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Showing posts from January, 2009

India Loses Luster at Davos

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The economic growth numbers and the rising stock markets during 2004-2007 persuaded many investors to buy into the Bollywood style "Shining India" hype made in Mumbai. However, now that the growth has slowed and the Mumbai stock market is returning back down to earth, the passive consumer of India's well-cultivated image as "peaceful, stable and prospering" investment destination is beginning to scrutinize the reality behind the hype.

Many are surprised to learn from the National Counter-terrorism Center (NCTC) in Washington that the death toll from terrorist attacks in India between January 2004 and March 2007 was 3,674, second only to that in Iraq. (In the same period, 1,000 died as a result of such attacks in Pakistan, the "most dangerous place on earth" according to the Economist, Newsweek and other vendors of geopolitical insight.) The recent Hong Kong-based Political & Economic Risk Consultancy Ltd. has rated India as the riskiest of 14 Asian…

Hallibuton to Settle Nigeria Corruption Case

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Halliburton is the latest in a string of Western companies settling charges or paying fines in connection with bribing foreign officials to get contracts. The company has agreed to pay $559 million to the U.S. to settle charges that one of its former units, Kellog, Brown and Root, bribed Nigerian officials during the construction of a gas plant, according to media reports.

The case under the U.S. Foreign Corrupt Practices Act against Kellogg, Brown & Root engineering unit stems from the construction of a giant liquefied natural gas plant on the Nigerian coast near Port Harcourt from 1996 through the mid-2000s. KBR was part of a consortium that built the facility, which at the time was the largest industrial investment ever made in Africa. Former U.S. Vice President Dick Cheney was the CEO of Halliburton during this period. Mr. Cheney is not named in the Justice Department charges and there is no evidence Mr. Cheney knew of the bribes.

The $559m payment would be the largest paid by …

China Tops South Asia VC Investments in 2008

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China continued to outperform India as a magnet for US venture capital investments in 2008. This was particularly interesting in a year that saw the venture investors feel the pinch from declining values of their portfolios. It was also a year when a company based in Pakistan became the first to receive US venture funding.

In India, the VC investment in the year 2008 amounted to $740 million across 125 deals, while it was $876 million from 144 deals during 2007. A major portion of the decline came in the last quarter of 2008 when world economy started feeling the bite of the credit crunch that precipitated the economic crisis on Wall Street.

Arun Natarajan, CEO, Venture Intelligence told SiliconIndia, "Everything got affected in the October-December quarter. VCs are much better off because the money is already available as many closed funding before the middle of 2008."

According to Srini Vudayagiri, Managing Director, Lightspeed Ventures, the venture capital space in India is …

Follow Haq's Musings on Twitter

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In response to readers' requests and in recognition of the popularity of Twitter, you can now follow the tweets from Haq's Musings anywhere in real time.

If you already have a Twitter account, please check out and subscribe here.

Happy Tweeting!

China's Debt Leverage Over America

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It is estimated that the continuing trade surpluses for years have helped China amass a whopping two trillion US dollars in dollar-denominated assets. Last year alone, China added US$450 billion to its reserves at a rate of over a billion dollars a day. About half of the Chinese US dollar-based assets are in the form of US treasury bonds that fund the ballooning US deficits.

Gao Xiqing, president of the China Investment Corporation, recently told James Fallows of the Atlantic Monthly, "Be nice to the countries that lend you money". Gao was clearly hinting at this new reality of " balance of financial terror" shifting in China's favor.

If history is any guide, the power of the lender over debtor nations is not just theoretical. The key moment when the world leadership passed from Britain to the United States came during the Suez crisis of the 1950s as a result of Britain's large WWII debt owed to the United States. When Britain, France and Israel invaded Egy…

Pakistan and Philippines Top Outsourcing List

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Menlo Park based oDesk has ranked Philippines and Pakistan as the top two outsourcing destinations in terms of growth, value for money and customer feedback.

oDesk helps its clients with tools, technologies and services to hire and manage remote work teams. Other companies in its category, including Elance, Guru and RentACoder, create marketplaces in which employers and freelancers can contact one another. These sites often manage the payments, and make money by charging membership fees and/or take a cut of the payment. The cuts can range from 4 percent to 15 percent.

According to oDesk, Pakistan experienced 328% growth in its outsourcing business in 2007-8, second only to Philippines (789%) on a list of seven top locations that include US (260%), Canada (121%), India (113%), Ukraine (77%) and Russia (43%).

Pakistan ranks number one in value for money for developers and data entry and number two overall behind the Philippines where the cost of answering calls is about half of the cost …

South Asian Exodus From Dubai

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Dubai police have found at least 3,000 automobiles -- sedans, SUVs, regulars -- abandoned outside Dubai International Airport in the last four months. Police say most of the vehicles had keys in the ignition, a clear sign they were left behind by owners in a hurry to take flight. It is believed that the owners of these vehicles are mostly foreign workers from South Asia who have lost their jobs after Dubai's real estate crash, according to a DNA report.

Dubai and other GCC countries are planning deficit-spending to stimulate their economies in 2009. Dubai will raise its budget by 11% for fiscal 2009. The city-state's finance department estimates the new spending will result in a modest fiscal deficit, Dubai's first ever. Other Gulf governments, including Saudi Arabia and Oman, have announced recently they will risk deficits next year instead of cutting back on spending, according to the Wall Street Journal.

Analysts have raised concerns about the large debt load Dubai has …

Military Balance in South Asia

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By Air Marshall (Retd) Ayaz Khan of Pakistan Air Force

Unfortunately India and Pakistan had adversarial relations since sixty years. After the Mumbai carnage Pakistan is under threat of pre-emptive strikes. The Fourth Indo-Pakistan war could be triggered by another terrorist attack anywhere in India. This is a dangerous scenario.

India and Pakistan have fought three wars, and war drums for the fourth war are getting louder. It is in order therefore to comprehend Indian military capabilities, and Pakistan’s ability to defend itself.

Defense capability is an interplay of economic and military potential. Indian economy is booming and its GDP growth is in double digits. The global recession has impacted Indian economy, but its defense capability remains intact. Military power and capabilities are sustained by economic and industrial potential. Geography, demography, population, oil resources and reserves, industrial capability including defense production, dollar reserves, self-reliance, edu…

Family Controlled Companies Take Hits in Mumbai

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Investors of Indian Companies controlled by families are growing suspicious in the wake of the Satyam scandal involving the Raju brothers. Older brother Ramalinga Raju served as chairman and younger brother Ram Raju was managing director of Satyam.
B. Ramalinga Raju admitted he had a fictitious cash balance of more than $1 billion on Satyam balance sheet and said in a letter of resignation that he overstated profits for the past several years, overstated the amount of debt owed to the company and understated liabilities. Eventually, he said, the scheme reached "simply unmanageable proportions" and he was left in a position that was "like riding a tiger, not knowing how to get off without being eaten."

In the aftermath of the Satyam scandal described as "India's Enron", shares of the energy giant, Reliance Industries, controlled by one Ambani brother, are down 19%. The smaller listed Reliance units have likewise been punished in the market. Reliance Comm…

The Truth About India's IT Revolution

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Satyam Computer Services Ltd., considered the poster child of India's information technology age, has shocked the world with a scandal of major proportions. The chairman of Satyam, a name that literally means "truth" in Sanskrit, said he cooked up key financial results, including a fictitious cash balance of more than $1 billion, raising doubts about the IT revolution hype in India that has attracted many international companies and significant foreign investments to the nation of over one billion people.

The Wall Street Journal is reporting that B. Ramalinga Raju, founder and chairman of Satyam Computer Services Ltd., said in a letter of resignation that he also overstated profits for the past several years, overstated the amount of debt owed to the company and understated its liabilities. Eventually, he said, the scheme reached "simply unmanageable proportions" and he was left in a position that was "like riding a tiger, not knowing how to get off without…

High Tech Warfare of the 21st Century

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Unmanned Aerial Vehicles or Drones designed and manufactured in Pakistan have been making news since IDEAS 2008 event in November of last year. Also in the news has been the growing reliance on armed drones (aka predators) by Americans in Afghanistan and Pakistan's FATA region to target militants with increasing casualties. This post is an attempt to put these headlines in perspective for those interested in the 21st century high tech warfare.

Back in 1970, the U.S. Army Gen. William Westmoreland is reported to have said: “On the battlefield of the future, enemy forces will be located, tracked and targeted almost instantaneously through the use of data links, computer-assisted intelligence and automated fire control. … I am confident the American people expect this country to take full advantage of its technology–to welcome and applaud the developments that will replace wherever possible the man with the machine.” Is this vision from the 1970s being realized today?

The basic strate…

Abject Poverty in Resurgent India

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India, often described as peaceful, stable and prosperous in the Western media, remains home to the largest number of poor and hungry people in the world. About one-third of the world's poor people live in India. More than 450 million Indians exist on less than $1.25 a day, according to the World Bank. It also has a higher proportion of its population living on less than $2 per day than even sub-Saharan Africa. India has about 42% of the population living below the new international poverty line of $1.25 per day. The number of Indian poor also constitute 33% of the global poor, which is pegged at 1.4 billion people, according to a Times of India news report. More than 6 million of those desperately poor Indians live in Mumbai alone, representing about half the residents of the nation's financial capital. They live in super-sized slums and improvised housing juxtaposed with the shining new skyscrapers that symbolize India's resurgence. According to the World Bank and the UN…

Year 2008 in Review-Pakistan

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The year 2008 was a year of great turmoil in Pakistan as the prior year ended with the tragic assassination of former Prime Minister Benazir Bhutto on Dec 27, 2007. It began with Bhutto's widower Asif Ali Zardari taking over the reins of Pakistan Peoples Party, Pakistan's largest political party, and ended with rising tensions in South Asia in the aftermath of Mumbai terrorist attacks.

Some of the key events that shaped the year for Pakistanis included:

1. Major defeat was dealt to pro-Musharraf forces in free, fair and democratic elections in which Pakistan Peoples Party won the most seats in parliament followed by former Prime Minister Nawaz Sharif's Pakistan Muslim League as the second largest political force.

2. President Musharraf was forced out of office and replaced by Asif Ali Zardari who won the parliamentary approval by an overwhelming majority.

3. With rising militancy in all parts of the country, suicide bombings in 2008 surpassed last year’s figures, with 61 att…