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Instead of chanting the devaluation mantra, exporters should reduce their costs
By Shakir Lakhani Published: August 9, 2017


This was very alarming since I am in the import business and would have to sustain big losses if the free fall continued.
Last month, the rupee plunged to its lowest in nine years. A banker friend called me and said,
“If you have dollars, don’t sell them, if you don’t have dollars, buy them. The market is plunging and by the evening you will need Rs120 to buy a dollar.”
This was very alarming since I am in the import business and would have to sustain big losses if the free fall continued.
In the evening, the price of eggs had shot up by Rs10 to the dozen. Why? In response, the shopkeeper said,
“Don’t you know? The dollar has gone up sharply.”
Pressed further, he said,
“I buy dollars every day, so I’ll have to pay more tomorrow.”
The next day, my wife lost her temper when the supplier of a famous brand of drinking water said that the price of a 19 litre bottle had increased by Rs10 per bottle. When she pointed out that the rupee had stabilised and was now trading at the previous rate of Rs105 per dollar, the man simply shrugged and said,
“Too late, once the price of something goes up, it can’t go down.”
What he said is true. Eggs are still selling at Rs110 to the dozen, despite the rupee being stable at the previous rate for a month now.

And that was not all. The next day, all the employees at our office (and the ones in our neighbourhood) demanded an increase in salaries. My driver and female staff said they would leave immediately unless given 10% more than what they were being paid. So, a devaluation of just 3% caused a rise in labour costs by 10%.
The present exchange rate is often given as the reason for the decline in the country’s exports. Exporters want the devaluation of the rupee so that they can compete with exporters from other countries in the region. What they can’t explain is why India and Bangladesh are able to export more than Pakistani exporters, even though the dollar is presently worth Indian Rs64, while the Bangladeshi Taka (BDT) is trading at 81 to the dollar. I remember a time when the Pakistan Rupee was much stronger than both the Indian Rupee and the BDT.

The main reason for the decreasing value of the rupee is that our imports cost much more than our exports. We import goods worth $48 billion, while our exports this year are expected to be $28 billion. This is a serious situation and unless something is done to increase exports (or reduce imports), our future seems bleak.
Since we can’t expect anything from our exporters (who think that devaluation is the only answer), we can do much to reduce our import bill. Even though we produce all kinds of food, we import almost $5 billion worth of fruit and other edibles. For some reason, we need to eat apples grown in New Zealand or South Africa, which cost Rs300 per kilogram (kg), and more.

Local apples consequently have become more expensive, they have gone up from Rs80 per kg to Rs180 per kg. Our supermarkets are full of dog food and cat food. This is surprising since we are not all animal lovers, nor do we have so many foreigners in our midst (those foreigners who do work in Pakistan are usually not paid enough to afford to spend part of their salaries on animal food).
Come to think of it, I have seen imported toothpastes and cosmetics (even from India) in our shops. I know we cannot ban all such items, but perhaps imposing a very high rate of sales tax on unnecessary items might cause their imports to decrease. Another option would be for the government to allow the import of such items only for private consumption and not for sale to others (as done in the US for those who consume marijuana and other specified drugs).
The second item is palm oil, from which edible oil is made. Why do we consume so much of it? Samosas and pakoras, for instance, are immersed in edible oil before frying. This is a huge waste of money, besides causing clogged arteries and leading to premature heart attacks. Our middle-class should take the lead and stop consuming imported fruits, pakoras and samosas. Remember the protest against high prices of fruit in Ramazan? A similar protest against high-priced imported items should have a major effect.

Why don’t our exporters learn from history? Ever since the first 100% devaluation by Zulfikar Ali Bhutto in 1972 (and subsequent devaluations, usually by Pakistan Peoples Party governments), the country’s economy has suffered. The benefit of devaluation is temporary and negligible, as prices of imported items immediately shoot up. Labour costs and fuel prices go up, leading to an increase in electricity and gas prices, which raise the cost of manufacturing and exports become uncompetitive.

The only benefit to exporters is that for a couple of months they earn more, and they are able to go abroad for a few days with their families. So, instead of chanting the devaluation mantra, exporters should reduce their costs and make their products competitive, as Indian and Bangladeshi exporters have done.


 
Engineer, former visiting lecturer at NED Engineering College, industrialist, associated with petroleum/chemical industries for many years. Loves writing, and (in the opinion of most of those who know him), mentally unbalanced. He tweets @shakirlakhani (twitter.com/shakirlakhani)

#GoneNawazGone: Today could be the darkest day in Pakistan’s judicial history or the day a new Pakistan was born
By Shakir Lakhani Published: July 28, 2017


Nawaz Sharif looks on during a lecture on Sri Lanka-Pakistan Relations in Colombo, Sri Lanka, January 5, 2016. PHOTO: REUTERS




The nail-biting suspense leading up to the verdict is now over. The unthinkable has finally happened. Nawaz Sharif, who managed to win three elections and serve as Pakistan’s prime minister, has been disqualified and faces political extinction.
This is the mother of all Supreme Court (SC) verdicts and whether it will change the country’s fate for better or worse will be decided in the next few days.
It could be the darkest day in Pakistan’s judicial history or it may be remembered as the day a new Pakistan was born, depending on whether or not the SC disqualifies others who are equally corrupt (which includes most of our present lawmakers).

Legal experts have different opinions on the verdict:
Even if it goes for only a trial or nothing then how 5 member bench when two judges never heard part of the case. Beyond sense for most
This is one for the history books.

Which side of history were you on? 
#PanamaVerdict
On the right side of history. Against juridical coup. History will mark this day as another dark day in Pakistan's history.
So after today's decision is it the end of House of Nawaz?
It is the continuation of 58(2)b jadeed
I also tell you this is no victory for @ImranKhanPTI . May he live long because he will regret one day what has happened today.



Nawaz Sharif disqualified by the SC on Article 62(1)(f) -- not on London properties but failure in 2013 to disclose salary from Capital FZE

Pakistan now has the dubious distinction of having had almost all of its prime ministers sacked before they completed their full five-year terms. Zulfikar Ali Bhutto, the first prime minister under the 1973 Constitution, served for almost four years, but since elections were due in 1977, he too did not complete five years.
Of course Nawaz and his men will claim that he has been removed by a judicial coup, that it is an international conspiracy to remove him, so on and so forth.
But Nawaz has only himself to blame for his troubles.
He could have resigned two months ago when two judges had held him to be unfit to be a member of Parliament. Resigning would have at least saved him the humiliation of being disqualified and being labelled as dishonest and corrupt.
Nawaz and his children cannot hold public offices for the next five years at least. Furthermore, Nawaz will undergo more humiliation when the National Accountability Bureau (NAB) finds him guilty of corruption and he could also be sentenced to serve time in jail.
The credit for Nawaz’s downfall undoubtedly goes to Imran Khan, although it was the Panama Leaks which accelerated the process. So it would not be out of place to mention here that Umer Cheema also deserves to be praised for exposing the Panama scandal, for which he has earned international recognition. And we now know that the decisive factor in the disqualification was Nawaz’s iqama (permission to work in the UAE, for which he received a regular salary but failed to declare it).
At present, after his disqualification, the country is without a prime minister. It is up to Nawaz to decide who will be the interim prime minister until Shehbaz Sharif is elected to the National Assembly and becomes eligible.
Knowing how suspicious and insecure Nawaz is, I doubt he will select a strong man to serve as an interim prime minister, although the country desperately needs such a man now.
In my opinion, the man who would be acceptable to all political parties as the next prime minister is of course Chaudhry Nisar Ali Khan, the now former interior minister. But unfortunately, he has differences with those who are very close to Nawaz, so it is doubtful that he will be the next one in line.
Shahid Khaqan Abbasi and Ayaz Sadiq are definitely suitable, but again as I said, Nawaz would not like to have someone more powerful or more popular than him to be in the driving seat.
Who should be the next prime minister of Pakistan?
·         Chaudhry Nisar Ali (40%, 63 Votes)
·         Shehbaz Sharif (35%, 54 Votes)
·         Ayaz Sadiq (17%, 26 Votes)
·         Shahid Khaqan Abbasi (8%, 13 Votes)
Total Voters: 156
In fact, it is very difficult for the Pakistan Muslim League-Nawaz (PML-N) to survive now. It is very likely that some, if not most, of its parliamentarians will defect to other parties, leaving the 2018 elections to be contested mainly between Pakistan Tehreek-e-Insaaf (PTI) and Pakistan Peoples Party (PPP).
However, we must not forget that it is very difficult to find an upright and honest politician in Pakistan. Almost all our parliamentarians have wealth which is much more than their declared incomes. So it is impossible that the 2018 elections will give the country a prime minister who is sadiq (honest) and ameen (upright).
The SC should now proceed against corrupt politicians like Asif Ali Zardari and others to eliminate corruption in the country. It should do so with the same speed with which the Panama accused were tried. If that is not possible, perhaps elections could be postponed for six months to a year to ensure that only honest and God fearing people are elected to our assemblies.
The SC should try the others according to the same standard that was set for Nawaz. All known corrupt politicians and holders of public offices should explain within a few weeks how they have managed to accumulate so much wealth. Those who cannot do so should be disqualified immediately. This is the only way people will believe that Nawaz has not been disqualified due to a conspiracy.
Let’s hope the SC does so without fear or favour.



Shakir Lakhani

Engineer, former visiting lecturer at NED Engineering College, industrialist, associated with petroleum/chemical industries for many years. Loves writing, and (in the opinion of most of those who know him), mentally unbalanced. He tweets @shakirlakhani (twitter.com/shakirlakhani)

http://blogs.tribune.com.pk/story/54193/gonenawazgone-today-could-be-the-darkest-day-in-pakistans-judicial-history-or-the-day-a-new-pakistan-was-born/

 

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