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About current

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Economic BriefingTete-A-TeteGlobal Statistics Happenings at HRSG

2020 has arrived and with it comes the promise of great growth and change! As part of our own journey, we’re excited to launch our inaugural issue of CURRENT, a biannual newsletter, which is curated to keep our readers informed about the latest global economic trends and indicators, new ideas and practices at the work-place, and insight into what is happening at HRSG. We have signed you up for our newsletter in the hopes that you will find great value in its content and that it will aid you in your own goals to grow and thrive. If you ever find that what we offer is not for you, simply respond to this email and we will remove you from our mailing list.

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Economic Briefing

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Economic Briefing

The IMF staff review with the Government of Pakistan (GoP) concluded on 8 November 2019. The results were satisfactory. IMF gave no relaxation, no waivers and asked GoP to meet its revenue objectives, while imple-menting its circular debt strategy. Any sweeping statements or fundamental conclusions at this stage ‘that the worst is over’ will be premature and misleading. The process of macro-economic stabilization takes at least five years, and Pakistan is no exception. The Mission acknowledged the direction, includ-ing the State Bank’s monetary policy. It wants its continuation in the short to medium term. The Fund wants GoP to play a more proactive role in ensuring independence of the central bank through legal instruments. IMF also wanted further progress on the implementation of the Public Finance Management Law. This will add to the fiscal cushion, as all public funds would remain in a single account, providing greater maneuverability to the government. The Fund also called for a strict adherence to the Rs. 1.6 trillion of government guarantee limit. There was a deliberate discussion of fiscal disci-pline that had delivered dividends in Q1 this year, as fiscal deficit came down to 0.7% of GDP from 1.4% of the same quarter last year.

Under the IMF programme, the government is required to deliver on six performance criteria including those relating to net international reserves, net assets of SBP, central bank’s stock of net foreign currency swaps and forward position, primary budget deficit, no government borrow-ing from central bank and a ban on GoP guaran-tees.

In addition, there are two performance criteria including zero new credit to the government by SBP and on accumulation of external public pay-ment arrears. Additionally, GoP’s performance is appraised on five indicative targets including disbursements under the Benazir Income Sup-port Programme (BISP), government spending on health and education, tax collections, pay-ment of tax refunds and a freeze on the power sector’s circular debt.

Embracing ground realitiesIt will take time and patience For FY20, the economic growth will be range-bound at about 3%, inflation is forecast at 12%, the cost of capital will remain high and overdue correction in the exchange rate will continue. Meeting even the 3% growth rate will depend on how well agriculture performs. Growth in industrial and service sectors is con-strained by more complex challenges. A weaker rupee, high inflation, higher interest rates and the ongoing implementation of the IMF driven reforms, will continue to have a toll on the economy. More people are being pushed below the poverty line, aggravated by serious job losses. Despite political noise, education, health, employment creation and poverty allevia-tion are not serious priorities. It should be kept in mind that further inter-est-rate tightening to fight inflation is not a viable option anymore. The industrial sector faced a significant fallout of lower fiscal outlay and monetary tightening in FY19. Chances of slippages in the fiscal balance still remain high, as GoP borrows more to retire old debt. There is no denying that this govern-ment inherited stock of domestic and foreign loans. But in its first year in power, Pakistan’s debt profile has worsened. Domestic borrowing totaled Rs. 4.31 trillion in FY19 compared to 1.5 trillion in FY18. In foreign loans, Pakistan’s total debts and liabilities stood at $106 billion in FY19, up from $95 billion.

IMF review and what it really means

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Economic Briefing

Risks are real, but manageable1. Increased unemployment, forcing further large swatches of the population below the poverty line. Large social implications.2. Inability to keep congruence in the fiscal, monetary and investment policies.3. Due to limited fiscal space, ruling party’s challenges in meeting electorate’s expectations.4. FATF Grey/Black lists.5. National security shifts, in view of a more assertive and confident India.6. Limited foreign policy. Unable to find a ‘seat of respect’ at the regional or the global table.7. Water, reference Indus Basin Water Accord with India.8. Fresh, balanced and transparent review of CPEC. China remains the most important strategic partner.

Externally in FY20, GoP is forecasting $24 billion in remittances, $26 billion in exports, and $53 billion in imports. It is unlikely that remittances and export goals will be met. Imports are achiev-able, as the government can shut off the sprock-et. It is reassuring to see deeper engagement to fight trade based money laundering. However, FATF remains as a large risk for any country. It has gone unchecked for over thirty years, and all credit goes to this government to acknowledge and begin addressing it seriously.

Ease of doing businessDoes this ranking really matter?

Pakistan has secured a big jump in the latest ‘Ease of doing business’ (EoDB) indicators released by the World Bank. This is commend-able and welcome, supported by the efforts of the previous government and the current one. However, it is helpful to understand what EoDB indicators are and what they are not. The indicators suffer from significant and well-recognized shortcomings. First and fore-most, the EoDB indicators score de jure mea-sures what has been announced by governments and not the actual delivery. The disconnect with the wider investment climate or economic perfor-mance, is not considered. Another major issue pertains to methodological inconsistency of the World Bank ‘Doing Business Framework’ that makes a comparison between a country’s progress between years difficult, if not impossible, to measure. Finally, the most powerful and logical critique of ‘global best practice’ frameworks pushed by International Finance Institutions, , such as EoDB is that they promote mimicry and often conflates form and function leading to a situation where ‘looks like’ substitutes for “does”. Amongst the most important parameters invest-ment looks for is policy certainty and continuity. This issue has dogged Pakistan since 1990s and the country’s track record is very poor. – yet policy consistency is not captured in the EoDB. There is a long list of examples that have under-pinned this poor reputation.

The Westinghouse case of the 1990s, the gov-ernment’s victimization of Hub Power/ many Independent Power Producers, and violating the energy supply agreement after Engro invested $1.1 billion in expanding its fertilizer manufactur-ing capacity. Moving forward, Al-Tuwarqi Steel Mills was forced to scrap its investment of hun-dreds of millions of dollars because GoP dishon-ored its commitment. At another time, another government reneged on PIA’s restructuring trans-action on flimsy grounds. These are a few exam-ples of serious breaches of sovereign commit-ments made by one government, struck down by subsequent ones. A thirty year review is a reason-able period to understand the seriousness of this challenge. Tax regime is another area of paramount impor-tance which has kept investment at bay. The tax treatment meted out recently by FBR to major investors in three Special Economic Zones high-lights the fact that the issues are not consigned to the past administrations, but are continuing today – extending into the time period covered by the latest EoDB report.

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tête-à-tête

1. What values are most important to you as a leader? Integrity and compassion

2. Did you face any gender biases on your way to becoming a CEO? Initially yes, like most of us I was not an exception either. Back home, we’re three sisters and we’ve been brought up in an environment where we had to do everything on our own. Hence, gender has never been a mental barrier for me. The journey was difficult but the resistance and roadblocks I had to face only made me stronger.

3. How do you prepare for major industry or company changes? Change is the only thing that is constant. If you don’t change, as an organization or as an individual, you cease to exist. As humans, we resist change but we are ever evolving and so is the business environment. You change in the face of external factors, you change because you need to innovate, do something different, only change is what keeps you on the progressive path. Outsourcing, though very common in the developed and developing countries, is still in its infancy here. The laws here are not conducive and keep you guessing and struggling to main-tain the legitimacy and viability of your service. The bigger challenge is keeping this legitimacy & viability constant, as it varies from industry to industry. I have a very diligent and diverse team, together we always strive to keep ourselves ahead of changing business dynamics.

4. How many messages are in your inbox right now? How do you manage email? On a daily basis I receive over 250 emails. It is a tough task but being on point with my emails is one of the ways I have my finger on the pulse of the business. Though one thing is for sure, I cannot sleep till all my emails are checked, responded to and sorted.

5. In one word, describe yourself. Passionate!

6. Who is Sadaf Hatif outside of work? What are you into? I am a very different person outside of work, I enjoy being with family and friends, watching movies, travelling and shopping. Last but not the least, I love the solitude of my own self.

7. Would you quit your job if you won the lottery, even though you love your job? Lottery or no lottery, I plan to retire young, enjoy life and do everything that I was unable to do earlier. I want to travel the world, learn to play the guitar, write a book. The list is endless.

8. What is the most important advice that you would give to women aspiring to be leaders to-morrow? Be yourself and don’t try to please everyone. You are unique! Believe in your dreams, only you can turn them into reality.

Sadaf HatifCEOHRSG Outsourcing & HRSG SSP

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GLOBAL STATISTICS

61%

More than 93%of organizations are considering or have alreadyadopted cloud services to improve outsourcing.

of companies are modifying jobs to better work with AI & automation.

Data security is a top concern for

68% of outsourcing companies who are considering movingto cloud technology.

percent of executives planto introduce mobile employeeexperience apps to help employees navigate an agilework environment.

59%

Source: https://www2.deloitte.com

Source: https://www.fortunly.com

Source: https://www.fortunly.com

Source: https://www.iofficecorp.com

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HAPPENINGS AT HRSG

We are excited to announce that our new office at Latifa Tower in Dubai is operational! The decision to open this office is a further example of our commitment to move past borders and develop lasting relationships. We’re stepping in at a time when there is a gap between what organiza-tions are demanding and what is available; we aim to fill that void. All our current and prospective partners are encouraged to reach out to us in Dubai:

info@hrsgonline.ae(+971) 4 352 9860

Services we provide in the GCC market:

- People solutions- Business solutions- HR technology solutions

HRSG in the GCC

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HRSG | Inspire

INSPIRE aims to connect professionals and enable learning through the exchange of experi-ences and ideas. The goal is to help you stretch your mind and expand how you look at things. Things like tech, innovation and disruptive forces.

Our first INSPIRE session took place earlier this year, up to 20 business leaders across several different industries joined us at HRSG’s head office in Karachi. The idea was to make new friends and cultivate interesting conversations.

Jamal Nasir, CHRO, HBL led the first session into the around new and upcoming trends in financial services and their implications on the HR department. The impact of technology and ‘big data’ on HR in particular was highlighted. Globally, different functions within business and industry are embracing digitization, utilizing data in ways never before thought possible. Cus-tomer journey mapping will continue to improve in relevancy as customer data touch points are optimized for extreme accuracy.

The local banking sector has come to the conclusion that investing in newer, globally accepted methods and technology standards will lead to a win-win situation. Providing ease of access and increased data security can allow for a satisfied consumer and an eventual reduction in costs as technology becomes widely available.

The HRSG | INSPIRE sessions are opportunities to experience community-based learning. It is a platform that allows you to share your vision, insight, and inspiration that is accelerating trans-formation in your organization. You’ll walk away with an insider view of the change that is hap-pening and the change that is about to come.

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Our presence in Islamabad

Our regional office in Islamabad is fully equipped to service public and private sector clients in the Federal Capital and the North. As a world-class firm, we go to great lengths to ensure there are no shortfalls in the peace of mind we provide to partners across Pakistan.

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HAPPENINGS AT HRSG

Decibel® HRMS has been primed to boost process efficiency and improve accessibility at Hashoo Hotels. We are thrilled for being granted an opportunity to work for such aprestigious company and are confident this partnership will greatly benefit both parties.

Decibel rollout across Hashoo Hotels

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HAPPENINGS AT HRSG

HRSG RECRUITINGIn the past year, our executive search team has placed 8 C-level executives across different industries.

HRSG SSPHRSG SSP has started delivering solution-based services to 2 major financial institutions in Pakistan.

HRSG OUTSOURCINGHRSG Outsourcing received an EOBI award for being amongst the top 3 contributors in the private sector.

HRSG CONSULTINGHRSG Consulting has recently won a significant organizational restructuring project with Diamond Group, aimed at optimizing its business lines.

Wins

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