Dream of a Digital Pakistan shattered

By Shujauddin Qureshi

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A tweet by Prime Minister Imran’s Special Assistant for Digital Pakistan Ms. Tania Aidrus on July 29, 2020, sharing her resignation, apparently being heartbroken by severe criticism of her citizenship status has shattered the dream of Digital Pakistan forever.

Pakistan government shared the list of Advisors and Special Assistants to the Prime Minister (SAPMs) who had huge properties and dual nationalities. Ms Aidrus was revealed as a citizen of Canada with a residentship of Singapore.

This resignation news has nothing to do with the so-called ban on the digital game PUBG by the federal government or a proposed ban on YouTube by the courts. Ms. Aidrus had opposed the ban on YouTube. She wrote in a thread of tweets: “Banning a platform like YouTube is not a solution. The 3 years when YouTube was banned in Pakistan it held back our content creator ecosystem which has just started to flourish now, creating employment opportunities for thousands. Our focus should be on ensuring better curation of content through policy and dialogue. Brute force measures like banning will not serve any purpose and will hold us back from achieving the vision of #DigitalPakistan.” Please click on this link

Pakistan has been striving hard to be included in the digital map of the world. Still, many powerful forces inside Pakistan have always hindered any such attempt at a higher level.

With joining of Ms. Aidrus as SAPM had raised hope for quick implementation of the state policies and infrastructures for a Digital Pakistan, but she faced a series of controversies from the start of her joining the DP programme.

First, the former Information Technology (IT) Minister Dr. Khalid Maqbool Siddiqui (belonging to the coalition party Muttahida Quomi Movement) resigned apparently for the rights of Karachi, but he was reportedly unhappy with the inclusion of Ms. Aidrus in her ministry.

Moreover, she also faced another controversy when a news item was published in the daily Dawn on June 26, 2020, revealing a controversy on social media, questioning the involvement of Tania Andrus, who is also a member of the board of directors of a company owned by Imran Khan’s aide and now the main accused in sugar scandal.

Only last year on December 5, 2019, Prime Minister Imran Khan launched the Digital Pakistan programme and nominated Ms Aidrus, a Google executive at that time who quit her position, to lead the initiative.

The inclusion of Ms Aidrus on the board of directors of a not-for-profit company the Digital Pakistan Foundation (PDF) had raised concerns, particularly one leading to a conflict of interest because of the lack of transparency around the foundation’s funding and operations.

Although someone else will replace Ms. Aidrus in the DP programme, there is no hope for Pakistan being digitalized in near future.

I am sorry for Sir Zeeshan Usmani, an IT expert and a visionary Pakistani living abroad as he had submitted very fruitful recommendations to Ms. Aidrus in a personal meeting with her at the Prime Minister House in Islamabad, which he had explained in his following YouTube video.

facebook.com/zusmani78/(opens in a new tab)

I am happy that we will soon see a revolution in the IT sector in Pakistan. But all this is devastating.

Had those recommendations been implemented Pakistan would be become digitalized very quickly. But the powerful mafia in the government was not ready to accept such changes and want to keep the country in the dark ages.

Mafias run Pakistani economy: Dr. Kaiser Bengali

According to Dr. Kaiser Bengali, an eminent economist Pakistani economy is mostly run by mafias, who often join politics and the government to get “legal benefits.”

These mafias enjoy monopoly profits, which they use to further strengthen their political designs.

Dr. Bengali, who remained Advisor to the past governments in Sindh, Balochistan and Centre, while speaking at an online post-budget 2020-21 webinar on Sunday said sugar, wheat flour, fertilizer and paper industries are minting money by availing various subsidies and incentives in the form of tax exemptions. Most of the owners of these industries are either in the government or they are relatives of the ministers.

“You have heard about the sugar scandal and a good thing has happened that an inquiry report has been made public, which exposed how the sugar mafia is looting the national wealth by adopting all “legal procedures.”

Describing further, Dr. Bengali said the sugar mafia provides wrong figures and manipulates the situation for their benefit. First, they export sugar and claim subsidies on exports then create a shortage in the country to raise its prices. These sugar mill owners are mostly politicians, who often make policies for their benefit. Sugar mills are not paying properly costs to sugarcane growers and swindle taxes like FED and GST through manipulation.

Flour mills receive wheat from the government’s procured stocks at subsidised rates. The main aim of this incentive is that they would supply flour at lower rates. In fact, these mills purchase wheat from the open market and then sell flour at higher by mixing the rates. “They put the subsidy on wheat in their pockets and sell flour at higher rates,” he said.

In Pakistan, three paper mills have created a cartel, which has made many publishing houses bankrupt as they sell paper at higher rates. “Now the situation is such that most of the curricular books, even in Urdu are published and imported directly from China and Indonesia as there is no import duty on published books. The paper mafia is so powerful that every year the government announces to change the duty structure, but it always fails to do so.

He said most of the fertilizer manufacturing units are owned by the Military subsidiaries in Pakistan, which receive Sui (natural) gas at very cheaper rates, almost free, and also receive subsidies on the selling of fertilizer to growers.

It is a matter of fact that more than 60 per cent of fertilizer is being used by Punjab, whereas Sindh consumes only 20 per cent. The Sui gas-producing province Balochistan consumes only 4 per cent of the fertilizer, thus most of the subsidy goes to Punjab at the cost of smaller provinces like Balochistan and Sindh that produce the natural gas.

“We have not seen the reverse transfer of the benefit from Punjab to Balochistan,” he said adding that Punjab does not provide any subsidy to Balochistan while supplying wheat the people of Balochistan have to purchase wheat at the market rates.

Watch the entire speech: Click here

Economic Survey paints dismal picture of economy

The provisional Gross Domestic Product (GDP) growth rate of Pakistan for FY 2020 is estimated at negative 0.38 per cent on the basis of 2.67, -2.64 and -0.59 per cent growth in agricultural, industrial and services sectors respectively, states the Economic Survey of Pakistan 2019-20 released on Thursday, a day ahead of the presentation of Annual Budget 2020-21 in the National Assembly on Friday.

Presented by Adviser to the Prime Minister on Finance Hafeez Sheikh the Economic Survey document has presented a dismal picture of Pakistan’s economy as most of the economic indicators have gone nose dive.

For example, the negative performance of both Industry and Services has overshadowed the growth in the agriculture sector, which grew by 2.67 per cent. This sector is badly hit by the locust swarms in Sindh and Punjab, the major agriculture provinces.

The economic team of the government has put all the burden of the downward slide of Pakistan’s economic indicators on the overall slowdown due to the lockdown after Coronavirus (COVID-19) in March 2020, although the economy was not performing well even before the start of COVID-19.

The provisional growth in the industrial sector has been estimated at -2.64 per cent mainly due to a negative growth of 8.82 per cent in the mining and quarrying sector and a decline of 7.78 per cent in the large-scale manufacturing sector. Due to the lockdown situation in the country, the growth estimates of the Small-Scale Industry for FY2020 are 1.52 per cent.

Similar to the industrial sector, the services sector of the economy has also witnessed a significant impact of the lockdown situation in the country due to COVID-19, particularly in the Wholesale and Retail Trade and Transport Sectors. The services sector has declined provisionally at 0.59 per cent mainly due to a 3.42 per cent decline in the Wholesale and Retail Trade sector and a 7.13 per cent decline in Transport, Storage and Communication sectors.

The finance and insurance sector, however, witnessed a slight increase of 0.79 per cent. The Housing Services, General Government Services and Other private services have contributed positively at 4.02, 3.92 and 5.39 per cent respectively.

The fiscal deficit has substantially reduced to 4.0 per cent of GDP during July-March, FY2020 against 5.1 per cent of GDP in the comparable period last year. Similarly, a remarkable turnaround is visible in the primary balance, which posted a surplus of Rs 194 billion during July-March, FY2020 against a deficit of Rs 463 billion. Overall, the improvement in the fiscal account is largely attributed to a higher provincial surplus and a sharp rise in non-tax revenues.

The government has retired Rs 736.47 billion to SBP against the borrowing of Rs 3,204.72 billion in last year. On contrary, the Government borrowed Rs 1,760.38 billion from scheduled banks against the retirement of Rs 2,213.85 billion last year.

Exports during July-April, 2019-20 remained at $ 19.7 billion compared to $ 20.1 billion during July-March, 2018-19, posting a decline of 2.4 per cent.

The total imports during July-April FY2020 declined to $ 36.1 billion as compared to $ 40.3 billion same period last year, thus registering a decline of 16.9 per cent.

During Jul-April FY2020, remittances increased to $ 18.8 billion as compared to $ 17.8 billion during the same period last year, with a growth of 5.5 per cent.

During July-March FY2020, the current account deficit (CAD) reduced by 73.1 per cent to US$ 2.8 billion (1.1 per cent of GDP) against US$ 10.3 billion last year (3.7 per cent of GDP). The significant reduction in CAD reflected mainly the impact of macroeconomic stabilization measures taken by the government.

The executive summary of the Economic Survey 2019-20 can be accessed online from the website of the Ministry of Finance. Please Click Here

RIP Steel Mills

The Economic Coordination Committee (ECC) of the federal cabinet on Wednesday announced laying off all the 9,350 remaining employees of the Pakistan Steel Mills (PSM) with a golden handshake incentive worth around Rs 20 billion.

Presided over by the Adviser to the Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh the ECC, however, decided to retain about 250 employees for a period of 3 months for the execution of the human resource rationalisation plan and completion of formalities.

This news sent a shock-wave among the workers and trade unions, which have been demanding the release of salaries of workers. They have announced to launch of a movement against the PTI government’s move. The social media is filled with speeches by Prime Minister Imran Khan and Asad Umer who had addressed PSM workers before coming into power. They had pledged to revive the Mills and not to retrench any workers. The social media posts indicate they have done the opposite.

At least two retrenched workers of PSM Ejaz Samoo and Muhammad Yunus Baloch reportedly suffered heart attacks and died due to the shocking news.

At least five trade union leaders of Pakistan Steel including Yaseen Jamro, who is the Chairman of the current Collective Bargaining Agent (CBA) of the PSM (Steel Mills Insaf Union) were arrested while protesting outside the mills on Thursday and were later released by police.

According to the government, each employee would be paid an estimated amount of Rs 2.3 million.

The Supreme Court of Pakistan on March 13, 2020, asked the federal government to lay off all the redundant employees and appoint new people if it wanted to keep PSM running.

Established by former Prime Minister Zulfiqar Ali Bhutto with financial and technological support from the former Soviet Union in 1973 the Pakistan Steel Mills was once the largest industrial mega-corporation complex producing steel for industrial purposes. The project was formally launched by former Military dictator General Ziaul Haq on 15 January 1985.

Having a production capacity of 1.1 million tonnes of steel  Pakistan Steel Mills is spread out over an area of 7,550 hectares (18,660 acres) including 4,205 ha (10,390 acres) for the main plant, 3,266 ha (8,070 acres) for the township and 81 ha (200 acres) for the 110 MG water reservoir. In addition, it has leasehold rights over an area of 3,043 ha (7,520 acres) for the quarries of limestone and dolomite in the Makli and Jhimpir areas of the Thatta district. (For further details pl. visit: Pakistan Steel’s History.)

The PSM, which has been facing many crises since the 1990s stopped its commercial operations in June 2015 without formulating any human resource plan for its 14,753 employees which has since come down to 9,350 in 2019.

Despite its non-functional status, the fate of such a large number of employees remained undeclared as they have been demanding their dues since 2015.

During General Pervaiz Musharraf’s era, the federal government tried to privatise it, but the Supreme Court of Pakistan stopped its sale.

I can recall that I wrote a feature in monthly Newsline in its May 2006 issue with the title The Grand Steel Steal, in which I highlighted the military government’s design to sell an important national asset.

Although it was an inevitable decision on part of the government as it is unable to pay huge amounts of salaries to the employees, who are virtually kept redundant due to the non-functioning of the corporation since 2015. The successive governments had failed to revive the Steel Mills, which needed huge capital investment. Once the Sindh Government had shown interest to buy the Mills, but it backed out due to unknown reasons.

4th time cut in policy rate @8%

For the 4th time in a row the State Bank of Pakistan (SBP) on Friday announced another cut of 100 basis points (bps) in the Policy Rate by fixing it at 8%, a press release said.

The SBP has reduced the policy rate by a cumulative 525 bps since 17 March 2020.

According to the central bank, the Monetary Policy Committee (MPC) at its meeting on 15th May 2020 made the latest adjustment in the Policy Rate. This decision reflected the MPC’s view that the inflation outlook has
improved further in light of the recent cut in domestic fuel prices.

As a result, inflation could fall closer to its lower end of the previously announced ranges of 11-12 per cent this fiscal year and 7-9 per cent next fiscal year, the press release added.

It was a long-standing demand of the traders to reduce the interest rate to facilitate their borrowings from banks. The traders have been demanding to reduce the Policy Rate to 2-3 per cent.

To facilitate the businessmen from the economic shocks of the Coronavirus (COVID-19) related lockdown in Pakistan the central bank has already announced a special scheme to provide soft loans to the private sector so that they can retain and pay salaries to their employees during the lockdown closure of the offices. On April 10, 2020, the SBP announced an incentive scheme entitled Refinance Scheme for Payment of Wages and Salaries to the Workers and Employees of Business Concerns.

The SBP enhanced its refinance limits to finance up to 100% of wages and salaries of businesses with an average 3- month wage bill of up to Rs 500 million. This can be used for the onward payment of wages and salaries in April, May and June 2020. Earlier, 100% financing was available up to a wage bill of Rs 200 million only. Similarly, for businesses with a 3-month wage bill exceeding Rs 500 million, State Bank will now finance of up to 75% with maximum financing of Rs 1 billion. Earlier, 75% financing was available up to a maximum of Rs 375 million and 50% up to a maximum of Rs 500 million.

The profits on bank deposits, term deposits and fixed deposit schemes would further be reduced as the commercial banks including National Saving Centre have already reduced their rates to a minimal level and pensioners and widows who have been investing in various schemes to earn regular income would receive less amount. Currently, term deposit profits range from 7 to 7.5 percent when the discount rate was 9 per cent. These banks will certainly reduce it further to bring to the level of 6 yo 6.5 percent.

Lockdown Diary: State Bank further cuts discount rate by 2% @9%

In a sudden and surprising move, the central bank announced today to further reduce the policy rate by 200 basis points (bps) to fix it in a single digit @ 9 per cent. The Monetary Policy Committee (MPC) of the State Bank of Pakistan in an emergency meeting on Thursday announced the cut in the policy rate, which is the third in a row during a period of less than a month.

Pakistan Central Bank has recorded a 4.25% reduction, which is the world’s highest rate cut in response to the coronavirus pandemic (COVID-19), said Muzammil Islam, a senior economist in his Facebook post.

“This reduces forward-looking real interest rates (defined as the policy rate less expected inflation) to around zero, which is about the middle of the range across most emerging markets,” the Monetary Policy Statement issued by SBP Thursday stated.

The MPC was of the view that this action would cushion the impact of the Coronavirus shock on growth and employment, including by easing borrowing costs and the debt service burden of households and firms, while also maintaining financial stability. It would also help ensure that economic activity is better placed to recover when the pandemic subsides.

The MPC noted the worsening outlook for global and domestic economic activity in the wake of the Corona pandemic. Given the unfolding situation, the MPC noted that it “remains ready to take whatever further actions become necessary in response to the evolving economic impact of the Coronavirus,” the statement said.

The world economy is expected to enter into the sharpest downturn since the Great Depression, contracting by as much as 3 per cent in 2020, according to projections released this week by the IMF. This is a much deeper recession than the 0.07 per cent contraction during the global financial crisis in 2009. Moreover, there are severe risks of a worse outcome, the statement said.

Despite the fact it was a longstanding demand of the traders to reduce the interest rate, this cut would affect the savings, as the profits on bank saving and terms deposits would be slashed down in the same proportion.

The traders have welcomed today’s decision of SBP.

Last time, the central bank had announced a cut in the policy rate on March 17 after a long four-year’s period by slashing 75 bps to 12.50% citing a declining inflationary pressure and a need to sustain the economy that was hit by the coronavirus crisis. This reduction was termed a meagre by the businessmen who rejected it.

Due to mounting pressure, within one week later on March 24^th the SBP again reduced the rates by 150 basis points to 11 per cent stating that the COVID-19 pandemic had caused major disruptions to economic activity and the IMF had also significantly downgraded its global growth outlook for 2020 from 3.3% growth previously to below zero.

The banks were paying over 12.5 per cent per annual interest rate on one year or more fixed/term deposits before March 17, which was reduced to 10 per cent per annum when the policy rate was reduced to 11 per cent on 24th March.

Uber, Careem exploit their drivers

App-based cab companies Uber and Careem are allegedly exploiting their drivers who are, in fact, the manpower asset for these transportation networks operating in major cities in Pakistan.

It is pity that the drivers, who are called “Captains” by Careem, are hired on attractive terms and the companies often show them green pastures in the advertisements to attract them, but when they enter into the real business, they face a number of issues including meeting fixed targets of trips to earn commission and imposition of unnecessary fines, invisible deductions and taxes.

A video was viral on social media recently showing a Captain of Careem ransacking the Gulistan-e-Jauhar office of the company in protest against a reduction in his payments. He was using foul language (that is why it cannot be shared here) and can be seen trying to sprinkle petrol on his clothes to set him ablaze in the protest. Although there were no further details in the video as it was filmed by an armature user of a mobile phone camera, certainly he was suffering extreme mental stress due to the company’s policies. He was seen saying the company is exploiting the driver and frequently reducing their rates.

A group of drivers of both companies (Uber and Careem) staged a protest demonstration outside Karachi Press Club early this month and they had similar complaints. A news item published in daily Dawn on 3rd December quoted representatives of the driver saying that their management was reducing their share, exploiting their working hours and deducting a certain percentage in the name of tax.

Uncontrollable price hike

Prime Minister Imran Khan at his party’s meeting in Islamabad on November 15 termed the current spell of the price- hike in the country as “artificial” and a “conspiracy” against his government. The economists, however, believe that it is not a conspiracy against any government but , in fact, a mismanagement and bad governance on part of the government machinery especially at the provincial and local governments’ levels that have miserably failed to maintain control over prices.

They have also argued that the present price hike is mainly because of rise in inflation rate because of a number of economic factors: substantial increase in the prices of the utilities like gas and electricity, petroleum products, reduction in agriculture production and devaluation of Pakistan rupee, which caused increase in rates of imported products. Government’s increased borrowings from banks and international lenders because of the low tax recovery and increase in interest rates are other some economic reasons for rising inflation, said a senior economist Dr. Shahid Hasan Siddiqui, Chairman of Research Institute of Islamic Banking and Finance.

He said the hoarders and mafias also play their role in increase in prices of commodities and products. They have official machinery’s support. Increase in sugar and wheat prices are some examples, he added. Indirect taxes have also increased, which has affected the middle and poor classes negatively, said Dr. Siddiqui.

The provincial food departments in both Sindh and Punjab have failed to control smooth supply and demand of the essential commodities like wheat and flour. Flour millers in Sindh have been complaining that the commodity traders are hoarding the wheat to manipulate the prices. Moreover the provincial government’s food department did not procure wheat in Sindh this year on the pretext that the government godowns were full due to last year’s storage. This has resulted in exponentially increase in price of a 100 kg bag of wheat in November against in April, when new wheat crop arrived in the market.

Flour millers say this year wheat crop was not short but due to corruption, mismanagement and inefficiency in the provincial governments the prices have increased and are still rising. This year the government had also allowed export of wheat, which was later banned in September but a lot of the new crop’s products were already sold out abroad. According to the statistics of Department of Plant Protection under the Ministry of National Food Security and Research Pakistan exporters send around 17655 tons of wheat between the period from August 1, 2018 to August 25, 2019.

The millers said when the government had realized that earlier estimates of the supply were not correct it should have allowed wheat imports to fill the gap. But it was not done.

It is a matter of the fact that Sindh’s wheat crop comes early in the market and this year due to provincial food department’s failure in official procurement of the commodity the profiteer traders found an opportunity to make profits, so they purchased the crop at cheaper rates from Sindhi growers and sold the commodity in Punjab markets at higher margins. It is a matter of the fact that increase in wheat price has not benefit ted the growers in any case. Only traders have minted the money.

Interestingly, in Punjab there was an official ban on the movement of wheat from the province so with arrival of new crop this was locally consumed. But earlier supplies from Sindh to Punjab resulted in artificial shortage of wheat in Sindh, thus the price of 100 kg bag of wheat was increased to Rs. 4,400. The federal cabinet’s Economic Coordination Committee (ECC) on hue and cry had to ask the Pakistan Agriculture Storage and Services Corporation (PASSCO) to release 650,000 tonnes of wheat to the three provinces — Khyber Pakhtunkhwa (KP), Sindh and Balochistan. Sindh has reportedly received 100,000 tonnes from PASSCO so far.

The expert term the price hike because of full control of mafias on supply of essential food items like sugar, wheat flour, milk. The district administrations which are responsible for price control have, in practical terms, miserably failed to control the prices. For example, the Commissioner of Karachi has fixed price of a liter of milk at Rs. 94 but nowhere in the city it is available at the official rate. But it is being openly sold at the rate of Rs. 110 to 120/ liter.

“We have been raising our voice at the meetings on price control at Karachi Commissioner office on regular basis, but the administration seems helpless before these profiteers,” said Shakeel Baig, Chairman of Consumers Rights Protection Council of Pakistan.

Similar is the situation of prices of roti or naan. The government has asked the Tandoor owners to sell a 150 gram roti at the rate of Rs. 10, but it is not being sold at official rate anywhere in the city. “We have conducted our own research in the market and we have found that normally Tandoors sell a naan which is of weight of only 110 or 120 grams, which cost them around Rs. 8 after calculating all expenses, but they are not ready to reduce the prices,” he said. Tandoor owners however have their own complaints of increase in flour and gas prices.

In August the Prime Minister after public complaints had asked the gas companies to reduce gas rates for naan/roti makers so they are able to sell roti at reduced prices. But reports from different cities indicated that prices were not reduced anywhere.

Electricity, gas and petroleum prices have increased in Pakistan since early 2018, which has affected every section of the society. The Gross Domestic Product (GDP) growth rate has shrunk this year to 3.1 percent and the growth in large scale manufacturing was reported negative due to financial crisis.

The recent sky-rocketing prices of fruits and vegetables especially tomatoes due to failure of local crops has also made the lives of consumers miserable. Once the prices of a kilogram of tomato crossed Rs. 400, the government found no other solution but to allow imports of tomatoes from neighbouring Iran, which took some time to reach Pakistani markets.

Tomato import from eastern neighbor India is already banned due to technical reasons. Some three years back Pakistani quality managers found infectious germs in Indian tomatoes, so they put a ban, which is continued. However, local production of tomato is quite sufficient to suffice the country’s demand. Sindh is the first province, where crop ripens first followed by Southern Punjab and Balochistan. But this year tomotta tomato crop in Sindh was badly affected due to climate change effects. It was destroyed at its sowing stage due to heavy monsoon rains followed by untimely rains in September and October, which resulted in heavy losses to growers. The local farmers had to re-sow the tomato seeds after end of wet spell, but the crop was 40 percent less, a local farmer said. The local tomato crop from southern Sindh especially from Badin district has started arriving in Karachi’s vegetable market, however it is still insufficient to fulfill local demands.

With the arrival of Iranian supply the prices of tomatoes have substantially dropped to Rs. 200 a kilogram.