Transcript: Imran Khan rises again in Pakistan

This is an audio transcript of the FT News Briefing podcast episode: ‘Imran Khan rises again in Pakistan’

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Saffeya Ahmed
Good morning from the Financial Times. Today is Monday, February 12th, and this is your FT News Briefing. Job security is top of mind for a lot of people in tech these days. And after last week’s election, Pakistan’s military might regret turning on Imran Khan.

Ben Parkin
For his party to nonetheless pull off this quite extraordinary result is a real potential longer-term game changer in terms of where the power in Pakistani politics lies.

Saffeya Ahmed
Plus, the fast-fashion giant Shein is in a delicate dance with Beijing ahead of its IPO. I’m Saffeya Ahmed, in for Marc Filippino. And here’s the news you need to start your day.

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2024 is promising to be another big year for layoffs in tech. Since January, companies have axed 34,000 jobs. Giants like Microsoft, eBay and PayPal have each cut thousands of positions. Analysts say these layoffs are happening because a lot of companies are looking to pivot to new areas of growth, including artificial intelligence. Tech companies started off last year with a lot of layoffs too. And at that time, they were looking to scale back their workforces after a massive hiring spree that happened during the Covid pandemic.

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Elections late last week in Pakistan did not go according to plan and now the country is in turmoil. Candidates loyal to Imran Khan — that’s Pakistan’s former prime minister — won the most seats in parliament. The victory is a big blow for the country’s powerful military. Here to talk to me about it is the FT’s Ben Parkin. Hey, Ben.

Ben Parkin
Hi.

Saffeya Ahmed
So give me some context here. Just how unexpected were these results?

Ben Parkin
Well, going into the election, the view was that there were a couple of these long-running dynastic parties and that they would do quite well and form the next government one way or the other. The reason being, because their biggest rival was in jail, Imran Khan, who is the country’s most popular politician but had been on the receiving end of a really heavy-handed crackdown by the military and others. And so it really looked like the deck had been stacked against them.

Saffeya Ahmed
Yeah. So what’s the larger backdrop when it comes to politics inside Pakistan?

Ben Parkin
Pakistan’s military is extremely powerful and looms very large over not just defence, but politics, even economics, business. And it’s long been a pattern that they have tried to pick winners in elections. Khan, ironically, rose up in politics, thanks in large part to the military support. But this relationship between them soured when he was the prime minister, and he was eventually removed in a no-confidence vote in 2022 and really turned on the army and started publicly criticising them in a way that very few politicians in Pakistan dared to do. So for his party to nonetheless pull off this quite extraordinary result is a real potential, longer-term game changer in terms of, you know, where the power in Pakistani politics lies.

Saffeya Ahmed
So then what’s next when it comes to forming a government?

Ben Parkin
So now the game is on, in a sense, no one has won a majority. On the one hand, you have the parties like the PML-N, the Pakistan Muslim League-N, the People’s party, and they’ve quickly started coalition talks to try and form the next government. And if they cobble together two or three, they could manage. The PTI, Khan’s party on the other hand, they’re saying they don’t want to form a coalition. They’re saying that actually the result was rigged and they have evidence of it, and they would have won a majority if it wasn’t for a lot of dodgy stuff that happened on election night. Now, nothing’s been proven, but they’ve filed court cases. They claim to have evidence. And so the PTI say they are going to prove their majority and come back to power before too long.

Saffeya Ahmed
OK. So what about Imran Khan? Where does this leave him?

Ben Parkin
Well, for now, nothing changes for him. He’s still in jail. He wasn’t eligible to contest. But politically, you know, the PTI are now very powerful. And so they are now gonna mount a very aggressive bid to try and get him out of jail and form the next government with him, hopefully, they would think as the prime minister.

Saffeya Ahmed
Wow. So if that were to happen, that would be a major turnaround. But what does this mean for Pakistan since it’s so uncertain who will lead the country now?

Ben Parkin
At least Pakistan is in a pretty precarious position. The country is already facing a very serious economic crisis. Inflation is running at around 30 per cent. Foreign reserves are falling. It really needs solutions fast. And in particular, it has an IMF program that is ending very soon. And you know, most economists you speak to will tell you that it needs another one. So in order to do this, it needs a stable, strong government who can go to the IMF, who can negotiate, and who can then come back to Pakistan and implement various economic reforms that the IMF will no doubt demand. And the danger, if Pakistan isn’t able to get an IMF deal across the line, is that in a few month’s time, you could end up in a situation where Pakistan could potentially be at risk of defaulting.

Saffeya Ahmed
Ben Parkin covers south Asia for the FT. Thanks, Ben.

Ben Parkin
Thank you very much.

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Saffeya Ahmed
A failed project at EY has turned out to be really expensive. According to newly filed accounts. The Big Four firm has taken on more than $700mn in extra debt after it tried to spin off its consulting business. The plan, called Project Everest, would have split up EY’s consulting and audit businesses into two parts, allowing consultants to avoid conflicts of interest. But the project collapsed in April because of fighting within the firm. The company’s current CEO, who oversaw Project Everest, will step down by the end of June.

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Last year, the fast-fashion giant Shein filed paperwork to go public in the US. But this is not just a simple listing. The company, which was founded in China, wants Beijing’s blessing before its IPO. Here to talk about it is the FT’s China tech correspondent, Eleanor Alcott. Hi, Eleanor.

Eleanor Olcott
Hi.

Saffeya Ahmed
So can you tell me a little bit about Shein as a company?

Eleanor Olcott
Shein is the hot new kid on the block. It’s the company Gen Z’s and bankers alike are all talking about. It’s become the outfitter of choice for young women in the west, who constantly update their wardrobes with ultra-cheap Shein clothes and accessories that are designed to be worn once for social media and then discarded. The founder, Sky Xu, is famously private. He’s a software engineer from China who spotted a gap in the market for an ecommerce platform that ships goods directly from factories in China to shoppers in the west. And it was once valued at 100bn, but that came down to 60bn in the latest fundraising round last year. Right now it’s the talk of the town amongst bankers, because if it lists, it is projected to be the most valuable company to go public in the US since Uber in 2019. That is if it gets Beijing’s blessing.

Saffeya Ahmed
Yeah. What’s Beijing’s role here when it comes Shein going public?

Eleanor Olcott
Shein filed its paperwork in the US in November, but then it approached China’s powerful data watchdog, the CAC, and the securities regulator, the CSRC, to get their approval for this US listing. Under strict interpretation of the rules, Shein doesn’t actually need to go and get that formal blessing to go ahead and list because it doesn’t generate any revenue in China. Shein made a very explicit choice not to sell in the country in part to avoid getting wrapped up in these regulatory hurdles. But it’s erring on the side of caution and going to Beijing to get its approval.

Saffeya Ahmed
So if the Shein IPO does go through, how big of a deal would that be?

Eleanor Olcott
The Shein IPO will be the first major foreign listing of a China-founded company with a large operation in China in several years. There have been a number of smaller IPOs, especially towards the beginning of last year. But investors are hoping that this will open the floodgates for larger ones, including ByteDance, which owns the viral short video app TikTok and Ant Financial, with the massive caveat that those two companies are more complicated than Shein because they have a wealth of data on Chinese consumers, which we know is a sensitive point for Beijing. But any Shein IPO would help revive hopes for a domestic tech sector starved of capital following a pretty brutal regulatory crackdown and punishing zero-Covid restrictions. And that really would be welcomed by Beijing, which is trying to court foreign investors back to the country. Approving the Shein IPO would be a step in the right direction.

Saffeya Ahmed
Eleanor Olcott is the FT’s China tech correspondent.

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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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