Sunday, June 19, 2016

Chicken More Affordable Than Daal in Pakistan?

Pakistan's finance minister Ishaq Dar has suggested to his countrymen to eat chicken instead of daal (pulses or legumes). Does the minister sound like Queen Marie-Antoinette (wife of France's King Louis XVI) who reportedly said to hungry rioters during the French Revolution:  “Qu'ils mangent de la brioche”—“Let them eat cake”? Let's look into it.

It is indeed true that some varieties of daal are priced higher than chicken. For example, maash is selling at Rs. 260 per kilo, higher than chicken meat at Rs. 200 per kilo. But other daals such as mung, masur and chana are cheaper than chicken.

The reason for higher daal prices and relatively lower chicken prices can be found in the fact that Pakistan's livestock industry, particularly poultry farming, has seen significant growth that the nation's pulse crop harvests have not.

Poultry Farm in Pakistan

Pakistan's poultry industry achieved 127% growth in the total number of birds produced, 126% growth in the total meat production and 71%growth in terms of total eggs produced between 2000 and 2010, according to government data. As a result, the cheapest sources of animal protein in Pakistan are the eggs and meat from the poultry sector.  As of 2013, the per capita availability of poultry meat in Pakistan is 5 kg. In addition, Pakistanis consume 51 eggs per year per capita.

Major Pulse Producing Nations in 2011

Poultry share of meat consumption in Pakistan has steadily increased over the years.  In 1971, the market share of beef was 61%, mutton was 37%, and poultry meat a mere 2-2.5%. In 2010 the market share of poultry meat had increased to 25%, while beef and mutton declined to 55% and 20% respectively.  This increase in the overall size of the poultry sector has decreased the gap between the supply and demand of animal proteins and helped stabilize beef and mutton prices, making meat relatively more affordable to more people.

Production of daal, another important source of protein in Pakistan, has not kept pace with demand. Domestic production is not enough to provide 6-7 kilos of daal per person consumed in the country. Pakistan is forced to resort to imports to meet demand. Pakistan spent $139 million to import 628,000 tons of pulses in fiscal year 2010-2011. Pulse imports jumped to $224 million in July 2014 to January 2015 period, according to a report.

Overall, livestock contribution to agriculture in Pakistan has now risen to 58.55 percent, with the rest coming from crops, fisheries and forestry, according to Economic Survey of Pakistan 2015-16. The agriculture sector accounts for 19.82 percent of GDP and 42.3 percent of employment with strong backward and forward linkages. Dairy farming has grown in Pakistan by leaps and bounds, making the country the third largest milk producer in the world.

Services sector now accounts for 59.16% of Pakistan's GDP,  the largest sector of the economy, followed by industrial sector that contributes 21.02%. Manufacturing is the most important sub-sector of the industrial sector containing 64.71 percent share in the overall industrial sector.

There has been significant progress in increasing animal protein supply via growth in Pakistan's livestock sector over the last few decades. Nations' policymakers now need to focus on increasing plant protein sources to close the gap between protein supply and demand in an affordable manner.


Related Links:

Thursday, June 16, 2016

Pakistan Power Regulator Publishes New Feed-in Tariffs for Solar

Pakistan’s National Electric Power Regulatory Authority (NEPRA) has published for public comments its revised feed-in tariffs (FiTs) for solar energy projects of up to 100 MW, according to a report in PV-Tech journal.
Source: PV-Tech
The proposed FiTs are slightly lower in Balochistan, Sindh and Southern Punjab region than in Khyber Pakhtun Khwa (KPK) and the rest of Punjab. The proposal for years 1 through 13 includes Rs. 11.128 (US$0.105) per unit for southern region and Rs. 11.783 (US$0.111) per unit for northern region. The rates drop to Rs. 5.588 (US$0.053) and Rs. 5.917 (US$0.056) per unit for northern and southern regions respectively for years 14-25.  The average for the next 25 years works out to Rs. 9.924 (US$0.094) and Rs. 10.507 (US$0.099) per unit for the two regions.

Pakistan Solar Map  Multi-year mean (2000-2012) of daily Global Horizontal Irradiance (GHI) for Pakistan in kWh/m2 [Note: preliminary, unvalidated results] Source: World Bank


Last year, NEPRA, the nation's power regulator,  approved a regulatory framework for solar and wind energy for both commercial and residential installations. The framework includes feed-in tariffs for commercial power producers and net metering for residential applications of up to 1 MW.



Under the new Net Metering Law, NEPRA, the Pakistani power regulator, will grant power generation licenses to solar and wind system owners. The owners will need to register the critical equipment used, particularly the make and model of inverter and generator used. Among other technical considerations, the generator must also install a manual disconnect device to take the system off the network if necessary, according to details published by PV Tech publication.

Net metering is a billing mechanism that pays solar energy system owners for the electricity they add to the grid. It allows a residential customers with rooftop solar panels to generate more electricity than the home uses during daylight hours and sell it to the power supply company. It will require a bi-directional meter (or two separate meters) for implementation.

Pakistan has already introduced feed-in tariffs (FiTs) for larger renewable power systems to supply electricity to the national grid on a commercial scale.  It paved the way for a 1000 MW Quaid-e-Azam solar park being built in Bahawalpur.

Cost of solar power is rapidly declining.  However, Pakistan's NEPRA's attempt to cut tariff down from 14.15 cents to 9.25 cents per unit is being resisted strongly by Zonergy Company Limited, a Chinese company working on Quaid-e-Azam solar park power project, according to a story in Express Tribune newspaper.  This is in sharp contrast to the record low solar tariff of Indian Rs 4.63 per unit (Pak Rs. 7.19)  for 500 MW solar project by US-based Sun-Edison, according to Indian media reports.

Pakistan's renewable power policy and regulatory frameworks have drawn praise from international law firm Eversheds which has described the country as “one of the most exciting renewables markets globally, with an abundance of potential”. Alternative Energy Development Board (AEDB) of Pakistan's CEO, Amjad Ali Awan has said that "Pakistan’s renewable market is relatively new but it provides an attractive investment opportunity with compelling structures which make it bankable as well as marketable."

Net metering law is necessary but not sufficient to promote widespread use of renewable energy. It will take serious coordinated efforts of Pakistan power regulator NEPRA, the country's nascent solar industry and various utilities like K-Electric to start implementation. Meanwhile, consumers could install a stand-alone rooftop solar system that can be connected to the grid in future. They just need to make sure to select high-quality equipment, particularly inverter and switch, for this purpose which will most likely be acceptable to utilities.

Related Links:

Haq's Musings

Pakistan Deploys IT Apps to Improve Service in Public Sector

Solar Power For Pakistan Homes, Schools, Factories

Shakti Solar Model For Pakistan

Pakistan's New FIT Policy For Alternative Energy

Media & Telecom Revolution in Pakistan

Pakistan Building 1000 MW Wind Farms

Pakistan Launches Wind Farm Projects

Renewable Energy to Solve Pakistan's Electricity Crisis

Electrification Rates By Country

Wind Turbine Manufacturing in Pakistan

Pakistan Pursues Hydroelectric Power Projects

Solar Energy for Sunny Pakistan

Wind Power Tariffs in Pakistan



Tuesday, June 14, 2016

MSCI Adds Pakistan Shares to Emerging Markets Index

MSCI Pakistan Index will be reclassified to Emerging Markets status, coinciding with the May 2017 Semi-Annual Index Review, according to an MSCI press release on June 14, 2016.

Emerging Market Upgrade:

Pakistan's Karachi Stock Exchange KSE100 Index has rallied 14% in 2016, making it Asia's best performing market so far this year in anticipation of the MSCI announcement.

Source: Bloomberg


The upgrade could attract additional $475 million of inflows by the middle of next year as investors rush to buy Pakistani shares, according to analysts quoted by Bloomberg News.



Pakistan was classified as Emerging Market in 1994, a status it retained during the Musharraf years.  It was downgraded to frontier status in December 2008, four months after the former president was forced out by PPP and PMLN politicians.

Loss of investor confidence after President Musharraf's departure triggered a major bear market that wiped out nearly $37 billion of market capitalization at the Karachi Stock Exchange. It led to the imposition of a floor on share prices that caused near total paralysis of market activity for more than three months, according to Bloomberg News.

Pakistan is seeing soaring foreign direct investment (FDI) with improving security and the start of several major energy and infrastructure projects as part of China-Pakistan Economic Corridor (CPEC), according to the UK's Financial Times business newspaper.

A New High in FDI:

The year 2015 was a bumper year for foreign investment  pouring into Pakistan, says the Financial Times. The country saw 39 greenfield investments adding up to an estimated $18.9 billion last year, according to fDi Markets, an FT data service. This is a big jump from 28 projects for $7.6 billion started in 2014, and marks a new high for greenfield capital investment into the country since fDi began collecting data in 2003.

Pakistan FDI Source: FT.com


The number of projects in 2015 is the largest since Pakistan attracted 57 greenfield projects back in 2005 on President Musharraf's watch.  China is now the top source country for investment into the country, surpassing the second-ranked United Arab Emirates, primarily due to its investments in power.

Top 10 Destinations of Chinese FDI 2012-14. Source: UNESCAP


Major CPEC Projects: 

China's Shanghai Electric, a power generation and electrical equipment manufacturing company, announced plans last year to establish a 1,320 megawatt coal-based power project in Thar desert using domestic coal, scheduled to launch in 2017 or 2018. Traditional energy and power projects made up two-thirds of last year’s total greenfield investment into Pakistan at $12.9 billion with alternative energy bringing in a further $1.8 billion.

CPEC Projects

Among the more notable projects, UAE-based Metal Investment Holding Corporation announced plans to partner with Power China E & M International to invest $5 billion to build three coal-fired plants at Karachi’s Port Qasim. In addition, the transportation sector is also showing promise, with 12 projects totaling $3 billion being announced or initiated last year.

Special Economic Zones:

Beyond the initial phase of power and road projects, there are plans to establish special economic zones in the Corridor where Chinese companies will locate factories. Extensive manufacturing collaboration between the two neighbors will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes.

The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped a succession of countries like Indonesia, Japan, Hong Kong,  Malaysia, South Korea, Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced, high-end exports.  As a country's labour gets too expensive to be used to produce low-value products, some poorer country takes over and starts the climb to prosperity.

Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.

Key Challenges:

While the commitment is there on both sides to make the corridor a reality, there are many challenges that need to be overcome. The key ones are  maintaining security and political stability, ensuring transparency, good governance and quality of execution. These challenges are not unsurmountable but overcoming them does require serious effort on the part of both sides but particularly on the Pakistani side. Let's hope Pakistani leaders are up to these challenges.

Summary: 

Pak-China economic corridor is a very ambitious effort by the two countries that will lead to greater investment and rapid industrialization of Pakistan. Successful implementation of it will be a game-changer for the people of Pakistan in terms of new economic opportunities leading to higher incomes and significant improvements in the living standards for ordinary Pakistanis. It will be in the best interest of all of them to set their differences aside and work for its successful implementation.

Related Links:

Haq's Musings

Chinese to Set New FDI Record For Pakistan

Pak Army Completes Half of CPEC Western Route

Chabahar and Gwadar Ports

Pakistan Launches $8.2 Billion Railway Upgrade

Pak-China Defense Industry Collaboration Irks West

President Musharraf Accelerated Human and Financial Capital Growth in Pakistan

China's Investment and Trade in South Asia

China Signs Power Plant Deals with Pakistan

Soaring Imports from China Worry India

China's Checkbook Diplomacy



Saturday, June 11, 2016

Pakistan's $8.2 Billion Rail Upgrade to Link with China, Russia, Central Asia & Europe

Pakistan government has approved an $ 8.2 billion project to upgrade the 1,872 km Karachi - Peshawar rail track, bridges, tunnels, and culverts, according to International Railway Journal.

The new track will support increased axle load of up to 25 tons, up from 22.8 tons which is now the norm in South Asian countries. The higher axle load capacity will allow heavier freight trains carrying more freight per train for greater trade overland.

China will provide 85% of the financing for the project. It will be done in two phases, with the first due for completion in December 2017 and the second in 2021.

It will be part of an international rail link that will connect Pakistan with China,  Russia, Central Asia and Europe. It will extend south from the city of Kashgar in the Xinjiang Uygur autonomous region in Western China to Pakistan's deep-sea Gwadar Port on the Arabian Sea, according to Zhang Chunlin, director of Xinjiang's regional development and reform commission.

Source: China Daily
A study for the plans for this international rail link was first presented in 2014 at a two-day International Seminar on the Silk Road Economic Belt in Urumqi, Xinjiang's capital, according to China Daily.

"The 1,800-kilometer China-Pakistan railway is planned to also pass through Pakistan's capital of Islamabad and Karachi," Zhang Chunlin said. "Although the cost of constructing the railway is expected to be high due to the hostile environment and complicated geographic conditions, the study of the (international rail link) project has already started," Zhang said. "China and Pakistan will co-fund the railway construction. Building oil and gas pipelines between Gwadar Port and China is also on the agenda," Zhang added.

The Pak-China link announcement was part of the discussion on China's broader effort to revive the historic Silk Route by building three main corridors through southern, central and northern Xinjiang to connect China with Russia, Europe and Pakistan. The Silk Road Economic Belt International seminar which concluded on Friday in Urumqi, Xinjinag was jointly sponsored by the State Council Information Office, China International Publishing Group (CIPG), China Academy of Social Sciences (CASS) and Xinjiang Academy of Social Sciences.

In a 2013 report, China's State-owned Xinhua News Agency articulated China's motivation to expand land trade in addition to building its navy to protect its sea trade. Here's what it said:

“As a global economic power, China has a tremendous number of economic sea lanes to protect. China is justified to develop its military capabilities to safeguard its sovereignty and protect its vast interests around the world."

The Xinhua report has for the first time shed light on China's growing concerns with US pivot to Asia which could threaten China's international trade and its economic lifeline of energy and other natural resources it needs to sustain and grow its economy. This concern has been further reinforced by the following:

1. Frequent US statements to "check" China's rise.  For example, former US Defense Secretary Leon Panetta said in a 2011 address to the Naval Postgraduate School in California: "We try everything we can to cooperate with these rising powers and to work with them, but to make sure at the same time that they do not threaten stability in the world, to be able to project our power, to be able to say to the world that we continue to be a force to be reckoned with." He added that "we continue to confront rising powers in the world - China, India, Brazil, Russia, countries that we need to cooperate with. We need to hopefully work with. But in the end, we also need to make sure do not threaten the stability of the world."

Source: The Guardian


2. Chinese strategists see a long chain of islands from Japan in the north, all the way down to Australia, all United States allies, all potential controlling chokepoints that could  block Chinese sea lanes and cripple its economy, business and industry.



Karakoram Highway-World's Highest Paved International Road at 15000 ft.


Chinese Premier's emphasis on "connectivity and maritime sectors" and "China-Pakistan economic corridor project" is mainly driven by their paranoia about the US intentions to "check China's rise" It is intended to establish greater maritime presence at Gwadar, located close to the strategic Strait of Hormuz, and  to build land routes (motorways, rail links, pipelines)  from the Persian Gulf through Pakistan to Western China. This is China's insurance to continue trade with West Asia and the Middle East in case of hostilities with the United States and its allies in Asia.

Pakistan's Gawadar Port- located 400 Km from the Strait of Hormuz


As to the benefits for Pakistanis, expanded trade and the Chinese investment in "connectivity and maritime sectors" and "China-Pakistan economic corridor project" will help build infrastructure, stimulate Pakistan's economy and create millions of badly needed jobs.

Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the  Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".

Related Links:

Haq's Musings 

Comparison of Chabahar and Gwadar

How Strategic Are Pak-China Ties?

Gwadar as Hong Kong West

China-Pakistan Industrial Corridor

US-Pakistan Ties and New Silk Route

Can Pakistan Say No to US Aid?

Post Cold War Shifting Alliances

Sunday, June 5, 2016

Pakistan Economy & Budget; NIA Pathankot Report; Hillary v Trump

How’s Pakistani economy doing? Is it gaining strength? How are the major economic indicators looking? What are Nawaz Sharif government’s economic priorities? How has it allocated spending in budget 2016-17 presented to National Assembly by Finance Minister Ishaq Dar? Why does Pakistan rely almost entirely on indirect taxation to raise revenue? Why is there such disproportionate burden for revenue placed on the poor and the middle-income Pakistanis? Why is the taxation system in Pakistan so regressive? What needs to be done to broaden the tax net to increase revenue and make the taxation system more fair. What should the provincial governments do? Should they impose at least a modest agriculture income tax and various service taxes to raise revenue?


How did the Indian National Investigation Agency conclude that Pakistan and its agencies had no role in Pathankot incident in India? Why are they now backtracking from this conclusion? What evidence of India-Pakistan border breach do they have to implicate Pakistani nationals in the incident? Or is it just Indian media hype, part of the Indian government propaganda by some elements to unfairly malign Pakistan?

What are Donald Trump’s and Hillary Clinton's strategies for the general elections in November 2016? Can Trump win by attacking minorities and women? Why the did Trump so personally and viciously attack US Federal Judge Gonzalo Curiel and New Mexico Governor Susana Martinez? Will Hillary’s strategy of questioning Trump’s temperament to be US president work? Will she use fear of mercurial Trump’s potential actions as president with his finger on the nuclear button to scare off voters from the Republican candidate?

Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Ali H. Cemendtaur and Riaz Haq (www.riazhaq.com)


https://youtu.be/nbNWnhI_oVk





http://dai.ly/video/x4elbrk




Pakistan Economy & Budget; NIA Pathankot Report... by ViewpointFromOverseas

https://vimeo.com/169428604


Pakistan Economy & Budget; NIA Pathankot Report; Hillary v Trump from Ikolachi on Vimeo.


Related Links:


Haq's Musings

Pakistan FDI Soaring as CPEC Gets Underway

Pathankot Attack in India

Trump Phenomenon

Talk4Pak Think Tank

VPOS Youtube Channel

VPOS Vimeo Channel