Pakistan should check illegal remittance channels: CEO Dhabi Group

[Naveed Yaseen]

SOHAIL SARFRAZ & ZAHEER ABBASI
ISLAMABAD (October 13 2008): Pakistan should take appropriate steps to check flow of foreign remittances through illegal channels to get optimum benefits of the expats hard earned money with annual inflow of more than $9 billion.

In an exclusive interview with the Daily Business Recorder, Bashir A. Tahir Chief Executive Officer (CEO) Dhabi Group shared his international banking experience; rupee-dollar parity, future investment plans and role of banking sector in current economic situation for improving the economy.

Terming "Hundi and Hawala system" as a major hurdle in foreign remittances through legal banking channel, he said that why Pakistan could not get rid of the "hundi system" which India effectively tackled during the tenure of Indra Ghandi.

He said that the late Indian Prime Minister Indira Gandhi with the imposition of emergency banned illegal means of transmitting expats money. She not only plugged all the channels but also confiscated the assets of people dealing in it. This sent a strong message to both the dealers and expatriates that the money they send through illegal means was not safe.

He said that $9 billion would be a huge amount that Pakistan can get annually through legal means provided it takes measures to break the illegal channel, which has been causing enormous damage to foreign exchange reserves.

Declaring "no risk" in Pakistani banking system, he said that the banks are not facing any kind of risk during the current economic scenario in Pakistan. Presently, Pakistani banking sector is robust with no sign of default. The general public should not be worried and need not to pay any heed to rumours of default. Such kinds of rumours are created by the vested interest, who want to distort the image of Pakistan aboard.

According to him, Pakistan banking system was sound for which the credit must be given to the Central Bank that has been playing a proactive role. No country of the world could develop without a strong banking system and the responsibility to make it stronger lies equally with the people as well as the regulator, he added.

It is the responsibility of the regulator to closely monitor all the banks and take measures against those who are not functioning properly within the laid down parameters. As far as Pakistan is concerned, the regulator is very strong which examines each and every aspects of bank in a critical way and sends report to the all banks individually. He said that the systems within the banking sector have to remain stable. If one system is being disturbed, it might hurt the entire banking system.

To a question, he said that prevailing international economic turmoil will also have an impact on Pakistan economy as well but at the same time there are positive signs for Pakistan with reduction in oil prices that according to international experts are likely to stabilise somewhere in $70s per barrel. The declining oil prices as well as remittances could help Pakistan manage its balance of payments to some extent. The legal transmission of foreign remittances by overseas Pakistanis could be a ray of hope for economy in the prevailing economic situation.

He regretted that there was a huge capital flight during last two years from Pakistan to the UAE and the government must have acted and taken into confidence the investors by addressing their fear and anxieties. Still the government can do a lot to restore local investors' trust for which it has to have meaningful talks with them aimed at giving them the message that it was fully supporting them on their legitimate demands, he added.

About the current depreciation of Pak rupee against the dollar, Bashir A. Tahir said that there is a need of policy with national interest to check this phenomenon in Pakistan. The currency exchange dealers sometimes indulged in the phenomenon of "talking the currency up", which means speculation by the dealers to create panic for extracting more value of the currency in consideration.

Comparing US with Pakistani media, he said that you would never see negative images in the Western media which could have negative impact on their economy. Similarly, the Western media never projected the terrorism casualties. The media in Pakistan also need to understand that exaggerated portrayal of terrorism incidence could immensely hurt Pakistan's economy.

Sharing a study conducted by him, the CEO of Dhabi Group said that the comparison of expatriate workforce between Pakistan and Philippines showed interesting results. Over 80 percent of the workforce of Philippines comprises of women against Pakistan's 95 percent male workers. The foreign remittances have been substantially increased from $9 billion to $10-$11 billion for Philippines. However, our situation has not improved, pointing towards some problems in our systems. About the future plan of the Dhabi Group, he said that the group would continue its investment plan for Pakistan, as the group has not budged from its plans in the worst scenario.

Bank Alfalah stands as one of the fastest growing financial institutions in Pakistan, expanding on local as well as International frontiers and working on the most modern dynamics of customer care and asset growth in banking. Bank Alfalah has recently unfolded a new phase of expansion by planning 49 new branches across Pakistan in order to meet the growing demand of reliable and Innovative banking products. The commencement of these branches is scheduled by the end of the current year.

Bank Alfalah is now ranked as the fifth largest bank of Pakistan within only ten years of its operations. To this date, the Bank has become the leading credit cards brand, and has innovated consumer products by redefining market dynamics. Presently, the Bank has 225 branches across 88 cities in Pakistan with eight foreign branches across Afghanistan, Bangladesh and Bahrain. The phenomenal corporate success of the Bank has been made possible through expanding its customer base and focusing on client needs.

He said that the Bank Alfalah is working on an extremely sound financial rooting and is in a progressive mode. Bank Alfalah for the half year ended June 2008 has shown remarkable growth. The deposits have grown to Rs 287.7 billion against Rs 270.6 billion in June, 2007, the Advances have grown to Rs 184.9 billion from Rs 158.6 billion, the Foreign Trade business has increased to Rs 150 billion from Rs 131 billion and profit before provisions and taxation has increased to Rs 3.28 billion from Rs 2.4 billion registering an impressive growth of 35% during the period under review.

He added that the Bank Alfalah is backed by an extremely strong investment commitment or the Abu Dhabi Group which has experienced growth on extraordinary scale across the Middle East and has Investments in Pakistan exceeding US $10 billion.

The Consortium is headed by the visionary HH Sheikh Nahayan Mabarak Al Nahayan who has always demonstrated keen Interest to invest in Pakistan. Alongside Bank Alfalah, the Group's other Investments comprise United Bank Limited, Alfalah Securities (Pvt) Limited, Alfalah Insurance Company Limited, Alfalah GHP Investment Management Ltd, UBL Insurers Company Limited, Wateen Telecom (Pvt) Ltd and lastly, Taavun (Pvt) Limited (a real estate joint Venture between Dhabi Group and Government of Punjab) in which Dhabi Group has announced an Investment of $1.2 billion, he added.

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