeqM5gGB71MuxyPPnNQBdZ4xMfvksHuxA?docId=N0201411315222132958A

Riaz Haq said...

Here's a report about Dawood Foundation encouraging entrepreneurship in Pakistan:

KARACHI - Six of the most dynamic women entrepreneurs talked about their experiences, triumphs and losses before a spell-bound audience at the second Ladiesfund Entrepreneurship Conference (LEC) hosted by the Dawood Global Foundation (DGF) at the Avari Towers.
The event was organised in partnership with the Higher Education Commission, the Avari Group, the Dawood Capital Management, and over 60 partners, sponsors and supporters. The audience was diverse and consisted of Very Important Persons, top entrepreneurs, budding entrepreneurs, journalists and enthusiastic university students.
The Ladiesfund was established in 2007 as an initiative to provide financial security to women and to promote and train women entrepreneurs. It aims to integrate the entrepreneurial needs based on the economic and social aspects of the local communities with respect to greater women participation in the workforce.
The conference started with recitation of the Holy Quran, followed by a welcome address by TU Dawood with an introduction to virtual businesses and how they are a fabulous option for women entrepreneurs. This was followed by a speech from British Deputy High Commissioner Francis Campbell, who was the chief guest. He spoke on the importance of entrepreneurship in Pakistan and how much it could help boost our economy.
To educate the budding entrepreneurs and students in the audience about what entrepreneurship really is, there was a short academic presentation by Avari Karachi General Manager Gordon Gorman. Then followed the first panel of the conference, which consisted of Mehrbano Sethi of Luscious Cosmetics, Ayaz Khan of Okra, and Wajeeha Malik of Olive Soap.
And as a pleasant surprise for the audience, Rohail Hyatt, the powerhouse behind the famous Coke Studio, joined the panel. This panel focused on the basics of entrepreneurship. They answered questions about the realities on entrepreneurship and what made them decide to become entrepreneurs.
The second panel comprised architect Naheed Mashooqullah, designer Hassan Sheheryar Yasin, and Naila Naqvi of Pie in the Sky and Chatterbox. They shared the inside scoop on how their brands tipped to being the best in their industries, despite facing the problems that all Pakistani entrepreneurs face, like electricity, human resources, etc.
They talked about expanding businesses, and whether expanding through other people, platforms or on your own is a better option. This was followed by a question-answer session. At the end was an art auction by Mehreen Ilahi of the Majmua Art Gallery to raise funds for the DGF, followed by a lucky draw conducted by the chief guest.
The conference was moderated and hosted by Sidra Iqbal. TU Dawood finally presented the plaques to the chief guest and panellists. The event concluded with thanking all the sponsors, supporters, students, event catalysts, volunteers and ambassadors. Funds raised from the LEC 2011 are audited by Ernst & Young Ford Rhodes Sidat Hyder, and go toward Ladiesfund Fellowships & Scholarships as well as women development initiatives.


http://www.pakistantoday.com.pk/2011/09/women-entrepreneurs-discuss-experiences-triumphs-and-losses/

Riaz Haq said...

A big donor is giving $50 million to Stanford to help promote innovation and entrepreneurship for alleviating poverty in the developing world. Here are some excerpts from a Mercury News story:



A Silicon Valley venture capitalist has donated $100 million to Stanford University's Graduate School of Business to establish a new institute to promote entrepreneurship in developing countries and eventually alleviate poverty.



Robert King, along with his wife, Dorothy, also gave a second gift to the entire university, $50 million in matching funds to encourage more donations to Stanford. The couple's gift is the second-largest publicly disclosed single donation to the school, behind a $400 million donation in 2001 by the William and Flora Hewlett Foundation.



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"The institute will be about sponsoring and creating entrepreneurial activity in developing economies," said Robert King, 76, who founded Peninsula Capital in Menlo Park. "Stanford is in an absolutely leading position to do that."



The Stanford Institute for Innovation in Developing Economies will be devoted to research, education and on-the-ground support to help entrepreneurs innovate and grow their businesses. Students and faculty will travel abroad to help businesses overcome obstacles to growth. The institute also will provide formal courses for entrepreneurs and nonprofit employees overseas.

----------------

The Kings say the inspiration for their philanthropy grew from hosting foreign students while they attended Stanford, a more than four-decade experience that underscored the importance of the link between education and entrepreneurship. It also led to a successful investment by Robert King, who provided seed money for China's giant search engine, Baidu, after he met the company's co-founders, Eric Xu and Robin Li, through one of the couple's home-stay students more than a decade ago.



"If anyone knows the value of encouraging entrepreneurship in the developing world, it's Bob King," Li said in an email statement. "Bob took a big chance on Baidu in our earliest days, investing in a Chinese search engine at a time when China's Internet was still in its infancy. I'm sure that this generous endowment will help create some great business leaders in the developing world."



The institute will build on work Stanford students and faculty already are engaged in through a collaboration of the business school and the university's Hasso Plattner Institute of Design in which products and business models are created for the developing world.



One venture to emerge from this work is d.light, a company creating products for people without access to reliable electricity. The institute will dispatch students and faculty members to work with overseas businesses and NGOs, or nongovernment organizations, identified as having great promise by other organizations.



---------------


"If their research is focused on Guatemala, we will send them there," Lee said.



The university is beginning the process to hire three tenure-track professors to fill research positions in the institute. They will join four current Stanford professors, Saloner said.



The Kings, who are active philanthropists, also founded the Thrive Foundation for Youth, which supports research on youth development and organizations that work with young people.


....................




http://www.mercurynews.com/top-stories/ci_19262908

Riaz Haq said...

Pakistanis have less favorable attitude towards entrepreneurship than the people living in other countries under similar economic conditions, according to a report by the Global Entrepreneurship Monitor (GEM) released here on Saturday.

GEM is an international research consortium, which measures entrepreneurial activity of individuals in 59 countries.

The GEM report on Pakistan for 2010, which was sponsored in the country by the Centre for Entrepreneurial Development of the Institute of Business Administration (IBA), divides 59 countries into three categories: Factor-driven economies, efficiency-driven economies and innovation-driven economies. Pakistan falls into the category of factor-driven economies.

Explaining the objectives of the research, Centre for Entrepreneurial Development Associate Director Dr Shahid Qureshi said it measured entrepreneurial attitudes, activity and aspirations through in-depth review of individual entrepreneurial characteristics of the adult (18-64) population in all parts of the country.

“It also lists factors that affect the level of entrepreneurial activity in society besides making suggestions to promote entrepreneurship,” Qureshi said.

According to the report, the new business ownership rate, which is the percentage of owner-managers of a business that is three to 42 months old, is 2.7% in Pakistan. It is ‘considerably less’ than the average rate for factor-driven economies (11.8%).

The established business ownership rate in Pakistan is 4.7%, according to the study, which is less than the average rate for factor-driven economies (12.6%).

The report’s key measure of entrepreneurship in a society is total early-stage entrepreneurial activity (TEA) rate, which is the sum of the nascent entrepreneurship rate and the new business-manager rate. According to the study, the TEA rate for Pakistan is 9.08%, which is lower than the average TEA rate for the factor-driven economies (11.7%).

The report says that early-stage entrepreneurs and business managers in Pakistan have low aspirations to grow as compared to most GEM participating countries. Besides, the report says that 27.73% of the total working-age population, including those who are entrepreneurially active, was of the view that fear of failure would prevent them from starting a business. However, the fear of failure in Pakistani population is less than the average of the factor-driven economies.

Speaking on the occasion, IBA Director and Dean Dr Ishrat Husain said the cost of IBA’s affiliation with Babson College of the United States was $1 million a year. “Despite all financial constraints, we’re not going to give up the affiliation.” Husain said that out of the national workforce of 50 million people, the large-scale manufacturing sector employed only one million people. He said a majority of the 49 million people was employed by the agricultural sector and small and medium-size enterprises.

Addressing the ceremony, Sindh Finance Minister Syed Murad Ali Shah said he dropped out of IBA after taking one semester many years ago. In contrast to the findings of the report, which emphasised the importance of entrepreneurship education, Shah said it was more about the urge within oneself. “Don’t count on others. Follow your gut feeling and do what you want,” he said.

http://tribune.com.pk/story/311603/global-entrepreneurship-monitor-pakistanis-less-enthusiastic-about-entrepreneurship/

Riaz Haq said...

Pakistan's Monis Rahman of Rozee.com makes the Forbes Top 10 list of Asian entrepreneurs under age 50. The list includes big names like Jack Ma of Alibaba.com

http://www.forbes.com/pictures/mhe45fee/monis-rahman/

Riaz Haq said...

Here's a report on Pakistan's fast growing entrepreneurial companies:

In the midst of challenging political and economic circumstances, the Pakistan100 broke many AllWorld records in relation to 15 other country rankings in the region, coming in only second to Turkey in terms of entrepreneurial growth and transparency. Many of the companies have been founded in the last ten years, and have already grown to be industry leaders. An average of only 42 years old, most Pakistan100 entrepreneurs plan to establish another company in the next two years.
----------------
The Pakistan100 was an unprecedented partnership between AllWorld Network, Cyan Limited, and partners Mishal, P@SHA, LadiesFund, CIOPakistan, TiE, Abacus Consulting and Rozee.PK. Thousands of emails were sent to companies around the country inviting them to compete for a spot on the Pakistan100. Companies had to be rapidly growing private non-listed companies, and they could come from any industry and any part of the country. Each company had to provide audited statements to confirm their revenues and each applicant’s business practices and ethics were strenuously vetted. The fastest growing of these became the inaugural Pakistan100.

Leading the Pakistan100 is number 1 company e2e Supply Chain Management, which grew 1,918 percent between 2008 and 2010, with 2010 revenues above $50 million and 297 employees. Launched in 2005, e2e has risen to become one of the most successful end-to-end logistics companies covering Pakistan and Afghanistan. Taking the second spot for Pakistan was Exceed Private Limited, with a growth rate of 1,320 percent and 90 employees. Founded by the youngest entrepreneur on the Pakistan100, Exceed rose to prominence for its historic restoration of Saidpur Model Village, redeveloped as an 18th Century city-museum with 5,000 residents.

Pakistan also had the most number of women entrepreneurs of any AllWorld list at 8 percent, and 7thranked Luscious Cosmetics of Pakistan topped the list of the fastest growing women entrepreneurs with growth of 392 percent and 82 employees. The Pakistan100 entrepreneurs have built globally competitive businesses with one quarter of their revenues coming from international markets and companies such as ROZEE.PK (#12) having secured VC investment from Silicon Valley.

Commenting on the success of Pakistan100 at the Awards Ceremony, AllWorld co-founders Deirdre Coyle and Anne Habiby urged the Pakistan100 to go further “When no one expected much, the Pakistan100 broke records for growth, transparency and competitiveness. They are the personification of what every country dreams of having. Now raise the bar higher and build Pakistan as a leading entrepreneurial nation.” Added Pakistan100 Founding Director Malik Ahmad Jalal, “As the Pakistan100, you send a signal to everyone in Pakistan and around the world that Pakistan is open for business. There is no more important message to secure peace and prosperity.”

The Pakistan winners are in Lahore for the two-day Pakistan100 Awards & Summit from March 9-10. The Summit will be an action packed two days featuring the Pakistan100 along with prominent speakers, panel discussions, networking sessions, and Pakistan100 Awards Dinner. Over 160 representatives from the winning companies will be in attendance and close to 150 VIPs and influencers.


http://www.newspakistan.pk/2012/03/10/pakistan-fast-growth-100-break-entrepreneurial-records/

http://www.allworldlive.com/feed/press/pakistan-2-arabia-fast-growth-500-pakistan-breaks-records-hub-entrepreneurs

Riaz Haq said...

Here's a story of what drives Pakistani entrepreneurs:

When I ask entrepreneurs in most countries what drives them to innovate and succeed, they give similar answers: Inspiration. Passion. Vision.

During a recent trip to Pakistan, I heard those same responses. But after spending a week talking to Pakistani entrepreneurs, I realized that for them these qualities are mere afterthoughts. What really drives them is their country. Above all they are propelled by the desire to pull Pakistan out of its political and economic abyss and back to some semblance of normalcy. Their patriotism, combined with their entrepreneurial drive, makes me bullish on Pakistan.
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Pakistan is in crisis. Serious and sobering crisis, not the rhetorical and idealistic “there is opportunity in crisis.” Security is a real threat. Corruption is a crippling problem. There is no confidence in the country’s laws, courts, or leadership. The Council on Foreign Relations recently issued a report on Pakistan that lists state collapse and authoritarianism as two possible future scenarios for the country. That is why I was surprised to hear from every entrepreneur I met with that not only did he or she believe in the country, but that his or her business was “about Pakistan.”

That was the response Shamoon Sultan gave when I asked him to describe the company he founded in 1998, Khaadi. The country’s leading design textile retailer, Khaadi produces high-quality fabrics and ready-to-wear his and hers loose shirts known as kurtas. They are products made out of locally sourced material and woven by local artisans. Most interestingly, they are products for locals who are not deterred, as I witnessed in one of 14 nationwide shops, by Khaadi’s high prices.

“For a country, it is important to create brands,” the soft-spoken and immaculately groomed Sultan said over breakfast at the garishly lit Marriott Karachi.

For him, a graduate of the prestigious Indus design school, Khaadi is a brand that reflects Pakistan’s rich tradition of handloom crafts and textiles. (Textiles account for 11 percent of Pakistan’s GDP.)

He isn’t necessarily selling something. “It’s not about the profits,” he said. He is the son of a successful businessman with options to leave the country, so that much was clear.

Much like Ralph Lauren tying his brand to America, Khaadi is the trim, bearded Sultan’s effort at providing an experience for his fellow countrymen to display pride. More importantly, he has created an enterprise where outsiders see another side of his country.

“Pakistan has a huge perception challenge,” said Monis Rahman, CEO of the Lahore-based Naseeb Networks. “That is interfering with investment that is badly needed to fuel growth.”

It has not interfered, however, with Rahman’s individual ability to raise capital for his several startups—capital raised not in Pakistan, but in Silicon Valley.
----------
Naseeb launched that September with 10,000 users. Six months in, the number rose to 80,000. That Pakistan has, according to Morgan Stanley, the third-fastest-growing number of Internet users made Naseeb.com’s prospects even brighter. And it firmly proved Rahman to be a worthy entrepreneur.

True to that identity, a few years later, in 2005, he launched another Web platform, this time through his own funding. It was a job-search site, Rozee.pk, which today is Pakistan’s No. 1 online employment site. Over 30,000 employers, including U.S.-based firms such as McDonald’s and Coca-Cola, advertise on Rozee.pk.


Read more: http://www.portfolio.com/companies-executives/2010/10/26/pakistani-entrepreneurs-are-in-it-for-country-and-profit/

Riaz Haq said...

Here's a BR story on State Bank governor encouraging Pak banks to finance SMEs:

KARACHI: Governor, State Bank of Pakistan, Yaseen Anwar has stressed upon the banks to give top most priority to SME banking with a view to ensuring uninterrupted flow of financial access to SME sector in the country.

Speaking at the signing ceremony of the project document between the State Bank of Pakistan (SBP) and Bank Alfalah under the DFID-funded Financial Inclusion Programme (FIP) at SBP, here Monday, he said the role of banks, especially of mid-tier banks, is crucial to ensure unhindered flow of financial resources to the SME sector which is the engine of economic growth in Pakistan.

"Though many banks in the market are trying to improve their market position in order to serve the sector more effectively, the current level of SME finance as well as an overall level of SMEs access to banking services remain unsatisfactory, and as such call for more serious efforts on part of the banks", SBP Governor added.

Anwar said that SME financing is very close to his heart due to its key significant contribution in the economic development of Pakistan. "The SME sector plays an important role in employment generation, poverty alleviation, and equitable distribution of resources and is the engine of growth", he added.

He pointed out there are 3.2 million economic establishments, of which 99% are SMEs, and SME sector represents over 90% of all enterprises and employs 75% of the non-agricultural workforce and contributes 30% towards the national GDP.

"However, despite its strong contribution in employment generation, exports, and national income, the SME sector is severely constrained in access to finance which is crucial for its growth", he added.

SBP Governor advised the banks to study the international examples of successful SME banking models which include Retail-based Model for Mass SME, Relationship-based banking, Advisory-based lending services, Segment-based Model, and Supply-chain linked Model.

Regrettably, he said that despite its immense significance and potential, the SME sector in Pakistan remains largely financially excluded, the current level of financing facilities to this sector stand at Rs 253 billion, constituting only 7% of the banks' total advances.

Anwar said that with the SBP- Bank Alfalah and International Finance Corporation (IFC) nexus, and the generosity of DFID, we can have more joint ventures of this sort in the future that would lead to a sustainable, sound and integrated financial system, characterised with ready access to finance, diversified loan portfolio and extended outreach to SMEs.

He said the State Bank, under the DFID-funded "Financial Inclusion Programme (FIP) will provide funding support to Bank Alfalah (BAF) in undertaking the IFC SME Advisory Project. "The main objective of the project is to create a symbolic podium which can position Bank Alafalah to cater to the financing needs of the SME sector including the S and M segments through a holistic banking and advisory services solution", he added.

SBP Governor said the SMEs need to be addressed through innovative credit assessment tools and techniques like credit scoring and capacity enhancement of the financial service providers, and an integrated approach to SME Banking. DFID and SBP are keen to upscale FIP to reach out the unbanked segments in Pakistan. Going forward, FIP funds will also be targeted to improve financial inclusion through SMEs banking, Anwar added....


http://www.brecorder.com/pakistan/banking-a-finance/61658-sbp-governor-asks-banks-to-give-top-priority-to-sme-banking-.html

Riaz Haq said...

Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":

On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”

Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro (ENGRO), a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.

These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.

At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”

Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
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Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...


http://www.businessweek.com/articles/2012-11-29/pakistan-land-of-entrepreneurs

Riaz Haq said...

Here's a PakistanToday report on SBP support of small businesses:

The State Bank of Pakistan's (SBP) Credit Guarantee Scheme (CGS) has helped small enterprises and farmers to access Rs 2.83 billion in bank financing over the last 18 months.

The Scheme (CGS) has facilitated financing in 105 districts across the country with 85 percent of loans provided to previously un-served/under-served clients in rural areas, of which 81 percent were subsistence farmers, said a SBP press statement on Wednesday.

Similarly, 91 percent of the loans under the Scheme were provided to small businesses with less than five employees of whom 90 percent were
Sole proprietors the statement added.

Under the CGS, banks also focused on serving the lower end of the commercial banking market through smaller loans, with an average loan size of Rs 390,000 for agriculture and Rs 2.1 million for small enterprises. Specific to the needs of the clients, the durations ranged from less than one year to three years.

The Scheme through its support to previously un catered small rural enterprises is likely to enhance economic opportunities and increase employment in the rural areas of the country.

The Technical Committee of the bank during its annual review of the Scheme observed that despite the extensive geographic spread and a focus on under-banked segments, the participating banks demonstrated prudent lending practices reflected in an infection ratio of only 2.91 percent for agriculture and 1.07 percent for small enterprise loan portfolios, which are much lower than the industry averages.

It shall be noted that the CGS is monitored by the Technical Committee drawing membership from the UK's Department for International Development (DFID), SBP and the Pakistan Banks Association (PBA).

The Scheme is working in tandem with nine banks including big five banks which were selected after due screening by the Committee.


http://www.pakistantoday.com.pk/2013/02/20/news/profit/smes-farmers-get-rs-2-83-bln-financing-under-cgs/

Riaz Haq said...

Here's an Aljazeera report titled "Pakistani economy grows in spite of state":

Lahore, Pakistan - Zia Hyder Naqi started his first business when he was eight years old, turning old newspapers into paper bags in the eastern Pakistani city of Lahore. He didn’t earn much, but the 1.5 Pakistani Rupees ($0.02) he made every day was enough to buy him his lunch, and a sense of satisfaction at having made something.

Today, 40 years later, Naqi is the managing director at a plastics manufacturing firm that employs 430 people, and earned $14.2m in revenue last year.

Synthetic Products and Enterprises Ltd (SPEL) is one of the largest firms of its kind in the country, and makes everything from plastic cups to the inner sides of car doors for firms such as Toyota, Honda and Suzuki, and everything in between.

Business has been good for SPEL, Naqi says, but that's not because the government is providing a conducive climate for economic growth.

"Let's start by saying that we work in spite of the government and not because of the government," Naqi told Al Jazeera. "It really means that we have to struggle. We compete against the best in the world."

Power cuts

Pakistan suffers from a raft of economic problems - spiraling inflation and unemployment, a chronic energy crisis, a lack of implementation of existing policies and an unstable investment environment, owing to the country’s tense security situation.

Primary among those difficulties, Naqi says, is the issue of power cuts - or load-shedding, as it is referred to in Pakistan.

"Our reliability is affected when we have load-shedding, because we don't know when power will arrive and go. So we have to create back-ups, which means that the cost of operations goes up. It affects morale, it affects our work, it affects our delivery, it affects our customers. [It affects] the cost at which we deliver, and how competitive or uncompetitive we become to the customer," he says, estimating that the cost of putting in those back-up system raises the overall cost of his products by as much as 10 percent.

Last year, Naqi’s firm spent an extra $1.2m on putting back-up generators into place, fuelling them and paying for their general upkeep, as opposed to taking electricity off the grid. Moreover, he says, that $1.2m is a sunk cost, as it is not being invested into productive processes. The result: it’s harder for Pakistan’s products to compete in the international market, as the cost of producing electricity pushes firms into a loop of spiraling costs and being unable to further invest in new technologies.

Pakistan’s electricity woes, analysts say, are a result of industrial growth outstripping the pace of growth in generation, and a woefully maintained distribution system that results in line losses of around 20 percent At its peak last summer, the country’s electricity shortfall was a staggering 8,500MW - about 40 percent of the country’s total generation capacity (not counting transmission losses)
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Meanwhile, far from the think tanks and policy committees, the entrepreneurial spirit of the eight-year-old Naqi is still alive and well. Over the last month, dozens of shops have sprung up all over Lahore, selling elections campaign-related merchandise - everything from pins and badges (for about $0.40 each) to gigantic flags ($2.44), from T-shirts ($3.05) to stuffed soft toys in the shape of party election symbols.

"With the amount of money that I’m making right now," says Muhammad Imran, 30, the owner of one such shop, "we could have built a whole bridge!"

....

http://www.aljazeera.com/indepth/features/2013/05/201358163114782192.html

Riaz Haq said...

Here's an APP report on US helping promote entrepreneurship in Pakistan:

ISLAMABAD, Nov 17 (APP): The United States is ready to cooperate with Pakistan for entrepreneurship development in the country to put it on the path of sustainable economic growth, said Advisor to US President on Entrepreneurship and Founding Managing Director of MIT Entrepreneurship Center Ken Morse on Sunday. “Entrepreneurship offers best option to Pakistan for engaging its youth in productive activities and to create more jobs,” he said while addressing the business community here.
He said Pakistan should celebrate entrepreneurship day to create awareness in society and motivate its youth for becoming entrepreneurs.
He was of the view that Pakistan should focus on encouraging its youth towards entrepreneurship to help them have respectable jobs and help promote economic growth.
Ken Morse is member of a delegation visiting Pakistan. The other delegation members include Jason Pontin Editor in Chief MIT Technology Review, Ms. Deirdre Coyle Co CEO of All World Network.
The delegation members along with Azhar Rizvi Chairman FPCCI Standing Committee on Innovation visited Islamabad Chamber of Commerce and Industry to discuss the importance of entrepreneurship development for Pakistan.
Morse said 65 per cent of small hotels and single person stores in the US were owned by South Asians, which showed that they had great potential for this profession.
Speaking on the occasion, ICCI President Shaban Khalid briefed the delegation about the ICCI activities for entrepreneurship and youth development.
He said ICCI had formed a Young Entrepreneurs Forum (YEF) to focus on encouraging youth towards entrepreneurship adding YEF organizes workshops, trainings and mentorship programs for youth development as well as promotes the networking of young entrepreneurs at local and international level.
The YEF recently organized an Indo-Pak Young Entrepreneurs Bilateral at Islamabad to promote linkages in youth of both countries, he said adding both the sides signed a joint statement which also declared to establish a Peace University to promote people-to-people relations between the two countries.
Jason Pontin, Editor in Chief of MIT Technology Review, said entrepreneurship had been identified as one of the most important vehicles for economic wellbeing of individuals and communities and added that MIT Enterprise Forum Pakistan (MITEFP) had been established to develop an entrepreneurial eco-system in the country.
He was of the view that fostering entrepreneurship in Pakistan would create greater employment, growth and competitiveness in the country and engage youth in economic activities.
He said,” We are planning to start MIT Technology Review in Pakistan and its publication will highlight Pakistani entrepreneurs’ success stories at international level giving them an international exposure.”
Ms Deirdre Coyle Co, Chief Executive Officer of All World Network, said Pakistan had great potential for entrepreneurship and “we are trying to put Pakistani companies on global stage by announcing the ranking of 100 fastest growing companies of Pakistan.”
This would help Pakistani companies to get international recognition and we want to show the world that Pakistan is very much open to business and help change perception about it, she added.
She hoped that joining the All World ranking, Pakistani companies would get global visibility, attract new customers, investors and talent all over the world and become part of a prestigious group of successful entrepreneurs.


http://www.app.com.pk/en_/index.php?option=com_content&task=view&id=249772&Itemid=2

Riaz Haq said...

Here's a WSJ story on a high-priced designer Peshawari chappal knock-off:

Imitation, it is often said, is the sincerest form of flattery, but many in Pakistan failed to take the compliment when British designer Paul Smith released a new sandal bearing close resemblance to the country’s Peshawari chappal (slipper), called it Robert, and sold it for $595.

The company received a torrent of abuse on social media for the design on Monday.

While the Pakistani sandal sells in markets across the country for around $6, Paul Smith’s version of the shoe is on sale for a 9,816% mark up.

Most of the criticism on Twitter focused on the sandal’s price, while others called for Paul Smith to give credit to the shoe’s Pakistani origin.
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The Peshawari chappal is originally from the northwestern town of Peshawar, but is today manufactured across the country. You can find the shoe from Karachi to Gilgit and on the feet of markets traders, government officials and young bridegrooms.

“It is as much of a part of our national identity as is the chicken tikka in our traditional cuisine,” said journalist Madeeha Syed of the shoe in an article for local English-language newspaper, Dawn.

Paul Smith’s version of the sandal is not the first time that the quintessentially Pakistani shoe has ventured overseas. A number of Pakistan-based online outlets already sell the sandal to customers around the world. They mostly target the widespread Pakistani diaspora, but the sandal has also proved very popular in France, says Sidra Qasim, co-founder of Hometown, a Pakistan-based online shop that sells Peshawari chappals.

“They like it because it has quality and good design and it is having a good impact,” she told The Wall Street Journal.

Hometown was started in 2010 by Ms. Qasim and Waqas Ali with the goal of providing a bigger market to local shoemakers in Pakistan. All the shoes sold by Hometown are made by a small group of craftsman in a small village in Punjab province, and are sold via the company’s site in 17 different countries. The biggest markets are India, the U.K. and France, said Ms. Qasim.

Despite the outrage from Pakistan’s vocal Twitter population, Ms. Qasim said that she thought it was mostly positive that Paul Smith had decided to use the Pakistani design in his summer collection.

“One thing we are very concerned about is that Hometown is about promoting Pakistani artisans to the global level, so at least they [Paul Smith] should give the right credit,” she said, “We are really happy, on the other side, that someone on the global level has recognized this design”

Hometown’s version of the Peshawari chappal starts at $90 – still a steep markup from the average market price. Another Peshawar-based online chappal shop, Zalmay, sells the sandals for around £27 ($45.)


http://blogs.wsj.com/indiarealtime/2014/03/11/how-paul-smith-sandals-peeved-pakistan/