Traders search for alternatives amid India-Pakistani standoff

In this file photo, the first vehicle crosses the bridge which connects Indian-Administrated Kashmir and Pakistan-Administrated Kashmir during cross-border trade at Kaman Post, 118km (73 miles) north of Srinagar, Oct. 21, 2008. (REUTERS)
Updated 07 March 2019

Traders search for alternatives amid India-Pakistani standoff

  • Businessmen say they prefer to look at newer options instead
  • Says New Delhi stands to lose more than Islamabad if economic limitations continue

LAHORE: With the cessation of bilateral trade between Pakistan and India due to an ongoing escalation along the border, leading business houses said they were now contemplating a deal with the US, Afghanistan and Central Asia instead.
“Pakistan has cheaper options available for major import of cotton from the US” while cement exporters tend to look for Afghanistan and Central Asian destinations besides supplying for local consumption to meet the growing demand within the country, said Anisul Haq, secretary general of All Pakistan Textile Mills Association (APTMA) Punjab on Wednesday. 
If the two countries wish to benefit from direct trade through Wagah, the trade has to be on a level playing field to reap dividends of close proximity and cheaper goods requiring lesser time to deliver consignments, Haq told Arab News. “We do not encourage a reroute of trade through other channels like the Afghan Transit Trade.” 
Pakistan’s total trade volume from India, during 2017-18, stands at $2,412.80 million, including total imports worth $1,924.28 million and exports at $488.52 million, according to documents available with Arab News. The major imports from India include cotton, organic chemicals, dyes and chemicals, machinery, raw material for pharmaceuticals, etc., while major exports to India include cement, gypsum, edible and citrus fruits, mineral fuels and oils.
Following the February 14 attack on Indian troops in the Pulwama district of Indian-administered Kashmir, New Delhi had withdrawn the Most-Favored Nation (MFN) status from Islamabad and imposed a 200 percent import duty on Pakistani goods. The unilateral move by India virtually brought all bilateral trade to a halt and truckloads of cement were seen parked inside the Wagah border and returned later.
Younas Dhaga, Secretary to Ministry of Commerce, told Arab News that Pakistan would stick to its stance whereby the Adviser to Prime Minister on Commerce, Razak Dawood had said he would raise the issue of India withdrawing the MFN status at the international forum of the World Trade Organization (WTO) if the stalemate continues.
According to the State Bank of Pakistan’s annual report 2017-18, “The cotton production marked an increase from 10.7 million bales last year to 11.9 million bales in FY18. Yet, cotton production not only missed the target of 13.6 million bales, but also stood lower than the textile industry’s need of 13.2 million bales.”

Pakistani, Russian officials negotiate deal to import crude oil from Russia

Updated 21 March 2023

Pakistani, Russian officials negotiate deal to import crude oil from Russia

  • Teams of Pakistan State Oil and Russia’s state-owned Operational Services Center met in Karachi on Tuesday
  • Petroleum minister said in January Pakistan wanted to import 35% of its total crude oil requirement from Russia 

KARACHI: Officials of the Pakistani and Russian state-owned oil companies on Tuesday held a meeting in Karachi to negotiate a deal under which Islamabad will acquire cheaper energy imports from Russia, an official with direct knowledge of the talks said.   

Russia this year conceptually agreed to supply crude oil and oil products to cash-strapped Pakistan at cheaper rates and signed several memoranda of understanding with Pakistan’s energy ministry.  

After the inter-governmental meeting in January, Pakistan’s state minister for petroleum Musadik Malik said his country wanted to import 35 percent of its total crude oil requirement from Russia. 

“Talks to negotiate government-to-government level deal were held in Karachi today,” the official, who is privy to details of the talks, confirmed to Arab News, adding that parlays were still underway and a deal may be signed “soon.” 

He added that the details would be shared after the deal was sealed. 

In the talks, officials of the Pakistan State Oil (PSO) are representing the country, while the Russian side is being represented by a team of Operational Services Center, a Russian state-owned company. 

Malik didn’t respond to Arab News' request for a comment on the matter. 

The current price of Brent crude has come down to $73 per barrel whereas the Russian crude oil price remained at $52 in February, which has further lowered between $42-48 in the international market, according to Pakistani media reports. 

“They [oil industry] urged Pakistan refineries to purchase Russian oil on their own in compliance with the G7 countries’ regulations,” Pakistan's Geo News channel reported. 

"However, the government is trying to secure a G2G (government-to-government) deal below the $60/barrel price cap imposed by G7 countries." 

Under the G2G deal, Pakistan's Petroleum Division wants to lock the deal at close to $50/barrel, according to the report. The G7 countries imposed the price cap on Russian oil in the wake of Moscow's invasion of Ukraine. 

Malik recently said that Pakistan would receive its first consignment of crude oil from Russia in the first week of April.

“The first consignment of crude oil from Russia will arrive in the first week of April,” the state-run Radio Pakistan broadcaster reported on March 17, citing the state minister.    

Pakistani officials last year visited Russia to negotiate the oil deal at a discounted rate. Islamabad and Moscow then agreed that the oil and gas trade transaction would be structured to ensure mutual economic benefit. 

In October last year, Russia's consul general in Karachi, Andrey Viktorovich Fedorov, said that sanctions imposed by Western countries on Moscow had impacted economic cooperation between Pakistan and Russia. The sanctions came in response to Russia’s invasion of Ukraine in February last year. 

Former prime minister Imran Khan, who arrived in Russia the day it launched a full-scale invasion, has previously said that Russia was willing to offer oil at cheaper rates to Pakistan. 

Miftah Ismail, who has now been replaced by Ishaq Dar as the finance minister, had rubbished Khan’s claims, saying Islamabad would be willing to buy oil at cheaper rates from Russia provided Moscow made the offer and Islamabad would not have to face sanctions on the deal. 

Pakistan denies IMF linked bailout loan deal to nuclear program

Updated 20 March 2023

Pakistan denies IMF linked bailout loan deal to nuclear program

  • Finance minister says delay in reaching staff level agreement with IMF “purely due to technical reasons”
  • Dar says last week’s comments about Pakistan’s nuclear program should not be linked to ongoing IMF negotiations

KARACHI: Pakistani Finance Minister Ishaq Dar said on Monday neither the International Monetary Fund (IMF), nor any foreign country, had raised issues related to the country’s nuclear program, and a delay in signing a bailout deal with the IMF was due to "technical reasons."

Dar was addressing his own remarks from last week in the upper house of parliament when he said no country or institution had a right to tell Pakistan” what range of missiles or what nuclear weapons it can have, we have to have our own deterrence.”

The remarks were widely linked to a months-long delay in signing a staff level agreement with the International Monetary Fund for a bailout package of $1.1 billion, that has been delayed since November mainly over issues related to fiscal policy adjustments.

In a statement issued by the ministry of finance on Monday evening, Dar said his comments on Pakistan’s nuclear program were being “quoted out of context.”

“My comments with regards to Pakistan’s Nuclear Program was in response to a colleague Senator’s specific question, wherein, I emphasized that Pakistan has sovereign right to develop its nuclear program, as it best suits our national interests, without any external dictation, which, by no means should in any way whatsoever be linked with the ongoing negotiations with the IMF,” the finance minister said.
“It is clarified that neither IMF nor any other country has attached any conditionality or made any demand from Pakistan with regard to our nuclear capability … The delay in IMF staff level agreement is purely due to technical reasons, for which we are continuously engaged with the IMF in order to conclude it at the earliest.”

On Sunday, the IMF country representative also denied any link with past or current IMF supported programs and decisions by any Pakistani government over its nuclear program.

Last week, Dar said an assurance from "friendly countries" to fund a balance of payment gap was the last hurdle in securing the IMF deal, which will offer a critical lifeline to avert an economic meltdown.

The latest tranche of funds are part of a $6.5 billion bailout package the IMF approved in 2019.

The latest deal will also unlock other bilateral and multilateral financing avenues for Pakistan to shore up its foreign exchange reserves, which have fallen to four weeks worth of import cover.

The IMF wants Pakistan to get the assurance for up to $7 billion to fund this fiscal year's balance of payments gap. Dar has been saying it should be around $5 billion.

New York Community Bank to buy failed Signature Bank

Updated 20 March 2023

New York Community Bank to buy failed Signature Bank

  • The 40 branches of Signature Bank will become Flagstar Bank. Flagstar is one of New York Community Bank’s subsidiaries
  • Signature Bank was the second bank to fail in this banking crisis, roughly 48 hours after the collapse of Silicon Valley Bank

NEW YORK: New York Community Bank has agreed to buy a significant chunk of the failed Signature Bank in a $2.7 billion deal, the Federal Deposit Insurance Corp. said late Sunday.
The 40 branches of Signature Bank will become Flagstar Bank, starting Monday. Flagstar is one of New York Community Bank’s subsidiaries. The deal will include the purchase of $38.4 billion in Signature Bank’s assets, a little more than a third of Signature’s total when the bank failed a week ago.
The FDIC said $60 billion in Signature Bank’s loans will remain in receivership and are expected to be sold off in time.
Signature Bank was the second bank to fail in this banking crisis, roughly 48 hours after the collapse of Silicon Valley Bank. Signature, based in New York, was a large commercial lender in the tristate area, but had in recent years gotten into cryptocurrencies as a potential growth business.
After Silicon Valley Bank failed, depositors became nervous about Signature Bank’s health due to its high amount of uninsured deposits as well as its exposure to crypto and other tech-focused lending. By the time it was closed by regulators, Signature was the third largest bank failure in US history.
The FDIC says it expects Signature Bank’s failure to cost the deposit insurance fund $2.5 billion, but that figure may change as the regulator sells off assets. The deposit insurance fund is paid for by assessments on banks and taxpayers do not bear the direct cost when a bank fails.

Munjz takes pivotal step in its business model, secures $5 million in funding 

Updated 19 March 2023

Munjz takes pivotal step in its business model, secures $5 million in funding 

  • Company provides property management system for community managers

CAIRO: Saudi Arabia’s Munjz joins the property technology sector after taking a pivot that has changed the company’s mission and opened doors to new opportunities. 

Established in 2017, Munjz first started as a platform for homeowners to connect with certified home service providers but, by the end of 2021, the company took a pivotal step after the founder recognized that the property management sector holds a large opportunity as it is worth over $1.8 trillion globally. 

In an exclusive interview with Arab News, Abdullah AlDaij, CEO and founder of Munjz, said, “We pivoted our business model to be in the business-to-business sector and to classify our company as a proptech company seeing that around $25 billion were invested in the global proptech industry, which is around 27 percent from the global funding in 2021. Our vision is to digitalize vertical industry businesses by providing software and services at the same time.”

Capitalizing on the new trend, he decided to create a property management system software while incorporating the home services platform to bring the best of both worlds. 

The company provides a property management system for community managers to run everything from financial to operational functions through the software. In addition, managers also have access to the marketplace of service providers like house cleaning, maintenance and material supply, which can be utilized to better operate the business. 

Residents also have access to the home services marketplace that is white labeled under Munjz to also cater to its direct-to-consumer segment. 


$1.8 trillion

Munjz took a pivotal step after the founder recognized that the property management sector holds a large opportunity as it is worth over $1.8 trillion globally.

“We have three different customer segmentations,” AlDaij explained, “in residential, I’m talking about compounds, real estate, developers, community association, hospitality, and property managers.” 

“The second segment is commercial where we are targeting retailers, offices, food and beverage, warehouses, healthcare centers and education centers. The third segment is the service companies that are in our marketplace, we are talking about professional services, cleaning services, hospitality services and logistics,” he added. 

Through its new customer segmentation pivot, Munjz managed to open room for more revenue streams to support the business. 

Abdullah AlDaij, Munjz chief executive officer. (Supplied)

“We have three main revenue streams,” he explained. “The first is from the marketplace, from our service providers. We are capturing a commission base from every service closed.” 
“The second revenue stream is the subscription fee to access the platform and the third revenue stream is from the end user who is requesting a service from the property manager,” he continued, explaining that the third revenue stream is the company’s white label services that are provided to property managers to cover residential orders. 

As the company pivoted to its new model just seven months ago, AlDaij predicts to hit profitability in 18 to 24 months through expansion plans into the aforementioned segments. 

“We operate in 15 cities in the Kingdom. By the first quarter of next year, we will expand to Egypt and Abu Dhabi. Our shift is going to be more convenient for us for global expansion because now we are focusing on our software as a service solution,” AlDaij stated. 

He added that the company will only focus on the PMS software in its expansion plans because of its convenience.  

“Inside the Kingdom, we are strong enough in terms of the marketplace because we have already built this network for the last five years. So, we have more than 3,500 service providers that are working with us, and all these companies are now available to our B2B clients,” he stated. 

As the company expands, AlDaij stated that Munjz will go through a shortlisting process for its service providers to offer better experiences to its clients. 

The company currently has 79 business accounts that include “Dunkin Donuts, McDonald’s, DHL and one of the biggest development companies in Saudi Arabia called Almajdiah, which has more than 20,000 units under its umbrella,” AlDaij added. 

Moreover, he stated that the company is expected to reach 300 business clients by the end of this year. 

Last month, Munjz raised $5 million in a series A funding round led by undisclosed investors with participation from Vision Ventures, Almajdiah Investment Co. and Watheeq Proptech Fund. 

AlDaij shared that the company will utilize its funding in product development and technology as well as structuring Munjz. 

“Because our customers are different it means the company is different. Therefore, the structure and the team members should be taken into consideration to look after the talent who can run this new strategy. The investment is going to be mainly in structuring the team members and looking after the talents and engineers,” he stated. 

Munjz currently has 50 employees and will reach 85 staff members by the end of this year. 

AlDaij concluded by stating that the Saudi property management sector will grow significantly in the coming years, as it was worth $23 billion in 2021 and is projected to reach $35 billion by 2028. 

Riyadh Cables expects to maintain double-digit profit driven by giga projects

Updated 19 March 2023

Riyadh Cables expects to maintain double-digit profit driven by giga projects

  • Firm recorded impressive net profit of SR351.9 million for 2022, an increase of 46.6 percent over the previous year

RIYADH: In its first-ever public result after being listed on the Saudi Stock Exchange, Riyadh Cables Group Co. announced an impressive net profit of SR351.9 million ($93.84 million) for 2022, registering an increase of 46.6 percent over the previous year. 

The Riyadh-based firm recorded revenue growth of 40.3 percent to SR6.9 billion during the same period, while its sales volumes increased by 37.1 percent to 190 kilo tons.  

The robust performance prompted RCG’s board to propose dividends of SR225 million at SR 1.50 per share for the financial year 2022, in line with its previous guidance and subject to shareholders’ approval at the Annual General Meeting.  

In an exclusive interview with Arab News, the company’s CEO Borjan Sehovac, said: “Strong local and regional demand drove an increase in sales volumes, resulting in a boost to sales growth. Profitability was enhanced by successful SG&A (selling, general and administrative expenses) optimization measures and overall cost management.”  

Riyadh Cables Group Co. CEO Borjan Sehovac. (Supplied)

He went on to add that RCG’s ability to win a larger share of bids locally and regionally was due to its “stellar reputation which we built along the decades.”  

With strong activity expected to be sustained in RCG’s core Middle East markets, he said they anticipate substantial demand-led growth in revenue in 2023, remaining healthy in the range of 3 percent to 5 percent, “while capex of SR200-plus million is expected to support the strong order backlog.”  

The company expects its net profit to increase by a double-digit figure in the financial year 2023. 

Tadawul listing 

Founded in 1984, RCG got listed on Tadawul on Dec. 19, 2022, after successfully raising $378 million from an initial public offering.  

After a long and strong track record, in which the company has achieved a leadership position in its sector, Sehovac said the IPO was a “natural next step on our growth journey – increasing our profile, strengthening our institutionalization drive and positioning us for future expansion.”  

Sehovac calls 2022 a “historic year” for their business, not least for the successful debut of RCG on the Saudi Exchange, but for reporting significant growth in both sales volumes and revenues for the full-year 2022.

“The company’s strong sales, coupled with an unwavering focus on operational excellence and efficiency, have not only resulted in impressive profitability but also ensured sustainable long-term growth,” said the CEO.  

RCG is among the 18 companies or funds that offered parts of their shares through IPOs during last year as the Saudi Stock Exchange continues to drive market growth in the region.  

At the end of 2022, Tadawul had a total of 223 listed companies, with the total offered value reaching SR37.51 billion as 2.96 billion shares/units were offered for all IPOs.  

Sehovac said the Saudi capital market is the region’s largest, most liquid and most attractive market. 
“Backed by the ambitions of Saudi Vision 2030, the underlying evolution of the Kingdom is, and will always be reflected in its financial markets,” he said, adding that they are proud to be active participants in it. 

The Riyadh-based firm recorded revenue growth of 40.3 percent to sR6.9 billion in 2022, while its sales volumes increased by 37.1 percent to 190 kilo tons. (Supplied)

Growth prospects   

RCG, which serves customers in Saudi Arabia, the Gulf Cooperation Council and international markets, is bullish about the growth prospects of the cables industry.  

“All global trends and indicators confirm that the power cables market is expected to grow globally based on the ambitious development plans and major demand drivers, such as energy transition and digital transformation,” said RCG CEO.  

On a local level, he said the power cables market in the Kingdom is expected to grow at a compound annual growth rate of 8.3 percent between 2022 and 2027 to reach SR16.8 to SR18.7 billion, driven by giga/mega projects as well as industrial and housing development.  

“RCG, being the largest player in the region, is ideally positioned to benefit from this growth,” he affirmed. 

Expansion strategy 

The company owns and operates 15 cable and related materials manufacturing and testing facilities, extending over 1.5 million sq. m in Riyadh, Sharjah and Baghdad. Its manufacturing infrastructure is integrated across the value chain including six factories to manufacture raw materials used in the cables industry to support its own nine cables factories. 

“This makes us self-reliant while also improving our manufacturing efficiency by being able to control the cost and quality of our manufacturing materials,” Sehovac said.

Asked about its expansion plan, he replied the company will expand its footprint in due course, and “we’ll make announcements to the market at the appropriate time.” 

RCG has a vast regional distribution network and a production capacity of 264,000 tons per year. 

Sehovac said the company is continuously looking to increase its market share by focusing on increasing sales of its primary products in existing markets and expanding to neighboring markets.  

He clarified that the company doesn’t have any immediate plans to raise funding as “we are a well-funded business with a strong balance sheet and plenty of headroom to grow.”   

With regard to the supply chain — as the raw materials are mostly imported —how does the company ensure smooth supply amid the volatile pricing of metal and aluminum?   Sehovac insists that the company always strives to increase the percentage of local content in its manufacturing process. 

“In fact, RCG sources its needs of aluminum, lead, and polymers locally. The company buys its core manufacturing materials through long-term contracts,” he revealed, adding that they also use a well-engineered hedging mechanism to offset commodity price volatility risk and stability of profits. 

ESG goals 

Divulging about the company’s environmental, social and governance strategy, Sehovac said the company owns state-of-the-art recycling facilities for the reuse of recyclable metals, polymers and cable drums, contributing effectively to the sustainability processes.  

“ESG is at the heart of RCG’s strategy. We are committed to reducing waste and CO2 emissions,” he said, adding that they are amongst key suppliers of renewable energy projects, supporting the Kingdom’s plans for generating 58.7 gigawatts of renewable energy with locally manufactured products. 

The CEO called Vision 2030 as “a roadmap for its investment plans, and to be a key player in delivering the vision’s objectives.” 

“This is a fantastic opportunity for our business and one that we are fully capitalizing on,” he concluded.