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Express Tribune
22-05-2025
- Business
- Express Tribune
Govt misses investment target
Listen to article Pakistan's investment ratio has slightly improved to 13.8% of the economy's size in the outgoing fiscal year but remained below the official target, as private investment stayed almost stagnant despite the government's multi-front efforts to attract non-debt creating foreign inflows. The Sovereign Wealth Fund remained dormant, while the Special Investment Facilitation Council's (SIFC) efforts also proved fruitlessboth vehicles had been set up two years ago to significantly boost investment. According to figures approved by the National Accounts Committee, investment as a percentage of the economy missed the official target again this fiscal year. Against a target of a 14.2% investment-to-GDP ratio, it remained at 13.8%, according to provisional figures. These will be officially released next Sunday at the launch of the Economic Survey of Pakistan. Still, the 13.8% figure marks an improvement from the previous year, when the ratio fell to a five-decade low of 13.1%. The Pakistan Democratic Movement (PDM) government had established the SIFC through an Act of Parliament to raise investment levels and remove growth bottlenecks. Despite year-long efforts, these have not yet produced tangible results. The government also established the Pakistan Sovereign Wealth Fund (PSWF) to attract investment from the Middle East. However, it remains non-functional due to disagreements with the International Monetary Fund (IMF) over its legal framework. SIFC has now shifted its focus toward resolving issues faced by domestic investors and helping the government formulate and implement economic policies. The fixed investment-to-GDP ratio also rose to 12%, up from last year's 11.4%, though still short of the official 12.5% target set in the previous budget. Private sector investment inched up to 9.1% of GDP, below the targeted 9.7%. The public sector investment-to-GDP ratio rose to 2.9%, contributing to the overall improvement. This assumes that the full Rs1.1 trillion development budget will be spent. Failure to meet the investment target limits the government's ability to address deteriorating infrastructure and social sector challenges using its own funds, resulting in increased reliance on loans for development. The savings-to-GDP ratio surpassed the official target of 13.3% and surged to 14.1% due to an anticipated current account surplus in this fiscal year. The IMF last week released its staff report, offering a detailed look into the workings of the SIFC and the Sovereign Wealth Fund. IMF projected foreign direct investment (FDI) for the fiscal year at 0.5% of GDPslightly lower than last year. In absolute terms, FDI is estimated at $2.1 billion this year. The IMF said that addressing the anti-export bias caused by restrictive trade policies and an ineffective tariff structure is central to unlocking Pakistan's competitiveness and attracting private investment. The government has again assured the IMF of its intent to amend the Sovereign Wealth Fund law and ensure transparency within the SIFC. According to Pakistan's commitment, "By end-March 2026 we will, in consultation with Fund staff, enact the necessary legal amendments to the PSWF Act and other legislation to strengthen the PSWF's legal framework, governance arrangements, and transparency and accountability mechanisms." To end ambiguity surrounding the Fund's legal standing, the government has assured the IMF that it will be defined as a state-owned enterprise (SOE) and made subject to the SOE Act. Other legal changes will also be made in the law to ensure the SWF's governance structures correspond with a holding entity's nature and mandate, and narrow its mandate to holding and managing SOEs on behalf of the state and creating value through their operational and financial improvement. The law will be amended to limit the wealth fund's role to attract foreign direct investment by facilitating and mobilising co-investment in strategic commercial ventures that generate financial returns in line with the SWF's investment mandate, while ensuring that the SWF and any sub-funds are neither the sole investors nor the first loss in any project, and that any investment is only motivated by financial risk-return considerations, according to the IMF report. The IMF report added that the revised legislation will ensure that all privatisation and procurement processes follow rules set by the SWF's Board. These rules must align with international best practices, ensuring open, transparent, competitive, and non-discriminatory procedures. Minimum disclosure requirements will be established for every stage of the process, including beneficial ownership. These rules will operate independently of government regulations but will generally align with official guidelines for divestment and procurement. Regarding the SIFC, the government assured the IMF that it would take additional measures to promote investment, maintain competitive neutrality, and ensure a level playing field. "We commit to ensuring that the SIFC does not propose, nor that the government provides, regulatory, spending, or tax-based incentives of any sort, or any guaranteed returns, or take any other action that could distort the investment landscape," the report stated. It added that all SIFC-led investments will follow the standard Public Investment Management framework.
Business Recorder
20-05-2025
- Business
- Business Recorder
Pakistani brands at Dubai Baby Expo set sight on expansion
DUBAI: Pakistani baby products manufacturers hoped they could wiggle their way into the hearts of mums and babies at the Baby Expo in Dubai. 'We are here to see consumer reaction to our products, some of which are sustainable textiles and reusable products,' Muhammad Safeer, director, Rehbar Majeed Textiles (Pvt.) Ltd told Business Recorder. 'We want to see whether we have a market over here.' The Faisalabad-based company was debuting its sustainable, organic products - sleep suits, swaddles, towel, bathrobes - at the second edition of the expo, which is the Middle East's largest maternity, baby, and toddler event, and was held on May 16 and 17. 'Natural fit': Pakistan's fashion industry makes presence felt in Dubai According to the Economic Survey of Pakistan 2023–24, manufacturing activity recovered somewhat in 2024, but the textile sector recorded negative growth by 8.3 per cent. The report says that rising input costs, a struggling textile sector, lower government spending, high inflation, and elevated policy rates compounded the issue. Presence at events such as the Baby Expo could be key to unlocking expansion. Safeer said the event gave Rehbar insight into customers' preferences. 'Reusable products currently in the market here are not very suitable,' he said, adding that reusable products such as diapers and wipes, are more popular in larger markets, such as the US and Europe. He also learnt the importance of display at such big events. 'I have learned about the display because they have better experience for the Gulf market. I see that there are differences in the display. This market requires a more appealing display with vinyls and stickers, etc.' Another Faisalabad based company that was at the show was Jaguar Middle - East FZC. It was represented by Dubai-based Pakistani business owner, Muhammad Usama Asim. 'It was important for Jaguar to come here to evolve in the new industry that is up and coming ? e-commerce and online ? and to get in touch with new target customers,' he said. The business, which has a manufacturing facility in Faisalabad, has pivoted to work efficiently with smaller clients who require 50 or 100 pieces, said Asim. The business currently has clients in the US and UK and is open to working with new e-commerce clients, not only as a producer but also as industry mentors. 'Everyone wants to launch their own brands and we're here to guide them and to let them know how it's done,' said Asim. Jaguar, which is affiliated with National Hosiery, a well-known brand in Pakistan, makes clothes from sustainable organic cottons, organic blends and bamboo blends for kids born prematurely to those 48 months and older. The brand, said Asim, has evolved as the parents' needs have changed over time. The Baby Expo featured over 250 global brands from the maternity, baby and toddler space and introduced the NextGen: Industry Leaders Summit in which professionals provided insights into emerging trends, market shifts, competitive strategies, and future opportunities in the baby and parenting industry. According to an event press release, the baby market is set to reach $217 billion by 2030, with Dubai's retail sector already having grown by 2.9 per cent to AED 83.12 billion in 2024, creating major opportunities for brands to lead through product innovation and digital advancements. Expo visitors learned about new sustainable product lines, baby accessories, toys, clothes, and cooking tips for nutritious and healthy meals. Panel talks featured industry leaders who shared new research in child development and tips on maternal care and parenting practices. The event was not just about selling products. It also highlighted issues around mental health. Maitha Al Mazroei co-found the Emirati baby clothing brand Sashi, which, similar to Jaguar, uses premium bamboo material. As a mother herself, she wanted to use the brand to spread the message about a new mother's mental health. 'A lot of women, especially new mothers, experience postpartum depression and they don't realize its effects,' said Al Mazroei. 'It's important to differentiate postpartum depression from baby blues,' said Rama Kanj, educational psychologist at The Valens Clinic, who also had a presence at the expo. 'Baby blues is when a mum is feeling low mood, some tiredness, and some low motivation the first few days after giving birth. 'However, postpartum depression generally lasts longer,' she added. 'Its impact is larger on the mother's mental health.' The main concern, said Kanj, is that the mother may not feel a connection with the newborn, the lack of which could hinder the early days or weeks of the development of an emotional bond between the child and the mother. 'Postpartum depression, unfortunately, is still not talked about because birth is supposed to be a happy time,' she said. 'And we don't really understand fully why a mother who just gave birth may be choosing to isolate herself, feel withdrawn, and not want to participate in the celebrations or the visits that people are doing.' In her efforts to raise awareness around the issue, Kanj wants mental health frontliners, such as gynaecologists, to identify symptoms and signs of postpartum depression so that they can make appropriate referrals. But part of the responsibility also falls on those around the mother, she added. 'We know that being well-surrounded socially helps a lot in boosting the mood, helping the mum know that she's not alone, letting her have a safe space to share her feelings and thoughts so that she feels heard.' She said it also helps if the responsibilities of the new mum are shared by others around her. As Kanj works with new parents, she focuses on empowering their parenting journey. Her advice to new parents: 'Don't strive for perfection, [parenting] is a work in progress. Listen to your child. Children communicate through various ways, not only through words but through behaviours as well. And trust your instincts.' Copyright Business Recorder, 2025
Express Tribune
10-03-2025
- Business
- Express Tribune
Camel carts vanishing from city's roads
In the midst of Karachi's towering skyscrapers, bustling shopping centers, and roads dominated by cars and trucks, a relic of the past continues to navigate the city's streets - a centuries-old mode of transportation that is rapidly fading from sight. Camel carts, once a common sight in the downtown areas of Pakistan's economic hub, have now been confined to only a few commercial streets in the city's southern district, commonly referred to as "Old Karachi." While modernity has taken over much of the metropolis, these carts can still be spotted in pockets of the city, primarily used for loading and unloading wood and other materials at Karachi's timber and scrap markets. "This way of transportation is almost gone from Karachi. You'll only find a few of us left," said Ghulam Hussain, a camel cart owner, as he unloaded steel bars at a store in Lyari, one of the city's oldest neighborhoods along the edge of the Arabian Sea. "Keeping a camel is no small task. With the rising cost of fodder and the takeover of transportation by trucks and trailers, it's getting harder to sustain this business," said Hussain, who has been operating camel carts for over two decades. The 55-year-old father of four earns between Rs5,000 to 6,000 daily, but a significant portion - Rs1,000 to 1,500 goes toward feeding his camel. Additionally, he pays another Rs1,000 to his helper, who assists him in loading and unloading goods. According to Hussain, only 15 to 20 camel carts now operate in Karachi's southern district, with the total number in the entire city not exceeding 150. Patting his camel before fixing a saddle and attaching it to the cart, Mir Mohammad prepared for another day of work outside a factory in Shershah Colony, where camel carts still gather before setting out. "My business is shrinking with every passing day. It's obvious that people prefer trucks and vans because they're faster and more efficient," he said. Pointing toward a truck driver sitting nearby, he chuckled and added, "He's the reason my work is fading away I honestly don't know how much longer I can continue this. Maybe another year, maybe less, but it's only a matter of time before we're completely gone." Camel population While Karachi's camel carts are dwindling, Pakistan remains one of the top countries globally in terms of camel population - 10th worldwide and second in Asia, after Saudi Arabia, according to World Population Review. However, according to the Economic Survey of Pakistan, the country's camel population currently stands at around 1.1 million, showing little to no increase over the past few decades. D. Mohammad Shahid Nabeel, an official with Punjab's Livestock Department, attributed this stagnation to various biological and economic factors. "One-humped camels, which make up 95% of Pakistan's camel population, take longer to reach reproductive maturity. They only breed in winter, reach puberty at four to five years, and have a gestation period of 13 months. This naturally limits their population growth," he explained. Additionally, the demand for camel meat, especially during the Muslim festival of Eid-ul-Adha, when thousands of camels are sacrificed, plays a role in keeping their numbers in check. Hussain, the camel cart owner, follows this cycle himself. He plans to sell his camel during the upcoming Eid-ul-Adha and purchase a younger one to continue his trade. "I do this every four or five years. It helps me afford a younger, stronger camel," he said. Decline of camels in agriculture and transport Camels have long played a vital role in Pakistan's rural economy, particularly in desert and mountainous regions where they are used for drawing water, plowing fields, and transporting goods. A well-fed camel can produce 10-15 liters of milk daily, making it an essential resource for many farming communities. However, modernization, increasing maintenance costs, and shrinking grazing lands have led many farmers and transporters to abandon camel rearing. "Those who breed camels on a large scale for commercial purposes still make a profit, especially during Eid-ul-Adha, but for farmers and laborers who use camels for agriculture and transportation, the costs have become unsustainable," said Mohammad Safdar, a camel breeder from the Thal Desert in Punjab. Speaking to Anadolu, Safdar explained that while some farmers continue to keep camels due to cultural and heritage reasons, their practical use has diminished. Tractors and trucks have replaced camels in farming and transport operations. Nabeel partially agreed but stressed that camels remain indispensable in certain parts of Pakistan. "In the vast deserts of Punjab and Sindh and the rugged mountains of Balochistan, camels are still essential. No other animal can survive in such extreme conditions," he said.
Express Tribune
05-03-2025
- Business
- Express Tribune
Pakistan's investment crisis
Listen to article Pakistan is grappling with a significant savings and investment challenge, worsened by persistent fiscal deficits that have squeezed the private sector and hindered productivity growth. The country's recurring economic crises can largely be attributed to the government's failure to broaden the tax base. Consequently, investment in the formal economy, as a percentage of GDP, is approaching historic lows. To overcome the current crisis, Pakistan's policymakers must encourage the flow of private capital into key sectors like infrastructure. Persisting with incentives for informal investments in areas like real estate has been disastrous. Pakistan must now foster an environment that encourages citizens to invest in the country's long-term development, rather than in unproductive, speculative assets. This shift would not only help formalise the economy but also attract the long-term investments necessary for sustainable economic growth and improved productivity. According to Economic Survey of Pakistan, investment as a percentage of GDP in FY24 stands at only 13.1%, the lowest in 64 years. The highest was recorded in FY65 at 24.6%. Pakistan's economy has always been driven by consumption. The contribution of consumption to GDP has remained around 89% in every period, whereas the contribution of investment to GDP has been recorded at 15-19%. The 1960s recorded the highest average investment-to-GDP ratio, followed by the 1980s and 1990s, with averages of 18.7% and 18.5%, respectively. However, since 2011, the investment-to-GDP ratio has seen a significant decline, averaging just 15.2%. According to the World Bank, in 2023, Pakistan recorded the lowest investment-to-GDP ratio in the region. The South Asian average stood at 31.8%, with India, Bangladesh and Vietnam reporting significantly higher ratios of 33.74%, 30.95% and 32.75%, respectively. This raises concerns about Pakistan's economic competitiveness in the region. A large portion of investment in Pakistan is driven by public sector spending. However, recurring economic crises have diminished the government's capacity to fund this investment, with over 60% of federal fiscal resources now dedicated to debt servicing, and most of the rest going toward covering current expenditures. Consequently, Pakistan's ability to pursue large-scale infrastructure projects without external borrowing is severely limited. This challenge is further worsened by the lack of incentives for formal economic activity, which reduces the capital available within the formal economy, particularly for infrastructure development. Pakistan has experienced significant de-industrialisation over the past several decades. According to Pakistan Bureau of Statistics, in last 40 years, the industry's share of GDP has declined annually by an average of 0.6%, dropping from 22.3% in 1980 to 20.8% in 2023. Pakistan's ranking on the Competitive Industrial Performance Index (CIP) has also worsened, falling from 78th in 1990 to 80th in 2022 out of 153 countries. In a regional context, Pakistan's CIP ranking is the lowest, with India and Bangladesh ranking 40th and 65th, respectively. A prudent, targeted policy is required to overcome de-industrialisation and achieve competitiveness. Government should: raise the investment-to-GDP ratio to 20% by prioritising sectors like petrochemicals, engineering, minerals, chemicals, leather, food processing and IT services; lower borrowing costs for manufacturing firms to reduce financial burdens; gradually reduce the Corporate Income Tax (CIT) to 25% for the manufacturing sector; revive the Export Finance Scheme and reduce taxes on SMEs and Associations of Persons; reduce input costs over the next decade and enhance export competitiveness by liberalising tariffs on raw materials and intermediate goods; lower the average tariff from 9.03% to 5% and facilitate duty-free access for industries; shift capital from real estate to manufacturing by raising taxes on the real estate sector and promoting Public-Private Partnerships to develop critical infrastructure such as railways, roads, highways, warehouses and ports. These reforms would help alleviate Pakistan's investment crisis by stimulating domestic investments and boosting industrial production, thereby increasing exports.
