Pakistan, IMF seal the deal

[Indus Pakistan]

Yes....Pakistan taxes quite low and also I believe gets some quota of oil from KSA at concession price below world price?

Clearly the government needs to increase tax on fuel to bring it at par with the region. That must generate fair few billions dollars if implemented.

 

[VCheng]

Clearly the government needs to increase tax on fuel to bring it at par with the region. That must generate fair few billions dollars if implemented.

If you think that is needed, just look at how Pakistan prices and taxes its water resources. A comparison to other countries would be even more eye-opening compared to fuel.

 

[Nilgiri]

Clearly the government needs to increase tax on fuel to bring it at par with the region. That must generate fair few billions dollars if implemented.

If on average 10 cents levied on Pakistan current consumption of all oil products (not just gasoline, but say you go after gasoline more and go after rest a bit less so it averages out to 10 cents a litre levied on top)...that will be about 3 billion USD of revenue in a year (for every 10 cent increase on tax).

You will get diminishing returns the more you ramp it up (given there is some elasticity in demand regarding the price of oil products)...but it wont be that much given oil (and energy more broadly) is quite price inelastic (i.e consumption level not that responsive to price change).

The issue will be the inflation created since energy is a broad spectrum (bottom base) input to the economy. So it will be a balancing act if Pak govt goes this route.

 

[Indus Pakistan]

@Nilgiri I have been looking at Pakistan's export potential and frankly it is depressing. But one thing that appears conspicious is the Sialkot/Gujranwla/Lahore triangle. This small area that geographically appears to have no advantage, indeed it is handicapped by being so far from the only sea port does so well at exports.

What is more impressive is the traders here are not rent seekers [those who have bought a licence to flog foreign brands/products and live off the local hostage market] but rely entirely or mostly on exports. Here think of sports goods, leather goods, surgical instruments, fans and all manner of other goods. What caught my attention was following my oft repeated lament that I never see a product from Pakistan in UK I happened to see cooking pots branded as 'Sonex' which had the "Made in Pakistan" tag. After some googling I found the company was based in Gujranawala. This small triangle seems to have everything rest of Pakistan is missing. Entreprenuers and exporters that are hungry and compete abroad to sell their products despite being so far from ports.

the inefficient transport system must add to cost of doing busniness seeing as they are over 800 mile from Karachi port and will not have sifarish or reach to make sure their goods are moved through the port without hangs ups. Clearly there are lessons for rest of Pakistan to learn from this. Even quick search on Google with Alibaba shows dozens of exporters from this triangle.

Maybe @Simurgh can give us some insight to the local culture that appears to be behind these dynamic exporters.

The green triangle.

 

[Nilgiri]

@Nilgiri I have been loking at Pakistan's export potential and frankly it is depressing. But one thing that appears conspicious is the Sialkot/Gujranwla/Lahore triangle. This small area that geographically appears to have no advantage, indeed it is handicapped by being so far from the only sea port does so well at exports.

What is more impressive is the traders here are not rent seekers [those who have bought a licence to flog foreign brands/products and live off the local hostage market] but rely entirely or mostly on exports. Here think of sports goods, leather goods, surgical instruments, fans and all manner of other goods. What caught my attention was following my oft repeated lament that I never see a product from Pakistan in UK I happened to see cooking pots branded as 'Sonex' which had the "Made in Pakistan" tag. After some googling I found the company was based in Gujranawala. This small triangle seems to have everything rest of Pakistan is missing. Entreprenuers and exporters that are hungry and compete abroad to sell their products despite being so far from ports.

the inefficient transport system must add to cost of doing busniness seeing as they are over 800 mile from Karachi port and will not have sifarish or reach to make sure their goods are moved through the port without hangs ups. Clearly there are lessons for rest of Pakistan to learn from this. Even quick search on Google with Alibaba shows dozens of exporters from this triangle.

Maybe @Simurgh can give us some insight to the local culture that appears to be behind these dynamic exporters.

Yes lot of such products are super time sensitive these days given you gotta compete with the juggernaut china for every little bit of bottom line.

Basically Pakistan in the 90s or 2000s needed to put some SEZs right next to Karachi and make some dedicated ports to handle their production and requirements....and get the business acumen + labour from the appropriate areas of rest of Pakistan (the triangle you mention)....and there could be lot more steady and higher export volumes (because it always takes 10+ years to really compete well at volume by optimizing and forming the steady assured links with the wholesale buyers in other parts of the world).

This is the kind of stuff more of the region needed to do.....organise and execute the production units the best you can with what you have (forget about the huge infra projects, big fancy real estate development etc etc) and do it at the lowest cost possible (so you earn the highest margin possible to reinvest into more later). Sometimes its as simple as focusing on coastline export zones so you dont have to rely on huge logistic chains. When you make your first bit of dough, then you can start improving into the interior to both extend the reach of production units and your markets too in more organic way.

For example I remember reading that in sialkot area, there is good niche industry for surgical instruments production that are exported world over (in fact I have seen reference to them in canadian medical industry). I check the amount and its 206 million in exports.....and the total trade demand in world is near 100 billion USD (for more broader medical industrments but nonetheless to give idea of scale).

Surely if Pakistan organised this lot better into export zone near its coastline, bring the men and organisation needed to such a zone....it could have been exporting multiple times this figure and also diversified into all kind of other medical instruments too. China for instance exports around 7 billion USD in this alone.

 

[Sine Nomine]

IK is a miracle maker. He gets the IMF to agree to social and welfare spending.

But not long ago,for him IMF was crime partner of Nawaz and Zardari.

Yes....Pakistan taxes quite low and also I believe gets some quota of oil from KSA at concession price below world price?

You forgot shipping distance Sir.

 

[gangsta_rap]

But not long ago,for him IMF was crime partner of Nawaz and Zardari.

abhay status quo kay pithoo kabhee to achee baat ko achee baay dekh kar manlay.

 

[Sine Nomine]

This small triangle seems to have everything rest of Pakistan is missing. Entreprenuers and exporters that are hungry and compete abroad to sell their products despite being so far from ports.

the inefficient transport system must add to cost of doing busniness seeing as they are over 800 mile from Karachi port and will not have sifarish or reach to make sure their goods are moved through the port without hangs ups.

https://en.m.wikipedia.org/wiki/Sialkot-Lahore_Motorway
Soon Lahore to Karachi would be done

 

[Indus Pakistan]

into export zone near its coastline

Unfortunately it's been the other way around. As millons of Pakistan went abroad to work in Gulf, Europe, USA etc they began sending billions in remittances. In fact as you probably know we recieve over $22 billion in remitances which is more then all the exports combined.

Within the country this creates demands for goods and services. Cars, TVs, buses and even fast food etc. The "coastline" as you mention was used to set up franchises of foreign brands that imported in kit form or other inputs and then assembled near the port to be sold on to the hostage market. In other words the port became a a rent seekers paradise to leach the domestic market under the monopoly of import restrictions. Got rich and then funneled most of the profits to Dubai etc

 

[Sine Nomine]

abhay status quo kay pithoo kabhee to achee baat ko achee baay dekh kar manlay.

Hahah jali na hain,Allah mai karam sai hum kisi kai pithoo nahi hain,par dil tota jub Khan sahab nai apney dawo mai sai kisi aik ko bhe poora nahi kiya.
Zardari bahir,Choor tabar bhe bahir.

 

[Crusher]

@Nilgiri I have been looking at Pakistan's export potential and frankly it is depressing. But one thing that appears conspicious is the Sialkot/Gujranwla/Lahore triangle. This small area that geographically appears to have no advantage, indeed it is handicapped by being so far from the only sea port does so well at exports.

What is more impressive is the traders here are not rent seekers [those who have bought a licence to flog foreign brands/products and live off the local hostage market] but rely entirely or mostly on exports. Here think of sports goods, leather goods, surgical instruments, fans and all manner of other goods. What caught my attention was following my oft repeated lament that I never see a product from Pakistan in UK I happened to see cooking pots branded as 'Sonex' which had the "Made in Pakistan" tag. After some googling I found the company was based in Gujranawala. This small triangle seems to have everything rest of Pakistan is missing. Entreprenuers and exporters that are hungry and compete abroad to sell their products despite being so far from ports.

the inefficient transport system must add to cost of doing busniness seeing as they are over 800 mile from Karachi port and will not have sifarish or reach to make sure their goods are moved through the port without hangs ups. Clearly there are lessons for rest of Pakistan to learn from this. Even quick search on Google with Alibaba shows dozens of exporters from this triangle.

Maybe @Simurgh can give us some insight to the local culture that appears to be behind these dynamic exporters.

The green triangle.

The people in Gujranwala/Sialkot/Gujrat have a high aptitude towards engineering particularly mechanical/electrical engineering, even I also had a fascination about mechanical and electrical stuff when I was in Gujranwala. I even had built a "laboratory" where I used to make various electronic projects using my tool kit like radio, sirens, timers, flip flops, bells etc. I can say that most people in Gujranwala would take a mechanical/electrial/engineering projects books written in Urdu on a literature book written on ghazals, poetry or novels. I think we are people of engineering works , not a people of literature/philosophy at all.

I also used to love to try to repair electrical appliances in my home in case I could figure out the fault. My inspiration was our family "mistry" (mason) who used to be master of many skills, in addition to masonry work he was also expert in sorting out mechanical plumbing problems of our water pump, he also used to repair even our TV, VCR, Refrigerator etc. I once visited his home and he had a full "electrical/electronic laboratory" at his home, he had full knowledge about the difference between electrical "series" and "parallel" circuits, transistors, resistors, capacitors etc. even though he was not formally educated. The reason behind his expertise was that he belonged to Mistry/Tarkhan zaat of our region who were local "engineers" in the villages in the past centuries and used to build homes, furniture and many useful devices in the villages in the past centuries.

We have a high concentration of Mistry/Tarkhan zaat people in Gujranwala/Sialkot/Gujrat area and they have natural talent for engineering. Most of the small manufacturing units involving producing mechanical/electrical products was first started by them, all these fans, sanitary fittings, washing machines, pots and utensils, tiles, plastic furniture, surgical devices, sports equipment etc. A large number of people in our region have natural curiosity to sort out how a product is made, the mindset is that if someone else can produce something why not "us".

I have read somewhere that even the metal workers and weapon makers of darra Adam Khel in KPK were also imported couple of centuries ago from Gujranwala/Sialkot region during either Durrani or Sikh empire times and belonged to the same Mistry/Tarkhan zaat due to their engineering skills with wood and metal, they must have been making some primitive forms of guns at that time. I am not sure about this story, it could be wrong but I read somewhere along these lines.

 

[Indus Pakistan]

Soon Lahore to Karachi would be done

Yes, when the entire length of the 800 mile motorway is completed soon things should better for these exporters from this triangle but as @Nilgri stated can you imagine if the entrepreneurs from their and their workers were invested in a SEZ on the coast in Sindh? By now we could have had Hong Kong on our hands.

 

[Nilgiri]

You forgot shipping distance Sir.

True but I think as % of final cost, its not really a big deal these days if u look at size of some of these tankers. Would be surprised if shipping cost forms more than 0.5% of final "at gas pump" price for places say 10,000+ km away from the gulf compared to pakistan.

Shipping is very cheap transport cost wise by far compared to anything else (bar dedicated pipeline of course) and its ideal for bulky goods where transit time is not really an issue. Basically if you increase consumption of the oil, you ply more ships to transport it since speed cant be increased etc.

The biggest % component price in oil tend to be just the steady demand pull for it from the market (and thus price influenced by OPEC supply). When supply is near its peak, you get a sense of what the true base cost in oil is (and how low it is), I remember in the US/Canada it was super super cheap in the 90s....because of huge guaranteed supply in those years.

 

[Indus Pakistan]

The people in Gujranwala/Sialkot/Gujrat have a high aptitude towards engineering particularly mechanical/electrical engineering, even I also had a fascination about mechanical and electrical stuff when I was in Gujranwala. I even had built a "laboratory" where I used to make various electronic projects using my tool kit like radio, sirens, timers, flip flops, bells etc.

I also used to love to try to repair electrical appliances in my home in case I could figure out the fault. My inspiration was our family "mistry" (mason) who used to be master of many skills, in additions to masonary work he was also expert in sorting out mechanical plumbing problems of our water pump, he also used to repair even our TV, VCR, Refrigerator etc. I once visited his home and he had a full "electrical/electronic laboratory" at his home, he had full knowledge about the difference between electrical "series" and "parallel" circuits, transistors, resistors, capacitors etc. even though he was not formally educated. The reason behind his expertise was that he belonged to Mistry/Tarkhan caste of our region who were local "engineers" in the villages in the past centuries and used to build homes, furniture and other devices in villages in the past centuries.

We have a high concentration of Mistry/Tarkhan caste people in Gujranwala/Sialkot/Gujrat area and they are have natural talent for engineering. Most of the small manufacturing units involving producing mechanical/electrical products was first started by them, all these fans, sanitary fittings, washing machines, pots and utensils, tiles, plastic furniture, surgical devices, sports equipment etc.

I have read somewhere that even the metal workers and weapon makers of darra Adam Khel in KPK were also imported couple of centuries ago from Gujranwala/Sialkot region during Durrani empire times and belonged to the same Mistry/Tarkhan caste due to their engineering skills with wood and metal, they must have been making swords, javelin etc. in those days. I am not sure about this story, it could be wrong but I read somewhere along these lines.

Interesting you say that. Last year I had my boiler go kaput. I rang around and finally I got a quote from Slough, London. It was the cheapest and they would fit Bosch boiler which is the best in heating market. I live over 180 miles from Slough and these guys came in on saturday morning. Finished the job by evening. Both were recent migrants from Eminabad which I believe is within that Sialkot triangle. These guys had arrived in UK only few years before but had set up the heating company and were doing really well. I was most impressed as most of their customers were English but because of their professional service and prices they were pulling in orders from across UK.

 

[Crusher]

Interesting you say that. Last year I had my boiler go kaput. I rang around and finally I got a quote from Slough, London. It was the cheapest and they would fit Bosch boiler which is the best in heating market. I live over 180 miles from Slough and these guys came in on saturday morning. Finished the job by evening. Both were recent migrants from Eminabad which I believe is within that Sialkot triangle. These guys had arrived in UK only few years before but had set up the heating company and were doing really well. I was most impressed as most of their customers were English but because of their professional service and prices they were pulling in orders from across UK.

Eminabad is a town situated in Gujranwala District on GT road.