KARACHI: ‘The customer is king,’ is what they say. After all, it is the customer who pays your salary and helps you live. Customers are at the centre of all business activity, and help us understand where we go wrong as producers and marketers. Therefore, the easiest way to grow a business today is to focus on your customers.

The key is to hold on to the best strategy. That may be acquisition – buying out another business in the same market; or value addition – increasing the average value of each product by getting each existing customer to spend more on alternate product and service offerings.

Increase customer frequency by giving more choices to spend. Acquisition is effective as a long-term strategy, as it increases resources quickly, but is an expensive option and never easy. Only attempt this when you get loyal customers with the deal who will continue spending on your products. If money is tight, stick to what you are good at – focusing on existing customers. Start-ups fail these days as entire businesses are geared only to bring in new clients: instead, try and recognise a niche, which you can later exploit.

An increase in customer spending amounts to customers doing more business with you, and the customer who spends more on your product stays with you longer. Some of the best ways to ensure this includes staying in contact, working on your after-sales service and feedback analysis, creating convenience, making your product accessible at all times and building personal relationships.

Customers providing you with the most income are the ones who account for the highest turnover on a regular basis. Anyone who is soaking up a lot of your time resources is not the right target.

Corporations have been trying to find ways to improve services through process innovation rather than people innovation, where intellectual capacities diminish and people are not trained well enough to feel proud of their training and to take it to the end customers. Service quality tools are worthless if you do not have happy customers.

The writer comments on international relations and public policy

Published in The Express Tribune, May 13^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

KARACHI: A business’ margins, sales and cash in hand are the prime levers on which every business tries to balance its existence. Similarly, the productive capacity of a business to deliver whatever it sells is another vital factor. Once a business understands its position among its competition, the next step is to link sales demand, profitability and resource capacity, while ensuring stable growth.

Companies today want stable profit trajectories at optimum cost ratios, both for the short run and the long run. This requires paying attention to two things: recognising the underlying relationships between growth, risk and profitability, and the practical techniques that will deliver your goals in a low-risk, affordable way.

All businesses struggle with sales due to factors such as a lack of cash, pressured profit margins, commission costs, time lapses, political changes, taxes, delayed delivery and delayed payments. The customer determines what a business is today, and their actions and buying patterns indicate what sells versus what is obsolete. Customers are the foundation of any business and it is the customer that decides what business should remain alive and what will die.

Inculcate higher credit control, savings and improve budget planning before you decide to boost sales. On the other hand, your working capital must be stable. If you are not actively pursuing safety measures, your business will be slowly eaten up by competition as they grow with better cost controls and revenue streams through research, efficient marketing and managing employee turnover and staff motivation.

Secure your business by securing customers, and let them decide what we can sell and what we should stop selling.

If you are in business, it is good for a lot of other people too. Banks want to profit off you by lending their cash resources to you. Accounting firms want you to grow, because it increases demand for their services like tax planning and costing. Finally, the government wants you to grow because it increases demand for employment, and your income contributes to the government treasury.

The writer comments on international relations and public policy

Published in The Express Tribune, April 29^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

KARACHI: Recent developments around the world indicate a clear need for urgency in bringing about an economic recovery. The last few years have seen most of the economic realities of our era come to light. These include widespread unemployment, rampant inflation, recessions, credit crunches, liquidity shortfalls, trade deficits, natural calamities and war.

2013 will be a real challenge. For starters, our debt-to-GDP ratio is at a steep 108%. We are a whopping Rs12 billion in deficit, which will eventually force us to rethink our economic realities. In the last three years, government borrowing from domestic sources has crossed 133% from Rs3.2 billion to Rs7.6 billion. Meanwhile, external borrowing has touched the highest levels – from Rs2.7 billion to Rs4.3 billion in four years, a growth of over 65%.

Pakistan also faces another problem that impedes its economic growth: only 22% of the population actually pays taxes. Due to high government borrowing from the International Monetary Fund in the past and rescheduled debts, every Pakistani born today carries a debt of Rs72,000. Meanwhile, corruption continues to flourish, with daily losses to the economy of Rs6-8 billion due to the absence of accountability controls and measures, says the National Accountability Bureau.

The central bank’s annual report indicated that: “It is important to realise that over-dependence on consumption makes growth unsustainable, especially while the investment rate in the country has been falling.” Here, the government fails to explain why the rate of actual investment is down and why we are missing our targeted growth rate. The government has recently unveiled the new investment policy for 2013, clarifying that “all restrictions on minimum investments have been removed”. But more needs to be done to cut down redundant processes and approval procedures that are cumbersome and counter-productive. Pakistan needs to ensure that it cuts down the ballooning import bill and create pathways towards self-reliance through exploring internal natural resources like Reko Diq and the Thar Coal projects.

As China takes over the strategic management of Gwadar Port operations, our bilateral relationship with the economic giant has broken new ground. The port is close to the Strait of Hormuz, giving us the maximum advantage over sea routes, opening up a trade and energy corridor for Pakistan.

Realistically, we stand on delicate ground today. But, if we aim to move in the right direction, we shall attain a successful economic frontier.

The writer comments on international relations and public policy

Published in The Express Tribune, March 11^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

KARACHI: The ability to generate revenues within existing markets and to identify new markets and avenues to reach the right customers is necessary to business growth and profitability. The ‘right’ consumer profile usually has two vital elements: income and education. 

Having a measure of disposable income is necessary for the buyer, whether he or she is educated or not. Without income, a person is essentially useless to a business as he or she cannot contribute to revenues.

On the other hand, buyers with some form of financial literacy and/or product knowledge are easier to woo, as they can be influenced in their decision-making through advertisement of products that suit their needs. Coupled with a healthy amount of disposable income, such buyers become a lucrative market for businesses – making competitors vie with each other for their attention.

Most brands nowadays go for a collective marketing strategy; ie, they target an entire class of consumers through an advertisement. The challenge, however, is gender-orientation: more specifically, how to induce more women and children to become primary buyers themselves, separate from the usually male-dominant activity of purchasing goods and services.

With 52% of Pakistan’s population comprised of women, this remains a large untapped market. As more and more of them enter the workforce and gain basic knowledge of how the financial system works, they increasingly make up the ranks of the biggest upcoming market for businesses. What businesses need to do, of course, is enable them to become primary decision-makers and buyers. There is no dearth of products that cater exclusively to women; why not gear the market so as to separate this segment from the traditional ones altogether?

Cultural and structural issues hamper real economic progress in the Pakistani context, as income disparities and financial exclusion prevent large chunks of the female population from taking part in commercial activity. The trend is changing slowly, as banking and technology catches up to local demands to provide products and services that extend financial services to all.

However, according to a survey conducted in 2012, a significant number of women still do not know exactly how to operate an automated teller machine (ATM) – hence a lack of confidence in controlling their own financials. Only 2% of the women in Sindh know how to withdraw money from an ATM, compared to 27% in Punjab, 23% in Khyber-Pakhtunkhwa and 20% in Balochistan. A complete lack of educational programmes in this regard significantly inhibits their ability to do so.

Banks have generally played a phenomenal role in consumer financing by educating end users – the entire family nowadays is encouraged nowadays to avail personal financial services, even children. With nearly all debit cards accessible through 1-Link servers, one only needs to locate an ATM and avail 24-hour banking services throughout the country.

In this regard, financial literacy is a vital tool in furthering market development. It educates new segments to step up the curve, understand the market, participate in buying decisions and ultimately become end buyers. Most of the bank cards issued today are usable at any retail outlet that wants to make money by maximising customer transactions. It also enhances the sellers’ chances to enhance sales, as a customer purchases nearly three times more using a debit card than with cash alone.

The future will revolve around technology, microfinance and automated banking, with debit cards taking over to become the medium for monetary exchanges for the average consumer. Considering these factors, banks have a major role to play in enhancing real economic growth within the country. If the average size of the market can be increased just by encouraging and educating more people – in our case women – to participate in commercial activity, the banks may hold the key to a future of financial inclusivity and personalised economics.

The writer comments on international relations and public policy and is also a banker and broadcaster for FM 91

Published in The Express Tribune, February 11^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

KARACHI: As another year passed, most of the third world nations are still surrounded by poverty and war. However, Pakistan looks better than others in some ways, hence the feel good factor.

According to the World Bank, Pakistan will be the ninth biggest recipient of overseas remittances this year, amounting to almost $14 billion as political and economic crisis in different countries leads to money coming back home. At the same time, the country needs to revamp its tax structure and undertake faster reforms in order to tax various segments, which pay almost nothing compared to the salaried class that pay over 22% of total tax and multinationals that pay the rest.

Another big area that needs to be focused on is coal energy as well as exploration of mineral deposits. We must also analyse how much an average consumer is paying in electricity bills and where wastage can be restricted and cost of living lowered.

Political climate is stagnant for now, but things may get tricky in the next few months, with elections around the corner. Investors are wary in the face of changes that may happen in the aftermath of the polls.

We must identify the vultures, which impact potentially thriving sectors like education, health, manufacturing and social development. Legal and consumer rights must not be exploited, but discovered much more clearly in the light of accountability laws.

People are exploiting each other’s weaknesses and insecurity, instead they should be helping each other. They should be more analytical and open to stricter changes or reforms that will eventually bring about a much stronger demographic outlook, more jobs, less inflation, higher standards of living, affordable housing, lower food cost and higher disposable incomes – all by reforming the tax structure, robustly and efficiently.

Anyone who does not pay tax or does not have an NTN certificate is as much a criminal as the one who steals from his workplace. He may be a bigger criminal as his crime affects the entire nation. If all segments pay tax, we will become a debt-free country starting 2015, subject to accountability of the corrupt whether law enforcement personnel, businessmen, bankers, doctors, lawyers, politicians, judges or lower income workers – everyone needs to stop skimming cash from the books or the buckets.

We have the best of resources and must now ensure that we show high performance through consumer-friendly and nation-friendly reforms, keeping a fair balance.

We still have the chance and we hope for all the good of this country we do not blow the opportunity off this time.

The writer comments on international relations and public policy and is also a banker and broadcaster for FM 91

Published in The Express Tribune, January 14^th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

KARACHI: Income disparity in recent times has made it necessary for a consumer to be aware of the benefits and demerits of taking loan financing and managing the risk. Financial institutions are readily offering loans to customers in order to refurbish their asset base and build income.

Consumer finance today is a challenging subject, both for the consumer and the service provider, as financial crisis looms over global markets. Sooner or later, banks and DFIs always resort to consumer financing to build their empires.

More importantly, the customer needs to be well-informed and well-equipped to review choices before making any decision. He must evaluate potential risks of taking loan financing.

Before an agreement on financing, we need to be clear, both as lender and borrower, about the fundamental elements involved in the process. Each lending decision almost always carries a risk. Customers either take a loan or an overdraft facility.

A main thing to note is that interest is charged on the full amount in case of a loan, while interest in the case of an overdraft is charged on the outstanding amount only.

Overdraft is also called cash credit. Banks reserve the right to liquidate the security in case the customer defaults on payments.

Another kind of loan is a bridge loan – a temporary loan usually taken in case of some uncertainty. Such loans are usually given to ‘credible’ individuals, based on their financial worth and market reputation.

Banks today need collateral – additional security to protect themselves during loan financing. Tangible security like land, property and car needs to be documented in case of loans exceeding over a certain ceiling, usually for commercial or business purpose, either to build, construct or renovate.

Lots of customers do not know that clarity of documentation is the main factor in getting a loan. The longer the association between the banker and borrower the greater the chances for a loan to be approved. Always maintain a bank account with one bank consistently to build potential credit history.

Short-term advances are always better for banks than long-term as they are less risky for the bank and easier for the customer to pay back.

A major concern that bankers face is to analyse the purpose of the loan, why the customer needs the money, what should be the payback period and what risks he may face in repayment. Hence, it is definitely the bankers’ concern to know the reason for the loan.

For example, running finance is a very useful facility. It is a short-term financing facility, where the mark-up is charged on the actual amount utilised by the customer, usually for business purposes. Here, the main factor that creates the possibility of the loan is the “character” of the customer. Once that is established and the purpose of the advance is disclosed by the customer, approval is easily done by the bank.

We wonder how we are unable to get a loan, whereby we should be wondering what we give as security against the loan. Loans are part of life and can be efficiently utilised, if only we have the discipline to use the money for legitimate value-added purposes that enrich our lives rather than make it more redundant and miserable under the financial mismanagement that we ourselves are prone to demonstrate.

The writer covers international relations and public policy and is a banker and broadcaster for FM 91

Published in The Express Tribune, December 17^th, 2012.

KARACHI: To keep the promises we make as a business, we need strong ethical values within our corporate culture. A formal code of ethics helps in this regard. It sets out exactly what is expected out of each member of an organisation, and where they should turn to for help and support. It should be the responsibility of every member of a corporate entity to fully embrace the codes of conduct laid out and conduct business with prudence.

In this piece, I would like to lay out 10 basic ethics that are essential for today’s corporations and their employees.

Observe group standards

All employees should ensure that they know all standards expected of them by their corporation. They should be aware of the intention, vision and minimum acceptable standard of performance envisioned by the organisation. This ensures that every employee follows the same rules and helps the organisation grow as it wishes to.

Comply with local laws

The country in which any company operates has its laws, statues, regulations, limitations, policies and mandates. Every individual must respect these as employees and work within prescribed limits as per guidelines or standard operating procedures. Whether it is a permanent role or a contractual agreement between the employer and employee, local laws have to be well-read and well-defined during the course induction by the employee relations department of every business.

Report breaches

It is the duty of every employee to ensure that they speak up against any breach of law, regulations or code of ethics by themselves or by any other member of their organisation so that the matter can be reviewed, investigated and the damage contained. This does not mean that employees wrongfully vilify others for personal grievances or in bad faith.

Cooperate with regulators

Transparency is the key to success with regulators. It is better to uncover a problem than to cover it up. Audit and compliance must be ensured by all employees at the workplace during the course of interaction with regulators. All banks, especially, have to comply with audit requirements as per the compliance operations manual. Strong long-term relationships with regulators will help the business achieve success and deliver a standardised product to the market.

Respect customer confidentiality

All clients and customers have the right to be well-served and well-protected, especially as far as their assets, funds, cash flows, personal information and reputation is concerned. Unless there is a case of fraud or forgery perpetrated by a client, all employees of a business must ensure a collective resolve to maintain a client’s right to secrecy of information and confidentiality. The only exception should be when client information is sought by a regulator or the government.

Ensure suitability of products

One of the major issues faced by customers is the lack of quality products and services. One must not sell an unsuitable product or service that does not meet the customer needs, or which may expose the company to a regulatory penalty, reputational damage or legal action by customers. The key to success lies with knowing your product well.

Advertise fairly

The reputational risk for a business is greatest when the media advertises its product without being fair and honest. Clarity of information and consistency of the message put forth is vital to ensure that people wish to buy and still pay the right price for a product.

Resolve customer complaints

Customer services make or break a business. Make sure that the customer services department ensures that the company is seen as efficient and caring towards customers, as opposed to being arrogant, ignorant or rude in any manner whatsoever. Being responsive to the customer is the hallmark of a good business, and ensures eventual financial and commercial success.

Reject bribery and corruption

The best employees are aware of the risks associated with corruption. Unawareness of the pitfalls of corrupt practices puts a business’ reputation at serious risk.  Any kind of illegal offer or payment to the government, third party vendors, regulators, existing or potential customers – or acceptance of the same from them – must be subject to prosecution.

Stay alert of fraud

Know your customer. Identification of the customer, their documentation, their personal references, previous work exposure, projects undertaken, reputation in the market, banking transactions must be scrutinised. This is necessary to ensure that the company is protected from fraudulent practices and insulates it from exploitation.

Everyone values relationships based on openness, trust and integrity. This holds true for business more than anything. All businesses must be constantly vigilant to ensure that they thrive on the back of practices that spread benefits, rather than contaminate everything around them.

THE WRITER IS A BANKER, FREELANCE WRITER ON INTERNATIONAL RELATIONS, AND BROADCASTER FOR RADIO 1 FM 91

Published in The Express Tribune, December 3^rd, 2012.

KARACHI: Many experts suggest today that successful government regulation revolves around creating an investment-friendly climate for foreign investors, as opposed to focussing solely on domestic businesses and technology.

Global debt will not disappear overnight: it is customary for smarter nations to recover as much as possible of what is due to them in economic, if not purely financial returns. For the debtors in this context, it is easier to offer customised investor solutions for lender countries in return for extra time in which to restructure their debt. This strategy seems to be working for countries with business-friendly markets and dynamic leadership that continues to break new ground. This reflects in the correlation between the ease of doing business in a country, and foreign direct investment (FDI) flows into it.

A large body of research has looked at the question of what the key drivers of FDI are. One approach sees FDI as being market-seeking (driven by economy size and country location), efficiency-seeking (driven by human capital or infrastructure quality) or resource-seeking (driven by the availability of natural resources or other strategic assets).

Many studies use a ‘gravity model,’ which seeks to explain what causes FDI flows between two specific countries. This research confirms that factors such as the size of the market and its growth prospects, distance to important markets, relative labour endowments and openness to trade tend to be important drivers of FDI. For example, the larger the market, the greater the scope for economies of scale in production, and thus the greater the chances of producing at competitive prices. Economies in central and eastern Europe have received large inflows of FDI over the past couple of decades because they are seen as entry points into the huge European market and also because they have relatively well-educated labour forces. The same is the case with emerging markets like Pakistan, where vast amounts of investments are anticipated if only we review our economic policy in terms of education and literacy.

The institutional and regulatory framework has also been shown to be an important determinant of FDI. One study finds that judicial independence and labour market flexibility are significantly associated with FDI inflows, depending on the sector of the investment.

Another view is that corruption is a significant deterrent to FDI, having an effect comparable to the impact of substantial increases in the tax rate on foreign firms. Indirect taxes on foreign investors, which are higher than the direct foreign income taxes in many countries, also reduce FDI inflows.

Business regulations matter as well. Using a data set of regulations specific to foreign investment, it was found that the number of procedures required to start a foreign-owned business and the strength of the arbitration regime both have a robust effect on FDI. Hence, economies with more effective regulations for starting a business benefit more from the FDI flows that they receive. If we analyse carefully, it is evident that governments that regulate well in one area, such as domestic business, tend to also regulate well in other areas, such as foreign investment.

Even though we are not exactly one of the best economies out there today, the future holds a different promise owing to the geopolitical situation globally, and our strategic location within Southeast Asia. Job creation will not be a problem here as we are resilient and efficient workers, whether we work as an individual or as a corporation. Yes, we have to crack down on corruption by ensuring justice prevails and ensure that decisions are taken on certain key measures that the government is talking about today. If we try and work alongside sensible lines, our economic infrastructure can turn around very successfully.

THE WRITER IS A BANKER, FREELANCE WRITER ON INTERNATIONAL RELATIONS, AND BROADCASTER FOR RADIO 1 FM 91

Published in The Express Tribune, November 19^th, 2012.

KARACHI: A recent incident at a local hospital, which resulted in the death of a prominent politician, is a sad reminder of the falling standards of our healthcare system. A minor surgery was purportedly botched by doctors, resulting in the patient slipping into a comatose state and finally losing her life. Whether the cause was negligence or an honest accident, we may never know: even though the government has formed a joint investigation team to probe the case.

We live in a country where less than 2% of the GDP is spent on healthcare, the majority of taxpayers do not enjoy health insurance, and no law regulates the practitioners of medicine. Care for the sick is a highly critical issue, yet it is ignored in Pakistan.

How we treat incidents of reported malpractice or negligence will determine the future of healthcare in this country. If a sick person cannot be sure that he or she is in safe hands in a hospital, they might as well abandon themselves to fate.

Healthcare experts should be in the business of saving lives, not playing with them. To this end, legislation which regulates their practice is a necessary first step in healthcare regulation. For example, a simple law would require that a surgeon who is old or infirm must never be allowed to undertake the delicate task of operating on a human being. Another one could seek to protect doctors and surgeons against possible threats, legal or otherwise, if it can be demonstrated that they do their job properly.

Secondly, the continuity of our healthcare system depends on the ample provision of clean and tested over-the-counter drugs. The local consumer has recently been forced to refuse taking locally-produced drugs due to fears of dangerous and untested medicines, quality control failures within the industry, and corruption in those involved in their dispensation to patients.

More and more Pakistanis refuse to take locally-manufactured medicines and opt instead for imported ones. As international prices rise, quality healthcare will only be available to those rich enough to afford it. This is highly condemnable, as the right to a healthy life is a very basic human right and should be available to all.

The 1976 Drug Act has been put on the back-burner for too long. The manufacturing, quality assurance and safety of consumers must be subjected to the law. Pharma companies should have their licences cancelled for good if they are found to be supplying medicines below required quality standards.

The lack of proper medical facilities, laboratories, equipment and medical gadgets must be remedied through implementation of strict laws that set certain minimum standards. The government’s first priority should be the promotion of the country’s welfare. This must be done before the administration loses all its credibility in the eyes of foreign donors, and the latter cease providing the funding for the various health programmes currently in operation in the country.

Sadly, even now most of the responsibility of keeping Pakistanis healthy is shouldered by international agencies. The government would do well to own up to its commitments and share that burden equally, if not in greater part. A healthy nation means a healthy workforce and, therefore, a healthy economy.

THE WRITER IS A BANKER, FREELANCE WRITER ON INTERNATIONAL RELATIONS, AND BROADCASTER FOR RADIO 1 FM 91

Published in The Express Tribune, November 5^th, 2012.

KARACHI: Since the inception of the global financial crisis, triggered by reckless gambling in the real-estate market, we live in a world where people, more than ever before, seek relationships based on openness, integrity and trust. Reputations now depend on the values we hold, and on which we can build relationships that are consistent, valuable, integral, compatible and profitable.

Today, the biggest challenge to managers and organisations is reputational risk, not operational risk.

A retailer requires an impeccable reputation for his brand to be accepted widely, even if it is branded or manufactured creatively. Brand positioning is impacted by the retailer’s reputation; it gets him a good price for his brand, without which the cost of business would be highly corrosive. Similarly, financial institutions need to rely on sound reputation, impeccable credentials and a highly competitive product line at the right costs to customers, if they are to successfully manage business revenue and sales.

With an average savings-to-GDP ratio of 13% – compared to at least 25% elsewhere in similar markets – Pakistan is slowly developing into a very troubled financial market. Capital flight is on the rise; maybe not overseas, but certainly out of banks.

Taking shortcuts to achieve business targets exposes companies to risk, and may limit their ability to operate in a country, region or market. The reputation of a company, and its dedication to customer services, ensures that positive recommendations spread to potential clients through word-of-mouth. Banks these days rely on customer loyalty, in return for which they are supposed to provide accurate and focused business solutions to ensure client satisfaction. But despite reaping huge profits from margins over client deposits, banks do not deliver the best rates to their customers. The modern customer is smart. He or she evaluates other investment options before putting their money into an account. They understand when they are being taken advantage of.

Customers should feel safe with the person or entity they entrust their money with. Confidentiality laws exist everywhere, but in Pakistan, we lack severely in implementing ethical business practices within our companies. The presence of a weak compliance management framework only dissuades customers as they may feel threatened with their financial information in unsafe hands.

Some organisations today also suffer from chronic nepotism – which installs weak leadership which ultimately marginalises customer interest for personal gain.

It should be kept in mind that some of the biggest banking corporations in the world have been brought to their knees because of a lack of a solid compliance structure. They compromised consumer interest and business ethics for revenue generation, which reaped them short-term gains, but crippled them in the long term.

Providing inaccurate or misleading information to customers just to increase deposits is a sure-shot way of destroying a bank’s future. Customers should be informed of the complexities and associated risks of a product with clarity and honesty.

Lastly, resolution of customer complaints really sets apart successful banks from the less prudent ones. Follow-ups should reflect courtesy, care and empathy for the customer’s problems. The old adage that ‘the customer is always right’ is a good place to begin reforming banks’ compliance structure. In times of increasing risk and a growing risk-averse class of investors, a customer-centric approach can revive an industry plagued by the fallout of the global financial crisis. The financial services industry must learn to not repeat past mistakes.

THE WRITER IS A BANKER AND BROADCASTER FOR FM91

Published in The Express Tribune, October 1^st, 2012.