| May 28, 2006 | Sunday | Rabi-us-Sani 29, 1427 |
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Karachi: then and now
Trend of Islamic banking
Role of service sector
Hospital distress
Raw deal for bank depositors
Whither Wapda?
Sugar crisis
Pensioners’ plight
Rs5,000 notes
THE signing of the ‘Charter of Democracy’ is a good omen indeed. It is a sign of maturity in political thinking which, if translated into action, will go a long way towards steering the country out of crisis.
We have already lost several good opportunities under political set-ups to steer the country out of crisis and make it a politically stable and economically viable state. We lost those opportunities mainly because of unnecessary confrontations between the parties in power and those in the opposition and between the prime ministers and important functionaries of the state.
The way these confrontations were pushed to the points of no return and the fact that some of the disgruntled opposition leaders went to the extent of inviting the intervention of the army could be reflective of nothing but political immaturity though there was no dearth of intelligence and good rhetoric.
The most recent example of such immaturity could be that of a major political party seeking the help of an army general in keeping, itself intact and sorting out some intra- party differences.
Now that the general election is due next year, and a new political set-up is likely to occupy the corridors of power, they must abide by seven do’s and don’ts at least if they want to rectify the ills that have taken roots in our systems all around.
One is that they must have the firm conviction that they must have come into power not forever but for a limited term.
The other is that they must understand that their coming into power for the next similar term, if they so wish, will depend on their performance and not on the elimination of all those who are likely to oppose them.
The third is that they must realise that the opposition is there not to dislodge them but to provide them a good opportunity to improve their performance. Criticism should not be taken as a libel but a device to enable them to know what their weaknesses are and how to correct them.
The fourth is that they shall not unnecessarily interfere in the working of civil servants and should judge their performance on the touch-stone of how well they serve the national interests and not the interests of those in power.
The fifth is that as far as possible they shall abide by the principle of exemplification, that is, to set examples by doing themselves first what they expect the people to do.
The sixth is that they must know that the position of power does not make one immune to accountability but rather enhances the scope and burden of accountability.
The seventh is that they should refrain from labelling the expression of dissatisfaction from any quarter of the country with their policies or performance as a threat to national solidarity but shall try to settle the issues involved as far as possible through dialogue and participative approach.
HAIDER ZAMAN
Karachi
I AM writing with reference to Afaq Rizvi’s letter ‘Karachi: then and now’ ( May 21). His use of the phrase ‘Bhuttos of Larkana’ is unfair and not justified. Zulfikar Ali Bhutto came to power in 1971 only because he commanded the loyalties of an overwhelming number of Pakistanis in Punjab, Sindh, Balochistan and the NWFP. His party emerged as victor not only in his native Sindh but also in Punjab.
Casting Bhutto in such narrow terms, therefore, does not do justice to history. More importantly, it was Karachi and not Larkana that Bhutto considered his home. He rarely lived in Larkana. Karachi’s 70 Clifton was his home for all practical purposes. He started his legal practice there, as well as his initial forays in politics. He met his future wife Nusrat Bhutto for the first time in Karachi and was married to her there. Most of his children were born and brought up in Karachi.
OSAMA MUSTAFA
Islamabad
APROPOS of the letter ‘Karachi: then and now’, I would like to add certain facts which can be verified.
On Jan 3, 1988 the finance secretary of the government of Pakistan had a meeting with the members of the Chamber of Commerce and Industry, Karachi . The meeting was held at a hotel in Karachi. A few days after the meeting a plain, unsigned paper was sent by the economic advisers wing of the finance division , government of Pakistan, which stated: “The demands placed by CC&I, Karachi, before the finance secretary on 3-1-1988 were given due consideration. Item-wise replies are as given below.”
The replies to all demands were negative but the answer to item 18 under the heading “Agro-based export industries” was very interesting: “Gwar-Gum industry is not listed among the five industries which have been identified as export-oriented. The proposed industry is Karachi-based and any preferential treatment to a Karachi-based industry would be contrary to the government’s policies of industrial dispersal.” The Gwar–Gum industry is, in fact, 100 per cent export-oriented and agriculture-based.
In the early 80s the KESC was not in such a bad shape and had excess power whereas Wapda was in very bad shape. Our then president Ziaul Haq decided to hand over the KESC to Wapda. There were some protests from members of the business community, as a result of which the president came to Karachi, drove to the residence of an industrialist friend and called the protesting persons to give them the appropriate message.
The KESC was handed over to Wapda. The tariff charged by the KESC was so much less than Wapda’s that industrial consumers outside Karachi were paying less than half of what the tariff was for Karachi industries.
On top of that, Karachiites were also paying a fuel adjustment surcharge. As a result of this gross mismanagement, Karachi which was once the biggest centre of textile mills became the biggest graveyard of textile industries.
YUNUS BANDUKDA
Karachi
THIS refers to Hussain Siddiqui’s ‘Trend of Islamic banking’(May 26). I agree with Mr Siddiqui but only partially. The Islamic Investment Bank (IIB) fiasco has two important aspects.
The common depositors of banks and non-banking finance companies are even today choosing to ignore the credit ratings of the institutions. The citizens lose all their deposits not only because they are ignorant about credit ratings, but also because they do not bother to ask their friends and relatives who know such things.
The IIB did not have any credit rating, and depositors should never have chosen to park their savings at the IIB in the first place. Most depositors in Pakistan are inclined to accept higher profits without realizing that only financial weak institutions will give them higher profit on their deposits.
Second, and equally important, someone should have the resources and desire to take the Securities and Exchange Commission of Pakistan to court for allowing this investment bank to continue taking deposits for five years despite the fact that it did not have any credit rating.
The NBFC rules developed by the SECP itself say that no NBFC can accept individuals’ deposits unless it had a credit rating of investment grade. The plaintiff should include the external auditors of the IIB too in the list of defendants. Or perhaps the superior courts could take a suo motu action and analyse whether or not the SECP wasted precious time (actually several years) in taking action against the IIB, and whether or not the external auditors should have apprised the shareholders and the SECP of the fly-by-night real estate investments by the IIB.
Both the SECP and the State Bank of Pakistan need to undertake a massive advertising campaign to apprise the depositors about the institution of credit ratings because unless the depositors themselves took charge of the safety of their savings, they will keep losing it to mismanaged financial institutions.
M. Aasim Maqbool
Karachi
IN a market economy, forces of demand and supply achieve the equilibrium. In other words, only those goods and services are provided which the market demands. This is termed as the dynamics of a free market economy, and this phenomenon acts as catalyst that spurs economic activity.
In the context of a developing economy, I have Pakistan in focus, the service sector remained a dormant partner in the economic growth process in the early years of our planned economic development. The planners’ emphasis was on manufacturing. However, economic growth has its own compulsions and justifications, and for any business sector to enter the arena of economic activity, it must ensure that the overall parameters set by the growth factors are adhered to.
The service sector in Pakistan which had its gestation period in the 1960s with the advent of advertising services went on to the teething period in the 1970s and the 1980s without much further progress. It was only in the 1990s that real groundbreaking took place with induction of courier services to be followed by such others in electronic mass communications, stevedoring and container services.
In this space, it is not possible to give a whole chronology of the services that are the norm of a developed economy. In fact, in countries such as the UK, the contribution of the service sector to the national GDP is higher than that of the manufacturing sector. In short, although we in Pakistan have made some strides towards creating a viable service sector, its full potential still remains to be explored to our advantage. I maintain that the possibilities in the service sector are enormous, and it only needs enterprise to exploit it.
MOHAMMAD JAWED MESIYA
Karachi
FOR the last two generations we have been living near Mughalpura, Lahore. The Shalamar Hospital happens to be the nearest to the locality. Time and again it has been brought to the notice of high-ups that the hospital is overcharging the lower middle class residents of the area. Although the hospital receives a handsome amount as Zakat donation and grant from the provincial government every year, the poor do not receive any concession or privilege.
The poor residing in the area say they have not been looked after properly at this hospital though the treatment is much more expensive than their expectation. Contrary to this, well-off patients having good terms with the hospital administration are being treated free of cost. Their bills amounting to thousands of rupees are waived off.
I request the Punjab chief minister and the governor to institute an inquiry committee to audit the funds, zakat and provincial government grant, etc., of the hospital. Also, an administrator should be appointed to monitor all these funds and run the hospital in a proper way where poor and needy patients will be looked after. Moreover, another hospital with full facilities is needed to meet the requirement of the area.
ATIF ISRAR
Lahore
A GREAT controversy is raging these days over the paltry returns paid to customers on their bank deposits. The State Bank of Pakistan has highlighted this issue in its report on the state of the economy while its governor exhorted banks to give better returns to savers at a recent gathering of bankers.
In a lukewarm and entirely unconvincing response, lame excuses were offered by some bankers for not sharing their bumper profits with depositors. This is despite their contractual obligation under the profit and loss system currently in vogue in our Islamic Republic.
Unfortunately, there was no one in that gathering of the high and mighty to voice the concerns of millions of depositors who are ultimately getting a raw deal in this division of spoils by the banking industry.
I have gone through some of the financial statements of banks for the last year that revealed excessive and unfair exploitation of their depositors. In a time-honoured tradition, a bank depositor is the bank’s principal stakeholder and bank’s principal role is that of a trustee of his money. While going through the recent financial statement of a foreign bank in Pakistan (domestic banks fare no better in this respect) with a modestly-sized branch network, I found that while it earned interest in excess of Rs7 billion it paid merely Rs1.7 billion to its depositors, that is a paltry 19 paisa return for each rupee it earned.
Under what formula this profit and loss sharing was done is beyond comprehension. Against this pittance for its depositors, the management took a lion’s share of a whopping Rs2.4 billion for its ‘trustee’ obligation. To its overseas masters, it remitted an amount of Rs2.5 billion on its capital of Rs4 billion, that is Rs800 million more than what it paid to its principal stakeholder, the depositors.
It is thus no wonder that there are cheers all around in the industry while bankers are paying huge sums to themselves by way of hefty salaries, perks and bonuses, the depositors are forced into a life of misery and squalor.
ABU SAEED A. ISLAHI
Ex-president, NBP
Lahore
ON behalf of the Senior Citizens’ Association of Pakistan, I support the advice given to the bankers in Pakistan by the governor of the State Bank of Pakistan to share profits with the bank’s depositors (May 15).
Dr Shamshad Akhtar’s advice to the scheduled banks in Pakistan is wise and timely as the new fiscal year will commence soon and the new budget of the federal finance ministry is on the anvil. Senior citizens are grateful to the SBP governor for her gracious concern for the rights and needs of the bank depositors.
At present the return the depositors get on their deposits is paltry. Senior citizens will be grateful if the governor of the State Bank asks the heads of scheduled banks in Pakistan to call meetings of depositors, especially senior citizens, to elicit their views in this regard. The State Bank can also ask the scheduled banks to submit to the SBP the details of any products they have launched for the benefit of their depositors.
Local bank managers, according to my experience, rarely inform customers about the investor-beneficial schemes their bank has in operation. The bank should examine what mark-up levies the bank has in vogue. The SBP should also look into the grants or help a scheduled bank gives to registered voluntary social welfare agencies.
QUTUBUDDIN AZIZ
Karachi
DESPITE claims of good governance, Wapda remains in the clutches of old-timers employed on extensions beyond superannuation. While the people continue to suffer from unreliable electricity services at exorbitant prices, unannounced and uncalled-for loadshedding and frequent power tripping, ‘sale’ of discretionary promotions and extensions of influential shady individuals continues unabated.
Innovative corruption techniques continue mushrooming, acts of corruption, including the recent Wapda Housing Foundation Farm Houses land scam going unaccounted. Despite a change of directors, nothing seems to have changed in Wapda.
The theft of electrical power is rampant and customer service continues to worsen day by day. People brought on board have failed to show any sign of improvement.
As a matter of fact, the most powerful man in Wapda is seen helpless today, overtaken by typical Wapda culture. Reforms in the power sector were once on the forefront of the government agenda, but now they have been put on freeze. ‘
All opportunities to bring this important sector of the economy back on track was conveniently lost during long over-supply period. The gap between hopes and expectations continues to rise.
Today no one trusts Wapda, including its own minister.
So fast has the level of mistrust risen that Wapda engineers and professionals are finding it increasingly impossible to perform their duties.
INAM ELAHI SUKERA ,br>Lahore
The Public Accounts Committee has concluded that sugar mills were responsible for the crisis.
The sugar mills not only did not release the available stock but also pocketed the profits from the raw sugar imported by the government to avert the crisis.
What is most frustrating and shocking is that several MNAs and federal ministers who own the sugar mills were leading this looting and plunder.
No wonder that they had the clout of staying the probe by NAB.
By looking the other way, the president and the prime minister are condoning the injustice done to the innocent people. If they are not willing to catch those who are robbing the nation, who else is going to rope in them?
As a helpless citizen I can only urge the honourable chief justice of Pakistan to take suo motu notice and bring the manipulators to book.
ASHRAF USMAN
Karachi
PENSIONERS are finding it increasingly difficult to make ends meet on a small income. Old age also means increase in illness. I am now over 80 years old, with an added problem of having become an invalid person, unable to move about except in a wheelchair. I am constantly in need of medications and consultations with doctors. The ever-rising cost of medicines and doctor’s fees are increasing medical expenses. There are other financial problems as well. All these demand greater expenses.
The salaried persons also have their problems, which may require an increase in their income. But the pensioners have bigger problems, which require a bigger increase in their pension. I maintain that perhaps a bigger percentage is required for pensioners than the salaried persons.
GEN (r) ZIAUL RAHMAN NAGI
Karachi
WILL someone kindly make the government understand the fact that a pensioner’s needs do not retire with him? These needs only retire when a pensioner retires from life. When the government has decided to increase the pay of the persons in service, it should not forget the hardships of the pensioners.
LALA FAZAL AHMED BELAI
Hyderabad
A NEWS item (May 27) said that the highest denomination currency note of Rs5,000 has been launched by the State Bank governor.
This will ease the comfort level of those who used to find it difficult to carry stacks of currency for under-the-table transactions. Now they will easily carry huge amount within their fists. No wonder, the Japanese never allowed the printing of such amounts as a currency note to discourage palm-greasing.
SYED ALI JAFRI
Lahore
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