Sizing Urban Middle Class in India and Pakistan

The simplest definition of the middle class is a group of people in a society who are neither rich nor poor. The middle class has always been considered vital to a country's stability and growth. The rich and the poor simply distrust each other too much to let the other govern. Nations with large middle class populations find it easier to sustain good, democratic governance.

Unfortunately for Pakistan, the size of the middle class was very small when it came into existence, and the country was dominated by a small powerful feudal elite created by the British rulers to sustain their colonial rule. And the urban middle class remained small for decades. The situation has, however, finally begun to change in the the last decade of 1999-2009 with a combination of increasing urbanization and faster economic expansion that fueled significant job creation in the industrial and services sectors to enable middle class growth.

Pakistan is now more urbanized with a larger middle class than India as percentage of the population. In 2007, Standard Chartered Bank analysts and State Bank governor Dr. Ishrat Husain estimated there were 30 to 35 million Pakistanis earning an average of $10,000 a year. Of these, about 17 million are in the upper and upper middle class, according to a recent report.



Urbanization is not just a side effect of economic growth; it is an integral part of the process, according to the World Bank. With the robust economic growth averaging 7 percent and availability of millions of new jobs created between 2000 and 2008, there has been increased rural to urban migration in Pakistan to fill the jobs in growing manufacturing and service sectors. The level of urbanization in Pakistan is now the highest in South Asia, and its urban population is likely to equal its rural population by 2030, according to a report titled ‘Life in the City: Pakistan in Focus’, released by the United Nations Population Fund. Pakistan ranks 163 and India at 174 on a list of over 200 countries compiled by Nationmaster.

Pakistan has and continues to urbanize at a faster pace than India. From 1975-1995, Pakistan grew 10% from 25% to 35% urbanized, while India grew 6% from 20% to 26%. From 1995-2025, the UN forecast says Pakistan urbanizing from 35% to 60%, while India's forecast is 26% to 45%. For this year, a little over 40% of Pakistan's population lives in the cities.

The urban population now contributes about three quarters of Pakistan's gross domestic product and almost all of the government revenue. The industrial sector contributes over 27% of the GDP, higher than the 19% contributed by agriculture, with services accounting for the rest of the GDP.



A 2008 report by UN Population Fund says the share of the urban population in Pakistan almost doubled from 17.4 percent in 1951 to 32.5 percent in 1998. The estimated data for 2005 shows the level of urbanization as 35 per cent, and CIA Factbook puts it at 36% in 2008, and it is increasing with 3% of the nation's population migrating to cities every year. With over 5 million rural migrants each year, the population of Pakistani cities in exploding, and Karachi has now become the world's largest city, according to Citymayors.com.

India's urban residents in 2008 residents accounts for 29% of its population, and the CIA Fact Book estimates it growing at 2.4% of the total population every year.

As to India's much hyped middle class, a new report by Nancy Birdsall of Center for Global Development says it is a myth. She has proposed a new definition of the middle class for developing countries in a forthcoming World Bank publication, Equity in a Globalizing World. Birdsall defines the middle class in the developing world to include people with an income above $10 day or $3,650 a year, but excluding the top 5% of that country. By this definition, India, even urban India alone, has no middle class; everyone at over $10 a day is in the top 5% of the country.

Unlike poverty which is defined by the World Bank as people living on less than $1.25 or $2 a day, there is no widely accepted definition of who counts as a member of the middle class in the developing world.

In India, for example, a scooter company aims ads at a schoolteacher who earns $2,500 a year and lives in a tiny brick house with no running water. Why? Because that teacher is counted as middle class by Indian marketers, according to MSN Money.

Economist Nancy Birdsall of the Center for Global Development (CDG) is attempting to establish a $10 a day minimum limit in terms of purchasing power parity (PPP) as the low end of the middle class, while excluding the top 5% of the population in a country from the middle class. "An upper limit of the 95th percentile, while on the high side, is just about sufficient to exclude the country's richest," Birdsall adds.

In India's case, everyone who makes $3,650 a year is in the top 5% (about 55 million people) of the nation's population. It is on this basis that economist Birdsall concludes that India has no middle class. Over 75% of India's population (versus 60% in Pakistan) lives on less than $2 a day, or $750 a year, according to Human Development Report 2009. The rest of about 20% of India's people falls between $2 and $10 a day.

It is interesting to note, however, that India has been much more successful in sustaining democracy than Pakistan. Perhaps it is attributable to early land reform in India that significantly tamed the power of the feudal class.

Using Birdsall's proposed definition, Pakistan now does have a middle class of tens of millions (at least 10% of the population), as its 30 to 35 million people earning an average of $10,000 a year (well above Birdsall's lower limit of $3,650.00 a year) account for about 17% of Pakistan's population. Another 60% of Pakistanis (vs 75% of Indians) live on less than $2 a day, according to UN Human Development Report 2009. The rest of 23% of the people have incomes between $730 a year ($2 a day) and $10,000 a year, and a significant percentage of them could be classified as lower middle class.

According to development economist Lant Pritchett, fewer than 25% of the people in the richest quintile in India complete 9 grades of school.

This is a combination both of the depth of India's poverty and its inequality. China had no middle class in 1990, but by 2005, had a small urban middle class (3% of the population). South Africa (7%), Russia (30%) and Brazil (19%) all had sizable middle classes in 2005.

Contrary to popular myths about rich-poor gap often expressed in Pakistani and Western media, Pakistan is more egalitarian than most countries of the world, including nations of South Asia region. According to UNDP HDR report 2009, Pakistan's ratio of expenditures of the top and bottom 10% of the population is 6.7 versus India's 8.6 and China's 13.2. The resource consumption by the lowest 10% of the Pakistani population is 3.9% and highest 10% consumes 26.5%. This compares favorably with 3.6% consumption by the bottom 10% in India and 31.1% by the top 10%.

In spite of the recent growth in Pakistan's middle class, it is still not strong enough to seize power. However, with the recent growth of independent mass media and greater political activism, the Pakistani middle class has begun to exert more influence on how the nation is governed. And the power of the current ruling feudal zamindars' party, the Pakistan Peoples Party, appears to be waning in the face of the new assertive middle class.

Unlike the more urban and middle class voters of the Pakistan Muslim League (PML) and the Muttahida Qaumi Movement (MQM), the PPP's voter lives in a different world, a world that has been dominant for decades. It is a feudal world controlled by the rural elite that is much more rural, more deferential, more rooted in tradition. Its nationalism is less marked and its Islam less influenced by the international trends of the last 30 years and thus much less politicized and much more based in centuries-old Sufi traditions. Describing this situation, Jason Burke of the Guardian has argued that "This is a Pakistan that is disappearing". Burke has quoted an unnamed 2008 PPP electoral candidate in rural Punjab who recognized and reportedly said that his party needed to "re-invent itself".

While many rural residents in Sindh and Southern Punjab who voted for the PPP have remained relatively isolated from major developments in Pakistan in the last decade, the urban middle class has grown dramatically in numbers and influence during the military rule of President Musharraf. The New York Times reported on this expansion of Pakistani middle class in November 2007 in these words: "As he fights to hold on to power, General Musharraf finds himself opposed by the expanded middle class that is among his greatest achievements, and using his emergency powers to rein in another major advance he set in motion, a vibrant, independent news media". Acknowledging this fact, William Dalrymple, a British journalist/author considered knowledgeable about India and Pakistan, recently wrote as follows: "It was this newly enriched and empowered urban middle class that showed its political muscle for the first time with the organization of a lawyers' movement, whose protests against the dismissal of the chief justice soon swelled into a full-scale pro-democracy campaign, despite Musharraf's harassment and arrest of many lawyers. The movement represented a huge shift in Pakistani civil society's participation in politics. The middle class were at last moving from their living rooms onto the streets, from dinner parties into political parties."

The future of Pakistan clearly belongs to its urban middle class. The behavior of the members of this rising urban middle class will largely determine if and when Pakistan grows out of the current crises to face the future with greater confidence.

Related Links:

Comparing India and Pakistan in 2010

Indian poverty

Pakistan Wage Structure 1990-2007

Middle Class Clout Rising in Pakistan

Urbanization in Pakistan

The Rise of Mehran Man

Industr ial Sector of Pakistan

India Has No Middle Class

Pakistan's Foreign Visitors Pleasantly Surprised

Escape From India

Reflections on India

After Partition: India, Pakistan and Bangladesh

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Financial Services Sector

Pakistan's Industrial Sector

Pakistan's Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

Pakistan's Multi-Billion Dollar IT Industry

India -Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

Comments

Riaz Haq said…
I have received several email messages mainly from Indians which refer to India's NCAER data and argue that "at least 75.30 Million households representing about 413 million people in India in 2009-10 are earning at least more than INR 90,000 = USD 2050 Absolute = USD 7200 PPP 2005."

The Indian NCAER data conflicts with the UNDP HDR 2009 data that says 76% of Indians (vs 60% of Pakistanis) live on less than $2 a day. NCAER data suggests that the entire population of about 400 million Indians at or above $2 a day is middle class, a definition that holds no water.

Middle class is defined differently by India than by the UN and the World Bank. Here's something from bihapurkar.com that might help understand the debate on middle class sizing:

"While consultants and companies advise investing in India based on the current and projected size of the “middle class”, the bogey of the definition and sizing of the middle class hasn't gone away yet and adds to the unease. The World Bank defines middle class as having between $10 and $20 purchasing power parity (PPP) per capita per day, which is a lot narrower than the NCAER definition of households income between Rs. 2-10 lakh ($4,000 to $21,000 at 2001-02 prices) annually; which is what McKinsey Global Institute uses in its Bird of Gold book. Chris Butel of IIMS-Dataworks suggests sensibly that the middle class are those that have their own personal transport (car or 2-wheeler), own entertainment as in a TV set, sound system and their own communication (phone). Some of us suggest that the middle class are those who are literally in the middle i.e., have approximately between the 33rd and 66th percentile of income. Expectedly the numbers swing wildly from 50 million to 200 / 230 / 300 million. What's more, the nagging worry persists that the middle class being defined by most of these income bands is actually India's upper class."
Mayraj said…
Here's a Seekingalpha report commenting on McKinsey study of Indian urbanization:

... new labor force will also be relatively young compared to other BRIC countries. The median age for the Indian population is 25.3 years—lower than Brazil (28.6 years) and well below China (34.1 years) and Russia (38.4).

In order to meet the needs of this urban class, MGI estimates India will need:

* $1.2 trillion in capital investment
* 2.5 billion square meters of roads to be paved
* 700-900 million square meters of commercial and residential space
* 7,400 kilometers of subways and transportation to be constructed

To put these figures into perspective, the investment amount needed is about one-third of India’s total GDP in 2009. And if 700-900 million square meters of real estate sounds like a lot, that’s because it is. India would need to build a city the size of Chicago every year for the next 20 years in order to create enough commercial/residential space.

While these numbers are staggering, perhaps the most important figure for commodity demand is MGI’s projections on the growth of India’s middle class. MGI estimates that India will have 91 million middle class households by 2030, that’s more than a 300 percent increase from the 22 million they have today.

As we’ve said many times before, the growth of the middle class in the developing world, especially in Asia, is a key driver of demand for oil, steel, copper, cement and countless other resources because the wealthier these people are, the more they will consume.

This mass of people will likely demand better housing, better roads, better goods— in all, a higher quality of life than what’s been available to them in the past. The resulting pressure this could have on commodity demand is the X-factor that we believe makes this cycle different than anything we’ve experienced in the past.


I agree there will be massive migration in India;but, not driven like China. It will be driven by rural failure. There are few jobs in urban India already, where will so many more jobs come from in future, if India doesn't fundamentally change its policies....

Most population growth in India is coming in the backward and poor northern states. Will these youth be able to fill the jobs that do open up in urban India?
Riaz Haq said…
Some commentators have raised questions about Standard Chartered Bank data about 30-35 million Pakistanis averaging $10,000 a year income, the group that Jason Burke of the Guardian calls "Mehran men" because they typically drive Suzuki Mehran model of cars (rather than European models or big SUVs).

Forget these numbers for the moment and just think about who should count as middle class in South Asia.

HDR 2009 says 76% of Indians and 60% of Pakistanis live on less than $2 a day. These are poor people none of whom can be considered middle class by any stretch of the imagination.

If you exclude the bottom 75% of Indians (versus 60% of Pakistanis) who live on less than $2 a day, and also exclude the top 5% rich, there are 19% of Indians (versus 35% of Pakistanis) who could be candidates for even a very loosely defined middle class status.

Add to the fact that Pakistan is more urbanized and has less inequality (Gini) than India, and the picture becomes clear.

Isn't it basic commonsense?
Riaz Haq said…
Here's a relevant piece from Deccan Herald:

The number of poor is multiplying along with the number of billionaires. Growth does not reflect the widening disparities.

There is something terribly wrong with growth economics. After all, 18 years after India ushered in economic liberalisation, the promise of high growth to reduce poverty and hunger has not worked. In fact, it has gone the other way around: the more the economic growth, the higher is the resulting poverty.

A report by an expert group headed by Suresh Tendulkar, formerly chairman of prime minister’s economic advisory council, now estimates poverty at 37.2 per cent, an increase of roughly 10 per cent over the earlier estimates of 27.5 per cent in 2004-05. This means, an additional 110 million people have slipped below the poverty line in just four years.

Poor multiplying
The number of poor is multiplying at a time when the number of billionaires has also increased. Economic growth however does not reflect the widening economic disparities. For instance, the economic wealth of mere 30-odd rich families in India is equivalent to one third of the country’s growth. The more the wealth accumulating in the hands of these 30 families, the more will be country's economic growth. A handful of rich therefore hide the ugly face of growing poverty.

If these 30 families were to migrate to America and Europe, India’s GDP, which stands at 7.9 per cent at present, will slump to 6 per cent. And if you were to discount the economic growth resulting from the 6th pay commission, which is 1.9 per cent of the GDP, India’s actual economic growth will slump to 4 per cent.
Anyway, the complicated arithmetic hides more than what it reveals. Poverty estimates were earlier based on nutritional criteria, which means based on the monthly income required to purchase 2,100 calories in the urban areas and 2,400 calories in the rural areas. Over the years, this measure came in for sharp criticism, and finally the Planning Commission suggested a new estimation methodology based on a new basket of goods that is required to survive, which includes food, fuel, light, clothing and footwear.
Accordingly, the Tendulkar committee has worked out that 41.8 per cent of the population or approximately 450 million people survive on a monthly per capita consumption expenditure of Rs 447. In other words, if you break it down to a daily expenditure, it comes to bare Rs 14.50 paise. I wonder how can the rural population earning more than Rs 14 and less than say even Rs 25 a day be expected to be over the poverty line. It is quite obvious therefore that the entire effort is still to hide the poverty under a veil of complicating figures.

India’s poverty line is actually a euphemism for a starvation line. The poverty line that is laid out actually becomes the upper limit the government must pledge to feed. People living below this line constitute the Below the Poverty Line (BPL) category, for which the government has to provide a legal guarantee to provide food. It therefore spells out the government subsidy that is required to distribute food among the poor. More the poverty line more is the food subsidy.

If the government accepts Tendulkar committee report, the food subsidy bill will swell to Rs 47,917.62 crore -- a steep rise over the earlier subsidy of Rs 28,890.56-crore required to feed the BPL population with 25 kg of grains. This is primarily the reason why the government wants to keep the number of poor low. In other words, the poverty line reflects the number of people living in acute hunger. It should therefore be called as a starvation line....
Riaz Haq said…
“Media Subdues The Public. It’s So In India, Certainly”, says Noam Chomsky, Prof Emeritus of Linguistics and Media a MIT.

Here are a few quotes from an Outlook India interview with Noam Chomsky:

"I spent three weeks in India and a week in Pakistan. A friend of mine here, Iqbal Ahmed, told me that I would be surprised to find that the media in Pakistan is more open, free and vibrant than that in India.

In Pakistan, I read the English language media which go to a tiny part of the population. Apparently, the government, no matter how repressive it is, is willing to say to them that you have your fun, we are not going to bother you. So they don’t interfere with it.

The media in India is free, the government doesn’t have the power to control it. But what I saw was that it was pretty restricted, very narrow and provincial and not very informative, leaving out lots of things. What I saw was a small sample. There are very good things in the Indian media, specially the Hindu and a couple of others. But this picture (in India) doesn’t surprise me. In fact, the media situation is not very different in many other countries. The Mexican situation is unusual. La Jornada is the only independent newspaper in the whole hemisphere."

"As soon as the plan to invade Iraq was announced, the media began serving as a propaganda agency for the government. The same was true for Vietnam, for state violence generally. The media is called liberal because it is liberal in the sense that Obama is. For example, he’s considered as the principled critic of the Iraq war. Why? Because, right at the beginning, he said it was a strategic blunder. That’s the extent of his liberalism. You could read such comments in Pravda in 1985. The people said that the invasion of Afghanistan was a strategic blunder. Even the German general staff said that Stalingrad was a strategic blunder. But we don’t call that principled criticism."

"Perhaps the period of greatest real press freedom was in the more free societies of Britain and the US in the late 19th century. There was a great variety of newspapers, most often run by the factory workers, ethnic communities and others. There was a lot of popular involvement. These papers reflected a wide variety of opinions, were widely read too. It was the period of greatest vibrancy in the US. There were efforts, especially in England, to control and censor it. These didn’t work. But two things pretty much eliminated them. One, it was possible for the corporate sector to simply put so much capital into their own newspapers that others couldn’t compete. The other factor was advertising; advertiser-reliance. Advertisers are businesses. When newspapers become dependent on advertisers for their income, they are naturally going to bend to the interest of advertisers.

If you look at the New York Times, maybe the world’s greatest newspaper, they have the concept of news hole. What that means is that in the afternoon when they plan for the following day’s newspaper, the first thing they do is to layout where the advertising is going to be, because that’s an important part of a newspaper. You then put the news in the gaps between advertisements. In television there is a concept called content and fill. The content is the advertising, the fill is car chase, the sexy or whatever you put in to try to keep the viewer watching in between the ads. That’s a natural outcome when you have advertiser-reliance."
Riaz Haq said…
Here is a quick comparison of different sectors of the economy in India and Pakistan in terms of employment and GDP contribution:

Country....Agri(emp/GDP)..Textiles..Other Mfg..Service(incl IT)

India........60%/16% ...........10%/4%.....7%/25%...........23%/55%

Pakistan......42%/20%...........12%/8%......8%/18%...........38%/54%



Assuming India's PPP GDP of $3.75 trillion (population 1.2 billion) and Pakistan's $450 billion (population 175 million), here is what I calculated in terms of per capita GDP in different sectors of the economy:

India vs. Pakistan:

Agriculture: ($833 vs. $1,225)

Textiles: ($1,242 vs. $1,714)

Non-Textile Mfg ($11,155 vs $5,785)

Services ($7,246 vs $3,654)

It shows that Indians in manufacturing and services sectors add more value and produce higher value goods and services than their Pakistani counterparts.

The income range in India is much wider from $883 to $11, 155 accounting for the much bigger rich-poor gap relative to Pakistan's range from $1225 to $5,785.
Riaz Haq said…
Here are excerpts from a report on Pakistan's retail sector:

The ongoing shift in population from rural to urban areas has underpinned the expansion of the retail sector. Strong real GDP growth until fiscal year 2006/07 (July-June) provided the foundation for years of double-digit growth in net retail sales in US dollar terms. However, net retail sales contracted by 1.2% in 2008. Sales then grew by only 5.7%, to US$75bn, in 2009, as the inflationary surge of 2008, which reduced spending power, abated only moderately. In local-currency terms retail sales growth in 2009 is estimated at 22.7%, owing to depreciation in the value of the Pakistan rupee against the US dollar. A gradual shift towards more formal retail facilities will facilitate the expansion of sales in 2012-14, but this process will be slow and confined to urban areas. (In 2010-11 retail sales expansion will be subdued, as overall private consumption growth slows sharply owing to the catastrophic floods that struck Pakistan in August-September 2010. Electronic retailing is almost non­existent in Pakistan because of the low levels of Internet penetration and credit-card use in the country.

Consumer finance accounted for 4.2% of the total stock of credit in the country in June 2010, according to the State Bank of Pakistan (SBP, the central bank). Credit for purchases of consumer durables was down by 25% year on year..... Because of their limited financial resources, most retailers sell on a cash-only basis. This is gradually changing, and credit-card use is likely to become an increasingly important element of personal finance in the long term. However, in the short to medium term credit-card use will be constrained by the poor economic climate: outstanding credit-card loans were down by 25% year on year in June 2010. Large, centralised shops have not been popular in Pakistan, as low levels of car ownership mean that people prefer "corner shops" near their homes. More importantly, frequent and often prolonged power failures reduce the advantages of refrigeration, leading to a preference for fresh goods bought for immediate consumption from neighbourhood retailers. Online retail sales are negligible, owing to the country's extremely low levels of Internet penetration and credit-card ownership and the absence of Internet merchant accounts to facilitate online credit-card transactions.

The retail market is highly fragmented and underdeveloped. There are over 125,000 retail outlets across the country, according to the Small and Medium Enterprise Development Authority, but around 95% of these are tiny corner shops. The few supermarkets that exist are concentrated in Karachi and Lahore. USC is the largest supermarket chain by far, with 5,850 outlets throughout the country in 2009, according to Planet Retail, an international industry consultancy. The other major chains are Whitbread (with 17 outlets in 2009), GNC (with six outlets), Metro (five outlets) and Carrefour (one outlet). However, even USC's market share is virtually insignificant in terms of retailing as a whole, according to Planet Retail, accounting for only 1.2% of total grocery spending in the country. The vast majority of retailers in Pakistan are small family-run shops, and this will remain the case throughout the forecast period (2010-14).
Riaz Haq said…
Here are a few excerpt from an Op Ed piece by Francis Fukuyama in today's Wall Street Journal. It's titled "Is China Next?":

Observing the high levels of political instability plaguing countries in the developing world during the 1950s and '60s, Mr. Huntington noted that increasing levels of economic and social development often led to coups, revolutions and military takeovers. This could be explained, he argued, by a gap between the newly mobilized, educated and economically empowered people and their existing political system—that is, between their hopes for political participation and institutions that gave them little or no voice. Attacks against the existing political order, he noted, are seldom driven by the poorest of the poor in such a society; they tend to be led, instead, by rising middle classes who are frustrated by the lack of political and economic opportunity.

All of these observations would seem to apply to Tunisia and Egypt. Both countries have made substantial social progress in recent decades. The Human Development Indices compiled by the United Nations (a composite measure of health, education and income) increased by 28% for Egypt and 30% for Tunisia between 1990 and 2010. The number of people going to school has grown substantially; Tunisia especially has produced large numbers of college graduates. And indeed, the protests in Tunisia and Egypt were led in the first instance by educated, tech-savvy middle-class young people, who expressed to anyone who would listen their frustrations with societies in which they were not allowed to express their views, hold leaders accountable for corruption and incompetence, or get a job without political connections.......

It is certainly true that the dry tinder of social discontent is just as present in China as in the Middle East. The incident that triggered the Tunisian uprising was the self-immolation of Mohamed Bouazizi, who had his vegetable cart repeatedly confiscated by the authorities and who was slapped and insulted by the police when he went to complain. This issue dogs all regimes that have neither the rule of law nor public accountability: The authorities routinely fail to respect the dignity of ordinary citizens and run roughshod over their rights. There is no culture in which this sort of behavior is not strongly resented....

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Indeed, there is some reason to believe that the middle class in China may fear multiparty democracy in the short run, because it would unleash huge demands for redistribution precisely from those who have been left behind. Prosperous Chinese see the recent populist polarization of politics in Thailand as a warning of what democracy may bring.

The fact is that authoritarianism in China is of a far higher quality than in the Middle East. Though not formally accountable to its people through elections, the Chinese government keeps careful track of popular discontents and often responds through appeasement rather than repression. Beijing is forthright, for example, in acknowledging the country's growing income disparities and for the past few years has sought to mitigate the problem by shifting new investments to the poor interior of the country. When flagrant cases of corruption or abuse appear, like melamine-tainted baby formula or the shoddy school construction revealed by the Sichuan earthquake, the government holds local officials brutally accountable—sometimes by executing them.
Riaz Haq said…
Here are some excerpts from an Express Tribune piece by Sher Khan from Lahore:

As one scans the underground music scene, small venues have increased for aspiring artists and musicians to promote their music. The use of cafe’s and the development of the university scenes have begun to nurture a platform for a variety of artists.

Across MM Alam, Lahore’s ‘rodeo drive’, several cafes such as the World Fashion Cafe or Cafe Rock and even Gloria Jeans have become regular stops where young artists try to showcase their music. Student and music societies ranging from University College Lahore (UCL) to LUMS have also provided venues for artists.

“There are shows happening in cafes such as Peeru’s, and almost every university has some sort of music society,” said Curtain Call Society’s general secretary Nausherwan Billa, who was also the president of the famous UCL music society. “There are around eight to nine gigs in Lahore in any given month.”

He said that his society organises monthly concerts, free of cost, for artists at Al Hamra and the Ali Institute. Guitar School, Origami and Curtain Call’s own initiative Octave, have also been working in a small way to provide musicians with venues and opportunities to perform in front of an audience.

In terms of the electronic music scene which has also seen a rise with artists such as Talal and Zoi, an avenue has been found in terms private parties at farmhouses on the peripheries of Lahore, such as Bedian and Thokhar.

“It’s a struggle for underground artists, because to get attention you have to play everywhere,” said Elysium Entertainments Director Mukarram Jamil, who has been managing underground bands for the past five years in both Islamabad and Lahore. “It’s not necessarily a positive trend because shows are not happening — whatever is happening is usually at the cafes and school level.”

Jamil, who also manages the underground band Moen Jo Daro that started off 2008, explained that cafe’s currently seem like the best place for underground musicians to start. “If I was starting out or I had band, I would not limit myself just to schools because the point is getting access to an overall market. An audience of seventy to hundred people with a varied crowd can spread news like social wildfire.”

Jamil explained the band Moen Jo Daro started under the same circumstances: First at cafes on MM Alam, then toured every major university in the city free of cost, till they finally forayed into the Islamabad scene by opening at a major concert there. Once the band pursued being paid for their performances, they had found that schools had an advantage in terms of facilitating and providing a venue for music shows. Schools are also more eager to accommodate as, due to their limited budget, they could not afford more mainstream artists.

In the past, the underground music scene, which was dominated by rock, had certain hidden venues which had become the hotspots out of which bands such as EP were built. For instance, there was a basement at Model Town Society and the Al Hamra room number one, as well as the open-air theatre at Gaddafi stadium.

EP’s bassist and manager Hasaan Khalid, who also is the Editor of the Student’s Blog, said that schools such as LUMS, UCL and Beaconhouse, Defence, had taken a step by providing venues for young artists to perform through school events, but also mentioned events such as the rock festival which was cancelled due to security.
Riaz Haq said…
Here's a Guardian newspaper report on Ramadan violence in Karachi and Zulfiqar Mirza's claims of MQM culpability:

Weeks of violent mayhem that have left more than 1,000 dead in Pakistan's biggest city culminated on Sunday in troops entering a gangster-run district in an attempt to end the violence.

The holy month of Ramadan, supposedly a time of piety, has only increased the slaughter on Karachi's streets, with beheadings and horrifically mutilated bodies dumped in sacks in gutters, the debris from a war between gangs divided on ethnic lines.

Over the weekend, the prime minister, Yousuf Raza Gilani, described the violence in Karachi as the country's "greatest challenge".

In an extraordinary televised press conference on Sunday, a senior official of the ruling Pakistan Peoples party (PPP) accused the interior minister, Rehman Malik, also of the same party, of culpability in the killings in Karachi.

Zulfiqar Mirza, the senior PPP provincial minister, claimed he had proof that Malik was "hand in glove with the killers".

Mirza resigned on Sunday, claiming that the city's largest political party, the Muttahida Qaumi Movement (MQM), was behind the bloodshed, allegations that could spark more trouble.

While holding a copy of the Qur'an, Mirza said the MQM was responsible for kidnapping, extortion and violence, including the killing of the journalist Wali Khan Babar, 28, earlier this year. "I am saying it openly that the MQM killed him," he told a news conference televised live around the country.

The MQM was not available for comment about the unusually blunt accusations.

The gang turf war is also a political and financial struggle about the control of extortion rackets – known as bhatta – with three mainstream political parties all drawing support from different ethnic groups and each having a criminal underworld following in the city.

The bloodshed has essentially pitted a gang associated with the PPP, the party of President Asif Ali Zardari, against thugs linked to the MQM, headed by Altaf Hussain, who lives in exile in London.

The MQM has long dominated Karachi but it is being challenged by the PPP and the third significant player, the Awami National party (ANP), which represents the city's huge ethnic Pashtun population, originally from north-west Pakistan. The MQM's base is provided by the Mohajirs, people who migrated to the city from northern India during the partition.

British diplomats have been active behind the scenes, pressuring all sides to quell the violence, which is crippling Pakistan's economic heart.

The MQM, the ANP and Karachi's business community have in recent days called for the army to intervene, with at least 1,000 people falling prey to the tit-for-tat killings this year – easily eclipsing the violence by religious extremists across the rest of the country.

But the PPP fears that deployment of the army could eventually topple its three-year-old government and Pakistan's latest, western-backed, experiment with democracy. The paramilitary units deployed, the Rangers, come under civilian control.

The Rangers uncovered torture chambers and arms caches during raids on Sunday in the Lyari district, a PPP stronghold. One dank basement shown to journalists contained a chair with handcuffs and padlocks attached. Two earlier attempts to enter Lyari failed.

The gangs often fail to capture rival gang members, taking out their anger instead on anyone from other ethnic groups – many innocent victims are innocent bystanders, often abducted or killed.

---

Another senior security official in Karachi said: "The MQM doesn't want to share the cake. But the others want their slice."


http://www.guardian.co.uk/world/2011/aug/28/karachi-gang-wars-intervention
Riaz Haq said…
Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".

Increased load shedding in Pakistan alone has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's job growth for the decade occurred from 2000-2007 when the economy showed robust gdp growth. During 2000-2007, Pakistan's economy became one of the four fastest growing economies in Asia with its growth rate averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program. Contrary to its public criticism of the Musharraf-era economy, the preceding facts were acknowledged by the current government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008.
Riaz Haq said…
Here are some of the findings of a recent paper by Durre-e-Nayab of Pakistan Institute of Development Economics (PIDE) titled "Estimating the Middle Class in Pakistan":

Depending on the definition applied, it is found that the size of the middle class ranges drastically in the country, as can be seen from Table 2. Applying the definitions having solely an economic rationale, we find the middle class to range from 60 per cent of the population (Table 2, Definition One) to being totally non-existent (Table 2, Definition Five). Translating it in number of people, using the population base of 187 million as it stands on mid-year 2011 (USCB, 2011 and UN, 2009), the size of the middle class ranges from a huge 112 million to no one. This variability, as stressed earlier, reflects the complexities and
arbitrariness associated with defining and measuring the middle class.

Among all the definitions given above, Definition Eight and Definition Thirteen, based on gradation of income and expenditure per person per day, respectively, are currently the most
extensively used measure employed to estimate the middle class (as also used by Chun (2010) and Bhandari (2010) among others)3. This definition too, however, suffers from the same drawback of relying solely on one criterion. As also pointed out by Eisenhauer (2008), Atkinson and Bourguignon (1982), Kolm (1977), Bourguignon and Chakravarty (2003) and Gilbert (2003), being a part of the middle class should be ascertained by a person’s socio-economic attributes holistically. Income is an important aspect but other qualities like level of health, wealth,
education and specialised knowledge are also significant factors for constituting a class. Technically speaking too, most of the definitions suffer from serious drawbacks. For instance, the ‘quintile approach’ can be useful in measuring or comparing income or expenditure growth but cannot be used as a method to estimate the middle class as the size cannot shrink or expand and by definition would permenantly remain at 60 percent. Any denomination of the median income should also be used with caution in low income countries like Pakistan. Taking 75 per cent of the median income might lead to the inclusion of people below the poverty line in countries with very low income levels. In the above-stated definitions and resulting estimates there are issues with the lower bounds
set for inclusion in the middle class. While some of the definitions (like Definition Three and Five) set the limit too high4, resulting in a very small middle class or in the absence of a middle class altogether, there are other definitions that set the limit too low, like those that set the lower
bound at $2 per person per day. Does the middle class begin where poverty ends? Ravallion (2010: 446) supports, “the premise that middle class living standards begin when poverty ends”.
This paper, however, supports the argument forwarded by Horrigan and Haugen (1988:5) when they posit, “to ensure that the lower endpoint of the middle class represents an income
significantly above the poverty line”. The middle class should, hence, include only those households that do not face the risk of experiencing poverty at all, and are not just those who
are outside the the realm of poverty at a particular time.


http://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-71.pdf
Riaz Haq said…
Here's an excerpt from an Express Tribune story on Pakistan's middle class:

So what is the ‘right’ approach to quantify the Pakistani middle class?

“The middle class shouldn’t be confused with ‘middle income,’ as class is a multidimensional phenomenon, which can’t be explained by income alone,” said Dr Durre Nayab, who heads the department of population studies at the Islamabad-based Pakistan Institute of Development Economics (PIDE).

Nayab recently published a paper titled, “Estimating the middle class in Pakistan,” in which she used a weighted composite index of five sub-indices, namely income, education, housing, lifestyle and occupation.

The fact that her study allows for education, housing, lifestyle and occupation while determining the size of the Pakistani middle class makes it more credible than a solely income-based estimation.

Using Pakistan Social and Living Standards Measurement Survey (2007-08), Nayab’s paper says the size of the broadest middle class in Pakistan is 35% of the total population.

“The middle class is associated with non-manual professions,” Nayab said while talking to The Express Tribune. “As we go up the class ladder, more and more people employed in ‘professional’ occupations are found. Also, the middle class is associated with college education.”

Her paper also concludes that the middle class is more of an urban phenomenon with a bigger presence in urban areas of Pakistan.

Considering that The Economist estimates more than half the world’s population is part of the middle class, the idea that Pakistan has roughly 60 million middle-class people doesn’t seem implausible.

This matters a great deal because as the rest of the world progresses economically, their companies and governments are increasingly focused on their middle classes. If Pakistan is to join that race, and compete effectively, then our companies and government must acknowledge the size, scope and contours of our middle class in their planning.

The Express Tribune is launching this series of articles in which we hope to help explore just who our middle class is, how they got there and exactly how money is being made by those who cater to their changing lifestyles.


http://tribune.com.pk/story/294987/the-rising-middle-class-who-is-part-of-pakistans-burgeoning-bourgeoisie/
Riaz Haq said…
Rising per capita income and a growing, young population spending more time online and at Western movies are helping build a mass market in Pakistan, according to Businessweek:

One way to take a city’s economic pulse is to check out where locals shop. In Karachi, Pakistan, shoppers are flocking to Port Grand, which opened in May. Built as a promenade by the historic harbor for almost $23 million, the center caters to Pakistanis eager to indulge themselves. This city of 20 million has seen more than 1,500 deaths from political and sectarian violence from January to August. At Port Grand the only hint of the turmoil is the presence of security details and surveillance cameras. “The whole world is going through a new security environment,” says Shahid Firoz, 61, Port Grand’s developer. “We have to be very conscious of security just as any other significant facility anywhere in the world needs to be.”

Young people stroll the promenade eating burgers and fries and browsing through 60 stores and stalls that sell everything from high fashion to silver bracelets to ice cream. Ornate benches dot a landscaped area around a 150-year-old banyan tree. “Port Grand is something fresh for the city, very aesthetically pleasing and unique,” says Yasmine Ibrahim, a 25-year-old Lebanese American who is helping set up a student affairs office at a new university in Karachi.

One-third of Pakistan’s 170 million people are under the age of 15, which means the leisure business will continue to grow, says Naveed Vakil, head of research at AKD Securities. Per capita income has grown to $1,254 a year in June from $1,073 three years ago.

The appetite for things American is strong despite the rise in tensions between the two allies. Hardee’s opened its first Karachi outlet in September: In the first few days customers waited for hours. It plans to open 10 more restaurants in Pakistan in the next two and a half years, says franchisee Imran Ahmed Khan. U.S. movies are attracting crowds to the recently opened Atrium Cinemas, which would not be out of place in suburban Chicago. Current features include The Adventures of Tintin and the latest Twilight Saga installment. Mission: Impossible—Ghost Protocol is coming soon. Operator Nadeem Mandviwalla says the cinema industry in Pakistan is growing 30 percent a year.

Exposure to Western lifestyles through cable television and the Internet is raising demand for these goods and services. Pakistan has 20 million Internet users, compared with 133,900 a decade ago, while 25 foreign channels, such as CNN (TWX) and BBC World News, are now available. And for many Pakistanis, reruns of the U.S. sitcom Everybody Loves Raymond are a regular treat.

The bottom line: With per capita income rising quickly, Pakistan is developing a mass market eager for Western goods.


http://www.businessweek.com/magazine/pakistans-consumers-flex-their-newfound-muscle-12012011.html
Riaz Haq said…
Here's an interesting story in Express Tribune on the rise of the middle class via banking sector:

Hasan Rizvi used public transport to get around the city, and didn’t have a house of his own 10 years ago, while he studied for a Bachelor of Commerce degree at a college affiliated with University of Karachi. Today, he owns two motorcycles, one car and a modest apartment in a middle-class neighbourhood that he rents out to supplement his monthly income.

Rizvi’s upward movement on the social ladder corresponds with the growth in Pakistan’s banking sector that he has been part of since 2004.

In 2000, the combined profit-before-tax of all Pakistani banks was Rs4.5 billion. It reached Rs80.7 billion in 2009 – almost 17-fold increase over nine years!

With more than 8,000 branches of 41 scheduled banks all over the country, the banking sector has witnessed phenomenal growth in the past 10 years: assets of the banking system have been growing at an average of 14.8 per cent since 2001.

The exceptional growth in the banking sector has created thousands of private-sector jobs. The public sector controlled almost 80 per cent of the banking industry in 1997. However, after privatisation of several banks, the figure reduced to 20 per cent in 2004.

Rizvi said that to buy his apartment he took out a loan from his bank in 2008 at a reduced interest rate. Generally, the mark-up on home loans for ordinary customers is around 20 per cent. But the interest rate Rizvi is paying on his home loan as a bank employee is just five per cent.

He said he now lets out the apartment for Rs14,000 a month. The monthly instalment he pays to his bank is Rs.13,000, which means that without paying a single rupee out of his pocket, Rizvi not only bought his own apartment, but also makes an additional Rs1,000 every month – thanks to the fringe benefits of his bank job.

Similarly, car financing is also cheap for bank employees. While ordinary customers pay a 16-18 per cent mark-up on car loans, a bank employee gets it at a nominal rate of about five per cent.

“Every banker out there drives his own car and lives in, or rents out, his own flat. Banks pay well. And they give you facilities no other employer can afford to give its employees,” Rizvi said.

High profits for commercial banks over the past decade have resulted in the expansion of the banking sector, creating more jobs and promising better compensation packages for middle-class young men and women with tertiary education.

There are many reasons for the expansion in the banking sector in Pakistan. Most importantly, privatisation of nationalised banks spurred growth and increased overall banking standards in the 2000s. The share of private-sector banks in aggregate assets of the banking industry surged from 44 per cent in 2000 to over 77 per cent in 2005....


http://tribune.com.pk/story/311896/the-resurgence-of-pakistans-middle-class-moving-up-the-social-ladder/
Riaz Haq said…
Here's Express Tribune on Saudi Arabia hiring thousands of Pakistani doctors:

Dr Nawaz* (not his real name) is a medical officer (MO) at Mayo Hospital and, like all government-employed doctors in BPS-17, got a Rs15,000 raise last year, taking his monthly pay to Rs44,000. Yesterday, the Saudi Arabian Ministry of Health offered him a job for 6,000 riyals (Rs145,000) a month.

“It’s a handsome offer. I’m going to take it,” said the doctor after an interview with the Overseas Employment Corporation, a Pakistani government agency that is hiring doctors for Saudi Arabia.

At Mayo Hospital, Dr Nawaz has to serve in shifts of up to 48 hours straight. In Saudi Arabia, he will get two days off each week and work eight-hour days.

“Here we have a lot of uncertainty. We cannot get a raise unless we protest and boycott work. I am getting out of it,” he said.

Dr Nawaz has been in a government job for three years and said he would resign before leaving. However, many doctors with more years in government service will likely seek permission from the government to go on leave to Saudi Arabia so they can return to their government jobs upon coming back to Pakistan.

Two private Saudi agencies are also interviewing Pakistani doctors for posts in government hospitals in Saudi Arabia. Saturday was the last day of interviews in Lahore. Interviews in Islamabad will take place from January 11 to 13.

“Around 3,000 doctors have been interviewed in Lahore for different positions including residents and consultants,” an OEC official told The Express Tribune.

He said that the Saudi government had recently built a lot of new hospitals and they were short of doctors. He did not say how many doctors the Saudis aimed to hire from Pakistan.

Residents (trainee doctors) are being offered salaries of between 5,000 (Rs121,000) and 8,000 riyals (Rs193,000), while consultants with a fellowship are being offered between 12,000 (Rs290,000) and 16,000 (Rs387,000) riyals. Senior professors and associate professors are being offered up to 30,000 riyals (Rs725,000) per month.

Last year, the Saudi Ministry of Health hired a thousand Pakistani doctors. Shortly afterwards, government-employed doctors in Punjab went on strike to demand better pay.

“This time they are going to hire more doctors,” said a senior doctor who went for an interview.

“The Indian government has just increased the salaries of public doctors and no Indian doctors are going to Saudi Arabia. They are focusing more on Pakistani doctors this year.” The Pakistan Medical Association warned that the country was losing its best doctors to Saudi Arabia and urged the government to improve the service structure for health professionals to stop the brain drain.

“The government on one hand claims to invest in health and education and on the other it does nothing to stop the brain drain,” said PMA Joint Secretary Dr Salman Kazmi.

“The government announces a pay package for doctors and nurses only when they go on strike or take to the streets. This is no solution. The government needs to develop a structure otherwise we may run out doctors.”

A Health Department spokesman said that the government couldn’t match the salaries offered to doctors abroad, especially when they had only recently been given raises. He said the government spent hundreds of millions of rupees on educating and training doctors and they should consider reasons other than monetary for working in Pakistan.


http://tribune.com.pk/story/318194/saudi-arabia-to-import-thousands-of-pakistani-doctors/
Riaz Haq said…
Here's an Express Tribune story on social mobility and a middle class suburb in Karachi:

The decision by Abdul Manan Shaikh’s family to move to Gulshan-e-Hadeed 10 years ago marked the beginning of his upward social mobility. Hailing from Larkana, where he learned the English alphabet at a government-run ‘taat’ school in sixth grade at an annual fee of less than Rs50, Shaikh has since attended three elite business schools of Karachi in the past decade.

Although he now drives a company car to a textile mill located in SITE every day, and attends evening classes at a business school in Clifton on weekends, he does not want to move out of Gulshan-e-Hadeed. In fact, his family bought a modest house there just three years ago.

So what makes Shaikh stay in a place as far removed from Karachi’s city centre as Gulshan-e-Hadeed?

Affordability

Real estate in Gulshan-e-Hadeed is affordable. A 120-squareyard independent housing unit with a lounge, drawing room and two bedrooms with attached bathrooms costs somewhere around Rs2.5 million. Similarly, 240- and 500-squareyard housing units are available for around Rs5 million and Rs6.5 million, respectively.

The average monthly rent for a 120-squareyard, single-unit house in Gulshan-e-Hadeed is between Rs4,000 and Rs6,000. Compared with other middle-class areas of Karachi, that rate is cheap.

Moreover, an improvement in the city’s inner highways means that it takes almost the same time from these areas to go to the centre of the city. Gulshan-e-Hadeed may be a remote place in terms of kilometres, but an easy drive through National Highway and Sharae-Faisal makes it a choice neighbourhood for mid-level corporate managers, like Shaikh, who have company cars and receive subsidised fuel.

Peaceful and suburban

Although Gulshan-e-Hadeed is 48 kilometres from SITE, and 42 kilometres from Clifton, it offers what many localities closer to the centre of the city do not: better security.

Gulshan-e-Hadeed connects to the main city through National Highway and Shahrah-e-Faisal. Even during the worst law and order situations, one can expect these two roads to stay clear of trouble. Moreover, the ethnic and religious harmony within Gulshan-e-Hadeed, thanks to a heterogeneous population mix, has kept the crime rate under control for years.

Infrastructure
--------------
All streets in Gulshan-e-Hadeed are paved and have ample space to park vehicles. There are no slums. Public transport is easily available, as buses leave for Karachi’s financial district every two to three minutes for the most part of the day.

Other than several degree colleges offering a decent standard of education, Gulshan-e-Hadeed is dotted with both government and private schools, including a cadet college and a branch of Beaconhouse School System in the adjoining Steel Town.

“A school, mosque and market are always at a walking distance from your home no matter which street of Gulshan-e-Hadeed you live on,” a local real estate dealer told The Express Tribune. “How many localities in Karachi offer that kind of closeness to these places?”

The real estate agent’s question is rhetorical. The fact that is that many of Pakistan’s largest cities now have similar suburban areas, which are in many ways similar to the Levittowns that sprouted around the United States after the World War II. Pakistan’s middle class has grown rapidly, and this is where many of them increasingly live.

Indeed, many of the villages that used to surround cities in Punjab’s GT Road belt have since turned into suburbs, no longer truly rural and offering an affordable option of the good life to many of the Pakistan’s up-and-comers. Indeed, these areas are acquiring a character of their own...


http://tribune.com.pk/story/318504/the-rise-of-the-pakistani-middle-class-how-new-suburbs-made-the-good-life-affordable/
Riaz Haq said…
Here's an Express Tribune story on housing trends in Lahore, Pakistan:

...as the middle class of the city has expanded, real estate developers have now increasingly begun to offer more affordable variants of the gated housing community, primarily by reducing the size of the average house. Builders predict the fastest growth in demand for the 125-square-yard duplex or townhouse, which is made affordable by offering an instalment plan for the full price, which can start as low as Rs1.2 million.

“The higher end of the market is saturated. Now the industry needs to cater to the rapidly growing middle class that is seeking comfortable housing facilities,” said Abdul Aleem Khan, who runs a real estate development business based out of Lahore.

“After completing one project with mostly larger units, I announced that I would build one with smaller, more affordable units and an easy instalment plan,” he said. “The response was very positive. People clearly need affordable housing and this [middle class] is a very neglected market segment.”

Eden Housing, one of the largest real estate companies in Pakistan, was the first to create such housing schemes in the 1990s, which typically include better roads and infrastructure than the rest of the city they are in. Since then, this formula has been copied by many developers, who saw how rapidly Eden was able to sell off its inventory.

“To live in such a community, which provides you with good infrastructure and security, is relaxing,” said Mujahid Ali, a resident of Eden Avenue, a gated community in Lahore developed by Eden Housing. “I moved here two years ago and have the peace of mind that there is no street crime or robberies within the scheme’s premises. My job requires me to visit other cities and I used to worry for my family’s safety. But since moving here, I can travel without that tension.”

Many of the facilities have hired a full-time staff of maintenance staff. The security is often provided by one of the more than 600 private security companies that now hire out both equipment and guards to a Pakistani middle class that is increasingly concerned for its safety.

Lahore has at least two dozen of these gated communities. In keeping with the temperament of the people in the Central Punjab region, there are hardly any apartments. Most of the housing units are bungalows, townhouses or duplexes. Some of the largest units can be spread over as much as 1,200 square yards, with the smallest ones generally being no more than 125 square yards. Other common sizes include 150 and 200 square yard units.

Builders often locate these communities close to major thoroughfares. Yet as real estate within Lahore proper grows increasingly scarce, many developers have begun to create such offerings on the outskirts of the city, taking advantage of the improvements in the transportation infrastructure in Punjab that includes a highway network comparable to that in some parts of the developed world. Once Lahore’s Ring Road is completed, such housing projects will be able to offer even faster access to the inner city.

Khan, the real estate developer, says that nearly all of the buyers of houses in these projects tend to be buying their own primary residences. “These schemes are not really meant for investors,” he said.


http://tribune.com.pk/story/328177/the-rise-of-pakistans-middle-class-as-crime-rises-property-developers-beef-up-security/
Riaz Haq said…
Here's a 2011 Dawn Op Ed on cement industry by Pakistan Cement Industry Association leader Tariq Saigol:

While the private sector performed magnificently whenever provided with an enabling environment, the response of the present government remains mired in confusion and inertia. Installed capacity was a paltry nine million tons in 1990, much of it being grossly inefficient as it was based on the outmoded wet process technology. As demand rose, the industry responded by launching a massive expansion programme. Over time, the installed capacity rose to nearly 44 million tons, a magnificent feat by any standards and a credit to the entrepreneurial spirit of the private sector.

However a number of adverse developments from 2007 onwards have brought the GDP growth to some two per cent. It is being reported by the media that the revised allocation after the latest cut, is a measly Rs180 billion. High inflation combined with slump in real estate and increase in the cost of production due to weakness of the dollar, resulting in a spike in coal prices, electricity and freight rates and accounting for 70 per cent of the cost, has adversely affected consumption while production cost soars, retarding construction activity in the private sector.

The current economic environment including low public spending has had disastrous consequences for the cement sector.

Local sales during the first half of the current fiscal year have witnessed an eight per cent year on year drop to around 10.1 million tons. Simultaneously, exports fell from 5.6 million tons to 4.6 million tons. The bad news does not end here. On top of low volumes, the average cement FOB prices fell to $48 per ton during the corresponding period— a level low enough to hardly break even.

Consequently cement sales through the sea route alone declined by about one third. Cement sales to India were also hard hit on account of non renewal of BIS certification (a quality control licence). Burdened with high energy and freight costs as well, the manufactures are desperate for some government support.

But no support is forthcoming. One would expect the government’s economic planners to appreciate the tremendous odds against which the industry is battling. If care of the cement industry is in short supply, then some thought may be given to the enormous exposure of the banks which have provided financing to the tune of $1.5 billion to the sector during 2003-2008.


http://www.dawn.com/2011/03/14/opportunities-missed.html
Riaz Haq said…
Here's an excerpt from a Dawn Op Ed by economist Sakib Sherani:

The estimates of the size of Pakistan’s middle class are truly astounding. Amongst the first to take a stab at this nearly a decade ago, as part of a request from a large fast-moving consumer goods (FMCG) client, I estimated the cohort to be at around 35 to 40 million, using a global definition of ‘middle class’ taking into account just one parameter — income. Later, eminent economic historian and commentator Shahid Javed Burki published his estimate in the context of the expansion of the middle class in the Musharraf years, and also arrived at a figure of around 40 million.

More recently, while preparing my presentation on ‘The Pakistan Opportunity’ for the Marketing Association of Pakistan’s flagship event MARCON 2012, I updated the figures arrived at earlier, making one crucial adjustment: for the estimated size of Pakistan’s undocumented (or, ‘black’) economy. The adjusted figure for the middle class is a staggering 70 million people, or 40 per cent of the population.
-----------
To put this number in perspective, Pakistan’s middle class is larger in size than the individual population of UK, France and Italy — and is a shade smaller than the total population of Germany. In absolute terms, it is the fourth largest middle class cohort in Asia, behind China, India and Indonesia. Affluent, educated, urbanised, and increasingly ‘globalised’, Pakistan’s middle class is not only growing, but is already a voracious consumer. The ADB report estimated total consumption spending by this group at $75bn.

This can be gauged by the furious pace of sales nationwide of cars, motorcycles, cellphones and durable goods over the past few years. Over 1.5 million motorcycles and nearly half a million cars have been sold in the country since 2008 (based on registration data), while the number of cellular subscribers has crossed over 100 million. True, despite such ‘glamorous’ numbers, Pakistan is a two-speed economy where the vulnerability of too many people has increased. Successive shocks to the economy — a severe energy crisis, unprecedented floods for two consecutive years, a fight against militancy which has gone on for several years — have all taken their toll on jobs and incomes.

However, despite these challenges, what amazes observers and commentators alike is the sheer resilience of the Pakistani nation.

Over the past few years, this resilience has come to a large extent from the performance of the rural economy, which has drawn strength from bumper crops and booming prices. The government’s intervention in the market for wheat has poured an additional several hundred billion rupees into the rural economy, propelling demand for cars, motorcycles, tractors, durable goods as well as fast-moving consumer goods (FMCG). In fact, the FMCG sector has witnessed an unprecedented boom in sales since 2008, which has defied expectations — and gravity.

Additional support for consumption has come from remittances from the Pakistani diaspora, and, in part, from the fiscal behaviour of the government which has injected several hundred billion rupees into the economy via borrowing from the central bank. From the foregoing, it is clear that the Pakistani consumerism story is not cyclical, but has structural underpinnings. Rapid urbanisation, a young, mobile and spirited population entering the work force, global connectivity via the Internet, social media and cable TV are all driving aspirations — and conspicuous consumption...


http://www.dawn.com/2012/03/23/consumption-conundrum.html
Riaz Haq said…
Here are excerpts of a Bloomberg piece by Indian journalist Pankaj Mishra on Pakistan's "unplanned revolution":

However, I also saw much in this recent visit that did not conform to the main Western narrative for South Asia -- one in which India is steadily rising and Pakistan rapidly collapsing.

Born of certain geopolitical needs and exigencies, this vision was always most useful to those who have built up India as an investment destination and a strategic counterweight to China, and who have sought to bribe and cajole Pakistan’s military-intelligence establishment into the war on terrorism.

Seen through the narrow lens of the West’s security and economic interests, the great internal contradictions and tumult within these two large nation-states disappear. In the Western view, the credit-fueled consumerism among the Indian middle class appears a much bigger phenomenon than the extraordinary Maoist uprising in Central India.
------------
Traveling through Pakistan, I realized how much my own knowledge of the country -- its problems as well as prospects -- was partial, defective or simply useless. Certainly, truisms about the general state of crisis were not hard to corroborate. Criminal gangs shot rocket-propelled grenades at each other and the police in Karachi’s Lyari neighborhood. Shiite Hazaras were being assassinated in Balochistan every day. Street riots broke out in several places over severe power shortages -- indeed, the one sound that seemed to unite the country was the groan of diesel generators, helping the more affluent Pakistanis cope with early summer heat.
Gangsters with Kalashnikovs

In this eternally air-conditioned Pakistan, meanwhile, there exist fashion shows, rock bands, literary festivals, internationally prominent writers, Oscar-winning filmmakers and the bold anchors of a lively new electronic media. This is the glamorously liberal country upheld by English-speaking Pakistanis fretting about their national image in the West (some of them might have been gratified by the runaway success of Hello magazine’s first Pakistani edition last week).

But much less conspicuous and more significant, other signs of a society in rapid socioeconomic and political transition abounded. The elected parliament is about to complete its five- year term -- a rare event in Pakistan -- and its amendments to the constitution have taken away some if not all of the near- despotic prerogatives of the president’s office.

Political parties are scrambling to take advantage of the strengthening ethno-linguistic movements for provincial autonomy in Punjab and Sindh provinces. Young men and women, poor as well as upper middle class, have suddenly buoyed the anti-corruption campaign led by Imran Khan, an ex-cricketer turned politician.

After radically increasing the size of the consumerist middle class to 30 million, Pakistan’s formal economy, which grew only 2.4 percent in 2011, currently presents a dismal picture. But the informal sector of the economy, which spreads across rural and urban areas, is creating what the architect and social scientist Arif Hasan calls Pakistan’s “unplanned revolution.” Karachi, where a mall of Dubai-grossness recently erupted near the city’s main beach, now boasts “a first world economy and sociology, but with a third world wage and political structure.”

Even in Lyari, Karachi’s diseased old heart, where young gangsters with Kalashnikovs lurked in the alleys, billboards vended quick proficiency in information technology and the English language. Everywhere, in the Salt Range in northwestern Punjab as well as the long corridor between Lahore and Islamabad, were gated housing colonies, private colleges, fast- food restaurants and other markers of Pakistan’s breakneck suburbanization....


http://www.bloomberg.com/news/2012-04-22/pakistan-s-unplanned-revolution-rewrites-its-future.html
Riaz Haq said…
Here's an LA Times story on gated communities in Pakistan:

Reporting from Rawalpindi, Pakistan — The houses and manicured lawns slope up the artificial hill edged by unbroken sidewalks and white picket fences, as children play and residents exchange pleasantries.

This sprawling subdivision called Bahria Town — "Come home to exclusivity," it boasts — operates its own garbage trucks, schools, firehouse, mosques, water supply and rapid-response force — a kind of functioning state within a nonfunctioning one. And all supplied without the bribes you'd pay on the outside, residents say.

"I like living here," said Abdul Rashid, a sixtysomething retired government worker. "It's like you're in a little protected country — tidy, utilities work, the family can relax. If there's any problem, you just ring up security."

The jarring presence of a middle- and upper-class retreat in this increasingly violent nation has been paved, in part, by the involvement of the country's powerful military. Benefiting from laws put in place during British Empire days to reward friendly armies and militias with land grants, the military now controls about 12% of Pakistani state land, by some accounts. And its privileged position allows it to partner with and otherwise route valuable tracts to favored developers.

Bahria Town and its partner, the military-run developer Defense Housing Authority, occupy twice as much land as Rawalpindi, the garrison city 30 minutes from the capital, Islamabad.

In the posh Safari Villas subdivision, past Sunset Avenue and College Road, Mohammad Javed, 69, surveys his pocket garden before heading into his three-bedroom corner house with a beige sofa ensemble and Samsung flat-screen TV. Houses in the neighborhood run from $25,000 to $60,000, well out of reach of most Pakistanis.

Bahria Town has been a hit not only with moneyed Pakistanis but also with returnees. Javed, who owned a gas station in Canada before retiring, hopes to replicate his North American lifestyle. Bahria's protective walls bring security, he said, although he still won't let his grown children visit lest something bad happen beyond its confines. "We meet in Thailand or Canada," he said.
-------
"No one besides the military has such access," she said. Bahria Town advertised on a recent Sunday for retired major generals and lieutenant generals to fill positions at the company, Siddiqa said: "These are his keys" to greater access.

But for resident and food industry entrepreneur Shaheryar Eqbal, these are minor issues relative to what Bahria Town delivers.

"The government should take these communities as a model and replicate them," he said. "The army already has a joint venture with Bahria Town. Things work. Pakistan must get through this terrorism phase, but this could really be the future."


http://articles.latimes.com/2011/oct/06/world/la-fg-pakistan-gated-communities-20111007
Riaz Haq said…
Here's an ET story about rising middle class consumption in Pakistan:

It is the paradox that puzzles everybody: the headline numbers indicate an economy in an abysmal state, but everywhere one looks, there are people shopping like there is no tomorrow. How is this possible? An analysis conducted by The Express Tribune reveals a surprising answer: women.

While the headline GDP numbers suggest sluggish economic growth, not all sectors are underperforming. A closer look suggests that the economic slowdown has been far from uniform, with some sectors booming, while others are in a deep slump. The retail and wholesale sector in Pakistan was worth about $40 billion in fiscal year 2012, and has been growing at 5.3% in real (inflation-adjusted) terms for the past five years, much faster than overall economic growth during that period.

And the benefits of this growth have been visible throughout the country. While large shopping malls opening up has become common place in cities like Lahore and Karachi, national newspapers now carry advertisements for shopping malls in smaller cities like Dera Ghazi Khan, Sukkur, Sargodha, etc as well. The average Pakistani household is very clearly more able and more willing to shop than ever before.

The reasons for this newfound consumerism are complex. Despite all the complaints about inflation, household incomes for Pakistanis in urban areas rose faster than inflation by an average of about 1.5% per year between 2006 and 2011, a period of extraordinarily high inflation rates. (Rural Pakistan did not fair quite as well.) The average household size also fell during that period, further raising per capita gains....
---
The reasons for why women have entered the workforce are manifold. Education levels have been rising rapidly across the board. Fertility rates have dropped from 7.1 in 1980 to just over 3.1 in 2011, causing household sizes to decline. Women with fewer children have more freedom to pursue careers outside the home.

And persistently high inflation may also have forced many families to consider being more open to women working outside the house: a second income can clearly go a long way in changing the fortunes of a household. It has clearly already helped the economy through a particularly difficult time.


http://tribune.com.pk/story/406355/the-rise-of-the-pakistani-middle-class-why-is-the-retail-sector-in-pakistan-booming/
Riaz Haq said…
Here's an ET story on Naya Mazimabad, a new gated community in Karachi:

After many years in Karachi, a housing society was launched on Friday for people who may want to escape the commercialisation of their neighbourhoods but cannot afford to buy pricier property in say DHA, PECHS or Mohammad Ali Housing Society.

Naya Nazimabad City, a project of stockbroker and businessman Arif Habib, is located at a drive of 20 minutes from Water Pump Chowrangi in Federal B. Area. Another big broker, Aqeel Karim Dhedhi, has also put his weight behind the project.

Naya Nazimabad’s sponsors want to outdo Defence Housing Authority (DHA) and Bahria by completing the project in time.

“We are not targeting the people who live in Defence or Bath Island,” said Ovais Sohail, the project manager. “Our clientele will come from Gulshan, New Karachi and Nazimabad.”

The project will be developed in phases with the first one to be finished by 2015. “This entire city will take ten to eleven years to complete.”

Sponsors have hired around 150 personnel of the Frontier Constabulary for security of the project, which is located near the violence-prone Qasba Colony and between Pukhtunabad and Baloch Goth. The number of FC guards will be increased once residents move in, an official said.

Naya Nazimabad, with hills on one side and Manghopir Lake on the other, will house 300,000 people in single-storey units and flats. Since the development of the homes depends on demand, developers were unable to say exactly how many houses will be built.

Hospital, schools and markets are part of the project.

Naya Nazimabad will have its own bylaws. “It’s not like you can buy the plot and construct whatever type of house you feel like,” said Sohail. “The bylaws need to be followed. We will continue to work as the administrator.”

A single-storey house covering 160 square yards is being offered for 3 million rupees, with a 1.2 million-rupee debt component.

The chairman of AKD Securities, Aqeel Dhedhi, said that the project drew on inspiration from the Askari and Navy Housing Scheme projects. “There are no gated societies in Karachi,” he claimed. “Naya Nazimabad will have gates on all three societies that will be properly guarded."
------------
According to him, a well-developed society needs over 1,000 acres of land. “Getting that in Karachi is near-impossible. The city stands divided on ethnic lines. And for all those schemes coming on the Super Highway, security remains a concern.”

Naya Nazimabad is spread over 1,200 acres, most of which belonged to Javedan Cement plant, a company of the Arif Habib Group.

While manager Ovais Sohail was sure that they would be able to provide basic amenities, a lot of questions need to be answered. Karachi’s water utility is under increasing criticism for failing to meet the needs of tens of thousands of people. How would it ensure a supply to Naya Nazimabad? Sohail explained that it helped that they are located right near Hub, the dam from where Karachi gets its water. “Both the main supply conduits pass near the project,” he added. “And I don’t see any reason for us to be denied the supply.”


http://tribune.com.pk/story/294569/naya-nazimabad-city-big-business-group-launches-gated-housing-society-near-sakhi-hasan/
Riaz Haq said…
Here's an ET report on Emaar Alma Townhomes project in Islamabad:

With Spanish and Portuguese architectural designs, imported electrical and sanitary fittings, ironmongery for doors and design-fitted kitchens, Alma Townhomes offer dream homes for those wanting to invest in real estate.

The second phase of the housing project, that was opened for buyers by international real estate developer Emaar on Saturday, saw a large number of potential home owners from twin cities showing up. The two-day event is being held at a sales centre inside Emaar’s 400-acre gated community — Canyon Views.

Situated on the Islamabad Highway near the Grand Trunk Road (DHA Phase-II Extension), the Alma houses target a major segment in the housing market – end users who are looking for an “affordable” house in a safe and sustainable community, according to Emaar Pakistan Head of Development and Projects Shairyar Salim. The company has completed the first phase, which is fully occupied.

The earthquake-resistant housing units, which occupy eight to 12 marlas and have three to four bedrooms, start with a price of Rs14 million, which is slightly high compared to Bahria Town’s Safari Villas and Defence Housing Authority (DHA). A 10-marla house Safari Villas and DHA cost Rs12 million and Rs11.5 million on average respectively, according to a Rawalpindi-based real estate agent Waseem Kiyani.

He said that a ready-made house on 10 marlas in Bahria Enclave can cost around Rs15 million with a one-year payment plan.

Facilities at these housing projects seem comparable, although Salim believes Emaar’s designs are more “advanced”, as they draw on the developer’s experience of making international housing projects.

The Alma Townhomes might also have a superior security apparatus. The integrated community has a three-tier security plan which includes two outer boundary walls and a security patrol on the streets.

“With Emaar, you’re confident that your money will not go down the drain,” said Asif Akhtar, a resident of the Alma Townhomes Phase-I who works for the Army Welfare Trust.

“They deliver on their promises, and their quality of construction and services are simply amazing,” he added.

The houses will be made available under a two-year payment plan and the construction is expected to be completed within that time frame, said Emaar Pakistan Head of Sales and Marketing Uzair Adil.

According to Salim, houses in Phase-I were quick to sell out and a similar response is expected from the second phase. The new community will also have access to facilities that were constructed for the first phase, such as a school and markets.

“The advantage of Phase-II is that the infrastructure is already present and the roads are almost complete,” he added.

Salim went on to explain that the houses will be built in groups of 50 to 60 units, with each group having a park, play area and BBQ area. Plans to build a hospital, shopping malls, community club houses and mosques are also underway.

Shaukat Zia, a civil engineer from Rawalpindi, who was present at the launch with his family, seemed quite impressed after being briefed about the project.

However, he was concerned about the investment, saying that a house in the townhomes seemed only feasible for the elite.

Salim said Emaar is looking to sell around 150 units in the first batch, which is approximately one-third of the total units.

Emaar Pakistan has invested over $2.4 billion in the country since 2007, according to information available on its website.


http://tribune.com.pk/story/437366/coming-soon-for-islooites-a-new-housing-community/

http://www.emaar.com/pakistan/
Riaz Haq said…
World Bank report on population planning in Pakistan:

In 1950, the average Pakistani woman had more than 6 children. This has dropped to a little over 3 but has stalled in recent years.

Men show increasing interest about family planning and contraception due to the financial challenges of raising large families.

Interventions should be backed up by an improvement in the supply of contraceptives and availability of family planning services in accessible facilities.

While healthcare systems have numerous opportunities for women to discuss family planning (e.g. antenatal care, deliveries, mother-and-child health services), far fewer opportunities exist for men. A recent study in Pakistan carried out by the Population Council with funding from the World Bank through the Bank-Netherlands Partnership Program (BNPP) found that men indeed want fewer children and are eager to receive technical information about family planning.

The study explored couples’ decision making processes regarding family size and contraceptive choices. It also looked at community perceptions of male-focused family planning interventions and men’s suggestions for future intervention strategies.

The qualitative study took place in four districts in Punjab, Pakistan and consisted of focus group discussions with men and in-depth interviews with couples. Data from existing quantitative baseline and surveys in the same area were also reanalyzed to assess the impact of male-directed interventions on fertility intentions and behavior.

Recommendations

Make men a primary focus of family planning programs in Punjab. Male-specific interventions should be introduced to augment men’s lack of knowledge of family planning methods, encourage timely decisions on fertility issues, and increase contraceptive use.
Initiate male group meetings with full geographic coverage, facilitated by a local or community resident and conducted by an ‘outsider’ health professional (preferably a doctor). To minimize delay in contraceptive uptake, contraceptives should be made available at the end of these meetings.
Train religious leaders to deliver messages communicating that birth spacing and family planning are allowed in Islam.
Ensure regular supplies to clients in order to decrease supply-side barriers to family planning use.
Service providers should be knowledgeable and skillful, and trained on managing side effects to increase and sustain family planning use.

http://www.worldbank.org/en/news/feature/2014/04/21/men-pakistan-want-fewer-children-family-planning

http://www-wds.worldbank.org/external/default/WDSContentServer/WDSP/IB/2014/02/26/000333037_20140226131753/Rendered/PDF/850620WP0PAKMe0Box382153B000PUBLIC0.pdf
Riaz Haq said…
The Emerging Middle Class in Pakistan: How it Consumes, Earns, and Saves
Dr. Jawaid Abdul Ghani
Professor, Strategy and Marketing Research,
Karachi School of Business and Leadership
jawaid.ghani@gmail.com

During the first decade of the twenty first century, and for the first time in the history of
Pakistan, over half of the households in the country belonged to the middle class (M-class).
During this period (2002-2011) the M-class, defined as households with daily per capita
expenditures of $2-$10 in 2005 purchasing power parity dollars1
, grew from 32 percent to 55
percent of all households in the country, and the number of people in this class doubled from 38
million to 84 million. Real aggregate national consumption increased by about $60 billion, of
which $55 billion was accounted for by the increase in consumption of the M-class. As a result
90 percent of the increase in national consumption during this decade came from the increase in
consumption of the M-class2
. It is not surprising that the Asian Development Bank listed
Pakistan as among the top five countries3
in the Asia Pacific region with the fastest growing Mclass
during 1990-2008 (Chun 2010).
What characterizes the M-class? Bannerjee and Duflo (2008) suggest that holding a relatively
secure job is the single most important characteristic of the M-class. Individuals with higher
levels of “permanent income” are less vulnerable to economic shocks, have lower discount rates
for future rewards and thus invest more in health, education, and other “rent generating”
credentials. Professionals and others in the “service class” with large amounts of human capital
and stable employment relationships are considered the most likely to invest in securing their
own and children‟s future. Indeed, according to Sorenson (2000) it is the level of uncertainty in
“lifetime wealth” and resulting living conditions which result in differences among social
classes4
. M-class values are described as optimism and confidence regarding the future, a
preference for moderation and stability, a willingness to pay a little extra for quality, the “ability
to defer gratification”, and income often based on specialized skills. As a result the M-class has
the “base amount of income to invest in productive activities that contribute to economy-wide
welfare” (Chun 2010), and is more likely to accumulate human capital and savings, and more
inclined towards entrepreneurship (Lopez 2012, Meyer 2012).

http://iba.edu.pk/testibaicm2014/parallel_sessions/ConsumerBehaviorCulture/TheEmergingMiddleClassPakistan.pdf

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