Automobile:
146,271 vehicles were produced in Pakistan in 8 months from July 2010 to February 2011, representing an increase of 9.2% y-o-y on the 133,918 units produced over the same period of FY09/10, according to figures from the Pakistan Automotive Manufacturers Association (PAMA). This consists of 85,924 units for passenger car production, 1,807 units truck production, 308 units bus production, 580 units jeep production, 12,000 units pick-up production and 45,652 units farm tractor production. Sales largely mirror production in Pakistan's auto market: the first eight months of FY10/11 saw a total of 143,785 new vehicles sold in the country, an increase of 7.1% y-o-y. Extrapolating the eight-month data across 12 months, total vehicle production would amount to 219,407 units, while total vehicle sales would register 215,678 units. This compares to the BMI forecast for the full fiscal year of just over 221,500 and just over 224,000 for production and sales respectively. However, these figures for FY10/11 aggregate sales and production are still considerably below the high watermark reached for both variables in FY07/08.
Although FY10/11 and FY09/10 have seen reasonably strong growth in y-o-y terms for both sales and production volumes, the industry is still recovering from a disastrous year in FY08/09, which was hit by a combination of the global economic downturn and severe internal political instability.
Consumer Electronics:
The media revolution of 24X7 news, entertainment and sports centered around rising number of television channels drove tv set sales up by 28.6% in 2010-2011.
Pakistan's consumer electronics market, including personal computers, mobile handsets and audio-video products, is now estimated at about $1.8 billion. BMI forecasts that this market will grow to $3 billion by 2015.
Computers accounted for about 20% of Pakistan's consumer electronics spending in 2010. BMI forecasts Pakistan's domestic market computer hardware sales (including notebooks and accessories) of $312 million in 2011, up from $292 million in 2010. Computer hardware CAGR for the 2011- 2015 period will be about 8%.
Mobile Handsets Pakistan's market handset sales are expected to grow at a CAGR of 16% to 29.5 million units in 2015, as mobile subscriber penetration reaches 70%. Revenues growth will be slower due to lower average selling prices (ASPs) of mobile handsets, with most handsets sold at less than $40. Another issue is the declining growth rate of mobile subscriber penetration, which is now more than 60%. 3G licenses are still expected to be awarded in 2011, but Pakistan's telecoms regulator has yet to confirm this.
Fast Moving Consumer Goods:
Fast moving consumer goods (GMCG) sector, including food, beverage and tobacco, grew by 9.3%, according to Economic Survey of Pakistan 2010-11. Adverting revenue from this sector has continued to drive proliferation of electronic mass media in Pakistan.
Conclusion:
The continuing growth in consumer spending is a testament to Pakistanis' resilience in the midst of multiple and very serious crises of energy shortages, continuing militancy and political violence and instability. The question is how long can this extraordinary resilience last if the corrupt and incompetent Pakistani politicians continue to persist in their mismanagement of the country and its economy.
Related Links:
Haq's Musings
Resilient Pakistan
Pakistan's Rural Economy Showing Strength
Pakistan's Exports and Remittances Rise to New Highs
Incompetence Worse Than Corruption
Sugar Crisis in Pakistan
Agricultural Growth in India, Pakistan and Bangladesh
Pakistan's Rural Economic Survey
Pakistan's KSE Outperforms BRIC Exchanges in 2010
High Cost of Failure to Aid Flood Victims
Karachi Tops Mumbai in Stock Performance
India and Pakistan Contrasted in 2010
Pakistan's Decade 1999-2009
Musharraf's Economic Legacy
World Bank Report on Rural Poverty in Pakistan
Copper, Gold Deposits Worth $500 Billion at Reko Diq, Pakistan
China's Trade and Investment in South Asia
India's Twin Deficits
Pakistan's Economy 2008-2010
Auto Industry in India, Pakistan and China
Media Revolution in Pakistan
20 comments:
Hey, nice article pointing out the facts.
Two things, don't you think that if the spending has increase than the 'corrupt inept politicians' are not doing such a bad job after all? And indeed if media did start highlighting the statistics you quote the investor mood and average spending would indeed increase further. In essence the media is killing the multiplier effect.
Secondly, can I repost the article on my blogzine? www.criticalppp.com
Saad: "don't you think that if the spending has increase than the 'corrupt inept politicians' are not doing such a bad job after all?"
I think the consumers are spending in spite of, not because of, Pakistan's corrupt and inept politicians. And the level of spending, as I point out in the post, is well below the level in 2007-2008.
You can publish this post on your blog as long as you give proper credit and publish the link to my blog.
Our industries needs to be like that of India's.
http://www.economist.com/node/21524924
Until then we will never grow in economy.
Pakistani car sales rose 61% in July, according to The Nation:
LAHORE - The new fiscal year has kicked-off on a positive note for the car manufacturers. As per the latest data released by Pakistan Automotive Manufacturers Association (PAMA), country’s auto sales surged by a significant 61 per cent to 17,563 units in July 2011 against 10,942 units in the same period of last year. On monthly basis, the volumetric sales improved by 134 per cent compared to 7,517 units sold in June 2011.
This significant improvement is primarily attributable to deferred sales from June to July as buyers opted to take advantage of 2-3 percent cut in prices on account of reduction in sales tax by 1 percent and other measures announced in Federal Budget FY12
Company wise breakup shows that, PSMC led the increase with 116 percent rise to 11,997 units compared to mere 4,503 seen in same period last year, while sales for INDU declined by 9 percent to 4,551 units compared to 4,999 units in July 2010.
An auto expert Furqan Punjani observes that July sales are not an actual depiction of the sector’s fundamental and they are expected to ease down going forward. Furthermore, amid absence of aggressive consumer financing due to higher markup rates and nominal growth in agriculture economy the volumetric sales for FY12 will only show an improvement of 5-10 percent.
Despite improved volumetric sales, he maintained ‘Market-weight’ stance on the sector on account of strained margins amid continuous appreciation of Japanese yen and high regulatory risk.
http://nation.com.pk/pakistan-news-newspaper-daily-english-online/Business/12-Aug-2011/Car-sales-jump-by-61pc-to-17563-units-in-July
Here's Bloomberg on Pakistan's rising food and beverage sector sales:
Nestle SA (NESN), the world’s biggest food company, plans to double dairy output in Pakistan by spending 300 million Swiss francs ($413 million) over the next three to four years as it looks to fend off local rival Engro Foods Ltd.
The investment will be used to build new milk factories, Ian Donald, managing director at Nestle Pakistan Ltd. (NESTLE), said in an interview in Lahore. The money will also help boost the juice, yogurt and noodle businesses of Nestle Pakistan, whose market value doubled in the past year.
The spending is part of Nestle’s push to expand its packaged-milk business in Pakistan as the Swiss company’s sales in Asia outpaced overall revenue growth last quarter. Consumer food companies are benefiting as marketing campaigns and rising incomes spur demand for packaged food in the South Asian nation.
“A lot of companies are coming up to tap Pakistan’s” food market where 95 percent of the products are sold unpackaged, said Misbah Iqbal, an analyst at AKD Securities Ltd. in Karachi. “That is certainly creating some challenges for established names. But I don’t see a big threat for Nestle in the next two years as the size of the cake is still big enough.”
Nestle’s sales in the South Asian country grew 25 percent in 2010 to 51.5 billion rupees ($597 million). Nestle Pakistan is the best performer on the Karachi Stock Exchange 100 Index this year. The stock fell 3 percent to 3,862.05 rupees as of 11:07 a.m. in Karachi, while the benchmark slid 1.2 percent.
Coca-Cola, Pepsi
The maker of Kit Kat chocolate and Nido powdered milk is facing growing competition from Karachi-based Engro Foods in the dairy segment and Coca-Cola Co. (KO) and PepsiCo Inc. in the bottled water and fruit juices businesses, according to data provided by London-based Euromonitor International. Engro Foods, established in 2005, was the second-largest seller of drinking-milk products in Pakistan in 2010, according to Euromonitor.
Nestle is pushing products for lower-income consumers into more rural regions of Asia as it aims to sell the items in a million stores by next year. Nestle’s planned investment in Pakistan will prepare the company to meet growing demand at its juice, yogurt and noodles businesses, which are likely to double in size in the next five to six years, Donald said.
‘Still Enormous’
“The opportunity to grow in Pakistan is still enormous,” Donald said. “We’ve a very bullish view on Pakistan, and will invest quite aggressively in production capabilities in the next three to four years.”
Nestle yesterday said revenue growth is likely to be at the top end of its forecast range this year after reporting the biggest sales increase since the first half of 2008. Sales excluding acquisitions, disposals and currency shifts rose 7.5 percent in the six months ended June 30, the Vevey, Switzerland- based company said. Nestle, which targets a 5 percent to 6 percent annual gain, also predicted higher margins.
The growth in so-called organic sales beat the 6.5 percent average estimate of analysts surveyed by Bloomberg, led by a 12 percent gain in Asia.
“The market is relatively underdeveloped,” Donald said. “So the fact that Engro and other names are entering the market is actually a very good thing. The fact is that they all together are stimulating growth in the packaged food segment.”
Engro Foods last week reported net income of 99 million rupees in the three months ended June 30, compared with a loss of 165 million rupees a year earlier. Sales climbed 46 percent to 7 billion rupees in the quarter. Nestle Pakistan on Aug. 3 reported net income rose to 1 billion rupees in the three months ended June 30, from 978 million rupees a year earlier
Nishat Group entering packaged milk market in Pakistan, according to Bloomberg:
Nishat Group, owner of Pakistan’s largest lender by market value, plans to enter the consumer goods business by starting milk production this year, Chief Financial Officer Inayat Ullah Niazi said.
“We have bought land outside Lahore and after beginning milk production, we will add other products to the line,” Niazi said by telephone from Lahore today. He didn’t provide more details.
Niazi said the group, which owns MCB Bank Ltd. and Nishat Mills Ltd., the nation’s largest textiles exporter, sees growth potential in Pakistan for consumer goods, particularly food products. The government plans to spend 3.5 billion rupees ($40 million) to improve the dairy industry, including expanding infrastructure, in the fiscal year ending June 30, and boost economic growth in the period to 4.2 percent from 2.4 percent.
“Dairy is one of the fastest growing businesses in Pakistan,” said Abdul Aziz Anis, who oversees $35 million in assets including shares of MCB and Nishat Mills, as chief executive officer of Karachi-based Alfalah GHP Investment Management Ltd. “There is huge growth potential in the consumer business, but the only question is the buying power of the population with still-high inflation.”
Nishat Group joins Nestle SA in expanding in dairy in Pakistan. The Vevey, Switzerland-based company said in August that it plans to double dairy output in Pakistan by spending 300 million Swiss francs ($334 million) in the next three to four years. Companies including Unilever and Colgate-Palmolive Co. are also expanding sales of consumer goods in the South Asian nation as demand for products such as Sunsilk shampoo and Colgate toothpaste bolster local units’ revenue.
Inflation in Pakistan rose 11.56 percent in August from a year earlier, the fastest pace in the Asia-Pacific region after Vietnam, according to data compiled by Bloomberg. The State Bank of Pakistan cut the discount rate to 12 percent from 13.5 percent this month to help spur investment in the nation, which has been hit by flooding and terrorism.
http://www.businessweek.com/news/2011-10-19/pakistan-s-nishat-group-to-start-milk-production-this-year.html
Here's a Pakistan Today report on motorcycle manufacturing in Pakistan:
Karachi - To effectively cope with domestic market of over 1.5 million units and after successful launch of their products in global markets, the local motorcycle producers are now planning a further investment of $100-150 million in their existing units.
The motorcycle industry analysts have pointed out that despite numerous hiccups faced by the economy in recent years, growth in motorcycle production has been robust at 15 per cent. “A decade back, the total motorcycle production in Pakistan was around 100,000 units, now the largest player alone is rolling out half a million units while total production of two wheelers has crossed 1.5 million. They said that the encouraging aspect in this regard is that industry is on the path to sustained growth. The local demand for motorcycles is likely to exceed 2 million units within a year or two,” they added.
“The global response to our quality motorcycles indicate a sustained and healthy growth in exports as well” they opined, adding that in fact, the industry experts are seeing themselves as the largest exporters in the engineering sector. A sustained growth is only possible due to regular investment and up-gradation of technology in the motorcycle industry. “The growth we see in motorcycle production would not have been possible without investment”, they added.
In this regard, Fahad Iqbal CEO, HKF Engineering, makers of Ravi motorcycles said that the industry now has to fulfill the growing demand in both domestic and global markets and for this, it needs to invest over $100 million in the next couple of years to keep abreast with market needs and demands. He said that all the motorbike producers having production of 50,000 units or above are now planning to expand their capacities to cope up with the market demands.
“There are almost a dozen players that have achieved this production level” he said, adding that even if each of them invests $10-15 million, the total investment would cross $150 million. These units have been regularly making investments to increase their market share but now they have reached a level where they have to invest in high-tech parts to ensure that instead of having 90 per cent local components, Pakistani bikes are produced by 100 per cent local parts, he added.
Market analysts urged that in such an encouraging situation, the government should refrain from taking steps that might jeopardise this investment. He said that an investment of $150 million by local players without any government concession is better than vying for similar investment over a period of 10 years from a foreign company. The current players, from Italy, China and Japan, are also in various stages of developing new models in the 100-150 cc range with the latest technology, he said. However, he added, they were not offered any relief even on imports of the environmentally friendly Euro 2 components, which have already been introduced in local bike production.
“Capacities exist in the country in areas like sheet metal parts and there is a huge investment need in areas such as die casting for parts like crank cases and crank covers, electronic parts such as CDI units, engine parts like ACG, clutch, pistons, shock absorbers (cushions), plastic parts such as emblems” said Arshad Awan CEO General Engineering and added that even capacity enhancement and thus investment will be needed in low-tech parts like head lights, tail lights etc.
http://www.pakistantoday.com.pk/2011/08/bike-manufacturers-plan-heavy-investment/
Pakistan auto sales up 24% in October, reports Daily Times:
KARACHI: Pakistan Automotive Manufacturers Association (PAMA) has released local automobile industry’s sales and production numbers for the month of October 2011. As per data, auto sales of the industry witnessed a substantial growth of 24 percent year to year (YoY) to 58,576 units in four months of fiscal year 2012 (FY12) as against the sales of 47,143 units in the corresponding period last year.
The main reason behind this substantial volumetric growth seems to be incentive given by the government to local auto manufacturers in terms of removal of Special Excise Duty (SED) of 2.5 percent on imported and manufactured vehicles coupled with reduction in General Sales Tax (GST) from 17 percent to 16 percent in addition to the low base effect. Pak Suzuki Motor Company Limited (PSMC) witnessed a 38 percent YoY growth to 34,877 units in 4M FY12 as against the sales of 25,279 units in same period last year.
Highest growth was observed in the sales of Suzuki Swift of 140 percent YoY to 2,328 units as against 969 units in the same period last year.
Liana under the domain of 1300cc and above segment also witnessed a handsome 37 percent YoY jump in its sales to 168 units in comparison of 123 units in the same period last year.
Ravi, the pickup, experienced a massive 23 percent growth to 5,722 units versus 4,665 units same period last year. Indus Motor Company Limited (INDU) witnessed a 7 percent YoY growth in sales to 17,806 units in 4M FY12 as against 16,622 units in same period last year. Hilux, under pickup segment led the growth in sales of the company with a gigantic 135 percent YoY to 1,099 units as against 647 units in the same period last year.
Toyota Corolla posted upsurge in sales by 6 percent YoY to 15,175 units as against 14,622 units in the same period last year. Cuore remained as the only segment of the company, whose sales experienced a decline of 19 percent YoY to 1,532 as against sales of 1,893 units in the same period last year. Honda Atlas Cars Pakistan Limited (HCAR) also showed a handsome growth in its sales of 14 percent YoY to 5,893 units in 4M FY12 as against the sales of 5,172 units in 4M FY11.
The main reason behind growth was low base effect. The City, the most liked segment of consumers post 20 percent YoY growth to 3,647 units as against sales 3,041 units in same period last year.
Civic another product of the company in 1300CC and above segment posted a modest rise of 5 percent YoY to 2,246 units in comparison of 2,131 in corresponding period of last year.
As far as the market share is concerned, PSMC leads the market with 60 percent market share followed by IMC and HCAR with 30 percent and 10 percent market share in 4M FY12.
http://www.dailytimes.com.pk/default.asp?page=2011\11\15\story_15-11-2011_pg5_2
South Korea's Posco (PKX, 005490.SE) is looking to invest in steelmaking projects in Africa and Pakistan to capture the growing demand in those parts of the world, an executive told MarketWatch:
Posco Executive Vice President Sung-Kwan Baek told Dow Jones Newswires on the sidelines of a business conference in Bali Friday the company hasn't decided on the location of the planned project in Africa, but he mentioned some possible countries such as Ghana, Mozambique, South Africa and Zimbabwe because those countries hold abundant iron ore reserves, the basic steel raw material.
Baek said that the African plant will also serve the Middle Eastern market.
"At the same time we are thinking about Pakistan and India because of their big population," Baek added.
In India, the company has started to build downstream production facilities such as coating lines, cold-rolling mills and silicon-steel lines in the Maharashtra state, he said.
Meanwhile, for the upstream projects, Posco is planning three projects, one of which is expected to come through next year. The projects will be located in Karnataka state with six-million tons of annual production capacity, in Orissa, which will have eight million tons capacity. The other one will be developed with India's state-owned Steel Authority of India Ltd., which will have three million tons in production capacity.
The company's offshore investment is part of the plan to boost its total production capacity to 70 million tons by 2020, with 40 million will be produced by its plants in South Korea.
Posco is currently also developing a plant in Indonesia, which will have a six-million-ton annual capacity and a similar project in Brazil.
"Outside the two countries, we need 20 million tons in production capacity. Our goal is in 2020, we have 30 million tons [in production capacities] in foreign countries," the official said.
He added that the company will try to finance future projects with its own cash, but it doesn't rule out any fundraising activities if necessary.
Baek said that the company will closely watch how the global economy will affect China in determining its offshore investment for next year.
"If China survives, we will still have room to invest in foreign countries," Baek said.
China currently produces half of the global steel supply. Baek said that if China's economy slows down the country will likely boost its steel exports, making competition tougher.
http://www.marketwatch.com/story/posco-looks-to-enter-africa-mideast-pakistan-2011-11-19
Here's an Express Tribune report on Carrefour hyper stores expansion in Karachi:
KARACHI: Hyperstar – a Dubai-based chain of hypermarkets – is starting its Karachi operations at Dolmen Mall, Clifton from today (Monday), a much anticipated development that came two years after its first Pakistaani store opened in Lahore.
Owned by Majid Al-Futtaim Group, Hyperstar is retail franchise of Carrefour, the world’s second largest retailer after Walmart. The company will kick off its opening ceremony at 2pm on Monday, a company official said, it will be the first hypermarket in Karachi. A retail hypermarket is different from wholesalers such as Makro.
Hyperstar Karachi will be spread over 100,000 plus square feet and display 30,000 products, said Mubashir Jalili, who is the vice president of development at Hyperstar Pakistan.
The store’s selling area is spread over 65,000 square feet while its warehouse is spread over 20,000 square feet. The mall can accommodate 3,000 cars, Jalili said, and a higher number of motorcycles.
In 2009, the company launched its first store in Lahore where it achieved remarkable results – achieving Rs1 billion in revenues in its first year and set to cross Rs3 billion ($35 million) this year, according to sources familiar with the matter.
The company – whose Lahore store alone attracts more than one million customers every month – has already identified four more locations for Karachi and three for Lahore, Jalili said. Hyperstar wants to expand its chain of stores first in Karachi and Lahore then in Islamabad and other metropolitan cities of the country, he added.
MAF group’s second hypermarket in Karachi is under construction at Lucky One Mall near UBL Sports Complex, the site which previously housed the now defunct Fazal Mill.
http://tribune.com.pk/story/291394/whats-in-store-citys-first-hypermarket-opens-today/
Online News: Half of Pakistan’s population may live in cities by 2030
ISLAMABAD: More than half of Pakistan’s population is estimated to be living in cities by the year 2030. Both natural increase and net migration are major contributory factors to urban growth.
These views were expressed by participants of a seminar on “Business and the Middle Class in Pakistan organized by the Planning Commission of Pakistan which was held here on Wednesday.
The seminar included speakers and discussants from some of the largest companies and businesses in Pakistan, coming together to discuss the importance of the evolving middle class in Pakistan.
The participants said that current urban growth rate was approximately 3.5 per cent as compare to 2 per cent nationally. More rural people are migrating to urban centers for higher-paying jobs. Upward social mobility creating and expanding the middle class.
Given the low median age, Pakistan’s middle class is unusually young as compared to developed economies, meaning that younger population will have the most disposable incomes.The expanding middle class consumers will aim for first world aspirations and greater focus will be on branded retail products. The middle class has been growing in number as well as in importance all over the world, which is why businesses strategize targeting this specific class.
The participants said that the middle class is conceptually defined as the class between the rich and the poor; however its boundaries are usually made arbitrarily. It is also important to note the multi-dimensionality of an adequate definition; a person belonging to the middle class needs to be evaluated not only on a monetary basis, other aspects of quality of life and available opportunities need to be encapsulated to arrive at a well rounded definition.
They said that studies show a positive relationship between the higher share of income for the middle class and economic growth as well as political aspects like democracy. Other studies indicate the emergence of entrepreneurs from the middle class. It is the middle class that was the driver of success in India and China.
They said that the biggest opportunity of the rising middle class, at present and future will be for companies selling mass-consumer goods and services. As incomes rise spending patterns will incorporate discretionary and small luxury items while proportionate expenditure on food, clothing and other necessities tend to shrink.
While the basics may decline as a share of consumption, in absolute terms they will continue to grow. Housing, healthcare and educational expenses are expected to register a greater share of the wallet – this spending will be driven by the strong link between education and higher salaries, as well as growing number of options for both higher and vocational education.
http://www.onlinenews.com.pk/details.php?id=186520
Here's an Express Tribune report tiled "Nokia Sees Pakistan Becoming a High-Growth Market":
KARACHI: Foreign delegates and local entrepreneurs discussed challenges facing businesses, sought greater industry-academia collaboration and highlighted business models to succeed in an emerging market at the 12th Management Association of Pakistan (MAP) Convention on Leadership Challenges for Business Success here on Wednesday.
Emerging markets will account for 80% of the world’s growth the next decade and Pakistan will be an important emerging market in future, Senior Vice President of Nokia India, Middle East and Africa Shivakumar said in a speech titled “Winning in emerging markets”.
Speaking to a conference packed with businessmen, Shivakumar – who is also the senior vice president of All India Management Association (AIMA) – said growth in developed economies has slowed down dramatically and the world is now looking at emerging markets, which account for 42% of population and 13% of income.
Pakistan is listed in four categories of emerging markets including Dow Jones 35 and emerging and growth level economies (EAGLES), he said. “Pakistan will be an important high-growth emerging market.”
In order to succeed in an emerging economy, he said, it is important to understand its segments and consumers. The emerging market consumers – most of whom live under $2 a day – are value-sensitive and not price-sensitive, he said and added entrepreneurs have to work on their business models to accommodate that segment of consumers who believe in the doctrine of “pay more, get more” and “pay less, get less”.
Sharing his experiences, he said, there are three things that he applied and succeeded. “Always put the country’s interest first, keep fixed costs very low and turn as many cost variables as possible,” he said.
“Never cut the features and offer your product at half the price. Consumers don’t want an incomplete product.”
Speaking to the participants earlier on, event’s chief guest and State Bank of Pakistan Governor Yaseen Anwar said it is time for all business leaders and managers to take the lead. Leaders must be more aware of the challenges facing the country – inflation, unemployment and power crisis.
There are no shortcuts to sustained economic development, Anwar said. “We need to develop the right strategies and then translate these strategies into action.”
AIMA President Rajiv Vastupal also addressed the event, saying IMF has lowered growth projection for both 2011 and 2012. “Today’s corporate leaders must focus on innovation to counter the global economic challenges,” he said. He elaborated the successful example of Apple’s iPad, which was launched during recession and earned a great success.
http://tribune.com.pk/story/306766/nokia-sees-pakistan-becoming-a-high-growth-market/
Here's an Express Tribune story on the opening of British Dept store Debenhams:
When Pizza Hut opened its first franchise in Pakistan in 1993, few were familiar with the concept of franchising. Soon it became a household name, and was followed by other fast food franchises. Many observers viewed these import-oriented luxuries in an underdeveloped country like Pakistan, with scepticism and considered it a waste of our precious foreign exchange. However, the trend of foreign retail outlets continues to expand into other products, services, and brands.
The press launching of the 200 years old British department store, Debenhams’ branch in Karachi earlier this month on 27,000 square feet space, at the upbeat Dolmen City Mall, was attended by important personalities, like, UK Minister of State for Trade and Investment, Lord Stephen Green and UK Cabinet Minister Baroness Sayeeda Warsi. It appears to have pushed the retail franchising business to another level. The skeptics are turning into fans.
This will be the first international department store in Pakistan offering a complete range of product categories synonymous with Debenhams, including a full range of women’s, men’s and children’s clothing, as well as, home, beauty and accessories. It is promised to be a truly world class shopping experience.
“I am very bullish on retail, not just for local but also foreign brands,” said Yasin Paracha, Managing Director, Team-A Ventures (Pvt) Ltd, which is the franchisee in Pakistan for Debenhams. “Foreign brands will perhaps give Pakistan that softer image we need; that we are normal people, with normal tastes and preferences and actually do drive in cars and wear western clothes! Furthermore, foreign brands will give the local brands the required positioning on the brand scene and will give customers the choice to decide where they want to spend their money.”
It is worth noting that before the fast food franchises, auxiliary industries like the home-delivery service and suppliers of quality poultry, meat etc, according to modern quality standards, hardly existed.
Paracha is very upbeat about the employment possibilities this presents. “This creates immense number of jobs; the average requirement per 1,000 square foot, of retail space is around six, which means Dolmen City, with a leasable area of 650,000 square feet will provide jobs to around 4,000 people! These will be mostly undergrads who might struggle to find good jobs in offices. Here they have the chance to work in a comfortable environment, look nice, and develop the discipline to deal professionally with customers. It also provides students the opportunity to work. Almost every teenager in the UK has worked in a retail environment.”
About government revenue and taxation, Mr. Paracha says, “This adds immense revenue, as most brands will progress towards declaring and paying taxes, they are too much ‘in your face’ to avoid it. Furthermore, instead of considering this as an outflow of foreign exchange, it actually saves it, as most people spend on shopping when they travel, they will convert to shopping within the country if they have the option and the right environment.”...
http://tribune.com.pk/story/325554/the-fast-track-growth-of-foreign-retail-franchises-in-pakistan/
Here's a Businessweek story on Pakistan's informal economy:
It’s early morning in Karachi, Pakistan’s biggest city, and Muhammad Nasir is outside his makeshift shelter of palm leaves, rags, and bamboo, washing up after breakfast. He uses water stolen from a nearby supply pipe that belongs to the local water utility. The 17-year-old bids farewell to his mother, an unlicensed midwife, and walks to his tire-repair shop, an open-air stand in a residential area with a table of tools and a wooden bench. He checks to make sure the electricity he’s drawing illegally from the overhead power line is on so he can run his tire pump. Then he sends 10-year-old Abid, one of his two employees, along with 12-year-old Irfan, to get tea from a nearby shop.
Nasir’s business, his home, his power and water supply, and even the cup of tea Abid brings him don’t exist in Pakistan’s official figures. They’re part of another economy that doesn’t pay taxes or heed regulations. It probably employs more than three quarters of the nation’s 54 million workers and is worth as much as 50 percent of Pakistan’s 18 trillion rupee ($200 billion) official gross domestic product. And while the documented economy had its smallest expansion in a decade at 2.4 percent in the year ended June 2011, soaring demand for cars, cement for houses, and other goods shows the underground market is thriving.
----------
the nation’s purchasing power is more than estimated, says Nadeem Naqvi, managing director of the Karachi Stock Exchange. Rising crop prices have pumped an extra 1 trillion rupees into the rural economy in the past four years, most of it undocumented, Naqvi says. He estimates agriculture may account for as much as 35 percent of GDP, instead of the 21 percent reported.
Evidence of consumer demand is everywhere as new shopping malls and restaurants in Karachi are filled to capacity. Car sales rose 14 percent in February from a year earlier, as more people could afford a Toyota Corolla or Suzuki Mehran (a small hatchback), according to the Pakistan Automotive Manufacturers Association. More than half a million motorbikes hit the road in the eight months ended February, a 5 percent increase, perhaps a sign that Nasir’s tire business has a bright future. ..
http://www.businessweek.com/articles/2012-04-05/the-secret-strength-of-pakistans-economy#p2
Here's 2012 BMI research report on consumer electronics market in Pakistan:
BMI expects the Pakistan consumer electronics market will grow by around 9% in 2012, with strongdemand for smartphones, flat screen TV sets, and tablets providing growth, despite an expectedslowdown in private consumption. The Pakistani consumer electronics market has considerable potential,but this is constrained by a large grey market, poor IP protection, an unstable economic and securitysituation, and weak distribution channels. Reforming high national and provincial taxes and tariffs onproducts ranging from computers to prepaid mobile cards would boost the market. The long-term marketdrivers include a rising population and growing affordability and demand for consumer electronics goodsis also influenced by trends from Middle Eastern markets.
Headline Expenditure Projections Computer sales: US$309mn in 2011 to US$331mn in 2012, +7% inUS dollar terms. Forecast in US dollar terms upwardly revised, despite a high level of illegal imports.AV sales: US$645mn in 2011 to US$710mn in 2012, +10% in US dollar terms. Forecast in US dollarterms upwardly revised, with the main driver being demand for flat-screen TV sets.
Handset sales: US$750mn in 2011 to US$816mn in 2012, +12% in US dollar terms. Forecast in USdollar terms upwardly revised, but despite the popularity of smartphones, most handsets are sold at lessthan US$50.
Risk/Reward Rating: Pakistan’s score was 28 out of 100.0, with low CE market and Country Structureratings dragging down high Potential Returns. Pakistan took thirteenth place in our latest RRR table, buthas potential to rise over time due to the size of the market.
Key Trends & Developments
The TV sets segment is forecast to grow at a CAGR of about 12% as consumers replace blackand white, and analogue sets with colour and LCD models. About 49% of TV sets sold each yearare still black and white. If the government is unable to crack down on smuggled goods, growthcould be slower than this.
PC vendors must contend with a significant segment of demand being met by imports of usedcomputers from countries such as China. The government has denied reports it plans ban importsof used computers, which is a measure strongly opposed by local retailers. The price differentialbetween an imported second-hand computer and a new one is considerable, according to localimporters.
In 2012, established brands will hope to regain some market share as a result of thegovernment’s recent ban on imported handsets without IMEI numbers. Low-cost Chinesephones are understood to account for around 30% of the local handset market. According toretailer reports, although the ban hit sales of low-cost Chinese handsets, Chinese reacted quicklyto the new circumstances. Meanwhile, established vendors are targeting the low-price tier withproducts offering dual-SIM support and other features that have proved popular for the low-costbrands.
http://www.marketresearch.com/Business-Monitor-International-v304/Pakistan-Consumer-Electronics-Q4-7165551/
Here's link to an interesting thread on Made in Pakistan products:
http://www.defence.pk/forums/military-photos-multimedia/156408-made-pakistan.html
LCD TV by TCL Nobel Flat Screens
http://www.tclnobel.com/
Here's a News story on rising obesity in Pakistan:
KARACHI: The obesity is an emerging challenge to human well-being like other parts of the world, it was also on the increase in Pakistan.
The overweight and obesity are the fifth leading risk for global deaths.
The World Health Organization (WHO) estimates suggest that 26 percent of women and 19 percent of men in Pakistan are obese. Women are 2-3 times more likely to be obese.Childhood obesity is increasing with an estimated value of 10 percent.
This was stated by Prof Dr Muhammad Iqbal Choudhary, Director International Center for Chemical and Biological Sciences (ICCBS), Karachi University.
He was delivering a lecture on Wednesday at the 4th International Symposium-Cum-Training Course on Molecular Medicine and Drug Research being held at the International Center for Chemical and Biological Sciences (ICCBS).
Over 350 scientists, including 35 scientists from 24 countries, are attending the international event, organised by Dr Panjwani Center for Molecular Medicine and Drug Research (PCMD), University of Karachi.
Dr. Iqbal said that obesity had become a serious health problem worldwide, which is a result of an imbalance between energy intake and expenditure; the molecular cascade involves in obesity and associated disorders are not fully understood.
Proliferation of adipocytes plays an important role in the onset and progression of obesity, he added.
`Obesity has been linked to several serious health ailments like heart disease and stroke, high blood pressure, diabetes, cancer.
Overweight and obesity are major risk factors for a number of chronic diseases, including diabetes, cardiovascular diseases and cancer; once considered a problem only in high income countries, overweight and obesity are now on the rise in low and middle-income countries.
Overweight and obesity are largely preventable; the intake of healthier foods, and regular physical activity are easiest ways to prevent obesity, he said.
There is an urgent need to have R&D programme in the field of anti-obesity drug discovery and development, he urged, saying that the fundamental causes of obesity are an increased intake of energy-dense foods that are high in fat, salt and sugars but low in vitamins, minerals and other micronutrients; and a decrease in physical activity due to the increasingly sedentary nature of many forms of work, changing modes of transportation and increasing urbanization.
Talking about the multi-drug-resistant pathogens, he said that a rapid decline in research and development on new antibiotics coincides with increasing frequency of infections caused by multi-drug-resistant pathogens.
The key reason of bacterial resistance is the indiscriminate of suboptimal use of antibiotics. During the last three days of the symposium, various lectures of the national and international scientists were held on different scientific issues.
http://www.thenews.com.pk/article-83095-Obesity-on-the-increase-in-Pakistan
Here's ET on Coke's planned investment in Pakistan:
KARACHI: Optimistic about its growth prospects in Pakistan, the Coca-Cola Company – one of the world’s largest beverage companies – will invest $379 million on manufacturing facilities across Pakistan over the next three years to expand its business, the company’s Pakistani subsidiary announced on Monday.
The announcement comes on top of the $172 million already invested by Coca-Cola in the country in 2011. The beverage giant will be spending the money on three new bottling plants, one each in Karachi, Multan and Islamabad. The announcement was made in the ground-breaking ceremony of the Multan plant on Monday.
The funds will be utilised for expansion and bringing about infrastructure changes and systemic improvements in the Coca-Cola system, an official press release said.
The expansion plans come as rising demand makes it difficult for Coca-Cola to keep pace with its existing production capacity in Karachi and Punjab, according to company officials. A decent growth in its top-line may also be another factor encouraging more investments.
Owing to its strategic location, Multan can not only serve southern and northern Punjab – which alone accounts for more than 60% of Coca-Cola’s business – but can also cater to Karachi’s market, company spokesman Fahad Qadir told The Express Tribune.
Greenfield investment refers to new foreign direct investment that will be utilised in setting up a completely new project, as opposed to an existing business expanding operations with its free cash flows.
Qadir says the plant will be fully equipped with state-of-the-art production equipment and product warehousing facilities. The plant will also have a much higher manufacturing capacity, he said.
Besides the three Greenfield plants announced, Coca-Cola Pakistan already operates six bottling factories in Pakistan, located in Karachi, Gujranwala, Multan, Lahore, Rahimyar Khan, and Faisalabad. It buys close to Rs13 billion in raw materials from around 300 local suppliers.
The Coca-Cola System, according to the press release, provides direct and indirect employment to more than 8,000 people in Pakistan; while another 35,000 people are employed through its supply chain, and another 100,000 benefit through employment in allied industries.
Coco-Cola Pakistan refused to comment on its revenues: but our sources say the company earned over Rs50 billion in revenues for the financial year ending June 30, 2012; a 55% increase when compared with the previous year. It also paid Rs10 billion in taxes.
http://tribune.com.pk/story/515776/coca-cola-announces-379m-expansion-plan-for-pakistan/
Here's an excerpt of Express Tribune report on LG Electronics investment in Pakistan:
“We have decided to expand our operations by enhancing production capacities to capture growing consumer demand in Pakistan,” said DY Kim, President of LG Electronics Gulf, while talking to The Express Tribune on Thursday.
“Currently, our production in Pakistan is only limited to televisions and LCDs, but in a couple of months we will start producing other household items like microwaves and washing machines,” he added.
LG Electronics is a global leader and technology innovator in consumer electronics, mobile communications and home appliances with 117 operations around the world.
LG achieved global sales of $49 billion in 2011. It is offering products in four segments – home entertainment, mobile communications, home appliances and air conditioning & energy solutions.
In Pakistan, LG is increasing investment to enhance production capacity, but Kim did not divulge exact figure and only said it would be in billions of rupees.
The company is looking to compete with Samsung, which has increased its market share in recent years.
“We want to give consumers with some other option and we are hopeful this will not take much time,” Kim said.
http://tribune.com.pk/story/550418/lg-to-invest-billions-to-capture-pakistan-market/
Here's a Dawn story on how people meters skew media coverage in Pakistan:
IT was some time in the first half of 2009 that I got a call from my director news telling me that the newsroom was now looking for more stories from the city of Faisalabad because the people meter, the ratings tool, had just been installed in that city.
For the first time, ratings were going to be reported from Faisalabad, and all the channels were rushing to up their coverage of stories from the city so as to capture the ratings that were going to be reported from there.
So suddenly the bureau chiefs in Faisalabad started to come under pressure to increase their story counts.
Anyone who has ever worked in television news knows how reporters and bureau chiefs complain about how their area gets neglected by the folks in the newsroom, how they bring in all these wonderful stories but the folks in the newsroom don’t run them.
This time, however, suddenly the tables were turned. Faisalabad had been a bit of a backwater in the news business until then, with small bureaus and small staffs and a trickle of news coming out occasionally that held any interest outside the city.
But suddenly, there was an inordinate amount of interest in news from the city, and bureaus found themselves inundated with demands for packages and news and what we used to call ‘chunks’ in the parlance of our rundown producers at the time.
And this is what happened. All the reporters worked their contacts for news and sound bites and other tidbits. Almost all of them started reporting the same story: Faisalabad was experiencing large spells of load-shedding, and power loom owners were protesting outside the offices of the Faisalabad Electric Supply Company (Fesco).
There’s no news like live news, and almost instantly the orders came from the newsroom to send a DSNG van to the site of the protests and prepare for a live uplink.
For the first time, Faisalabad saw itself live on air on the major channels, and very quickly the size of the protests swelled. As the numbers grew, so did the amplitude, and very quickly tyres were brought out to be burned.
Burning tyres make for great footage, there’s fire and smoke and commotion all around them, and if you position the camera right, you can catch pictures of huge columns of smoke rising above an agitating mob. The newsrooms loved it, and the more they stayed live on scene, the more agitated the scene became.
The whole thing ended with the mob storming the Fesco offices. The anchors screamed about a crisis brewing in the city, as the screen showed looped footage of a mob smashing windows and chasing Fesco staff. That night the talk shows were abuzz as opposition politicians railed at the government for allowing matters to come to this.
“I saw someone there beating an electric pole with a stick!” shouted one fellow on a talk show. “That’s how mad people are over there! Good thing you weren’t there sir,” he taunted the government representative on the show, “else it would’ve been you they would’ve been beating with that stick!”
Faisalabad was propelled into the national news flow very suddenly, and the immediate arrival of the television spotlight had a very damaging impact on that city initially.
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The power riot found no such national leadership, only sporadic and very opportunistic local leaders who were easily co-opted or sidelined, and therefore has largely vanished from the scene. In the final days of the interim government, load-shedding had hit a peak never before seen in the country, but the streets by and large remained calm.
The media’s mirror is a dangerous tool. It reflects the reality it sees, but reflects it selectively. The television spotlight can illuminate, but it can also incinerate the reality upon which it is trained.
http://dawn.com/news/1053024
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