Thursday, July 7, 2016

International Risk Consultancy Sees Continued Political Stability in Pakistan

Prime Minister Nawaz Sharif will survive Opposition's political challenges emanating from the Panama Leaks corruption allegations, according to an analysis by Eurasia Group, an international political risk consultancy that bills itself as "the world's largest political risk consultancy".

Eurasia Group's clients range from financial institutions to multinational corporations and government agencies. It has offices in New York City, Washington, D.C., London, Tokyo, São Paulo, and San Francisco.

Coming on the heels of the Eurasia Group report is the International Monetary Fund (IMF) upward revision of Pakistan's GDP forecast to 5% for the current fiscal year 2016-17.  Pakistan's ETF (PAK) is up about 15% this year, reflecting MSCI’s recent announcement that it will add the country to the MSCI Emerging Market index, according to Barron's, Wall Street Journal's sister publication.

In Eurasia Group's analysis of Pakistan, its South Asia specialist Christopher Cannell has written as follows:

 “Prime Minister Nawaz Sharif of the ruling Pakistan Muslim League – Nawaz party (PML-N) will remain in London until … the end of the month of Ramazan, recovering from heart surgery even as he faces fresh corruption allegations stemming from the Panama Papers. Yet while the mounting allegations will weaken Sharif’s political position at a time when he was not present to defend himself, he will continue to lead the PML-N and early elections are highly unlikely. …"

"The PML-N is likely to win the 2018 election with a reduced mandate … The contest to replace him will be complicated by corruption allegations against many main contenders within the PML-N, sparking worsening political instability after the election … Sharif’s … approval rating has experienced a non-negligible drop from 75% in October 2015 to 54% in June 2016, the only poll conducted after the leaks. However, Sharif’s political standing is grounded on the PML-N’s strength in parliament, the tacit support of the Army, and the $46 billion China Pakistan Economic Corridor – a set of infrastructure projects critical to Pakistan’s future economic performance—negotiated by Sharif and his PML-N. The PML-N remains the largest party in the lower house, and would not pass a motion of no-confidence in the PM, and it retains control of its Punjab heartland, the most populous area of Pakistan. …" 

Expectation of political stability is drawing increasing foreign investment to Pakistan. Two multinational giants acquired 2 Pakistani companies in just the last week alone as part of their growth strategy to establish presence in Pakistan.

Dutch dairy giant FrieslandCampina acquired 51 % of Karachi-based Engro Foods Limited, the second largest dairy producer in Pakistan. In the same week, Turkey's Arcelik announced purchase of Dawlance, Pakistan's market-leading home appliance maker.  Both cited opportunity for double-digit growth in the emerging market as the main reason for their acquisitions.

Smart money is starting to flow into Pakistan again as the world recognizes the country's new political stability and its tremendous economic potential as a growing emerging market.  Investors and businesses are looking to profit from expanding Pakistani economy backed by growing middle class consumption and rising Chinese investments in energy and infrastructure.

Related Links:

Haq's Musings

China's Haier Expands Manufacturing in Pakistan

Japanese Multinationals Rank Pakistan Among Top Growth Markets

Chinese FDI in Pakistan For CPEC Projects

Pakistan Included in MSCI Emerging Market Index

Pakistan's Middle Class Grows to 55% of Population

China-Pakistan Industrial Corridor (CPEC)

Pakistan Launches $8.2 Billion Rail Upgrade Project

Monday, July 4, 2016

Multinationals Buying Pakistani Companies to Profit From Growth

Two multinational giants acquired 2 Pakistani companies in just the last week alone as part of their growth strategy to establish presence in Pakistan.

Dutch dairy giant FrieslandCampina acquired 51 % of Karachi-based Engro Foods Limited, the second largest dairy producer in Pakistan. In the same week, Turkey's Arcelik announced purchase of Dawlance, Pakistan's market-leading home appliance maker.  Both cited opportunity for double-digit growth in the emerging market as the main reason for their acquisitions.

Pakistan's Emerging Market Upgrade:

Earlier in June, Morgan Stanley announced its decision that Pakistan's MSCI shares index will be upgraded from frontier to emerging market status. 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.

Pakistan Dairy Market:

Pakistan is the third largest milk-manufacturing country in the world, with 38 billion liters on an annual basis, according to Retail Detail of Europe.  FrieslandCampina wants to take advantage of the shift to packaged dairy products in Pakistan: not even 10 % of milk consumption comes from processed and packaged milk in Pakistan, but FrieslandCampina expects that to change in the near future.

“Thanks to this well-organized and very successful company, we have obtained a strong position in the Pakistani dairy market. A growing middle class is switching to processed and packaged milk in Pakistan and Engro Foods provides a platform to build on. This acquisition will contribute to the value proposition we want to give our member dairy manufacturers. We will also help develop the agricultural industry in Pakistan with our extensive knowledge on the dairy manufacturing process and thanks to our Dairy Development Programme", CEO Roelof Joosten said.

To tap into the Pakistani market, FrieslandCampina is buying 51% of Engro Foods at an estimated price of $448 million, a securities filing said on Monday. Topline Securities said Engro Corporation will generate cash of around Rs. 47 billion, part of which will most likely be invested in energy-related projects with a higher rate of return, according to a report in  Pakistan's Express Tribune newspaper.

Home Appliance Demand in Pakistan:

Pakistan's $3 billion home appliance market is experiencing double digit annual growth. It has attracted the attention of China's Haier, a multinational giant that recently acquired American General Electric's home appliance business.

Haier has 8 industrial complexes, two of which are foreign--one in the United States, and one in Pakistan,  according to  Xiaofei Li, the author of "China's Outward Foreign Investment: A Political Perspective". In these Special Economic Zones, Haier does localization to suit the needs of the consumers.  For Pakistani market, Haier especially designed a washer that can hold 15 long gowns at one time. There are many more such Special Economic Zones envisaged as part of the CPEC (China-Pakistan Economic Corridor).  It will be essentially an industrial corridor spanning almost the entire length of the country from the Arabia sea coast to the Karakorams where it enters China via the Karakoram Highway (KKH), the word's highest paved road.

Pakistan's privately-held Dawlance is also a major player in Pakistan's home appliance market. It is Pakistan's leading refrigerator and microwave brand, No. 2 air conditioners and No. 3 in the laundry category. In  2015, it reported $221 million in revenue and $45 million in EBITDA (earnings before interest, taxes, depreciation and amortization), according to Nikkei Asian Review.


“Pakistan is the sixth most populous country in the world with a population of 200 million people. In particular its young population and increasingly growing economy make it an enticing prospect as a market in the region. With the acquisition of Dawlance in Pakistan, Arçelik will employ a total workforce of 30,000 worldwide and will have a global production base of 18 manufacturing facilities including Turkey, Romania, Russia, China, South Africa and Thailand. Our acquisition is also a powerful example of south-south cooperation, representing a technology and know-how transfer between developing countries,” said Fatih Ebiçlioğlu, the head of the Consumer Durables Group of Koç Holding that controls Arcelik, according to Turkey's Hurriyet Daily News.

Summary:

Smart money is starting to flow into Pakistan again as the world recognizes the country's tremendous economic potential as a growing emerging market.  Investors and businesses are looking to profit from expanding Pakistani economy backed by growing middle class consumption and rising Chinese investments in energy and infrastructure.

Related Links:

Haq's Musings

China's Haier Expands Manufacturing in Pakistan

Japanese Multinationals Rank Pakistan Among Top Growth Markets

Chinese FDI in Pakistan For CPEC Projects

Pakistan Included in MSCI Emerging Market Index

Pakistan's Middle Class Grows to 55% of Population

China-Pakistan Industrial Corridor (CPEC)

Pakistan Launches $8.2 Billion Rail Upgrade Project

Sunday, July 3, 2016

Terror in Bangladesh & Turkey; India’s Curry & Dal Crises; Pakistani Mangoes in America

Who terrorized Dhaka and Istanbul? Why were these cities targeted by terrorists? Is terror spreading farther and wider after recent foreign military interventions to check ISIS in Syria? Have mistakes by Muslim nations' governments contributed to the growing wave of terror? Can military force alone end it? If not, what else needs to be done? What kind of comprehensive strategy is needed?

Why is India suffering from curry and dal crises? Why are prices of dal, tomatoes. potatoes and other essential foods rising rapidly in India? What is Modi government doing to increase supply and ease rising food inflation in the country? What are its chances of success in short and long term?

Why are Pakistani mangoes becoming more easily and widely available in America? Are Pakistan mango exports finally ramping up? What took so long for Pakistani mangoes to arrive in significant quantities in Silicon Valley? Can 6 million strong Pakistani diaspora's demand drive greater Pakistani exports of mangoes and food other items?



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

https://youtu.be/Lzx8I8C2MIo





http://dai.ly/x4jj855


Terror in Bangladesh & Turkey; India's Curry... by ViewpointFromOverseas
https://vimeo.com/173269056


Terror in Bangladesh & Turkey; India's Curry & Dal Crises; Pakistani Mangoes in America from Ikolachi on Vimeo.

Related Links:

Haq's Musings

Did the West Sow the Seeds of ISIS in Syria and Iraq?

Dal Crisis in South Asia

Pakistani Mangoes in America

Pakistani Diaspora

Talk4Pak Think Tank

VPOS Youtube Channel

VPOS Vimeo Channel

Wednesday, June 29, 2016

Sabri Assassination; India's NSG Bid; Brexit & Trump; Hamza Yousuf vs ISIS

Who killed Pakistan's world famous sufi singer Amjad Sabri Qawwal last week? Why was he targeted close to home in MQM-dominated Liaquatabad neighborhood? Is the Sabri killing a failure of Sindh Rangers' Karachi operation? Who wants to see the Army-led Karachi Operation fail? India? RAW? TTP? PPP? MQM? Why?

Why is India seeking full membership of NSG? Why has its effort failed so far? How did India succeed in getting the NSG waiver to allow nuclear trade in 2008? Did Pakistan's then ambassador Husain Haqqani recommend to then President of Pakistan Asif Ali Zardari to not ask China to oppose the India NSG waiver? Is the NSG waiver not enough to accomplish India's goal of growing both its civil and military nuclear programs?

Why did the British voters vote 52% to 48% to leave the European Union? Do these British voters supporting Brexit have anything in common with Donald Trump supporters in the United States? Is this vote part of anti-establishment backlash against globalization, immigration and trade sweeping Europe and America? Is this result motivated by racism, Islamophobia, and xenophobia? Or does it reflect a genuine economic anxiety of those who have been left behind?

Source: Harvard Business Review
Why is ISIS naming San Francisco Bay Area based American Muslim scholar Hamza Yousuf as its enemy? What did Yousuf's viral video "Crisis of ISIS" say that so angered ISIS leaders that they named him as an assassination target in their online publication tracked by the US FBI? Is it because Hamza Yousuf has effectively challenged ISIS based on Islamic theology? Or is it because Hamza Yousuf has taken on ISIS on its favorite battleground in social media and cyberspace?

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


https://youtu.be/LaLi85lRsck





https://vimeo.com/172752421


Sabri Assassination; India's NSG Bid; Brexit & Trump; Hamaz Yousuf vs ISIS from Ikolachi on Vimeo.

Related Links:

Haq's Musings

MQM-RAW Links

Did the West Sow the Seeds of ISIS?

Husain Haqqani's Animosity Toward Pakistan

Sadiq Khan Hails Triumph of Hope Over Fear

Trump Phenomenon in America

Is Trump Getting Foreign Policy Advice From Husain Haqqani?

Trump's Muslim Ban

What Can Pakistani-Americans Do to Stop Trump?

Silicon Valley Opposes Islamophobia

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.


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