Category: Business

The most important business news, explained in a young, easy to understand way. News that affects young career professionals.

  • SNGPL announces mealtime-focused gas supply plan for Lahore residents

    SNGPL announces mealtime-focused gas supply plan for Lahore residents

    Sui Northern Gas Pipelines Limited (SNGPL) has introduced a fresh schedule for supplying natural gas to residential consumers in Lahore.

    As per the latest notification, the provision of sui gas will be facilitated from 6:00 AM to 9:00 AM in the morning, from 12:00 PM to 2:00 PM during the afternoon, and from 5:00 PM to 8:00 PM in the evening.

    These timings appear to align with SNGPL’s decision to ensure gas availability primarily during meal times in the three major segments of the day. This revised timetable will take effect starting from August 18, 2023.

  • Rawalpindi man lists nearly 30-year-old Honda Civic for sale at Rs1.5 million, says ‘it’s worth it’

    Rawalpindi man lists nearly 30-year-old Honda Civic for sale at Rs1.5 million, says ‘it’s worth it’

    With the rising prices of new cars rendering them unaffordable for many, even owners of older vehicles have begun to demand surprisingly high prices for their decades-old vehicles. In Rawalpindi, a seller recently posted an advertisement on the online buying and selling platform OLX Pakistan, listing a basic 1995 manual Honda Civic EXI at a staggering price of Rs1.5 million.

    The Current contacted him to ask if the price was a mistake. He confidently said it wasn’t and truly thinks his well-kept car is worth the Rs1.5 million price. He’s received many offers and a lot of interest in his nearly 30-year-old car. He also mentioned that he’s the third owner of this 1995 Honda Civic.

    It is noteworthy that a mere two years ago, cars of the same model year were being listed on online marketplaces for a significantly lower price, less than Rs600,000. However, the present scenario witnesses a surge in the asking price for these vehicles.

    This trend is not exclusive to a particular model but rather extends to nearly all used cars, given that even the cheapest car from Pak Suzuki Motors, the Suzuki Alto, now commands a price of nearly Rs3 million. Consequently, a considerable number of individuals, constrained by budgetary limitations, opt for pre-owned cars.

    While the price might raise eyebrows for a car of this kind, die-hard Honda Civic enthusiasts might willingly pay this hefty amount. That’s especially true if the car’s condition lives up to the seller’s claims.

    Given its popularity among Pakistan’s racing community and its appeal to those wanting to build a car from scratch, the price could find its justified niche.

  • PDM govt adds Rs18.5 trillion to Pakistan’s debt in just 15 months

    PDM govt adds Rs18.5 trillion to Pakistan’s debt in just 15 months

    In a span of just 15 months, the Pakistan Democratic Movement (PDM) government has significantly added Rs18.5 trillion to the country’s public debt, a striking amount surpassing the debt accumulation of its rival, the Pakistan Tehreek-e-Insaf (PTI), during its three-and-a-half-year tenure.

    Between March 2022 and the close of the 2022–23 fiscal year, the gross public debt surged from Rs44.4 trillion to Rs62.9 trillion. This rapid increase of 41.7 per cent in just 15 months occurred without a well-defined strategy to curb it. As a result, the federal government’s debt, for which the finance ministry bears direct responsibility, escalated to Rs60.8 trillion by June 2023. The debt bulletin, published on a recent Wednesday, indicates an addition of Rs18 trillion during the PDM government’s one year and three months in power.

    As per a report in the Express Tribune by Shehbaz Rana, this unsustainable surge in public debt is mainly ascribed to unregulated spending, insufficient revenue collection from areas such as real estate, services, and agriculture, alongside the diminishing value of the Pakistani rupee in comparison to the US dollar.

    It’s worth noting that the government under Imran Khan added Rs18.1 trillion to the public debt over a span of 44 months, a threshold that the current administration led by Shehbaz Sharif managed to surpass in just 15 months. However, it’s important to mention that the debt figure for July has yet to be compiled by the State Bank of Pakistan.

    This trend becomes even more significant when we consider that the combined debt addition by the Pakistan Peoples Party (PPP) and the Pakistan Muslim League-Nawaz (PML-N) from 2008 to 2018 was Rs18 trillion. Another Rs18 trillion was added from August 2018 to March 2022 during Imran Khan’s government, and now the PDM government has contributed an additional Rs18.5 trillion in a remarkably brief period of 15 months.

    Comparatively, from September 1, 2018, to the end of March 2022, the PTI government, on average, increased the public debt by Rs14.5 billion per day, more than double the average daily increase of Rs5.6 billion during the PML-N period. The PDM government has further escalated this daily addition to an average of Rs41 billion.

    By the time the PTI government’s term concluded, the total public debt amounted to Rs44.4 trillion, equivalent to 83.5 per cent of the gross domestic product (GDP) before the economy’s rebasing. Following the rebasing process, there was a 15 per cent reduction in public debt relative to GDP but no reduction in absolute terms.

    At present, the public debt constitutes 74.3 per cent of the GDP. Steep currency depreciation has also contributed to the federal government’s debt. Over the past 15 months, the total domestic debt of the federal government surged to Rs38.8 trillion, an addition of Rs10.8 trillion (or 38 per cent). When Imran Khan left office, the domestic debt stood at Rs28 trillion.

    Alarmingly, the external debt of the federal government surged by 48 per cent to Rs22 trillion within just 15 months, with a net increase of Rs7.1 trillion attributed largely to currency depreciation. By the end of March 2022, the external debt, excluding IMF liabilities, was Rs14.9 trillion.

    External debt constitutes roughly 36 per cent of the total debt, and fluctuations in the exchange rate have a significant impact on debt even without borrowing additional funds. In a span of 15 months, the rupee-dollar parity plummeted from Rs183.5 to Rs286.4, a decline of Rs103 or 56 per cent. This substantial and rapid depreciation has also contributed to inflation.

    On a recent Wednesday, the rupee slid further to Rs295. An immediate outcome of this mounting debt is a considerable rise in the cost of debt servicing. It is projected that debt servicing will exceed Rs5.8 trillion by the end of the last fiscal year. 

    As a result of reckless borrowing, Pakistan’s total debt and liabilities have surged to Rs77.1 trillion, equivalent to 91.1 per cent of the national economy’s size. This ratio is deemed unsustainable for a developing nation like Pakistan.

    During the past four years of the IMF programme, Pakistan struggled to enhance the Federal Board of Revenue’s (FBR) tax-to-GDP ratio, despite it being a priority for both the IMF and the World Bank.

    This raises concerns about the effectiveness of obtaining foreign loans for the sake of tax reform. Moreover, there has been a lack of serious efforts to control expenditures. The Shehbaz Sharif government, like its predecessors, continued to allocate funds to projects and initiatives that fall under provincial jurisdiction as per the constitution.

  • Pakistani rupee drops to Rs295 against US dollar

    Pakistani rupee drops to Rs295 against US dollar

    It appears that the Pakistani rupee is poised to shatter previous records and reach an new all-time low, as the local currency continued its decline against the US dollar on Wednesday, decreasing by 1.16 per cent in the inter-bank market.

    By the end of the day, the rupee settled at Rs294.93 against the US dollar, marking a decline of Rs3.42, as reported by the State Bank of Pakistan (SBP).

    This represents its lowest point since May 11 of this year, when it hovered near Rs299.

    Just one day prior, on Tuesday, the rupee also experienced a setback against the US dollar, concluding at Rs291.51.

  • Output of Pakistan’s main industries declines by over 10%

    Output of Pakistan’s main industries declines by over 10%

    The economic landscape of Pakistan has faced a notable setback, with the Large Scale Manufacturing Industries (LSMI) output experiencing a decline of 10.26 per cent during the fiscal year 2022–23 when compared to the same period in 2021–22. This concerning information has been revealed by the Pakistan Bureau of Statistics (PBS), shedding light on the current state of the country’s industrial sector.

    The provisional Quantum Index numbers of the large-scale manufacturing industries (QIM) further underscore this decline. Specifically, the LSMI output took a significant hit in June 2023, plummeting by 14.96 per cent compared to June 2022. However, there is a glimmer of hope, as the output experienced a slight uptick of 0.98 per cent in comparison to May 2023.

    Diving into the specifics, the LSMI Quantum Index Number (QIM) for June 2023 has been estimated at 112.21, while the QIM for the period of July–June 2022–23 stands at 114.83. These numbers provide a quantitative overview of the challenges faced by the manufacturing sector during this time frame.

    The foundation for these indices lies in data provided by several key agencies, including the OCAC, Ministry of Industries and Production, Ministry of Commerce, and Provincial Bureau of Statistics (BoS). Their collaboration has enabled the creation of the provisional quantum indices of LSMI for June 2023, based on the 2015–16 base year.

    Various industries have played a role in shaping this decline, with notable contributors including food (-1.14 per cent), tobacco (-0.65 per cent), textiles (-3.65 per cent), garments (2.79 per cent), petroleum products (-0.89 per cent), chemicals (-0.52 per cent), pharmaceuticals (-1.85 per cent), cement (-0.86 per cent), iron and steel products (-0.24 per cent), electrical equipment (-0.54 per cent), and automobiles (-2.21 per cent).

    Analysing the production trends over a larger period, July–June 2022–23, as compared to July–June 2021–22, reveals a mixed picture. While there have been increases in production for wearing apparel, furniture, and other manufacturing (football), there have also been notable decreases in food, tobacco, textile, coke, and petroleum products, pharmaceuticals, chemicals, non-metallic mineral products, machinery and equipment, automobiles, and other transport equipment.

    Industries that demonstrated growth during the July-June period include wearing apparel (27.16 per cent), leather products (1.29 per cent), furniture (35.51 per cent), and other manufacturing (football) (28.99 per cent). However, sectors such as food (6.90 per cent), beverages (6.43 per cent), tobacco (28.36 per cent), textiles (18.68 per cent), and many others have faced declines, indicating a complex and multifaceted economic situation.

    In particular, the petroleum products industry has witnessed a substantial decline of 13.39 per cent during July–June 2022–23. High-speed diesel and furnace oil also experienced negative growth, with decreases of 17.09 per cent and 14.65 per cent, respectively. On the other hand, jet fuel oil managed to buck the trend with a growth rate of 6.63 per cent, suggesting a nuanced narrative within the energy sector.

    Cement production, a crucial indicator of construction and infrastructure activity, also faced a decline of 13.67 per cent during July–June 2022–23, highlighting potential challenges in these sectors.

    As Pakistan navigates through these economic fluctuations, stakeholders and policymakers will need to closely analyse the contributing factors to these declines and strategize effectively to bolster the country’s manufacturing sector, ensuring sustainable growth and resilience in the face of challenges.

  • Air Link partners with Xiaomi for assembling TVs in Pakistan

    Air Link partners with Xiaomi for assembling TVs in Pakistan

    Air Link Communication Ltd. will start assembling Xiaomi televisions in Pakistan in January 2024. This noteworthy development, reported by Bloomberg, marks a strategic move forward for the company.

    Muzzaffar Hayat Piracha, the Chief Executive Officer (CEO) of Air Link, shared insightful details with the publication. He highlighted the collaborative partnership formed two years ago between Air Link and Xiaomi, focused on distributing mobile phones across Pakistan.

    Importantly, both companies foresee a streamlined investment process, as the assembly lines for the two product lines exhibit notable similarities.

    Bloomberg’s analysis sheds light on Pakistan’s positive economic transformation following a pivotal deal with the International Monetary Fund. This consequential agreement effectively doubled the nation’s foreign exchange reserves, elevating them to an impressive $8 billion. A key requirement of this agreement was the removal of all restrictions on imports, a significant move that has provided relief and opportunities for companies, including Air Link.

    Notably, Air Link’s journey has been one of progress, transitioning from breaking even to achieving profitability over the past six months. This serves as a testament to their resilience and strategic acumen, according to Air Link’s CEO.

    Air Link, which commenced operations as a mobile phone distributor a little over a decade ago, etched its name in history by spearheading Pakistan’s largest private sector initial public offering in 2021.

    Piracha highlighted this milestone while also outlining the company’s ambitious goal to ramp up monthly mobile phone production to an impressive 500,000 units by the end of the year, surpassing the current rate of 300,000 units.

  • Petrol price increased by Rs17.50 to Rs290.45 per litre

    Petrol price increased by Rs17.50 to Rs290.45 per litre

    The caretaker government has increased the petrol price by Rs17.50 to Rs290.45 per litre while diesel price has been increased by Rs20 to Rs293.40 per litre.

    The situation appears to be worsening for the already burdened population, who were already facing challenges in affording expensive petrol. Now, an additional financial strain is looming as they will be obligated to pay even higher prices.

    The Finance Division, addressing the recent developments, explained that the escalation of petroleum prices in the international market over the past two weeks has necessitated a revision in consumer prices within Pakistan. This decision has been made in response to the global market dynamics impacting local prices.

    This announcement follows a substantial price hike in fuel that was announced by the former Pakistan Democratic Movement (PDM)-led government on August 1.

    At that time, a significant increase of Rs19 per litre in the prices of both petrol and diesel was introduced. This move was attributed to the mounting global oil prices.

  • Islamabad International Airport outsourcing plan finalised: 15-year agreement for third-party management

    Islamabad International Airport outsourcing plan finalised: 15-year agreement for third-party management

    The decision to outsource Islamabad International Airport was finalised on Tuesday. According to the details, the airport will be under third-party management for 15 years, with a non-refundable advance payment of $100 million in case of any third-party violations.

    Administrative, financial, design, and construction responsibilities will be handled by the third party. They will also have the authorisation to construct shopping malls and brand shops within the airport. The third party will retain control over service charges, exchange rates, and shop rents as per the agreement.

    According to ARY News, Customs, site security, and immigration services, on the other hand, will continue to be managed by the Civil Aviation Authority (CAA), according to sources.

    Previously, the Aircraft Owners and Operators Association of Pakistan (PAOOA) expressed opposition to the government’s unilateral decision to outsource the country’s major airports without adhering to PPRA rules.

    The association criticised the government for awarding contracts to IFC and the World Bank (WB) for the outsourcing of three airports. The association’s statement questioned the secrecy surrounding the outsourcing process, raising doubts about its transparency.

  • Tesla introduces cheaper Model S, Model X variants with reduced ranges

    Tesla has unveiled more affordable versions of its Model S sedan and Model X SUV in the United States. These new “standard range” models are priced at $78,490 (PKR 22.4 million) and $88,490 (PKR 25.3 million), respectively, marking a roughly 10 per cent reduction from the previous lowest-priced options. The company aims to boost sales by focusing on cost reduction.

    The new models will be available for delivery between September and October 2023. They come with a standard “pearly white” exterior and an all-black interior, while other colour choices will come at an additional cost.

    The updated Model S offers a driving range of up to 320 miles (515 km), which is lower than the existing basic and performance versions, which provide up to 405 miles and 396 miles of range, respectively. Similarly, the new Model X SUV boasts a range of up to 269 miles, falling short of the basic and performance versions that offer up to 348 miles and 333 miles of range, respectively.

    Tesla’s focus on price cuts and cost efficiency is evident in its consistent efforts to reduce prices in various markets. By doing so, the company aims to remain competitive and navigate economic uncertainties. In China, the company has recently lowered prices for its Model Y long-range and performance variants.

    This strategic move coincides with Tesla’s upcoming releases, including the long-anticipated Cybertruck and the completion of a manufacturing plant in Mexico. The latter is dedicated to producing a mass-market electric vehicle, which will serve as the foundation for a robotaxi.

    Although the Model S and Model X are some of Tesla’s earliest offerings, introduced in 2012, they have maintained premium pricing compared to the more budget-friendly Model 3 sedan and Model Y crossover. In the second quarter of this year, Tesla delivered 19,225 Model X and S vehicles, an increase from 16,162 vehicles delivered during the same period last year.

  • Petrol price likely to increase by Rs15 per litre after August 16

    Petrol price likely to increase by Rs15 per litre after August 16

    Starting August 16, petroleum products are expected to undergo a notable price hike. In particular, the price of petrol is projected to rise by Rs15 per litre, while diesel will likely see a steeper increase of Rs20 per litre.

    This surge in prices is attributed to a rise in global commodity rates. Recent reports indicate that the cost of crude oil has climbed by $5 per barrel, going from $86 to $91 per barrel. This increase is largely due to the elevated prices of petroleum products on the global market. Additionally, a separate premium charge of $2 per barrel has been applied to crude oil.

    Simultaneously, the international prices for both diesel and gasoline have also experienced a $5 surge, climbing from $97 per barrel to $102 per barrel.

    Should these prices remain unchanged, the anticipated effect on Pakistan’s fuel market would translate to a Rs15 per litre hike for petrol and a more substantial Rs20 per litre increase for diesel.

    In the context of the previous fortnightly review conducted by the outgoing government, a significant Rs19 per litre escalation in petrol and diesel prices had been announced. This decision was justified as being in alignment with the demands of the International Monetary Fund.