The poor saving habits of Pakistanis
Pakistanis have never been accustomed to the culture of savings and expect to borrow in times of need.
KARACHI:
Pakistanis have never been accustomed to the culture of savings and expect to borrow in times of need, according to Pervaiz Ahmed, CEO of Pak-Qatar Family Takaful. “Resultantly, we pledge our future income, which is highly undesirable in terms of planning,” he explained.
Ahmed, in an interview with The Express Tribune, admitted that his industry is facing challenging times in the wake of the economic downturn. Although the group he represents, with a total paid-up capital of Rs840 million, is keen to increase investments in Pakistan, things have been put on hold for now not just because of the economic crisis but also the widespread political uncertainty.
Pak-Qatar has been operating in the country since 2007 and is backed by some of the strongest financial institutions from the state of Qatar.
“Since family Takaful requires long-term investment and in pressing times people usually take a hold on such decisions, it is indeed challenging to expand business in the current scenario,” he said.
Even in the depressing business climate, the man heading one of the leading Takaful firms in the country was open about more players entering the market.
He believes that as more companies come in, the level of information in the public will increase and the market will grow. “This will automatically help all of us,” he said.
Many have asserted that as a result of the previous government’s overemphasis on the promotion of consumer banking in the country, a characteristic of Shaukat Aziz’s premiership, the national saving rate has plummeted as people got involved in a ‘status war’.
The trend seems to have continued as national savings, expressed as a percentage of gross domestic product, declined from 20.8 per cent in fiscal 2003 to 14.3 per cent in fiscal 2009, according to one estimate.
“Ironically, most of the available financing was utilised towards non-productive uses and resultantly many Pakistanis are still paying off their debts,” pointed out Ahmed.
Calling for increased financial planning, the CEO contrasted that in the UK, as soon as students graduate from university they take out insurance policies, recognising that savings should commence right from the start of one’s career.
Answering a question about the impact of inflation, he said a sharp increase in prices actually decreases the purchasing power of the common man, further reducing the saving rate and thus affecting industry.
Published in The Express Tribune, October 6th, 2010.
Pakistanis have never been accustomed to the culture of savings and expect to borrow in times of need, according to Pervaiz Ahmed, CEO of Pak-Qatar Family Takaful. “Resultantly, we pledge our future income, which is highly undesirable in terms of planning,” he explained.
Ahmed, in an interview with The Express Tribune, admitted that his industry is facing challenging times in the wake of the economic downturn. Although the group he represents, with a total paid-up capital of Rs840 million, is keen to increase investments in Pakistan, things have been put on hold for now not just because of the economic crisis but also the widespread political uncertainty.
Pak-Qatar has been operating in the country since 2007 and is backed by some of the strongest financial institutions from the state of Qatar.
“Since family Takaful requires long-term investment and in pressing times people usually take a hold on such decisions, it is indeed challenging to expand business in the current scenario,” he said.
Even in the depressing business climate, the man heading one of the leading Takaful firms in the country was open about more players entering the market.
He believes that as more companies come in, the level of information in the public will increase and the market will grow. “This will automatically help all of us,” he said.
Many have asserted that as a result of the previous government’s overemphasis on the promotion of consumer banking in the country, a characteristic of Shaukat Aziz’s premiership, the national saving rate has plummeted as people got involved in a ‘status war’.
The trend seems to have continued as national savings, expressed as a percentage of gross domestic product, declined from 20.8 per cent in fiscal 2003 to 14.3 per cent in fiscal 2009, according to one estimate.
“Ironically, most of the available financing was utilised towards non-productive uses and resultantly many Pakistanis are still paying off their debts,” pointed out Ahmed.
Calling for increased financial planning, the CEO contrasted that in the UK, as soon as students graduate from university they take out insurance policies, recognising that savings should commence right from the start of one’s career.
Answering a question about the impact of inflation, he said a sharp increase in prices actually decreases the purchasing power of the common man, further reducing the saving rate and thus affecting industry.
Published in The Express Tribune, October 6th, 2010.