Pakistan’s start up industry is collapsing
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Pakistan’s start;up industry is collapsing; Swvl to Airlift—it can’t afford it anymore

Odyssey News

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Pakistan’s start-up industry is collapsing. Swvl to Airlift—it can’t afford it anymore
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  • While high-profile casualties during Pakistan’s economic crisis may be an inevitability, Airlift’s shutdown is significant. It’s a sign of a larger problem.

New Delhi: Pakistan’s once burgeoning startup world was rocked last week when e-commerce fast delivery service Airlift — akin to India’s Dunzo and Blinkit — announced its closure. It cited the “devastating impact” of the global economic recession and market downturn on the startup’s ability to meet its capital requirements despite attempts at restructuring.

What was once a promising market that boomed due to the Covid pandemic and government reforms, with prospective entrepreneurs utilising the indoor downtime to explore the digital space, now threatens to go up in flames.

While high-profile casualties and dominoes falling off during Pakistan’s ongoing economic crisis can be considered an inevitability, Airlift’s shutdown is significant. It is due to its status in the eyes of the Pakistani media and the global startup space — it was the country’s ‘poster child’. In August last year, the instant last-mile delivery startup had raised $85 million dollars in its Series B funding round, attracting the cash of venture capitalists from the UK and the US — Harry Stebbings and Josh Buckley, respectively.

“The funding round is the largest ever round for a Pakistani startup and is equivalent to the entire amount raised by local startups so far this year and the highest in the MENA [Middle East and North Africa] region,” Deal Street Asia had reported at the time.

Airlift’s funding in the third quarter of 2021 was one among other 82 startups’ publicly announced funding across stages, from the seed to Series B. According to the documentation work done by local consultancy firm Invest2Innovate and cited by Al Jazeera, these startups raised a ‘record-breaking’ 350 million dollars overall last year.

By contrast, this year, so far, has seen funding records of just 37 startups, 21 of which were during the first quarter with just two — merchant platform Bazaar and versatile e-commerce app Bykea — at the Series B stage.

And that’s not all. Prior to the three-year-old Airlift’s departure, other well-known start-ups like Egyptian bus sharing service Swvl and Turkish second-hand automobile marketplace VavaCars announced a temporary suspension and a permanent exit, respectively, from the Pakistani market in June.

Insiders’ view

But insiders like Golootlo co-founder Ali Meruani say that this is part and parcel of a risky industry where 90 per cent of participants don’t make it in the long run.

“Pushing boundaries means that failure is part of the equation, so we should be comfortable with it. We should celebrate them and celebrate failures. Running a start-up means you must be resilient, so this is just another bump in the road,” Meruani told Dawn, adding that the shock over Airlift’s downfall is more to do with the ‘small’ size of Pakistan’s start-up ecosystem.

The founder of Pakistani venture capital firm i2i ventures, Kalsoom Lakhani, concurs with Meruani about the industry’s size. “The challenge with Pakistan is that we’re not a ‘too big to fail’ ecosystem. We can’t afford anybody failing at this point, as it’s bad for perceptions about our environment. As we’re such a new economy, every single company becomes an ambassador — especially Airlift,” Lakhani told Rest of World, an online publication that covers tech stories in non-Western nations.

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However, the reserved optimism expressed by VCs and start-up founders must be taken into account, with systemic issues affecting Pakistan’s start-up space as outlined by Al Jazeera.

Alongside a ‘drastic’ gender inequality, other roadblocks that more directly appear to impact start-ups in the country include a lack of diversity among local angel investors, unclear taxation laws for foreign investors, and a workforce that is not yet trained for senior positions in this new wave of digital firms, the Al Jazeera report added.

“It is imperative that the government and all other key stakeholders understand that we are at a crossroads where addressing the needs of these start-ups and their aliates and creating a favourable environment for them will determine the course of the entire digital economy over the years to come,” Invest2Innovate’s detailed 2021 report warned, with the 2022 downturn acting as a stark reminder for Pakistan.

While high-profile casualties and dominoes falling off during Pakistan’s ongoing economic crisis can be considered an inevitability, Airlift’s shutdown is significant. It is due to its status in the eyes of the Pakistani media and the global startup space — it was the country’s ‘poster child’. In August last year, the instant last-mile delivery startup had raised $85 million dollars in its Series B funding round, attracting the cash of venture capitalists from the UK and the US — Harry Stebbings and Josh Buckley, respectively.

“The funding round is the largest ever round for a Pakistani startup and is equivalent to the entire amount raised by local startups so far this year and the highest in the MENA [Middle East and North Africa] region,” Deal Street Asia had reported at the time.

Airlift’s funding in the third quarter of 2021 was one among other 82 startups’ publicly announced funding across stages, from the seed to Series B. According to the documentation work done by local consultancy firm Invest2Innovate and cited by Al Jazeera, these startups raised a ‘record-breaking’ 350 million dollars overall last year.

By contrast, this year, so far, has seen funding records of just 37 startups, 21 of which were during the first quarter with just two — merchant platform Bazaar and versatile e-commerce app Bykea — at the Series B stage.

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And that’s not all. Prior to the three-year-old Airlift’s departure, other well-known start-ups like Egyptian bus sharing service Swvl and Turkish second-hand automobile marketplace VavaCars announced a temporary suspension and a permanent exit, respectively, from the Pakistani market in June.

Insiders’ view

But insiders like Golootlo co-founder Ali Meruani say that this is part and parcel of a risky industry where 90 per cent of participants don’t make it in the long run.

“Pushing boundaries means that failure is part of the equation, so we should be comfortable with it. We should celebrate them and celebrate failures. Running a start-up means you must be resilient, so this is just another bump in the road,” Meruani told Dawn, adding that the shock over Airlift’s downfall is more to do with the ‘small’ size of Pakistan’s start-up ecosystem.

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FIA inquiry: MNA withdraws case against ‘business partner’

Madison Franz

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FIA inquiry: MNA withdraws case against ‘business partner’
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KARACHI: Pakistan Peoples Party MNA Dr. Mehreen Bhutto has finally struck a compromise with a businessman after a falling out during which the MNA registered a fraud case against the latter for fraudulently declaring her partner in a business venture. The MNA is already facing FIA inquiry into assets beyond means.

According to the official documents (available with The News) PPP parliamentarian Dr. Mehreen Bhutto along with her three brothers is facing an inquiry from the Federal Investigation Agency (FIA) about accumulating wealth beyond known sources of income that included partnering with a travel agency. Bhutto had lodged a fraud case against her business partner, his spouse and other family members.

MNA Mehreen Bhutto lodged an FIR at Clifton Police Station, Karachi, on August 4, 2022, against her business partner Asadullah Shaikh, his wife and other directors of M/s AAA Travels for enlisting her as one of the directors of the business without her knowledge and consent and blamed them for misusing her CNIC, passport and other documents. Bhutto in her FIR quoted a news story published in ‘The News’ on August 4, 2022, to claim that she came to know through a news report that she was a director at AAA Travels and claimed it was all done without her explicit knowledge. She also claimed that she neither signed any document nor received any benefits from the company.

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The case was sent to the Court of Civil Judge and Judicial Magistrate-V, Karachi South, Mazhar Ali for trial, where after some hearings the judge accepted the compromise application filed by MNA Bhutto by informing the court that a compromise has taken place with her ‘rival’ group. During the pendency of the trial, the accused Asadullah Shaikh told the court that the case against him and his family was fake and was registered using her political influence. He told the court that MNA Bhutto was a willful partner who regularly received monetary benefits but disassociated herself from the business when the FIA started an inquiry against her. The court approved the settlement on Tuesday, November 15, 2022.

ALSO READ  Wood, timber import: certain conditions suspended

The FIA initiated the inquiry in 2019 against the PPP MNA when in 2014, a complaint was filed against MNA Mehreen Bhutto and his three brothers alleging mega corruption. During that period, despite many notices served under Section 160 of the Criminal Procedure Code (Cr.PC) MNA Bhutto did not appear before FIA, Sindh, Zone-II. Following the application of out-of-court settlement in October, MNA Bhutto and her three brothers appeared before the enquiry officer FIA-Sindh Zone-II and recorded their statements.

This reporter approached MNA Bhutto and her business partner Asad Shaikh for their versions, called at their cell numbers, and then sent them detailed text messages at their WhatsApp number but till the filling of this news story, both avoided responding.

 

 

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IMC raises Toyota vehicle prices

Madison Franz

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IMC raises Toyota vehicle prices
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KARACHI: Despite the low cost of import on account of the rupee’s recovery against the dollar in the last one and a half months, Indus Motor Company (IMC) has increased prices by Rs190,000-700,000.

In the last week of September, one dollar was trading at Rs240 but it plunged to Rs214-215 after Ishaq Dar was made finance minister.

IMC, in its letter to the authorized dealers, said the vendor cost of production has significantly soared due to economic uncertainties and inflation in the raw material cost. In addition, uncertainty in currency fluctuation, and increase in utilities and other overheads have also impacted the cost of manufacturing.

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The new price of Toyota Corolla 1.6 CVT and 1.6 CVT U/S is Rs4.979 million and Rs4.789mn, up by Rs190,000 and Rs200,000, respectively.

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Hilux 4×2 standard, U/S, Deckless, 1.2TR, 4×4, and III Standard now carry a price of Rs5.959m, Rs5.989m, Rs5.529m, Rs5.739m, Rs7.879m and Rs9.069m, showing a jump of Rs400,000-620,000.

Published in theodysseynews, November 19th, 2022

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Wood, timber import: certain conditions suspended

Madison Franz

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Wood, timber import: certain conditions suspended
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ISLAMABAD: The government has suspended import conditions for certain categories of timber and wood till March 31, 2023 on the request of All Pakistan Timber Traders Association (APTTA), sources close to Secretary Commerce told Business Recorder.

Sharing the details, sources said, the conditions for import of plant and plants materials including timber/ wood had been incorporated in Part-IV of Appendix-B, Import Policy Order (IPO) 2022 on the recommendations of Department of Plant Protection (DPP) of Ministry of National Food Security & Research.

The conditions were (i) Import Permit (IP) issued by DPP, (ii) SPS certificate issued by National Plant Protection Organization (NPPO) of the exporting country, and (iii) Plant Protection Release Order (PPRO) issued by DPP.

According to Commerce Ministry, Karachi Timber Merchant Group had approached Commerce Ministry requesting to extend the date of implementation of conditions of import permit and plant protection release order for the import of timber and wood falling under PCT Codes 44.01 to 44.09, as provided under Sr. Nos. 385 to 44O of Part-IV of Appendix-B, IPO 2022.

The sources explained that the conditions could not be met for the already arrived shipments because those consignments were supplied against contracts entered into months ago. Consequently, the Federal Government, in light of the decision of ECC of the Cabinet and its subsequent ratification by the Cabinet, suspended operation of Import Policy provisions contained in Sr. No. 386 to 44O of Part-IV, of Appendix-B, Import Policy Order 2022 from the date of issuance of IPO, 2022 to August31, 2022.

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Timber, wood: Import conditions under IPO suspended

All Pakistan Timber Traders Association had again approached the Ministry with the request to suspend the import conditions and restrictions on wood and timber in tariff classes 44.01to 44.09 for all the “Bills of Lading issued until June 30, 2023”. The APTTA argued that any decision made in haste would destroy the entire wood business sector (H.S Code 44.01 to 44.09) causing damage to a large number of industries that rely on wood as a basic raw material including the construction industry which was connected to 45 to 50 other industries.

Ministry of Commerce maintained that in order to facilitate the import of wood/ timber, it is requesting the government to direct the DPP to review the conditions for import of wood and timber and bring them in conformity with the international best practices so that the import of wood and timber was not subjected to unnecessary and cumbersome procedures.

Ministry has proposed that the date of implementation of IPO 2022 regarding import of timber and wood falling under HS Codes 4401 to 4409 (Sr. Nos. 386 to 440 of Part-IV, Appendix-B, IPO 2022) may be suspended till June 30, 2023, i.e., for the Bills of Lading issued till June 30, 2023 or formulation of the procedure by the DPP whichever is earlier.

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Ministry of National Food Security and Research (MNFS&R) supported the proposal; however, with the condition that no further exemption would be supported after June 30, 2023 and that the import condition in Import Policy Order and Plant Quarantine Act, 1976 and Plant Quarantine Rules, 2019 would be enforced in letter and spirit after 30 June, 2023. It further required that the importers of timber should be advised to plan future imports, accordingly.

The sources said the Economic Coordination Committee (ECC) of the Cabinet recently approved the proposal of Commerce Ministry and decided that the date of implementation of IPO 2022 regarding import of timber and wood falling under HS Codes 4401 to 4409 (Sr. Nos. 386 to 440 of Part-IV, Appendix-B, IPO 2022) shall be suspended till March 31, 2023.

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