Investment & Privatization Journal
January, 2020




President & Editor-In-Chief:
Syed Jawaid Iqbal

Javed Ansari

Assistant Editors:
Faizan Usmani
Syeda Areeba Rasheed

Feature Editors:
Khawaja Amer

Editorial Team
Faisal Siddiqi
Sumair Aftab
Kashif Ali

Layout & Graphics:
Riaz Masih
Kamran Ghulam Nabi
Haroon Rasheed

General Manager
Marketing & Sales
Syed Ovais Akhtar

Circulation & Coordination
Aqam-ud-Din Khan


New research underscores the importance of a strong marketing department. Not only does marketing create value for a firm’s short-term profitability, but it also has a positive effect on long-term shareholder value. The study includes data for more than 600 US firms over a 16-year period.
Company executives take note - marketing matters.

Not only does marketing pay off in the short-term, but it has a positive effect on long-term shareholder returns, according to new research from Iowa State University’s College of Business. Hui (Sophia) Feng, lead author and assistant professor of marketing at Iowa State, says the study provides clear evidence of the marketing department’s value.

“During the economic crisis, the first thing firms cut was the marketing budget and staff,” Feng said. “The marketing department contributes to both the short-term and long-term, so managers should not be short-sighted and cut the marketing budget and staff just because of a crisis or poor quarterly figures. Managers need to look beyond one quarter or one year and see marketing is important.”
The study, published in the Journal of Marketing, measures marketing department power, and a firm’s ability to build and leverage brand equity and customer relationships. To objectively calculate these measures, Feng and colleagues Neil Morgan and Lopo Rego, at Indiana University’s Kelley School of Business, developed a new scale to measure marketing department power and marketing capabilities using publicly available data for more than 600 firms in the U.S. over a 16-year period. It is the first study to take such a comprehensive and objective approach.

To determine the marketing department’s power, researchers compared head count, compensation,

The fertilizer industry of Pakistan has enormous potential and is well on its way to becoming one of the biggest fertilizer exporters in the region in the coming years. Factors that directly contribute to these forecasts are issuance of LNG regasification licenses and the establishment of new fertilizer plants by prominent organizations in the country. Being primarily an agrarian state, Pakistan’s growth is heavily dependent on the fertilizer industry. According to reports, Pakistan’s fertilizer demand has always remained higher than its supply. However, with the advancement of technology and increased number of players in the industry, production capacity has increased to approx. 9 million tons per year, which has consistently surpassed the national demand over the last few years. Furthermore, the consumption of fertilizer has increased manifold due to heightened awareness among farmers that its usage in good quantity is fruitful for higher yields and a significant increase in their income as the commodity is provided at subsidized rates.

During FY 2018, cumulative sales of urea increased by 40% to 6.3 million tons and DAP sales edged to 6% to 2.3 million tons. Moreover, a further pick-up in demand for urea can be foreseen. Also, comfortable inventory levels of urea and DAP have reduced pricing power for local fertilizer manufacturers and as a result, average urea price has increased by 10-11% year-on-year. At present, international urea and DAP prices are hovering around $218 and $335 per ton (avg. annual price), respectively, and are expected to remain steady which, along with removal of price cap (Rs 1,400 per bag) from urea, would provide an added advantage to local manufacturers. The government in order to enhance productivity in agriculture sector has provided tax relief on phosphate fertilizer equivalent to Rs. 300 per 50 kg bag of DAP, reduction in GST on urea from 17 to 5 percent/voluntary price reduction by the fertilizers manufactures, cash subsidy of Rs. 100 per 50 kg bag of urea, subsidy of Rs. 800 and Rs. 500 per bag of SOP and MOP respectively, by the Government of Punjab in order to promote the use of Potash. Besides passing on the benefits of tax incentives and gas subsidy to farmers, it must be appreciated that the fertilizer industry has always looked beyond profitability.

Currently, in Pakistan, there are six major producers of fertilizers which include Fauji Fertilizer, Engro Fertilizer Company, Dawood Hercules and Fatima Fertilizers. Media reports suggest that the Chinese government is keenly looking for avenues to enter Pakistan’s agriculture and fertilizer sector. The Chinese state and banks are expected to provide capital and loans to Chinese companies interested in setting up ventures in Pakistan. There are rumours that China is going to set up a fertilizer plant that will produce 800,000 tons per year. In order to keep the graph of the fertilizer industry stable, the government should and must avoid knee-jerk decisions pertaining to GIDC and GST, as it has displayed in the past.
Over the years, this essential industry has been suffering due to these unfavourable policies and decisions. Thus, the government should strategically extend more support for the fertilizer sector, enabling it to play a more authoritative role in national food-security. The government should expedite remedy of cash-flow challenges caused by large amounts mired in overdue refunds and sluggish reimbursement of subsidy to the fertilizer companies.

Pakistan has two cropping seasons, “Kharif” being the first sowing season starting from April-June and is harvested during October- December. Rice, sugarcane, cotton, maize, moong, maash, bajra and jowar are “Kharif” crops. “Rabi”, the second sowing season, begins in October-December and is harvested in April- May. Wheat, gram, lentil (masoor), tobacco, rapseed, barley and mustard are “Rabi” crops. Pakistan’s agricultural productivity is dependent upon the timely availability of water. The total cropped area in Pakistan is about 22.2 million hactares. The share of food grain crops is 54 percent, followed by cotton and sugarcane 20 %; pulses 6 %; oilseed crops 3 %; fruit/vegetables 4 % and other crops about 13 %. Wheat is the main food crop. It occupies about 36.3 % of the total cropped area, followed by cotton with 14 %, paddy with 9.5 %, sugarcane with 4.5 % , maize with 4.5 % and other crops with 20.8 %.
According to a fertilizer use survey, five major crops, wheat, cotton, sugarcane, rice and maize account for about 87 % of fertilizer consumption. Wheat accounts for about 45 % followed by cotton with a share of 23 %. Sugarcane is the third crop; nutrient use per hectare is highest for this crop. The share of fruit and vegetables is 5.6 %. The yields of the major crops are below their agronomic and genetic potential. There is a consensus among researchers, extensionists and policy planners that, given the necessary resources and inputs, yields could be increased by 30 to 40 % through more rational use of fertilizers.

Climate Challenges

The decade past had begun with predictions of an impending climate change catastrophe, and it has ended with the reality of not paying closer attention to those warnings. Apocalyptic scenarios had been imagined by evidence-backed scientists — and not doomsday merchants — who foretold that the extreme weather patterns would only worsen in the coming years, as global temperatures kept increasing and sea levels continued to rise. Ten years ago, extreme heatwaves were documented in parts of Africa, the Middle East and Russia; a drought gripped the Amazon River basin; and heavy snowstorms swept across North America. In Pakistan, powerful floods caused by heavy rainfall led to over 2,000 deaths, while millions of others were displaced. They were forced into becoming climate change refugees, as their homes and livelihoods were swept away by the waters.
It is time to re-imagine our global economies, because the current systems for creating wealth are simply not sustainable. As we welcome the new year, the world’s leaders and decision-makers must put climate at the forefront of their agendas. May 2020 be the year of decisive action, and not merely words.


Afsheen Iqbal,,


Economy in 2020

The year 2020 is going to be a decisive one for the economy. The stabilisation that saw a tortured start in 2019 is set to continue, but optimists in the market are anticipating an end to the chokehold of high interest rates and the aggressive taxation drive sometime in the early months of 2020. The growth rate has plummeted while forecasts say the economy should register a growth rate of between 2.5pc to 3.5pc by the end of the fiscal year. Manufacturing has hit one of its lowest ebbs ever, except perhaps for the years immediately following the great crash of 2008, while private investment and business confidence have also been lacklustre. Even as the economy chokes under the stabilisation measures adopted out of necessity by the government in 2019, the incoming year presents some promise of change.

The prime minister has already begun promising a shift in the focus of economic management away from stabilisation towards growth. In multiple forums over the past few weeks, he has declared the economy stable and the time to move towards growth to now be imminent. These words are partially responsible for fuelling a sense of optimism among certain sections of the business community about the new year. If interest rates are to be reduced and the level of government spending, especially on development projects with strong linkages across various sectors of the economy, picks up, a


return to growth and reinflation of aggregate demand can spur economic activities quickly. Interestingly however, the prime minister’s finance adviser is a little more circumspect when talking about transitioning to growth, but even he is promising greater dedication of fiscal resources to encourage export-oriented sectors.

Instead of keeping the focus on growth, the government should present 2020 as the year of reform and outline in detail its plans for the state-owned enterprises, the power sector and the future of administered pricing regimes as well as the overhaul of the regulators to ensure a competitive playing field going forward. More than raw growth, let 2020 be the year the country arrests and reverses the steady erosion of its productivity. That would make for a very happy new year indeed.

Faizan Alvi,


Development in the Tribal Districts

If the Punjab government is struggling with governance issues, it appears the KP administration is not far behind. A recent report says the government departments have utilised only 0.4pc of the Rs83bn development outlay for the merged districts in the first six months of the current fiscal year. After the latest review of the development portfolio, KP Chief Minister Mahmood Khan conveyed his displeasure to the 13 departments responsible for this poor show. The breakdown of the funds spent on development projects, and more importantly, funds not spent at all, paints a dismal picture of the performance of yet another provincial government headed by the PTI. When it comes to making speeches and commitments about mainstreaming these districts, politicians have been falling over each other to solemnly pledge revolutionary changes. The reality, however, tells another story. The hefty sum of Rs83bn is a good start because the region has long been neglected and is in dire need of uplift.

In the final analysis, this lack of performance shows the entire government in a bad light. This should be of concern to Prime Minister Imran Khan because these districts have been politically integrated after a long and arduous process. They, in fact, present a challenge to the centre as well as to the province: fulfil all the promises made and bring the fruits of development into the region or risk losing credibility and face. There is much riding on the project to mainstream the tribal districts, and it would be a shame if the PTI leadership fell short of the task at hand.

Zeeshan Ahmed,


News:   Analysis:
Government wants quick NEVP implementation
despite resistance from auto industry
  Anaemic Growth
under Civilian Rule

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