Business in a Trumpili world
Business in a Trumpili world
By: Afshan Subohi
Pakistanis are somewhat reluctant to accept, but it has been by no means ‘business as usual’ since the day President Donald Trump took charge of the White House.
The choice of the team and the decisions announced by the US president clearly signal a policy turnaround.
The flurry of orders over the past one month has challenged the global economic order and reopened debates on issues that the world thought had been sorted out and settled once and for all at the intellectual level.
These include women rights, religious freedom, refugee settlement, sensitivity to environment concerns, treatment of socially disadvantaged citizens, value of delegation of power, sharing and caring among nations for the larger good, and the supremacy of the rule of law. T
oday, none of it stands the way they stood a few weeks ago.
Discussing the blowback of fanning Islamophobia and how it could instill a new life in what appears to be waning militancy in Pakistan and elsewhere is beyond the scope of this report despite the economic cost that the worsening security situation entails.
Commenting on strictly the economic dimension, experts contacted said the negative by far outweigh positive fallouts of changes initiated in the US.
“It will take time to understand all dimensions of a new Trumpili (a word coined for Trumpian) world”, said a commentator.
The upbeat factors include rise in flow of remittances by non-resident Pakistanis; slow-down in brain drain; less interference by the US in local affairs and the consequent inward shift of focus.
The list of fears is just as impressive.
Only more: uncertainty could depress private investment, bilateral trade engagement may weaken with exports taking a hit; dollar volatility may disturb the local currency market; sudden rise in remittances may create bubbles in quick-return avenues of investment like property, stock and commodity markets; US capital flows to development sector may shrink; and public hostility towards US could exert pressure on American companies in Pakistan.
“It took centuries of sufferings and decades of struggle to arrive at a stage in history where racism, bigotry, misogyny came to be equated with ignorance and backwardness. Despite divergence on multiple issues, the humanity covered great distance in the past three decades to evolve a consensus on issue that hurt and help progress of citizens across the world,” commented a watcher defending protests against Trump in and outside the US.
“The progress on MDGs that lifted millions out of poverty through interventions under global watch was unimaginable 50 years back. The launch of SDGs in 2015 further solidified the spirit of collective action for making the world safe, free and fair,” he added.
“Now if the leader of the most advanced nation starts acting erratic and openly expresses views and takes actions inspired by dangerously conservative narrow outlook, people and businesses have every reason to be alarmed and resist as much as they can,” he concluded.
Corporate America which was projecting Trump as a free market champion at the World Economic Forum earlier got the first reality check when the president announced what was termed ‘Muslim ban’.
The business heads of renowned US companies, including Amazon, Google and GE, who have talented employees from all around the world, including Muslim countries, opposed and claimed that their staff was “critical to their success” and pledged to make their voice heard by the new administration.
“A hostile Muslim reaction will directly hurt our business as we have profitable subsidiaries in many Muslim majority nations,” said a joint communiqué that was quoted by the media.
Back home, top business circles were deeply anxious about making sense of the possible impact on capital flows, currency and market accessibility, and how to adjust to those changes. They regretted the lack of guidance from the government.
On its part, the government, fearing sanctions, did take certain security-related measures (banning and arresting leaders of banned outfits). It announced broadening the base of the combing operation to weed out rough elements.
Drawing comfort from the progress on CPEC front, the official position understated the possible fallouts of protectionist bend in US policy set.
The economic diplomats in PM Sharif team claimed to have prepared a brief, suggesting measures to avoid disruption in bilateral trade with the US.
The bankers insisted that mild unrest in Pakistan’s currency market is rooted in other factors that had little or no connection to Trump or his policies.
They dismissed the possibility of higher flow of remittances from the US which is unlike the post-9/11 phase.
“See data. It speaks louder than words. The data shows that remittances are actually falling,” a banker said. He seemingly forgot that SBP has yet to report the inflows after Trump took over late in January.
Real estate consultants took great pains for obvious reasons to prove that the talk of another property bubble in the making was not true.
“Well, at least my sister settled in US is here despite re-entry risks. She bought an apartment in haste as she wanted some place to return just in case the situation turns for the worse,” a friend discussing the subject commented.
A property dealer concurred. “I have not a shred of doubt in my mind that the next cycle of price spiral is just about starting, though it is hard for me to explain it”.
Commerce minister not expecting any change
By: Mubarak Zeb Khan
The Ministry of Commerce has prepared a paper assessing possible consequences of the change in US administration on Pakistan’s trade relations with the US.
“We will send our assessment shortly to Prime Minister Nawaz Sharif,” said Commerce Minister Khurram Dastgir Khan.
The US is the single largest export destination for Pakistani products. The change in the US administration has sent chills down the spine of Pakistani exporters who anticipate changes in the trade regime.
Talking about such apprehensions, Minister Khan ruled out any immediate change in trade regime with Washington. The Trump administration’s current focus is on China and NAFTA where changes in US policy are unlikely to have any adverse implications for Pakistan, he said.
Pakistan has no special bilateral trade concessions that can be withdrawn, he stressed.
The only US trade concession that Pakistan currently has is the decades-old multilateral Generalised System of Preferences (GSP).
“The US GSP is relevant marginally, as Pakistan’s major exports — textile and leather — are not included in the scheme,” he said, adding that Pakistan mostly trades with US on MFN tariffs.
In the year 2015, as per US statistics, Pakistan exports to US totalled $3.7 billion, out of which only $179 million (5pc) were under GSP.
“No statements have been issued on GSP as yet but it is strongly supported by US importers and a lobby of hundred-plus countries that benefit from it,” the minister said.
The GSP status of 127 countries, including Pakistan, was suspended by US Congress after the expiry of the programme on July 31, 2013.
However, the GSP has been renewed through Dec 31, 2017, and will be effective retrospectively between Aug 1, 2013 and July 28, 2015.
However, it is not clear whether the scheme will be extended beyond 2017. Under the GSP, Pakistan can export more than 3,500 items to the US market without paying any duties on them.
Many of Pakistan’s goods are eligible for GSP duty-free, including most manufactured items, inputs used in manufacturing, jewellery, carpets, certain agricultural products, many types of chemicals, minerals and marble.
However, the products not eligible for GSP include most of textiles and apparel, watches, footwear, handbags, luggage, and leather products.
The minister said that the US withdrawal from TPP has been a positive development for Pakistan as it has eliminated a potential threat for Pakistan’s textile exports.
In case the US moves for tariff hikes and stronger regulatory enforcements against countries where it has large trade deficit, this will create opportunities for their competitors in the US market, he further said.
Statements by the Trump administration on Pakistan so far relate more to security concerns.
“The ministries of Commerce and Foreign Affairs collaborate in monitoring the Pak-US security relationship, as it serves as a prism for bilateral economic relations,” the minister said.
“We will engage principal trade officials as soon as they take office, and our US-based trade officers are preparing their briefs for the initial outreach,” Khan concluded.
Danger averted... but just
By: Dilawar Hussain
Since his election as president of the only superpower, Donald Trump has been awkwardly playing the ‘Don Quixote de la Mancha’ role. He has been swaggering his sword around. It has horrified not only his foes but also friends.
Threatening too many countries at the same time, the Republican president already finds himself on the wrong side of history. The man made proud proclamations that he later had to retract.
Economists, industrialists and analysts in Pakistan were thrown into panic after Trump announced travel ban on seven Muslim countries.
Pakistan was not in the loop, but Trump hinted that the country was under the microscope.
“The danger, though averted for the time being, of a travel ban had the trappings of economic catastrophe, which would have translated in stock meltdown and loss of fortunes for investors,” said a veteran stock market player.
But many others disputed or diluted that impact, albeit admitting that the negative economic repercussions could scarcely be totally ruled out.
Chief Commercial Officer at JS Global Khurram Schehzad stated that since US has so far been an important economic and trade partner of Pakistan, any implementation of the protectionist’s agenda by Trump in general and eco-sociopolitical decision for Pakistan in particular could lead to short-term impact on Pakistan economy.
Pakistan has been running a positive trade balance of $2.6bn with US which has also been a significant contributor of aid and a major contributor in terms of foreign investment — FDI and FPI from the US accounting to about 32pc on average in the last four years. Remittances from the US also are about 14pc of the total.
CEO of Insight Securities Zubair Ghulam Hussain said that a travel ban, if imposed, would hurt the biggest exporting sectors of the country: Textiles and IT.
Out of the country’s aggregate exports of around $25bn, slightly more than a half constitute textile exports and 25pc of that, amounting roughly to $3bn, goes to US markets.
“Travel advisory ban would prevent exporters to meet the buyers in US markets,” Zubair said.
Impact on equity market: On Wall Street, all three major indexes — S&P 500, Dow Jones Industrial Average and Nasdaq Composite — are at record high on growing optimism that Trump would cut corporate taxes. Investors at the PSX were, however, unsure of the prospects.
They thought that it all depended on how the Republicans decided to view Pakistan.
“Foreign investment in Pakistan’s capital market has been significant from the US-based funds and some of them are the world’s largest and have been holding big stakes in the top-15 Pakistan stocks (by market capitalisation) which is expected to be increased significantly once Pakistan is reclassified into the MSCI Emerging Markets category in May,” affirmed Schehzad.
He pointed out that the US share in portfolio investment has been over 55pc of the total FIPI. But there is a caveat. Since foreign institutional players’ investment decisions are driven on the basis of risk-reward, in case of any adverse decision by the Trump administration, there could be a very short-term impact on Pakistan equity market.
Investors’ decision is forever based on investment’s risk/reward rationale. For instance, some of the largest American institutional players do invest in Russia and even Iran.
“Since Pakistan offers double-digit earnings growth by the listed corporates with gradual policy-level reforms, the US companies and investors’ dash to the door on the wish of Trump administration, will not make much investment sense and can be ruled out,” said a fund manager.
Opinion divided in Punjab
By: Nasir Jamal
SO far, Pakistan has mostly remained off the new US administration’s radar. But it has only been a month. How long? The question is keeping on their toes people related to economy, business and exports.
Interestingly, not many Punjab-based businessmen are bothered about the potential fallout of a possible American policy change towards Pakistan. Many of the businesspeople Dawn spoke with brushed off any negative impact of US protectionist approach.
“Economic and business relationships have never been a cornerstone of the bilateral ties between Islamabad and Washington,” argued CEO of a major textile company that sells most of its products to American firms.
“In fact, our economic relationship with the US has always been a byproduct of America’s strategic and military interests in Pakistan and the region. As long as these interests remain part of the US foreign policy objectives and they continue to get the desired results, we don’t have to worry about Trump’s policies or his treatment of some Muslim nations,” he insisted, refusing to lend his name to his thoughts.
Some even took comfort in the fact that the Republican president had spoken quite “effusively” about Pakistan and its leadership when Prime Minister Nawaz Sharif had telephoned him to congratulate on his victory.
“We aren’t like any other (Muslim) country whose citizens have been barred from entering the US,” asserted a senior executive of a major commercial bank.
“The Americans realise this and are aware of our strategic importance in this region, and will keep away from drastic decisions.”
The banker actually feels very much “encouraged” by Trump’s willingness to mediate between Islamabad and New Delhi.
Some insist that Pakistan’s reliance on the US for investment and trade has already been on the decline.
“How low can Pakistan’s economic and business relationships with the US further sink? In the worst-case scenario, Trump will curb immigration from Pakistan, cut aid and put restrictions on future American investments here. But he will not go to that extent because it will erode whatever political influence it still enjoys on Islamabad,” a former president of the Lahore Chamber of Commerce and Industry said, refusing to be named for ‘personal’ reasons.
He was of the view that China was fast substituting America as the largest foreign investor in Pakistan and becoming its biggest trading partner under the $55bn CPEC.
“The completion of the corridor has the potential to turn Pakistan into a regional trading hub and connect its exports with new markets. But the government will have to tweak its policies here and there to boost domestic investments in the export-oriented industries,” he added.
However, there are businessmen who think the Trump policies could indirectly, if not directly, hit Pakistan’s economy.
“What if his protectionist and anti-Muslim policies weakened the fragile global economy? Another global recession will hit Pakistan’s exports hard, slow down investments — including from China — and lead to job losses.
“Let’s pray President Trump doesn’t implement the agenda of Candidate Trump,” the chairman of a major business group with interests in textiles, cement and other industries concluded.
Why the turnaround in US policy
• Clip the influence of others in evolving a multi-polar world.
• Appease the anti-establishment sentiments.
• Trade social gains for economic promises.
• Reverse the progress of liberal ideas.
• Secure more jobs in US at any cost.
• Play on US citizens’ base instincts to broaden support.
Business on a tightrope
By: Kazim Alam
American businesses operating in Muslim-majority countries seem to be just one tweet away from ruin, thanks to frequent Twitter tantrums and country-specific executive orders by President Trump.
It may only be a matter of time before deep-rooted anti-Americanism manifests itself in passionate calls for boycotting US products and services should the new US administration continue to antagonise international trade partners.
For example, a late-night ‘twitterstorm’ by President Trump denigrating Pakistan can spell disaster for dozens of American companies operating in the country.
So how frightened are American businesses in Pakistan these days? Nobody knows because they remain tight-lipped. The American Business Council of Pakistan (ABC), a 67-member representative body of large US companies operating locally, is avoiding any brush with media.
None of its 11 office-bearers were available to comment on the issue, according to ABC Secretary-General Amna Daudi.
Speaking to Dawn, former ABC president Saad Amanullah Khan said big American businesses are deeply concerned about the direction the United States is taking under the new administration.
“There’s been no policy change yet. But the whole atmosphere here is of anticipation,” said Khan, who worked in Ohio-based P&G for three decades and led Gillette Pakistan for more than seven years.
Member-companies of the ABC and Overseas Investors Chamber of Commerce and Industry (OICCI) are apprehensive, he said.
“Building walls and imposing import duties don’t send a good message to the rest of the world,” he said.
According to Bilal Khan, a senior economist at Standard Chartered Pakistan, the prospect of a large-scale boycott of US products and services in the event of a travel ban on Pakistanis remains highly unlikely.
OICCI Secretary-General Abdul Aleem believes the hype being built around the idea of global American businesses taking a hit because of President Trump’s policies is unfounded.
“We’re not at a stage where Pakistanis start boycotting American products,” said Aleem whose organisation has 31 member-companies of American origin.
There has been no noticeable change in direct investment from the US as a result of Trump’s executive orders, Aleem said. It is business as usual as far as imports are concerned, he added.
“Pakistan is not Mexico. Their decision to exclude Pakistan from the ban list must have been well-thought-out,” he said.
IT has nothing to lose
By: Shahab Nafees
The uncertainty that seems to have gripped the world at large has had no impact on the local IT industry. It’s not because they have found a method in Trump’s madness, but because the sector has little at stake, they say.
“No US tech company has a development centre here. So Trump or no Trump, there’ll be hardly any impact on us,” said a Pakistan Software Export Board (PSEB) official who declined to be identified.
The countries whose IT workers could be directly affected by radical shifts in US long-standing policy are those where American companies have outsourced their jobs and set up offshore development centres, he said.
India, for example, should be worrying if Trump gets serious about his buy-American, hire-American dream, the official added.
“I don’t think our IT exports are going to take a hit. Frankly, we are not directly relevant to this situation,” an official at Cisco Systems told Dawn.
“Besides, I think it’s too early to give any definitive view,” he said, stressing that it takes six to eight months to exactly know what an incoming government is trying to achieve.
The manufacturing sector, he said, may be the victim, but not the tech industry. “The IT sector is a little amorphous. You cannot confine it to a boundary,” he said.
Shakir Husain, CEO of Creative Chaos, a technology, digital and outsourcing services company, agreed there would be little impact on Pakistan as the country’s exposure to H-1B visas is limited.
Moreover, Pakistan’s software industry is minuscule when compared with India, whose IT exports are near $100 billion.
In contrast, Pakistan’s exports of tech and IT services and software, according to PSEB statistics, stand at around $2.5bn a year at present, including exports generated by IT companies and freelancers.
The exports are projected to touch $10bn by 2025, but they must grow by at least 20 per cent each year to reach that target. Growth in IT exports was 41pc in 2014-15 and 18pc in the preceding fiscal year.
Domestic revenue generated through local sales of software and IT services is around Rs52.5bn ($500 million), hence the total revenue of Pakistan’s IT industry exceeds $3bn.
However, data from the State Bank of Pakistan (SBP) paints a far less rosy picture, showing not all exports are documented.
According to the central bank, exports of telecommunications, computer, and information services were only $821m in 2014-15, which went down to $784m in 2016-17 and amounted to just 15pc of the country’s overall service exports.
“Data is a big problem in Pakistan... We fear data, we are afraid of documentation,” explained Husain.
If wishes were horses
By: Humair Ishtiaq
AS the cliché goes, if wishes were horses, beggars would ride. Though it was not coined for or about Pakistanis, we would all be riding our way to the promised land in a world which, to use a modern-day cliché, stands Trumped.
The sentiment was led by Imran Khan who went public with this wonderful thought that Pakistan would be a direct beneficiary of anything and everything that the American president might end up doing against us. People would stop looking around for help and start looking inwards, the PTI supremo believed.
The words made a lot of sense, but, as it appears, only in the world of low-value political rhetoric. As far as the common man is concerned, he seems to have come of age. Dr Syed Shah Talha Iqbal, a physician running his own practice in a middle-class area, represents the voice of many when he points out that regardless of what Donald Trump does or doesn’t do, Pakistan (read, leadership) is not looking inwards, but eastwards ... to China. Self-reliance is not even a target, he insists.
“It was SEATO and CENTO back in the Cold War period; today it is CPEC. A change in nomenclature. A change in geographical proximity. But that’s it. The dependence is very much there. We need a messiah in almost all aspects of life — from personal to national. If there is none, we create one. China is just one.” Tough words.
But that is what many believe. In fact, some are even more sceptical. “Being out of the frying pan may well be a lovely thought, but the possibility of being into the fire is dreadful,” warns Mohammad Ismail, a small-time entrepreneur of sorts who wonders if China would buy, say, our textiles if the US refuses to.
Banker Haroon Ahmed takes the thought process forward by talking about the financial and human capital that the country might gain in the shape of remittances and expatriates feeling isolated or threatened in Trump’s America and deciding to move back at least for a while.
“This might actually happen, but what does the country stand to get out of it. The remittances will definitely boost the reserves but in turn the money will end up creating bubbles — in the real estate sector, for instance — which will help a few at the cost of many. Besides, there have always been people interested in returning to the country for one reason or the other, but almost all of them do take a return flight sooner or later.
“Our society has always struggled to absorb competence or commitment or any such thing. People with money have been returning for long without investing because the procedures are cumbersome and corrupt. Professionals and academicians have been returning disillusioned for lack of opportunities. Why will it be any different this time?”
There is no dearth of families in Pakistan that have someone based in the United States as part of the Pakistani diaspora, and that brings us to the level of uncertainty that families here are facing. As is true in most uncertain situations, there are some ideas doing the rounds that are laughable on the face of it.
Talking of the tussle between Trump and the courts, many believe that there might well be a “mini-9/11” on the way that might sweep the floor for the president. And if that doesn’t happen, “Trump may well be the next Kennedy”.
Perfectly preposterous, one might say. But that is how public perception stands in a world Trumped!
Understandable murmurs in the development sector
By: Sumaira Jajja & Faizah Malik
MUM is the word on either side of the line between the donors and the NGOs.
Spokespersons at the US consulate refused to comment, advising instead to visit the White House website regarding any questions on President Trump’s policies. Likewise, most NGOs indicated that “nothing can be said” at the moment which might have a negative impact on funding from their US donors.
The Americans did emphasise that the statement given in response to Prime Minister Nawaz Sharif’s telephone conversation last November with the president-elect was “good and positive”. But the litany of executive orders churned out by the White House has led to anxiety in the sector.
In total, the US obligated nearly $67 billion to Pakistan between 1951 and 2011. In the 1990s, the funding was halted and USAID offices were closed. However, 2009 onwards, aid was resumed after the US Congress approved the Enhanced Partnership for Pakistan Act (Kerry-Lugar-Berman bill) which authorised a tripling of US economic and development-related assistance to Pakistan, or $7.5 billion over five years.
From 2001 onwards, Pakistan has been given more than $33bn in aid and military reimbursements by the US.
It is interesting to explore what the fears are based on.
During the long-winding election campaign, leading voices representing the local civil society had been outright supporters of Hillary Clinton, which, in turn, means they were actively and strongly against Trump. The intense paranoia is understandable.
“We are already facing strict inspection by agencies which are monitoring our funding and activities. Given the way Trump has behaved thus far, many of us feel that there might be someone monitoring conversations and at some point there will be repercussions,” said a noted civil rights activist who in the past has been a beneficiary of State Department’s International Visitors Leadership Programme.
Similar views were shared by many in the development sector. Though none had anything concrete to share, the stress on their faces said much more than their words.
An aid consultant based in Islamabad provided a bit of context.
“The development sector is very competitive and paranoid. The paranoia is so intense that many pro-Hillary activists feel anything they say or tweet might be taken out of context by competitors here, with the screenshot posted to the Trump administration which may lead to a funding crunch,” said the consultant.
But there are those who stress that the fears are unfounded.
“Pakistan is too important to be ignored,” said a high-ranking official of an NGO which has been a recipient of US and EU funding.
“As much as the report by Hudson Institute suggests that Trump should curb aid to enforce certain conditions, nowhere has the current administration given any indication that it will act on it. Though it does make for viral content, it is just a rehash of what needs to be said in the US to keep getting funds in DC,” said the official with an Army background.
“Pakistan is thriving. On the bright side, there is always the option of striking it out with China or Russia.”
Mosharraf Zaidi, a columnist and former adviser to the Ministry of Foreign Affairs, UN, and USAID, said a lot of people in the development sector “don’t understand global politics … The western countries are committed to spending money on development. There are UN, OECD commitments and it is not easy to get away from these. Else it would have happened a long time ago”.
Having said that, “in the long term, I think it is very healthy for Pakistan to have less aid so that we may do away with dependence,” he said.
“Over the past ten years or so, donor influence has decreased in countries including China, Turkey, Indonesia and India. They have done well on their own and so can we,” he stressed.
Textile and clothing sector in an upbeat mood
Industry and business leaders are generally optimistic about the future of trade relations with the US, especially because there are no such preferential trade arrangements in place that may go away in the wake of protectionist policies being framed by the Trump-led US.
Federation of Pakistan Chambers of Commerce and Industry (FPCCI) President Zubair Tufail categorically stated that since Pakistani products enter the country purely on the basis of market strength, therefore, there was no question of any negative development.
“Why would anyone like to shift or divert imports when they are getting quality goods at a competitive price from Pakistan,” he wondered.
“I feel Pakistani exports to US would actually increase in the coming days,” he maintained. Interestingly, he did apprehend that there could well be some problems related to travelling to the US.
Former chairman of All Pakistan Textile Mills Association (Aptma) Yasin Siddiqui said there could be negative or positive impact on Pakistan’s trade relation with US depending upon how the new administration frames trade policies. There may be a new era of liberalism or there would be chaotic conditions the world over, he added.
With Nafta and TPP on the rocks, and the future of World Trade Organisation being uncertain, imports and exports will be left totally at the mercy of market forces for which Pakistan is well placed as far as trade with US is concerned, argued Siddiqui.
In 2015-16, he continued, Pakistan’s total exports to US stood at $3.5bn which came to around 16.84pc of total Pakistani exports. The textile exports to US were at $2.9bn in the same year.
“If you look at these figures, 23.36pc of total textile exports worth $12.456bn go to the US. And this happens without any preferential treatment. There is nothing to fear,” concluded Siddiqui.
Fears may erode credibility, argue bankers
By: Shahid Iqbal
Though banks and currency markets face no fear from the change in the White House, they do concede that decisions and incidents are taking place at a pace which is keeping them alert.
The travel ban did disturb them, but the court action calmed them down, they say.
“Why fear? There is no negative sign from the US. Any talk of misplaced fear may actually damage our credibility,” warned a senior banker.
However, generally speaking, bankers avoided discussing concerns arising out of a possible action against Muslim countries. All they stressed was the fact that banks in Pakistan were not facing any hindrance.
Pakistani banks, they said, were never charged of money-laundering though the country had to face tough vigilance from global agencies.
There were issues with just one bank and it is no more on the country’s banking list. The currency dealers also shared the bankers’ sentiment.
Talking about the recent decline in remittances from the US, the bankers said it was an extension of the trend that started a couple of years ago.
The remittances declined by 9pc in the first seven months of the current fiscal year. The US happens to be the third-largest source of remittances for Pakistan.
Bankers said if anything goes wrong in relations with the US, exports, not remittances, will be the first to take the hit.
“Pakistanis working in US may have their fears, but we don’t expect any major change like it happened in the aftermath of 9/11,” said Atif Ahmed, a banker dealing with remittances and currency exchange.
However, he pointed out that any sanction on Pakistan could freeze the country’s foreign dealings since banks keep most of their dollars in their foreign branches, while the State Bank invests most of its reserves in the US.
“But we think it will never happen,” he hastened to add.
The currency dealers, on the other hand, found the current scenario positive for the dollar as the currency has gained against the euro and the British pound.
Forex Association of Pakistan President Malik Bostan said that since the change in the White House, all major currencies had lost weight against the greenback.
The dollar may gain against the rupee in the interbank market, but for State Bank’s intervention which, he said, was an artificial value.
Why the world is on edge
• Policies are anchored in the past more than the future.
• Unpredictability.
• Lack of respect for the rule of law.
• Fanning the religious divide.
• Hurting globalisation.
• Diminishing the value of diplomacy.
• No respect for nature and media.
The reality of realty
By: Muhammad Kashif
REALTORS do not expect any surge in property investments in the near future by overseas Pakistanis, especially from those living in the US.
Property dealers say the country’s real estate sector has not been receiving any higher inflows of investment nor enquiries from Pakistani-Americans because none of the recent actions have had any direct fallout on Pakistanis. In short, the post-9/11 bubble is not expected to happen again, say the realtors.
“Yes, the Pakistani community is concerned, but they are not in a panic or planning to move back,” a Pakistani journalist working in the US for almost two decades said.
An independent US judicial system has reinforced confidence of the Pakistan community, he added.
Abdul Wahab Parekh of Parekh Estate Clifton agreed, stressing that the property market across the country was maintaining a status quo.
“Pakistani-Americans have not been facing any problems in travelling to and from the US, so they haven’t shown any extraordinary interest in the property market.”
However, Association of Builders and Developers Chairman Mohsin Akbar Sheikhani differed.
Having recently returned from a visit to the US, he said his Pakistani friends had definitely started thinking of having real estate assets back home and for that they are exploring ways because in the US there are certain restrictions on large foreign transfers through banking channels.
Mian Bilal Hanif, Chief Executive of Estate Heights, which operates in Punjab and Islamabad and deals mainly in gated housing societies, observed that despite the rather low comfort level of Pakistani-Americans, not many have started liquefying their assets abroad. It’s a wait-and-watch time for them, he said, adding that government actions in recent times in terms of regulating the real estate market would also be a factor in this regard.
“Overseas investors closely monitor developments in the real estate market. The government should regulate the sector in a gradual manner rather than fixing all ills in one-go which caused flight of capital to Dubai and Malaysia and other countries,” he added.
The impression that US-based Pakistanis are aggressively buying houses, flats and plots through their relatives is not correct because the market has not fully recovered from the shocks it received in recent months, he added.
According to him, gated housing societies developed by a few big names will be major beneficiary of prospective investments by Pakistani-Americans whenever that happens.
Trump's 'unsettling' decisions
A rundown of major decisions churned out from the White House since President Trump assumed office.
Combating criminal organisations
The order is intended to "thwart" criminal organisations, including "criminal gangs, cartels, racketeering organisations, and other groups engaged in illicit activities." It directs law enforcement to apprehend and prosecute citizens, and deport non-citizens involved in criminal activities.
Read the full text of the order here »
Reducing crime
The order intended to reduce violent crime in the US, and "comprehensively address illegal immigration, drug trafficking, and violent crime."
Read the full text of the order here »
Protecting law enforcement
The order seeks to create new laws that will protect law enforcement, and increase the penalties for crimes committed against them.
Read the full text of the order here »
Reviewing Wall Street regulations
Trump signed two actions on Friday that could end up rewriting regulations in the financial industry that Obama and Congress put in place after the 2008 financial crisis.
Read the full text of the order here »
Reviewing the fiduciary duty rule
The memorandum directs the Labour Secretary to review the “fiduciary rule” another Obama-era law intended to protect Americans’ retirement money from conflicted advice from financial advisers that was scheduled to go into effect in April.
Read the full text of the memorandum here »
For every new regulation proposed, repeal two existing ones
It also caps the spending on new regulations for 2017 at $0.
American Heart Month
This ceremonial proclamation invited Americans to wear red on Friday (Feb 3) for National Wear Red Day The goal was to remember those who have died from heart disease and to improve its prevention, detection, and treatment.
Read the full text of the proclamation here »
Drain the swamp
The order requires appointees to every executive agency to sign an ethics pledge saying they will never lobby a foreign government and that they won't do any other lobbying for five years after they leave government. It loosened some ethics restrictions that Obama put in place.
Reorganising the national and Homeland Security Councils
Trump removed the nation's top military and intelligence advisers and appointed Trump's chief strategist, Steve Bannon, as a regular attendee, and disinvited the chairman of the Joint Chiefs of Staff and the Director of National Intelligence where their presence was not necessary.
Defeating ISIS
Making a point to use the phrase "radical Islamic terrorism" Trump directed his administration "to develop a comprehensive plan to defeat ISIS." drafted within 30 days.
Immigration ban
In Trump's most controversial executive action yet, he temporarily barred people from majority-Muslim Iran, Iraq, Libya, Somalia, Sudan, and Yemen from entering the country for 90 days, and Syrians from entering until he decides otherwise.
'Rebuilding' the military
This action directed Secretary of Defense James Mattis to conduct a readiness review of the US military and Ballistic Missile Defense System, and submit his recommendations to “rebuild” the armed forces.
National School Choice Week
Trump proclaimed January 22 through January 28, 2017 as National School Choice Week. The programs weaken public schools and fund private schools at taxpayers' expense.
Build the wall
Trump outlined his intentions to build a wall along the US border with Mexico, one of his main campaign promises. The order also directs the immediate detainment and deportation of illegal immigrants.
Cutting funding for sanctuary cities
Trump called "sanctuary cities" to comply with federal immigration law or have their federal funding pulled.
Expediting environmental review for infrastructure projects
The order allows governors or heads of federal agencies to request an infrastructure project be considered "high-priority" so it can be netted quickly.
Approving pipelines
Trump signed three separate memoranda set to expand oil pipelines in the United States. The first two approve construction of the Dakota Access Pipeline and the Keystone XL Pipeline, and the third requires all pipeline materials be built in the US.
Read the full text of all three memoranda here »
Reduce regulations for US manufacturing
Trump directed his Secretary of Commerce to review how federal regulations affect US manufacturers, with the goal of figuring out how to reduce them as much as possible.
Reinstating the 'Mexico City policy'
The move reinstated a global gag rule that bans American non-governmental organisations working abroad from discussing abortion.
Hiring Freeze
Froze all hiring in the executive branch excluding the military, directing no vacancies be filled, in an effort to cut government spending and bloat.
Out of the TPP
This action signaled Trump's intent to withdraw from the Trans Pacific Partnership, a trade deal that would lower tariffs for 12 countries around the Pacific Rim, including Japan and Mexico but excluding China.
Intention to repeal and replace the Affordable Care Act (Obamacare)
Reince's regulatory freeze
Environmentalists worried if this could mean Trump is about to undo many Obama’s energy regulations.
Sanctions on Iran
Sanctions imposed on companies and individuals suspected of involvement in Iran’s missile programme and its support for foreign armed groups, warning there will be more pressure on Tehran to come
Tailpiece: In his two terms, President Barack Obama issued 227 executive orders over 96 months, a total number at par with recent predecessors, but the lowest per year average (2.3 per month) in 120 years. Trump, so far, has signed 11 executive orders.
Oil sector is likely to absorb early shocks
By: A.S.
IN the short run the world oil price may follow its own path as adjustments to the energy policy reversal in the US are expected to materialise in two years at the earliest. Pakistani government is said to be closely monitoring the oil market forecasts, but does not believe that political changes in the US have the potential to rock the global oil price equilibrium.
Federal Petroleum Minister Shahid Khaqan Abbasi was prompt in his response. “Oil is currently between $55-60 and forecasted to stay in this band in the medium term. However, in the past decade, experts failed to predict price spikes on the higher or lower side,” he said.
“Oil prices are affected by a number of supply/demand, commercial and market speculation factors that are hard to foretell,” he added.
“The US is a net energy exporter now through efficiency gains, renewable, shale oil/gas. Any reduction in demand in US will not affect global oil price in the medium term,” he concluded.
The early decisions of the current US administration clearly tilted in favour of fossil fuel industry, brushing aside concerns of environmentalists and communities.
President Trump reversed Obama’s energy policy that closed environmentally sensitive areas for drilling. His order to advance Keystone XL Pipeline and the Dakota Access Pipeline, and the order to expedite environment review and approval process and the discussion over 20% tax on oil import and a tax relief will encourage oil companies.
Experts, however, rule out an impact of a change in US policies on oil production or price over the next two years. They believed higher compliance by OPEC members to curb oil output by 1.2 million bpd for the first half of 2017 will boost oil prices. The projected price band of $50 to $60 in the current year will remain immune to US policy drift.
The respective managements of all oil majors in Pakistan were approached but they declined to say anything on or off the record. Some experts in the oil sector, however, did share their views.
Farooq Rehmatullah, a respected name in the sector, was forthright. “Pakistan’s scale of dependence is too high. We can ignore global happenings, but can’t dodge the impact of oil price movement on the country’s precious reserves,” he said.
“To contain the vulnerability of the economy to exogenous price shocks, the focus of energy policy needs to be on developing indigenous resources and improving logistics infrastructure,” he stressed.
Other experts hammered the underperformance of OGDCL and PPL despite massive concessions and exploration rights. “The private oil companies’ performance is better by a big margin. The United Energy dug about 30 wells in the last one year within the small area in its bound compared to hardly a dozen wells drilled by state-run companies,” said an expert, seconding Rehmatullah’s view.
“With the governance on auto mode we are takers and not makers of deals,” said another expert critical of lack of alertness and absence of homework on the part of the government to broker best possible deals for the country and the people.
US ideals and the dustbin of history
TORONTO: As business leaders overtake Washington, ideals are being sent to the dustbin of history.
Just a few days back, US President Donald Trump opted to sign the bill repealing the regulation that required American energy and mining companies to disclose their payments to foreign countries. The rule, born from the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010, faced a long legal battle and was not put into place until June 27, 2016.
Earlier in the month, the House Joint Resolution 41 thus eliminated the regulation issued by the US Securities and Exchange Commission (SEC) last June that would have forced energy and mining industries, involved in extraction in one form or the other, to report payments they make to governments abroad for access to natural resources.
The rule was meant to fight corruption in resource-rich countries by mandating that companies on United States stock exchanges disclose the royalties and other payments that oil, natural gas, coal and mineral companies make to governments. The SEC has been of the view that the regulation helps “combat government corruption through greater transparency and accountability.”
Republicans and energy companies, however, have been arguing for long that the regulation added costs and caused an unfair disadvantage on overseas projects.
The administration and congressional allies have also been saying that the SEC rule imposes massive, unnecessary costs on United States oil, natural gas, and mining companies, putting them at a significant competitive disadvantage to foreign companies that do not have to comply.
Exxon Mobil Corp, whose former CEO Rex Tillerson is now the Secretary of State, was one of the most vocal opponents of the rule, along with other major oil companies. According to Politico, Tillerson in 2010 personally lobbied against the provision of Dodd-Frank that led to the rule during the Obama era.
Siding with the oil industry and casting the rule as unnecessary and expensive, President Trump said at the signing ceremony that the legislation was part of a larger regulatory rollback that he and congressional Republicans were undertaking with the goal of economic and job recovery.
Later when President Trump asked Representative Bill Huizenga (Michigan) to speak about the legislation, the measure’s lead sponsor, emphasised: “Over (the last) 20 years, there’s been 56,000 rules that have been put in place, with very little legislative input or oversight, and it’s time that changed.”
Yet, the critics are in a rage. After the House initially opted to repeal the bill, Isabel Munilla of Oxfam International underlined that the “The US had been at the forefront of the transparency issue, with more than 30 countries following in its footsteps to pass similar legislation. State-owned companies from Brazil, China, and Russia are all now required to disclose their payments. If the Senate follows suit in overturning this rule, the US will go from a leader into a laggard.”
Munilla then emphasised: “Voting to roll-back basic transparency rules provides zero benefit for the public but will instead allow corrupt elites to continue to stuff their pockets with oil money and steal from their citizens”
Eric LeCompte, executive director of the religious development organisation Jubilee USA, said: “In the short term, we lost a tool that can help track the billions of dollars lost to corruption and tax evasion in the developing world. Improving financial transparency and ending global poverty are two sides of the same coin.”
Major oil companies have been under intense scrutiny in recent months. Late last year, Russia sold a 19.5 per cent stake in its giant oil company Rosneft, but the full identities of those who bought it are unknown — as yet.
Also, ExxonMobil, then led by Tillerson, was under investigation by Nigeria’s economic and financial crimes commission over lucrative oil rights it secured in 2009 by beating out China’s fourth-largest oil producer, despite apparently underbidding its rival bid by $2.25 billion, the Guardian revealed last year.
Critics are also pointing out that US oil majors, Exxon and Chevron aren’t listed on the European exchanges. Hence they don’t have to comply with the EU disclosure rules. That may give them an undue edge over other oil majors who must report project-level payments.
A new United States is emerging from the ashes of the November election. And this United States is too different from the one we all knew and literally respected — for decades.
Russia seeks 'post-West' order as US vows loyalty to allies
By: AFP
MUNICH: Russia Saturday called for an end to an outdated world order dominated by the West, even as US Vice President Mike Pence pledged Washington’s “unwavering” commitment to its transatlantic allies in NATO.
Russian Foreign Minister Sergei Lavrov laid out a diametrically opposed global vision and offered “pragmatic” ties with the United States, just hours after Pence vowed to stand with Europe to rein in a resurgent Moscow.
“I hope that (the world) will choose a democratic world order — a post-West one — in which each country is defined by its sovereignty,” said Lavrov.
The time when the West called the shots was over while NATO was a relic of the Cold War, he said.
In its place, Moscow wanted arelationship with Washington that is “pragmatic with mutual respect and acknowledgement of our common responsibility for global stability”.
The two countries had never been in direct conflict, he said, and were close neighbours across the Baring Straits.
Moscow has been impatiently waiting for US President Donald Trump to make good on his pledge to improve ties which plunged to a post-Cold War low as Barack Obama slapped on sanctions over the Ukraine crisis and Russia’s alleged meddling in Trump’s election.
On the campaign trail, Trump repeatedly praised Russian President Vladimir Putin and voiced his willingness to work with him in fighting terorism.
But in the face of growing heat over its links to Moscow, Trump’s administration appears to be backing off the warmer words used earlier for the former Cold War foe.
‘Greatest ally’
Exasperated and worried by Trump’s calling into question long-standing foreign policy assumptions, European leaders have warned Washington not to take transatlantic ties for granted.
On a European roadshow this week, Trump’s lieutenants have sought to reassure jittery allies that the administration will hold fast to existing foreign policies, including maintaining sanctions on Russia over the Ukraine crisis.
Hours before Lavrov addressed the Munich Security Conference, Pence told the same forum that the United States will stay loyal to its old friends.
“The United States is and will always be your greatest ally. Be assured that President Trump and our people are truly devoted to our transatlantic union,” Pence said.
The US would also not relent in pushing Russia to honour the Minsk ceasefire accords with Ukraine, he said.
“The United States will continue to hold Russia accountable, even as we search for new common ground, which as you know, President Trump believes can be found,” the vice-president said.
At NATO headquarters in Brussels on Thursday, Defence Secretary James Mattis said Russia must first “prove itself” and respect international law before there could be any improvement in relations strained by Moscow’s Ukraine intervention and annexation of Crimea.
Mattis also said the transatlantic bond was “as strong as I’ve ever seen it”, and emphasised that America remained “rock solid” in its support of Article 5 — NATO’s core “one for all, all for one” collective defence pledge.
Likewise, US Secretary of State Rex Tillerson indicated he would take a tough line in his dealings with Russia.
Following his first meeting with Lavrov in Bonn on Thursday, Tillerson said the US would cooperate with Moscow but only when doing so “will benefit the American people”.
German Chancellor Angela Merkel, who has been a key player in mediating talks between Ukraine and Russia, said it was “regrettable” that Europe had not managed to reach a stable relationship with Russia over the last 25 years.
“I will not give up on finding a way for better relations with Russia despite our different views on many questions,” she said, championing international cooperation rather than a policy of isolationism.
“In a year in which we see unimaginable challenges we can either work together or retreat to our individual roles. I hope that we will find a common position,” she said.
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