Gidh: Shamoon Abbasi’s take on metaphorical vultures

Following the commercial success of Waar, the budget of Gidh has been revised and increased. PHOTO: FILE

LAHORE: 

Before shooting for Waar began, or Hamyun Saeed had started work on Mein Hoon Shahid Afridi and Hamza Ali Abbasi was simply a theatre-talent trying to make it as an independent film director, Shamoon Abbasi had started working on Gidh; his latest film which is set to begin shooting in February.  

Shamoon Abbasi has never been one to take a back seat, or take a break. Any time he completes a project, he is already looking forward and thinking about how he can make an impact. One main aspect of his multi-dimensional career has been his desire to direct.

“I have never wanted to just be a stagnant actor, directing has always been my plan. I’ve always felt it was my responsibility to stand-up, produce and deliver,” says Abbasi. The actor has come a long way since he first entered the industry. While the success of Waar may have made him a famous face, he has always made sure to have control over the types of projects he works on.

“When I started out I had to struggle. I didn’t have money or projects, I was trying to survive. That is what my journey has mainly been about,” says Abbasi.

His directorial debut is something that he wants to undertake on a large scale. Gidh (which mean vultures in Urdu) is an attempt at making a commercial Pakistani film that maintains the sub-continent aesthetic of glamour, music and scale. The film will be produced by Six Sigma productions, which also produced Mein Hoon Shahid Afridi.

“The idea is to make a commercial film, not necessarily in the monetary sense but visually. We have a lot of action films which have touched upon issues of war and fundamentalism. The idea with Gidh is to tackle a serious subject and replace that desire to produce Bollywood-style films,” says Abbasi. “This will be totally Pakistani, and have a commercial look with its glamorised feel.”

Gidh has been described as a film about a well-known celebrity, who struggles with society at-large, through the media, police and public. The theme will explore how one man is tested by the challenges aiming to drag him down.

“I can’t really discuss the plot in detail, but it’s about vultures in our society, and how a superstar is brought down by people whose intents are dangerous,” says Abbasi.

Following the success of Waar, Gidh has expanded its budget and will look to begin production by February. “I think it’s a good thing that the release has been pushed because it has allowed us to get an idea of what this new market is like, and gauge the reaction of the people,” says Abbasi.

Shamoon has assembled an outstanding cast for the project, including Mumbai-based actor Sara Loren, Humayun Saeed, Hamza Ali Abbasi, himself, and two new female actors Sadia Khan and Kiran Tanveer. While the film had originally been slated for an earlier release, it was delayed as Abbasi and Humayun Saeed got caught up with other projects. Shamoon had also interestingly tabbed Hamza Ali Abbasi to write the film before he became famous, by complete chance.

The film will have an array of songs by different directors such as Kamran Akhtar, who is known for his work with Mahesh Bhatt in Bollywood. The film will be shot in Islamabad and Lahore, with songs being shot in various scenic locations all over Pakistan. The background score will be done by Amir Munawar and Hasil Qureshi, who also have Waar in their repertoire.

Gidh will not have a lengthy production process; the plan is to release the film by August 2014, meaning that the film will be complete, from beginning to end, in eight months. Abbasi said he felt it was important that film productions did not lag because of the hindered output of the overall industry.

Consumer goods: Multinationals bask in high-growth market

MNCs not only growing in Pakistan, but also giving huge returns to investors.

KARACHI: 

In complete disregard for all the negative headlines about violence and energy shortage, multinational consumer goods and food companies continue to grow in a country they refer to as an attractive market for investment.

Despite a negative perception – one of the main hindrances to foreign direct investment – the numbers indicate that major MNCs, in consumer goods and food sector, are not only growing but also giving hefty returns to investors both locally and abroad.

Stocks of major consumer goods and food companies listed on the Karachi Stock Exchange have appreciated 73.1% to date in 2013, outperforming the benchmark KSE-100 index, which has gained 50.8%.

The numbers were taken from a sample of MNCs listed on the Karachi bourse including Unilever Pakistan, Unilever Foods, Nestle Pakistan, Colgate-Palmolive and Gillette Pakistan. The current year’s market performance of these stocks, according to statistics compiled by Topline Securities, is 10.2 percentage points higher than 62.9% they gained last year.

The Express Tribune, in this report, tries to analyse what factors have been contributing to this growth and keeping these giants interested in a market confronted by deteriorating law and order and crippling power outages.

“Pakistan, with its nearly 200 million population, is simply a too large and attractive market to ignore,” Unilever Pakistan CEO Ehsan Malik said, explaining why the Anglo-Dutch food and consumer goods giant is interested in this market.

If being the world’s sixth largest consumer base is not enough, it is the country’s population growth rate that will create a high demand for food and consumer goods in the years to come.

Pakistan will soon become the fourth most populous country in the world, Nestle Pakistan’s Head of Corporate Affairs Waqar Ahmed said.

Pakistan’s population is growing at four million people a year and in four years, he says, the increase in food consumers will be larger than the population of Switzerland (15 million).

“The growth of consumption within the Pakistani market dictates that we spend more in order to be able to supply the consumers with the value they deserve. Hence for us, the investment climate within Pakistan is as good as it ever was.”

Nestle is a very good example of the country’s growth potential, Topline Securities Manager Research Zeeshan Afzal said. The Swiss giant almost doubled its sales from Rs41 billion in 2009 to Rs79 billion in 2012.

The data highlights the performance of listed MNCs but unlisted foods and consumer goods companies have also grown manifold.

Mondelez International – a subsidiary of Kraft Group based in Chicago – says Pakistan has been one of their top-five growth markets in the world.

Nestle Pakistan, Unilever, Unilever Foods, Colgate – Palmolive, Gillette. SOURCE: TOPLINE SECURITIES

The confectionary giant saw a significant growth in their snack brands in Pakistan, which is among the highest in the world. Their Cadbury Dairy Milk and Tang brands alone earn Rs1 billion a year in sales.

In food and consumer goods business, says Afzal, law and order is not that big a problem. The goods are produced by MNCs but the rest is done by distributors who are local people. What matters in this business, he says, is the growth and in Pakistan the growth is driven by volumes and not the price.

Beverages giant Coca-Cola, for example, didn’t need investment from its parent company, it rather invested in its new plants from profits generated by its local operations, the analyst said.

The energy shortage, he said, is also not an issue for most MNCs because of their high profitability.

Explaining the population demographics that have driven this growth, Afzal said more women are entering the workforce contributing to a rise in their family’s incomes.

Rising urbanisation, growing middle class and sophisticated consumption habits, he said, have all contributed to this growth. A big chunk of its population is young while it is one of the top countries adding 20-year-olds to the world.

These people get jobs and establish families, thus contribute to the growth of the consumer goods business.

The country’s food consumption is very high but there is still a lot of room for further growth, believe analysts as well as industry officials.

“Per capita consumption [in Pakistan] is still well below the benchmark countries in Asia and therefore there is a vast room for growth,” said Malik, CEO of Unilever Pakistan.

Oil and gas: Investment environment fraught with risks

Foreign companies say risk is high, some firms have already pulled out.

ISLAMABAD: 

Foreign oil and gas exploration and production companies view the investment environment in Pakistan as something that is fraught with risks, which emerge due to bureaucratic hurdles, cumbersome regulatory framework, slow implementation, inconsistent policies, NAB investigations, law and order issues and foreign policy.

Background interviews with officials of these companies reveal that the risk factor is high, driving away prominent names – Malaysia’s Petronas, British Petroleum, Ireland’s Tullow, Canadian Niko Resources and US-based Chevron.

“Risk factor is high for investment in oil and gas in Pakistan, most foreign companies put the risk at 25%, which have gone up due to lack of implementation of policies,” the head of a company told The Express Tribune.

He said most of the foreign companies painted the picture based on media reports, which affected the parameters used to calculate the investment risk. “If we get a reasonable return, then we don’t take into account these parameters,” he said.

In an effort to stimulate investment, Pakistan has approved Petroleum Policy for 2012, low Btu policy, tight gas policy and also offered attractive prices for offshore drilling. It is also working on tapping shale gas reserves.

“However, no new investor participated in the bidding of exploration blocks during the tenure of the previous government and only existing players expressed interest,” a foreign company representative said. “We also did not take part as we want to resolve the issues first.”

Foreign companies term bureaucracy a major stumbling block. Though the country saw significant gas discoveries before 2000 under the Petroleum Policy for 1994, the bureaucracy pressed the then government to bring a new policy and reduce the gas price.

Only two companies – Dewan Petroleum and OMV – found gas reserves under the new 2001 policy. However, Dewan later faced a NAB probe over the price issue and OMV also encountered price problems, which did not end.

In another example, Polish Oil and Gas has been supplying tight gas to a state-owned gas distributing company for the last five months, but has not received a single penny because of “bureaucratic hurdles”.

Inconsistency of policies has also added to the risk. OMV made an investment following guarantees that the price set in the 2012 Petroleum Policy for a 10% increase in production would be offered. However, this clause was amended when the new government took over.

“This is what we are facing, putting our investment at stake,” a head of a foreign company said.

Director General Petroleum Concession (DGPC) and the Oil and Gas Regulatory Authority (Ogra) are the two regulators that deal with exploration companies. However, both are termed ineffective as the DGPC has failed to address the issues faced by the companies whereas Ogra has been working without the member gas – a crucial slot – for several months. In the absence of the member gas, gas price cannot be determined.

The foreign company head insisted that this was not the right time to develop shale gas reserves, which needed environmental regulations and tax laws. The government should rather focus on tight gas, low Btu and onshore and offshore gas by implementing the announced policies, he suggested.

Cancellation of projects, like the LNG Mashal, has also discouraged investors. After the scrapping of Mashal project, the country got a poor response to all tenders, in which only Pakistani parties participated.

Law and order situation was another area of concern. There are several blocks in Balochistan that hold considerable hydrocarbon reserves, but they are not being drilled due to the poor security situation.

In the refining field, conditions are not encouraging either. Byco expanded its refinery with a capacity of 120,000 barrels per day after approval of the Economic Coordination Committee (ECC). But the regulator objected and the company had not been able to start commercial operations.

Apart from this, the Abu Dhabi government has put billions of dollars in Khalifa Refinery, but the project has been on hold because of a tussle over the appointment of the head of Pak Arab Refinery (Parco).

Experts say that the policy does not treat all countries equally. It “benefits specific countries like China, US and Saudi Arabia”, but Iran, which is eager to set up a refinery at the Gwadar port with an investment of $8 billion, could not push ahead with the plan because of US pressure on Pakistan.

Russia also offered investment in different projects but faced a poor response and even the Russian president postponed a planned visit to Pakistan during the tenure of the previous government.

“Pakistan wanted to sign only a memorandum of understanding whereas Russia was seeking concrete deals on different projects including the Iran-Pakistan gas pipeline,” a source said

Obstacles in place: Despite encouraging policies, foreign investment not forthcoming

To achieve policy objectives, country has to tackle red tape, law and order.

ISLAMABAD: 

Pakistan offers one of the most liberal investment regimes in Asia, but still it encounters hurdles to attracting foreign investment aimed at increasing economic productivity and creating jobs for the youth bulge.

After offering the maximum, the government has now come up with an amnesty package to woo investors even at the risk of compromising its standing among nations of the world.

In 1997, the country opened its services, social, infrastructure and agriculture sectors for foreign and domestic investors. Before that, foreign investment was restricted to manufacturing industry only. Since then, successive governments have by and large been content with an open investment policy with a resolve to protect the interest of investors.

These principles have been reiterated in the Investment Policy of 2013. All sectors and activities are open for foreign investment except for investment in arms and ammunition, high explosives, radioactive substances, securities, currency, mint and consumable alcohol. No minimum requirement has been set for foreign equity investment in any sector. Also, there is no upper ceiling, except for specific sectors including airline, banking, agriculture and media.

Foreign investors in any sector enjoy the liberty and can repatriate profits, dividends or other funds in the currency of the country from where the investment originated.

Despite such an encouraging policy, the country has been struggling to restore its former glory when foreign investment hit a record $5.3 billion in 2007-08, constituting about 23% of gross domestic product.

Since 2008, investment has been continuously declining. In previous fiscal year 2012-13, investment stood at $1.5 billion or 14.3% of GDP. The sluggish investment is leading to an increase in imports, highlighting the country’s heavy reliance on consumption, which is now driving economic growth.

What is the PML-N doing

Since the Pakistan Muslim League-Nawaz government took power in June this year, there has been a ray of hope that it would take measures to give a boost to investment. It has already set an ambitious target to bring $2.5 billion in the first year.

However, in the first four months (July-October) of the current fiscal year, the results are not encouraging. According to State Bank of Pakistan’s statistics, net foreign investment in four months stood at just $283.7 million, $32 million or 12.6% higher than the corresponding period of last year.

The increase was not because of higher inflows, it was actually the result of a slowdown in outflows. In four months, investment inflows were $650 million, slightly less than a year earlier. But outflows were $362 million compared to $404 million in the previous year.

“Pakistan’s issue is not policies but implementation of the policies,” believed Board of Investment Chairman Mohammad Zubair. He could not find anything in the investment policy which could discourage foreign investors.

Zubair stressed that individual and team work would make a difference in the times ahead, believing that efforts being put in by his team would start giving results after six to eight months.

By not making any change in existing investment policies, the government has undoubtedly given a positive signal to the foreign investors. However, tax concessions to certain industries and frequent changes in tax laws are the challenges which the foreign investors believe should be addressed.

Prime Minister Nawaz Sharif is widely considered investor-friendly and has lived up to his reputation by announcing an incentive package for green field industrial projects. As part of the incentives, no question will be asked about the source of investment if money is pumped into new or existing projects from January 2014.

Still, risks remain that proceeds from narcotics trade and money-laundering could be used for investment purposes despite the government’s insistence that such receipts would be subject to scrutiny.

The Investment Policy of 2013 revolves around the themes of reducing cost of doing business, streamlining the processes required for doing business, ease of doing business with creation of industrial clusters and special economic zones and links between trade, industrial and monetary policies for greater convergence.

To achieve these, no efforts have yet been made to tackle red tape and improve governance. Appointments on key posts depend on personal liking and disliking, which could scuttle moves to address the real issues hurting investments.

Another major obstacle is the law and order situation, which is not likely to improve at least for a couple of year

IMF releases structural benchmarks details

These benchmarks are the new reform measures introduced in regard to the approved IMF bailout programme. PHOTO: FILE

ISLAMABAD: The International Monetary Fund (IMF) has released the details regarding structural benchmarks, Express News reported on Monday. These benchmarks are the new reform measures introduced in regard to the approved IMF bailout programme.

It includes 11 conditions: 

• Pakistan should announce the gas tariff rationalisation plan by the end of this month. Revenue generated from this plan should equal 0.4% of Gross Domestic Product (GDP).

• In order to make the State Bank of Pakistan (SBP) sovereign a draft of the law should be presented.

• Pakistan has to make the Central Power Purchase Agency operational.

• Exemptions in income tax, sales tax, federal excise duty, custom duty through statutory regulatory orders (SRO) should be withdrawn by Pakistan. Steps for the additional revenue need to be taken.

• Pakistan will have to get the draft of Deposit Protection Fund Act ready by the end of September 2014 and then discuss it with the review mission of the IMF.

• Securities Bill draft should be prepared by Pakistan and shared with the IMF team as well.

• By June 2014 26% shares of Pakistan International Airlines (PIA) will have to be privatised.

• Amendment is required in the Pakistan Penal Code 186.

• Criminal procedures 1898 also require amendment.

• An independent and professional audit firm should be hired to audit the energy sector.

• 30 public firms, whose privatisation and restructuring strategy was approved in October by the Cabinet Committee on Privatization (CCOP), should be extradited.

Background

In November, IMF had called for linking the frequency and duration of power outages across Pakistan to the recovery of bills. This, the international lender believes, will discourage rampant power theft and non-payment culture in the country. Increasing power pilferage and non-payment of bills adds to the ‘circular debt’, which eats up the scarce public resources.

Sources familiar with the recent talks between the IMF and Pakistan had told The Express Tribune that the international financial institution had added a new structural benchmark in the $6.7 billion bailout programme.

Virgin Money joins Help to Buy mortgage scheme

Virgin Money is the latest lender to sign up to Help to Buy. Photograph: Neil Hall / Rex Features Photograph: Neil Hall / Rex Features

Virgin Money has become the latest lender to offer 95% mortgagesunder a government scheme to make more home loans available to borrowers with small deposits.

The bank's decision to come in early, which was announced in George Osborne's autumn statement, brings the number of lenders offering mortgages through the second part of the Help to Buy scheme to four.

Virgin Money's rates start at 4.29% fixed for two years on a 90% mortgage and 5.29% fixed for two years on a 95% loan. A three-year fixed-rate costs 4.69% at 90% loan to value and 5.39% at 95% LTV, while over five years the rate at 90% LTV is 4.89% and the rate at 95% LTV is 5.49%.

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The rates are not the lowest on the market, but the mortgages are fee-free and anyone using one of the deals to buy a home can claim £300 cashback as a contribution towards legal fees, valuation fees or the general cost of moving. Unlike the other Help to Buy loans that are available, they are open to remortgagors as well as first-time buyers and those moving home.

Anthony Mooney, director of financial services at Virgin Money, said: "Virgin Money is one of the fastest growing lenders in the market, and we want to continue to build our support for people's home ownership ambitions.

"Joining the Help to Buy mortgage guarantee scheme today, several weeks ahead of our original plans, further strengthens our commitment to consumers in this under-served part of the market."

David Hollingworth of mortgage brokers London & Country said the rates would not be topping the best-buy tables, but the entrance of another big lender to the 95% mortgage market was welcome.

He added: "The rates are also following the trend for low fee structures, which is bound to appeal to those with limited deposits."

The second part of the Help to Buy scheme offers a taxpayer-backed guarantee on 15% of the mortgage which pays out if the property is eventually repossessed and sold at a loss.

In the first month after its launch in early October, RBS and Halifax agreed mortgages for around 2,000 people, and take-up of the scheme is set to increase as more lenders start to offer loans.

HSBC joined in November with the lowest interest rates on 95% loansoffer through the scheme, starting at 4.79%, but buyers have to raise a deposit of at least £10,000 to qualify.

Aldemore is set to announce its Help to Buy loans before the end of the year, and Santander and Barclays will offer deals in the new year, when the scheme was originally scheduled to launch.

Virgin Money's total lending to UK households increased by £870m during the third quarter of 2013 according to data for the Bank of England concerning its Funding for Lending Scheme. Since June 2012 it has made net lending of more than £3.2bn to households.

As well as launching the Help to Buy loans, it also changed its rule on interest-only mortgages. In a pre-announced move it has removed the minimum loan size from its criteria but will now only allow interest-only borrowing on property worth at least £500,000 where the household income is at least £100,000 a year.

Borrowers will no longer be able to use a cash Isa or the sale of the property to pay off the mortgage at the end of its term

Nationwide building society computer says 'no' to our account

A switch off: Nationwide's IT system decided it wouldn't register a new account. Photograph: Garry Weaser for the Guardian

My wife and I have attempted, unsuccessfully, to switch our Co-operative Bank accounts to the Nationwide building society. This has proved impossible since the Nationwide IT system, after several attempts, was not able to correctly spell our married name – a common local Highland surname – nor register our postal address, which is a normal, rural address for this area. It had to be within five lines, which the Co-operative Bank had been able to do. It was also evidently necessary to incorporate United Kingdom on the last line which, again, should have proved straightforward.

We have never encountered any problems regarding our name and address from any other financial institution.

We were interviewed at the Nationwide Inverness branch in November. After one and three-quarter hours of fruitless attempts to get our name and address on to the system, the manager was brought in. This did not help matters as his attitude seemed to be that we were causing trouble in his branch. We had to leave after two hours.

We would caution other new customers regarding the Nationwide's IT system, and query whether it was up to the job of adequately handling their accounts. K MacK and R MacK, Dingwall, Ross-shire

We can understand why this was upsetting. We are happy to report that Nationwide has acknowledged its error and has apologised. In a statement it said: "On this occasion an IT glitch caused problems with opening the account. Unfortunately, normal procedure was not followed and the couple should not have been kept in the branch for such a long time. The issue has now been fixed but, in order to progress opening the account, we need them to come back to the branch to complete the application process. As an apology for the inconvenience, and to cover any costs of revisiting the branch, the society will be offering £100