Friday, June 25, 2010

Afghan Mineral Wealth Discovery Inspires Hope in Pakistan

Recent confirmation of vast new mineral deposits, an estimated trillion dollars worth spread in all parts of war-torn Afghanistan, has sparked interest in conducting a comprehensive aerial geological survey in Pakistan.



Significant deposits of copper and gold (Saindak and Reko Diq in Balochistan), zinc and lead (Lasbella, Balochistan), a new gas field (Nawabshah, Sind) and coal (Tharparkar, Sind) have been confirmed in recent years by Geological Survey of Pakistan and Pakistan Mineral Development Corporation in collaboration with mining firms from Australia, China and other nations. Reko Diq alone has estimated reserves of two billion tons of copper and 20 million ounces of gold. The value of the deposits has been estimated at about $65 billion. Based on preliminary data, a nation-wide aerial survey can be helpful in finding significant additional mineral resources in Pakistan.

The conventional exploration methods historically used by geologists have essentially relied on sturdy boots, picks, hammer, shovels, binoculars, an all-weather writing pad and a geographical map of the area to be explored. Advanced remote sensing technology, with gravity, magnetic and hyper-spectral sensors, used by American geologists in Afghanistan flying in US Navy's P3 Orion submarine-hunter aircraft and WB-57 high-flying spy planes has now transformed this process of geological resource mapping. This was at least partly motivated by the lack of roads and dangerous security situation that currently exists on the ground in Afghanistan.

Dr. John Brozena, the Chief Scientist of US Naval Research Laboratory, participated in the Afghan aerial prospecting missions. He described the effort to Ira Flatow, the host of NPR Science Friday, as follows:

" There were two separate (Afghan) airborne surveys during 2006. Ours was in a P-3, a naval aircraft, a research-configured P-3, and our was at sort of 20,000 to 30,000 feet. The second aircraft, equipped with different sensors, was flown at about 50,000 feet. That was the WB-57.

So there's information from several programs between those two aircraft. But what you need to think about when you're looking for all these minerals or thinking about all these minerals is that geologists fuse information from every source that they can get.

So a great deal of this information came from old Soviet maps. You may have heard that the workers within the Afghan Geological Survey, during the time of the Taliban occupation or control of the country, hid the maps that were made during the Soviet period and brought them forward and gave shared them with U.S. Geological Survey, who then worked with us and the WB-57 folks to put together airborne surveys to supplement the on-the-surface maps...

And so when you're thinking of how you would go about looking for all these minerals or finding them, it's really a combination of every piece of information you can integrate, and we've contributed to one part of that....

...our sensors system - and we had a very large group of sensors on the P-3, these I should mention these are former submarine chasers. It was their primary function in the Navy at the time, and the Naval Research Laboratory and its - the Navy Scientific Development's Squadron 1, VXS-1, have a couple of P-3s that are stripped out of all their military hardware, all the sensors for submarine warfare, and all the weapons systems have been removed. And they've been turned into research trucks that can carry lots of different kinds of equipment.

We had gravity, magnetics, hyper-spectral let's see, what else...

A gravity sensor detects variations in mass, local mass variations, which could be either density or amount, like a mountain. And so if you take a topographic map and try to remove the topographic variations, you're left with a good estimate of the density variations in the earth beneath you.

And that's related to both the combination of geologic structure and the materials that are in the area, and that's one type of remote sensing. It's not definitive. You have to calibrate against some ground truth. You have to integrate that information with other things. But knowing the regional densities and density variations tells you quite a lot of information.

The gravity is used primarily for sedimentary basins, looking for oil and gas, as opposed to minerals. You've been hearing in the newspaper about minerals possibly in Afghanistan. ...

The gravity sensor is more appropriate and it was onboard the aircraft looking for sedimentary basins. And in fact, we there were known sedimentary basins around Afghanistan, and what we did was define their extent and their geometries. And there are a couple that look fairly perspective, that the USGS is working on, trying to come up with estimates of potential oil and gas within Afghanistan. And they may have a fair amount of gas and even perhaps a bit of oil...

the gravity does contribute something, because if it gives you the real - the regional geologic context, the folding and faulting and things like that that are important for mineralization.

Then the next primary sensor that would be used would be the magnetics, which, from its sound, detects the variation in the magnetic field locally, around space. And that tells you about a lot about the minerals or the materials that are in the area.

It there's different amounts of magnetic field that are associated with different types of materials, and in combination with the gravity and the ground truth, again, it's a good way to do initial searches for either likely areas for minerals or direct detection.

In the case of something like iron ore, it has a huge magnetic signature directly, and so you can actually see the extent of an ore deposit if you get close enough to it.

One of the problems we had was flying at 20,000 to 30,000 feet. We're a long ways away from some of those things, so their signatures are attenuated. But in the case of a very large ferrous metal deposit, it's you still pick up signatures...

Well, hyper-spectral imaging, if you think of a normal camera as dividing the visual spectrum into three colors, red, green and blue, and then mixing them to make the various colors that you see on a photograph, a hyper-spectral imager divides into many more colors, essentially, many more bands.

The one that we were using on the P-3 divided visual range plus a little bit of the infrared into 72 bands. And so you're looking for emissions, or lack of emissions within each of those bands. And those are diagnostic of, again, materials. But the thing here is you're looking only at the surface. It's you can only see what's on the surface with any type of imaging like that, and...

It's continuing. Rampant Lion is a developmental project at the Naval Research Laboratory that's not particular to platform or sensors. It's a way to put together multiple sensors on whatever platform's appropriate for a particular problem.

So we've operated in Colombia, in Iraq and Afghanistan. We're hoping to operate in the future with other countries, as well, and we have quite a lot of interest in different places in Africa and...


The "other countries" referred to Dr. Brozena apparently include Pakistan, at least according an April 2010 story in Pakistan's Business Recorder newspaper.

Quoting "reliable sources", the Pakistani paper reported on April 2, 2010, that "Pakistan has turned down United States (US) offer of aerial geological survey to explore natural reserves due to security concerns". The story said that the "US was explicably not ready to share the data with Pakistan collected through aerial geological survey, .... Pakistan has accepted Chinese assistance to conduct a comprehensive scientific geological survey of Pakistan, which will be helpful in exploring oil, gas and mineral reserves. According to sources, Defence Ministry has supported the proposal to involve Chinese Geological Survey (CGS) for geosciences co-operation".

As Pakistanis hope to discover new mineral wealth by renewed focus on exploration, I think it is important to remind everyone that Pakistan's most important resource is its people. While the country's anticipated deposits of iron, copper, cobalt, zinc, lead, gold, oil, gas and coal can help generate significant revenues, it is important to ensure that the bulk of additional new revenue is invested in education and healthcare to develop the nation's human resources for its future well-being.

Related Links:

Haq's Musings

Remote Sensing Oil and Gas Fields in Pakistan

Pakistan's Mineral Yearbook 2005

US, NATO Fighting to Stalemate in Afghanistan

South Asia Slipping in Human Development

Abundant, Cheap Coal Electricity in Pakistan

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Tuesday, June 22, 2010

TEDx Launched in Karachi, Pakistan

TED (Technology, Entertainment, Design) is a U.S. based private non-profit foundation that is best known for its conferences, now held in Europe and Asia as well as the U.S., devoted to what it calls "ideas worth spreading." Its lectures, called TED Talks distributed through the Internet, are subject to an eighteen-minute time limit. Speakers are an eclectic mix of people with ideas representing a wide cross section of humanity.

TED is run by Chris Anderson, a Pakistani-born Oxford-educated journalist, who recently returned to the land of his birth to launch TEDx Karachi conference. Organized by Dr. Awab Alvi, aka Teethmaestro, and others, the theme of the Karachi conference held on June 4, 2010 was "What Pakistan Needs Now". Chris Anderson, Curator, TED, Jacqueline Novogratz, Founder/CEO, Acumen Fund, Roshaneh Zafar, Founder/CEO, Kashf Foundation, Asad Umar, CEO, Engro, Monis Rahman, Founder/CEO, Naseeb Networks, Asad Rezzvi, CEO, e-Cube Global and Joshinder Chaggar, Theater Artist. It was attended by a very diverse crowd of 500 people.



According to reports from a number of citizen journalists who attended the conference, Chris talked about the power of the technology and connectivity to transform lives in the developing world. He expects that ubiquitous cell phones will have all the capabilities to connect to the Internet in the developing world. Ubiquitous Internet access combined with online applications and videos will help change how most of us learn, play, think, act and contribute to society.

Some of what Chris talked about is already happening via YouTube. Though it was not mentioned by him, an example of it is the Khan Academy, established by a Pakistani-American Salman Khan in Silicon Valley, which uses Youtube videos to teach a variety of subjects ranging from math to science to personal finance. Availability of these videos via cell phones will enhance opportunities for teaching a much larger number of young people.

TEDx Karachi featured Asad Umar of Engro Power, an appropriate choice in the midst of a major energy crisis requiring creative solutions in Pakistan. Engro is working on clean power plant using flared gas, a CDM project, to produce 225 MW power. In addition, there is a 1200 MW coal-fired plant being built by Engro using Thar coal. Umar believes only 4% of Pakistan's vast Thar coal reserves could take care of all of Pakistan's current energy needs at significantly lower cost.

Monis Rahman, the founder of Naseeb social network as the first US VC-funded company in Pakistan, presented his idea of using the vast network the 90 million cell phones as a job search tools. His company also runs rozee.pk, a job posting site.

Roshanneh Zafar of Kashf Foundation spoke about the work of her foundation funded by the Acumen Fund. Kashf is focused on microfinance to help enable and empower women entrepreneurs in Pakistan. As blogger Nuruddin Abjani who heard her speak put it: "she was one of the most passionate about Pakistan and how she is changing it with her foundation and how each one of us can. She got everyone teary-eyed when she sang the National Anthem and everyone stood and joined her - AS ONE! She showed how ONE person could make ALL the difference in the world. And she is SO DAMN RIGHT! If only we could UNDERSTAND!"

Jacqueline Novogratz of the Acumen Fund, who happens to be Chris Anderson's wife, spoke last with an urgent call for action. She asked, "If not now, when? If not us, who?" As an example, she mentioned the work of Tasneem Siddiqui in "Khuda Ki Basti", a low-cost housing project to deal with the housing crunch from growing rural-to-urban migration in Karachi, and the second similar project now underway in Lahore.

TEDx Karachi is expected to be just the first of many more TEDx events planned in Pakistan to encourage new ideas and inspire Pakistanis to act by finding and implementing creative solutions to address many of their nation's problems. It is in the best spirit of lighting candles instead of cursing darkness.

Related Links:

Haq's Musings

Light a Candle, Do Not Curse Darkness

Pakistani-American Entrepreneurs in Silicon Valley

Smart Phones to Widen Internet Access in Pakistan

Life Goes On in Pakistan

Pakistan's Multi-Billion Dollar IT Industry

ICT: Hope or Hype?

Haq's Musings

Truth About India's IT Revolution

Education in Pakistan

Musharraf's Legacy

Quality of Higher Education in India, Pakistan

Pakistan's IT Industry Takes Off

Pakistan Launches UAV Production Line

Pakistan's Defense Industry Going High-Tech

Pakistan's Software Successes

Pakistan's Industrial Sector

Pakistan's Financial Services Sector

Auto Sector in India and Pakistan

Pakistan Textile Industry Woes

Pakistan Software Houses Association

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Sunday, June 20, 2010

Mobile Internet Revolution in Pakistan

“The times they are a-changin’,” said Steve Jobs in a recent e-mail exchange on Apple's iPhone, “and some traditional PC folks feel like their world is slipping away. It is.”

Google CEO Eric Schmidt has started talking up his company's new motto "Mobile First", urging its developers to start creating versions of new services for smartphones before converting to run on PCs.

"There is a huge thirst for smartphones in emerging markets," Microsoft said in a statement. "For many people, the phone rather than the PC is the main entry point to the Internet, resulting in a high demand for rich communication devices. In order to meet this demand, we have teamed up with MediaTek to facilitate the provision of affordable smartphones," the company added.



As the smart phones prepare to take center stage among computing and Internet access devices, there seems to be a rare consensus emerging among the American technology titans at Apple, Google and Microsoft that the smart phone will be the primary device used to access the Internet...particularly as it relates to demand in the developing world where mobile phones have much higher levels of affordability and market penetration than the personal computers. A logical outcome of such a consensus is the increasingly fierce competition which will significantly drive down the cost and dramatically increase availability of smart phones globally, particularly the developing nations like India and Pakistan where the telecom companies are already building mobile broadband networks. PTCL currently offers 3G service in Pakistan, and a 3G license auction is planned for this year to add more service providers. In addition, the growth of Wi-Fi in South Asia will be an added low-cost data option for smartphones.

BlackBerry service is offered by a number of telecom service providers and widely available in Pakistan's cities, towns and villages. Last year, Time magazine reported from Faridkot, a Pakistani village, that "straddles a paved road about 2 1⁄2 hours' drive from Lahore, and two new gas stations mark the village boundaries. Beyond those are factories and fertile farmland. There is even BlackBerry service". However, the high cost of Blackberry device and mobile Internet service limits it to only about 60,000 elite subscribers in a nation of over 100 million subscribers, about 64% of the population. India, with about 50% cell phone penetration, has nearly 400,000 Blackberry user. The number of Internet users can be expected to rise exponentially as affordability significantly increases to satisfy what Microsoft calls "a huge thirst for smartphones in emerging markets".

The key cost reduction drivers are likely to be similar to the ones seen in the earlier PC battle in 1990s between Wintel (Windows on Intel) and Apple Mac platforms which I personally observed and enabled as a CPU pioneer at Intel. While Macintosh represented a major advance in ease of use with Apple controlling it, the Wintel platform opened up hardware competition with multiple vendors leading to lower prices and tremendous growth in terms of applications and hardware availability. In this new era, the two biggest entries are expected to be Apple iPhone and Google Android, with each trying to outdo the other in terms of ease of use, number of applications and prices.

While Apple currently enjoys dramatic iPhone growth, it's future market share is likely to suffer from the cost barriers it is building into its pricing model which designed to maximize its profits with ongoing revenue stream from third-party content. According to Newsweek, there’s only one place where anyone can buy iPhone apps: Apple’s online App Store. And Jobs keeps a 30 percent cut of the revenue. As for ads, Jobs will sell those, too, and he’ll keep 40 percent. Of course, Jobs also sells music, movies, and books via his iTunes Store, keeping 30 percent. So instead of a one-time sale of a Mac, each iPhone and iPad becomes an ongoing revenue stream.



Currently, Q1/2010 market data shows that Apple iPhone and Google Android are running neck and neck, each selling at an yearly rate of 36 million phones each, while RIM's Blackberry is slightly ahead with about 40 million phones a year. Nokia (Symbian OS) still leads the pack with sales of 86 million smartphones a year. The overall smartphone shipments of about 230 million units still lag the 275 million PCs sold annually. However, a number of forecasters expect smartphones annual sales to equal or exceed PC unit sales by 2011.



Currently, only 7% of Indians and 11% of Pakistanis have the Internet access, according to ITU. Growth in the Internet access anticipated via smartphones can open up a vast new world to a larger number of South Asians. Smartphones have the potential to spur mass literacy, significantly improve health, enable wider access to financial services, help enhance human productivity and afford new opportunities for e-learning for human development to reduce poverty. Growth of Mobile Internet with availability of a new wave of smartphone applications in India and Pakistan has the potential to revolutionize South Asia.

Related Links:

Haq's Musings

Wireless Broadband in Pakistan

Phone Fight

Mobile Internet in Pakistan

Media and Telecom Growth in Pakistan

Poverty Reduction Through Telecom Access

Pakistan's Telecom Boom

Pakistan Tops Text Message Growth

WiMax Rollout in Pakistan

Mobile Internet in Pakistan

Low Literacy Threatens Pakistan's Future

Gender Gap in South Asia

Mobile Financial Services in Pakistan

Financial Services in Pakistan

Distance Learning in Pakistan

Top 5 ICT4D Trends in 2010

ICT4D in Pakistani Hospital

ITCN Asia 2010 Conference in Karachi

State of Telecom Industry in Pakistan

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Friday, June 18, 2010

Kleptocrats Rule India and Pakistan

When Asif Ali Zardari became president of Pakistan, I was reminded of the famous ancient philosopher Aesop who is quoted to have said, "We hang the petty thieves and appoint the great ones to high office". While Zardari's rise from a convict in Swiss corruption case to the highest office in the land of his birth is among the most egregious, it is by no means unique. There are many examples of kleptocracy in Pakistan's neighborhood, as recently outlined in a piece by Mohan Murti, former Europe Director of the Confederation of Indian Industry (CII), published by the Hindu. Here are some excerpts from it:

It is a fact that the problem of corruption in India has assumed enormous and embarrassing proportions in recent years, although it has been with us for decades.

In a popular prime-time television discussion in Germany, the panelist, a member of the German Parliament quoting a blog said: “If all the scams of the last five years are added up, they are likely to rival and exceed the British colonial loot of India of about a trillion dollars.”

One German business daily which wrote an editorial on India said: “India is becoming a Banana Republic instead of being an economic superpower. To get the cut motion designated out, assurances are made to political allies. Special treatment is promised at the expense of the people. So, Ms Mayawati who is Chief Minister of the most densely inhabited state, is calmed when an intelligence agency probe is scrapped. The multi-million dollars fodder scam by another former chief minister wielding enormous power is put in cold storage. Prime Minister Manmohan Singh chairs over this kind of unparalleled loot.”

An article in a French newspaper titled “Playing the Game, Indian Style” wrote: “Investigations into the shadowy financial deals of the Indian cricket league have revealed a web of transactions across tax havens like Switzerland, the Virgin Islands, Mauritius and Cyprus.” In the same article, the name of one Hassan Ali of Pune is mentioned as operating with his wife a one-billion-dollar illegal Swiss account with “sanction of the Indian regime”.

A third story narrated in the damaging article is that of the former chief minister of Jharkhand, Madhu Koda, who was reported to have funds in various tax havens that were partly used to buy mines in Liberia. “Unfortunately, the Indian public do not know the status of that inquiry,” the article concluded.

“In the nastiest business scam in Indian records (Satyam) the government adroitly covered up the political aspects of the swindle — predominantly involving real estate,” wrote an Austrian newspaper. “If the Indian Prime Minister knows nothing about these scandals, he is ignorant of ground realities and does not deserve to be Prime Minister. If he does, is he a collaborator in crime?”

The Telegraph of the UK reported the 2G scam saying: “Naturally, India's elephantine legal system will ensure culpability, is delayed.”

This seems true. In the European mind, caricature of a typical Indian encompasses qualities of falsification, telling lies, being fraudulent, dishonest, corrupt, arrogant, boastful, speaking loudly and bothering others in public places or, while traveling, swindling when the slightest of opportunity arises and spreading rumors about others. The list is truly incessant.

My father, who is 81 years old, is utterly frustrated, shocked and disgruntled with whatever is happening and said in a recent discussion that our country's motto should truly be Asatyameva Jayete.

Europeans believe that Indian leaders in politics and business are so blissfully blinded by the new, sometimes ill-gotten, wealth and deceit that they are living in defiance, insolence and denial to comprehend that the day will come, sooner than later, when the have-nots would hit the streets.

In a way, it seems to have already started with the monstrous and grotesque acts of the Maoists. And, when that rot occurs, not one political turncoat will escape being lynched.

The drumbeats for these rebellions are going to get louder and louder as our leaders refuse to listen to the voices of the people. Eventually, it will lead to a revolution that will spill to streets across the whole of India, I fear.

Perhaps we are the architects of our own misfortune. It is our sab chalta hai (everything goes) attitude that has allowed people to mislead us with impunity. No wonder Aesop said. “We hang the petty thieves and appoint the great ones to high office.”


Here is video clip of the poor Indian children ignored by the kleptocrats:



Related Links:

Haq's Musings

BRIC, Chindia and the Indian Miracle

Zardari Corruption Probe in Switzerland

From Bureaucracy to Kleptocracy

India Targets Rights Groups as Maoists Insurgency Grows

India Deploys 100,000 troops Against Maoists

Taliban Digging Their Own Graves

Bloody revolution in India

Maoists Impact on India's Economy

Are India and Pakistan Failed States?

Arundhai Roy on Maoist Revolt

India's Maoist Revolution

NY Times on Maoists

Can Indian Democracy Deliver?

Grinding Poverty in Resurgent India

Pakistan's Choice: Globalization or Talibanization

The Tornado Awaiting India

Countering Militancy in FATA

Taliban or Rawliban?

Is Indian Democracy Overrated?

Political, Economic and Social Reforms in Pakistan

Fixing Sanitation Crisis in India

Western Myths About "Stable, Peaceful, Prosperous" India

Taliban Target Landed Elite

Feudal Punjab Fertile For Terror

Caste: India's Apartheid

The Three Dangers Facing India

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Tuesday, June 15, 2010

India Emerges as Low Cost Leader in IVF Baby Supply Chain

Cost arbitrage that began with call center outsourcing from the West to India has now found its way into the low-rent wombs of poor Indian women! This new growing business has created a global supply chain with low-cost human babies as the final product brought to the West. This business can cut the cost from over $100,000 in the U.S. to less than $6000 per baby in India. It is explained in an Israeli documentary "Google Baby" scheduled to be aired on HBO in the United States tomorrow. The movie follows an Israeli gay man who decided to have low-cost test-tube babies by outsourcing the job to India.



Wealthy Americans and Europeans, gay or straight, can now shop online for an egg from an egg donor in the West, use their sperm or from sperm another western donor, and implant the embryo into a surrogate mother in India. These people don't want their European genes to be mixed with those of the poor women in India, but the Indian women are acceptable as cheap surrogate mothers.

On NPR Talk of the Nation show aired today, the show host Neal Conan and Google Baby producer Zippi Brand Frank introduced the basic idea of surrogacy in India in the following exchange:

"CONAN: And essentially your film follows a young man from Israel who has been -he and his partner have adopted a baby, has gotten a surrogate baby themselves from the United States. And he says in the end it ended up costing him $140,000. And he thinks, wait a minute, everything else is being outsourced to India. Why not this?

Ms. FRANK: Exactly. That's what - that's exactly his start-up(ph). I mean he did it - he did his first baby through 100 - he paid 140,000 U.S. dollars and he decided he's going to find the cheapest way to do the other babies. And now his business is really growing rapidly, I would say. And it costs, if you go to India and you still want to have a Western egg donor but you can, you know, you can compromise for an Indian surrogate mother, so you pay only 40,000 U.S. dollars, and that's the maximum you can get for a baby."


The NPR radio show featured a couple of soundbites from an Indian obstetrician Dr. Nayna Patel in Anand, Gujarat, who is actively promoting her India-based surrogacy business in the West.

"Dr. NAYNA H. PATEL (Akanksha Infertility Clinic): Hello? Yes. I'm so sorry, Doctor, but you know it's not an easy procedure. It's a very complicated procedure, surrogacy, and they should understand all the implications before they go into it. Yeah? So that - yes. The husband and wife themselves should come, understand the whole procedure, and then decide whether they would want to go for it or not, okay? When they come personally we can discuss it, okay? Okay. Welcome. Bye-bye. No, no, no, most welcome. Bye-bye."

"Dr. PATEL: I am Dr. Nayna Patel, and I'm practicing in vitro fertilization (unintelligible) in Gujarat, India. And (unintelligible) started practicing surrogacy. And these are a few of my surrogates who work with me. All of my surrogates are very humble, simple, nice females. And they are very committed, they are very dedicated, they're very religious. And they want to do their job in a very dedicated manner. These surrogates are (unintelligible) and they always deliver under my care and supervision. And this, as a clinic, we try to supervise as a whole procedure."


Dr. Nayna Patel's IVF and cheap surrogacy business has dramatically picked up since her appearance on Oprah Winfrey Show back in 2006.

It is common in the United States for IVF children to know and maintain contact with their surrogate birth mothers. However, the poor Indian mothers do not want to acknowledge their surrogate status in public, nor do they want any connection with the babies they carry to term because of social taboos. Critics argue that the surrogacy practice in India is not only exploitation of poor women, but it is also a violation of the UN Convention on the Rights of the Child which states that all children have a right to know their parents.

Here is a video on ethical and moral implications of legalized commercial surrogacy in India:



Related Links:

Haq's Musings

Status of Women in India

Gender Inequality Worst in South Asia

Grinding Poverty in Resurgent India

Women's Status in Pakistan

A Tale of Tribal Terror

WEF Global Gender Gap Rankings 2009

India, Pakistan Contrasted 2010

Female Literacy Through Mobile Phones

Pakistan's Woman Speaker: Another Token or Real Change

Female Literacy Lags Far Behind in India and Pakistan

Female Genocide Unfolding in India

Honor Killings in India

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Wednesday, June 9, 2010

Op Ed on Pakistan's Budget 2010-2011

Guest Post by Dr. Ashfaque H. Khan, Dean of NUST Business School, Islamabad.

Abdul Hafeez Shaikh, the newly-appointed finance minister, presented his first and the government’s third federal budget in the National Assembly on June 5, 2010. Budget 2010-11 is the first budget under the new National Finance Commission Award and as such it posed difficulties far many analysts, experts, trade bodies and other segments of our society in understanding the budget.

The varieties of comments made in the print and the electronic media on the budget reflect such misunderstandings. One such misunderstanding deals with the size of the allocations made to the health and educational sectors.



Dr Shaikh’s budget speech was unconventional in several respects. Firstly, more than half of the speech was extempore, reflecting his confidence in the budget. No finance minister has ever moved an inch away from the written text of the budget speech. Secondly, Dr Shaikh gave an Economics 101 lecture to his fellow parliamentarians, particularly explaining inflation, the burden of public debt and the crowding out phenomenon.

Thirdly, he was upright in acknowledging the many failures of his government in the last two years and expressed his resolve to address the challenges. Fourthly, he was extremely critical about the performance of the Public Sector Enterprises (PSEs) and the damage they have caused to the economy. In so doing, he indirectly criticised his own government in treating these enterprises as sources of unproductive employment.

Fifthly, he bitterly criticized his predecessor for “indiscriminate borrowing” and doubling public debt in a short period of time. This requires courage to call spade a spade. I am glad that I was not the only person to have expressed concerns on such indiscriminate borrowings and the rising debt burden.

Budget 2010-11 has been presented with a view to setting new directions for a responsible economic and fiscal management. This budget is a major departure from the last two budgets as it aims to make concerted efforts to address the prevailing economic challenges.



Pakistan’s current economic challenges include: declining investments and slower economic growth; rising unemployment and poverty; persisting double-digit inflation; unsustaining debt burden; depreciating exchange rate; power mismanagement; and waning confidence of the private sector.

The first and foremost principle in addressing the challenges listed above is to stabilize the economy. Macroeconomic stability is the pre-condition to generate growth momentum. Stabilization is therefore the main objective of the Budget 2010-11. Through this budget, the government intends to reduce inflation which is the best relief that it can provide to the poor people of this country. Targeting budget deficit at 4.0 per cent of GDP represents the government’s resolve in reducing “twin” deficits (budget and current account) and bring debt situation under control.

Reduction in deficits and burden of debt would release pressure on interest rates which will allow the SBP to reduce the discount rate, generate growth momentum and create productive employment opportunities.

While stabilizing the economy through the budget the government has not forgotten the poor and the fixed income group. The allocation to the Benazir Income Support Program has been increased from Rs46 billion to Rs50 billion, hence benefiting four million families. This is a targeted cash transfer program for the poor alone to minimize their difficulties caused by higher inflation in general and food prices in particular.

The budget also talks about the exit strategy of the beneficiaries of the BISP in line with the international best practices. The salary of the government servants has been increased (50 per cent) beyond their expectations. The pensioner has also not been forgotten as he would see it rising by 15-20 per cent. These were the human face of the budget.

The budget also acknowledges the dominant role of the private sector in promoting growth and creating employment opportunities. The role of the government should only be restricted to creating conducive environment for the private sector through right policies and investment in physical and human infrastructure. Currently the government is actively involved in several public sector enterprises such as PEPCO, PIA, Railways, Pakistan Steel, PASSCO, TCP, NHA, Utility Stores etc.

These PSEs are inefficient and poorly managed and are a burden to the national exchequer. Can a poor country like Pakistan afford to pay Rs245 billion from the budget to keep them afloat? The answer is obviously no.

Dr Shaikh has committed himself to restructure these eight PSEs in 2010-11 and make them financially solvent as part of the reform agenda. History around the world has shown that such PSEs cannot be made financially solvent through restructuring.

The only solution is to bring them on privatization mode and sell them to the private sector even if we get a single rupee. At least it will save Rs245 billion of the national exchequer which can be diverted to the development program. It is sad that Dr Shaikh did not talk about privatization of these PSEs and did not put any amount under privatization proceeds in the budget. Do we sill need ministry of privatization?

Dr Shaikh and his team should be congratulated for presenting a sound budget in a most difficult and challenging time. This budget is fully consistent with my thoughts which have appeared in this column. This was the only way forward to address the current economic challenges. This budget is not a populist budget but a realistic one.

Budget 2010-11 can be termed as stabilization budget with human face and reform agenda. Mr Prime Minister! Your economic team has presented a sound budget. It would need your support in executing and achieving the revenue, expenditure and budget deficit targets. These targets, though ambitious, are yet achievable, provided the provincial governments and yourself keep supporting Dr Shaikh and his team.

Note By Riaz Haq: Here are some of the highlights of Pakistan Economic Survey 2009-2010 released by Ministry of Finance:

* Gross domestic product (GDP) was at 4.1 percent as compared with 1.1 percent of the previous fiscal year.
* Inflation is less severe as compared to last year’s 22 percent but is still in double digits at 11.5 percent.
* Current account deficit is expected to decline to below three per cent of Gross Domestic Product during the outgoing fiscal year.
* External current account deficit was contained to 5.6 % of GDP (US dollars 9.3 billion) in fiscal 2008-09, from a high of 8.3 % of GDP in 2007-08 (US dollars 13.9 billion)
* Economic growth in 2009-10 is provisionally estimated at 4.1 %, higher than the targeted growth of 3.3% percent.
* The fiscal deficit was slashed to 5.2 % of GDP in financial year 2008-09, from 7.6 % of GDP in 2007-08, a fiscal adjustment of 2.4 % of GDP.
* Foreign Exchange Reserves have been rebuilt to nearly dollars 16 billion, from their low of under dollar 6 billion in October 2008.
* International credit rating agencies upgraded Pakistan from CCC plus to B Minus by S&P, while Moody’s revised its outlook to Stable.
* Manufacturing Sector posted a positive growth of 5.2 % during the current fiscal year.
* 44 % of population has access to sanitation, while 65 % to clean water.
* Pakistan has become the largest user of Compressed Natural Gas (CNG) in the world, as per the statistics issued by International Association of National Gas Vehicles on CNG. Presently, 3105 CNG stations are operating in the country and 2.4 million vehicles are using CNG as fuel.
* Literacy Rate has improved from 56% to 57%. Literacy rate in Punjab is (59 %), Sindh, (59%), Khyber Pakhtunkhwa (50%) and Balochistan at (45%).
* Social protection measures were expanded from around Rs 8 billion two years ago to around Rs 80 billion this year.

Related Links:

Pakistan Budget 2010-2011 in Brief

Pakistan's Economic Performance 2008-2010

Incompetence Worse Than Corruption in Pakistan

Pakistan's Circular Debt and Load Shedding

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Pakistan's Energy Crisis

Karachi Tops Mumbai in Stock Performance

India Pakistan Contrasted 2010

Pakistan's Foreign Visitors Pleasantly Surprised

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 Decade 1999-2009

South Asia Slipping in Human Development

Asia Gains in Top Asian Universities

BSE-Key Statistics

Pakistan's Multi-Billion Dollar IT Industry

India-Pakistan Military Comparison

Food, Clothing and Shelter in India and Pakistan

Pakistan Energy Crisis

IMF-Pakistan Memorandum of Economic and Financial Policies

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OPEN Forum Attracts 600 Pakistani Entrepreneurs in Silicon Valley

OPEN Forum 2010 in Silicon Valley, California attracted nearly 600 people, including entrepreneurs, venture capitalists, engineers, lawyers, physicians and others on June 5, 2010. It was an all day conference organized by the Organization of Pakistani Entrepreneurs (OPEN) in Silicon Valley featuring 5 plenary sessions, and over a dozen break-out sessions addressed by 58 speakers and panelists on special topics of interest to various groups of attendees. The conference had a large number of sponsors, including dozens of Silicon Valley companies founded or managed by Pakistani-Americans.



This post is based on partial coverage of the event. For more details, please view the conference video recordings on facebook available via Vpype, a startup founder by Pakistani-American entrepreneur Shoieb Younus.

The conference was opened by Naeem Zafar, President of OPEN Silicon Valley, who briefly described the conference agenda and the organization's objectives and its various events and activities for the audience. It was followed by a morning keynote featuring Faysal Sohail who manages energy, materials and IT portfolios for CMEA Capital with over a billion dollars in venture investments.

Morning Keynote:

Keynote speaker Faysal Sohail described the last decade of 2000-2009 as "zero decade" in terms of returns for the US venture capital industry. He then went on to explain the massive impact of small start-ups as the employment engine of the nation's economy, citing Kauffman Foundation's data that virtually all of the net new jobs from 1980 to 2005 were created by companies less than 5 years old.

Faysal sounded an optimistic note about opportunities for innovation and entrepreneurship that lie ahead for his audience at OPEN Forum 2010. Emphasizing the fact that the United States remains #1 in innovation, he picked energy, healthcare and information technology sectors for tremendous opportunities for researchers and entrepreneurs.

In energy sector, Faysal said that the nearly 2 billion people in Asia coming out of poverty will need energy to drive their productivity. He specifically mentioned the areas of energy production (solar, wind, bio fuels), energy storage (grid scale storage) and efficiency (LEDs, Sensors).

In healthcare, Faysal mentioned new drugs (cancer, diabetes, pain management) and new devices (hearing aids, optical, surgical equipment).

In information technology, he brought up web 2.x (social web, mobile), strategic outsourcing (tech platform, outsourcing), and software as service (enterprise solutions).

In closing, Faysal declared that "the best is yet to come", and the opportunities for entrepreneurship are vast with large global markets and capital-efficient startups relying on outsourcing of infrastructure and tools.

Social Entrepreneurs Panel:

Moderated by Saad Khan, a partner at CMEA Capital, this panel featured Salman Khan of Khan Academy, Leila Janah of Samasource, Tabreez Verjee of Kiva, and Misbah Naqvi of Acumen Fund.

The panelists described what they do as social entrepreneurs and what led them to it. Salman Khan started at a hedge fund before he was inspired by a cousin and her friends to create Khan Academy for tutoring math and science via his Youtube channel.

Leila Janah of Samasource went to work for the World Bank in Washington to fight poverty, but she was soon soured by the bank bureaucracy whose focus was on self-interest rather than the interest of the world's poor which it is supposed to serve. Her first day at the World Bank was spent at a seminar advising bank employees on financing a second home. She quit her job to found Samasource, which is a non-profit service that seeks contracts from companies in the West, and slices large contracts into microwork tasks like data entry, software testing, transcription and research outsourced to the poor, but educated, workers abroad.

Tabreez Verjee serves on the board of Kiva, a Silicon valley startup that combines microfinance with the Internet to create a global community of people connected through lending. The company allows lenders to lend amounts as small as $25 and choose who to lend to via the Internet. The funds are disbursed to small entrepreneurs and loans repaid using existing microfiance companies operating in different parts of the world. Kiva is working with Asasah microfinance in Pakistan.

Misabah Naqvi is the business development manager of Acumen fund which invests in social enterprises. She was originally a banker in Pakistan before joining the Acumen Fund. The fund is a business rather than a charity, and puts all of its returns back into the fund to support more social efforts based on sustainability, scale and social impact. In addition to investing in microfinance, the Acumen fund has invested in Saiban which is building low-cost housing in Pakistan.

Reasons to Believe in Pakistan:

Mir Ibrahim Rahman, the young CEO of Pakistan's private TV channel Geo TV, previewed his planned media campaign "Reason to Believe" or RTB in Pakistan. It is designed to offer "reason to believe" to build a solid foundation for progress. Mir articulated a whole series of reasons to believe in Pakistan's future ranging from its young population, its vast energy resources in form of coal deposits, its great potential as a food basket, and its long coastline, to its strategic location in terms of world trade in energy, goods and services.

He said Pakistan's acquisition of nuclear assets required a great deal of hard work and tenacity, great qualities that can also be put to use in developing Pakistan's industrial and technology sectors. Mir said Pakistanis should celebrate their dual heritage from the great Indus civilization and their Islamic ancestors in Baghdad.

He lauded the role of Pakistani expatriates in funding Pakistan to the tune of $10 billion a year, and suggested there was a lot of room for growth in investments from overseas Pakistanis.

He expressed optimism that the birth pangs of democracy will start to pay dividends in Pakistan in the near future. He pointed to the successful passage of the 18th amendment, the consensus on the NFC award for allocation of federal funds to various provinces, and the assertive judiciary as good signs for the nation.

Electric Vehicles Panel:

The panel included Richard Lowenthal, Founder and CEO of Coulomb Technologies and Maurice Gunderson, senior partner at CMEA Capital. It was moderated by Faysal Sohail, MD of CMEA.

Lowenthal, who said he drives BMW's MINI-E all-electric car, outlined the benefits of electric vehicles in terms of "no tail-pipe" and low cost of "2 cents a mile". He was immediately challenged by Gunderson on both counts, and responded as follows:

1. The 2 cents a mile cost does not reflect the true cost of electricity generated by burning coal. A lot of the cost of coal-burning is externalized by power companies in terms of the dead and sick coal miners and environmental pollution and other costs to society.

2. The little tail-pipes in cars are simply replaced by huge smokestacks at coal-burning power plants.

3. Policy drives economics; Economics does not drive policy. Putting price on carbon by taxing CO2 emissions can fundamentally alter the cost calculations to make renewables more competitive.

Both panelists agreed that there is a need for a comprehensive energy policy that reflects the true costs of various fuels for optimal mix of energy sources in the United States. Electric cars make sense if they result in overall environmental improvements at reasonable costs. In addition to solar, wind and biofuels options, Gunderson argued for more nuclear power as well.

Assuming that the earth is a hollow sphere filled with oil, Gunderson said he did a calculation back in the 1970s on how long the oil would last at the rate of increase in the 1970s. He concluded that the oil would last 86 years. Although the rate of increase in oil consumption has declined since the 1970s because of significant improvements in the internal combustion engine efficiency, the fact remains that the earth is not a hollow sphere filled with oil. Eventually, the oil and other fossil fuels will run out, and new energy sources will be needed to sustain reasonable standards of living.

Lowenthal discussed the key issues in electric vehicles adoption ranging from the size and capacities of new batteries to the frequency and duration of charging and the need for recharge infrastructure for it. Silicon Valley's Tesla Motors is solving the problem by putting in a very large battery pack to have a range of 300 miles. Shai Agassi's Better Place in Israel is pushing battery swap-out stations along the highways.

Birds of Feather Sessions:

There were a number of BoF sessions at the conference. Three such sessions were offered to alumni from NED University in Karachi, University of Engineering and Technology (UET) Lahore and Ghulam Ishaq Khan (GIK) Institute in Topi, KPK. Among these, I attended the NED BoF which attracted about 40 NEDians, more than the other two. Several NEDians could not attend because they were speakers or panelists at other session that conflicted in time with the NEDians BoF.

Afternoon Keynote:

The keynote speaker was Iqbal Quader, the founder of Grameephone in Bangladesh and currently the head of MIT's Legatum Center in Cambridge, Massachusetts. He shared the story of how he persuaded Dr. Muhammad Younus of Grameen Bank to invest in Grameenphone. He used the analogy of Grameen's cow loans to poor villagers in Bangladesh to describe how the mobile phone could be a thought of as a cow that produces revenue by enabling people in remote villages to communicate with others to stay connected and improve productivity. The revenue from the phone calls would enable better livelihood for small entrepreneurs and help repay the loans to expand access and empower villagers. Younus was persuaded, and the rest is history.

Quader believes that the proliferation of mobile phones offered by private telecom companies as a communication tool has empowered Bangladeshi people to improve their lives in many ways...something that was unimaginable under the government owned phone monopoly which concentrated power with 67% of the phones in the capital city of Dhaka. The proliferation of cell phones means devolution of power to the people, and it has far reaching positive impact for society at large in developing nations. The dramatic improvements in ordinary people's ability to communicate, organize and do business anytime, anywhere will have positive results in terms of economics and politics of the nations experiencing the mobile communications revolution.

Summary:

I think OPEN Forum 2010 was well worth the time and the energy that was put into it by the organizers and the attendees alike. I believe the conference clearly succeeded in its immediate objective of bringing aspiring entrepreneurs of Pakistani origin together with many investors and mentors in Silicon Valley, informing the audience and stimulating discussion of new ideas and opportunities, and educating the speakers and the attendees. But its real impact won't be apparent until there is a significant critical mass with many more successful Pakistani entrepreneurs inspired by what they saw and heard at OPEN Forum 2010.

Related Links:

Is Pakistan Too Big to Fail?

Thorium Energy to Save Planet Earth?

Fighting Poverty Through Microfinance in Pakistan

Silicon Valley Summit of Pakistani Entrepreneurs

Pakistan's Multi-Billion Dollar IT Industry

Media and Telecom Sectors Growing in Pakistan

Pakistan's Middle Class Growth in 1999-2009

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Wednesday, June 2, 2010

Pakistan's Media and Telecom Boom Continuing

Pakistan's media and telecom revolution that began during the Musharaf years is continuing unabated.

In addition to financial services, the two key service sectors with explosive growth in last decade (1999-2009) in Pakistan include media and telecom, both of which have helped create jobs and empowered women.

Pakistan is among the five most dynamic economies of developing Asia in terms of increased penetration of mobile phones, internet and broadband, according to the Information Economy Report, 2009 published by the United Nations Conference on Trade and Development (Unctad). Among the five countries in terms of mobile penetration in South Asia, Pakistan is placed at number three followed by Sri Lanka and Bhutan. Iran and Maldives are ranked above Pakistan.

In the area of internet penetration, Pakistan is placed third and for broadband penetration the country is ranked fourth.



The report sees the mobile industry as a ‘cash cow’ in some countries noting that Pakistan was experiencing significant macroeconomic problems, yet the mobile market steams ahead as the effects of the global economic recession on the global mobile network are so far limited.

With an increase of 38% over 2008, the television advertising revenue for 2009 in Pakistan was Rs 16.4 billion ((US $200m), accounting for about half of the total ad market during the year. The TV ad revenue is continuing to rise as a percentage of total ad revenue, mostly at the expense of the print media ads. The biggest spenders in 2009 were the telecom companies with Rs 8 billion, followed closely by fast moving consumer goods (FMCG) sector with Rs. 7 billion, as reported by Pakistan's GeoTV channel. FMCG products, as opposed to consumer durables such as home appliances, are generally low cost and replaced or fully used up over a short period of days, weeks, or months, and within one year. Other important sectors contributing to ad revenue are financial services and real estate, but these sectors have experienced significant slowdown with the current economic slump.

According to Daily Times, Chairman Mushtaq Malik of the Pakistan Electronic Media Regulatory Authority (PEMRA) has said that the cable television sector “is the fast growing segment among the electronic media ventures”. In the first 100 days of the current government, he has claimed that new licenses for 16 satellite TV channels, 10 FM radio stations, and 232 cable TV channels have been granted. It is anticipated that this would lead to additional investment worth Rs. 2.5 billion, generating 4000 additional jobs in this sector. The cable television sector alone is employing some 30,000 people in the country.

APP reported that overall size of Information and Communication Technology (ICT) industry in Pakistan has crossed more than $ 12 billion, of which $ 1 billion is foreign direct investment (FDI). This was asserted by the Adviser to Pakistani Prime Minister on Information Technology Sardar Latif Khan Khosa while speaking at the inauguration of 5th Information & Communications Technology Exhibition and Conference - CONNECT 2010 at Karachi Expo Center.

He said Pakistan has one of the fastest growing the tele-density in the world, currently at 63.5 percent, while neighboring India is just 37 percent.

Khosa said there are more than 95 million mobile connections in the country and are still growing in numbers. This is exponential growth as mobile telephone market has seen a 14-fold increase since the year 2000, he added.

A pilot program in Pakistan has demonstrated the effectiveness of pushing mass literacy through the use of cell phone text messaging capability. The five-month experiment, initiated by United Nations Educational, Scientific and Cultural Organization (UNESCO), targeted 250 females aged 15 to 24 years old in three districts of Pakistan's Punjab province. In this pilot project which successfully concluded last month, the participant who have just completed the basic literacy course, were given a mobile phone each. They received three text messages a day in the local language. They were required to practice reading and writing the messages in their work book and reply to their teachers by text.

Here's a recent IEMR research report forecasting 135 million mobile phone subscribers in Pakistan by 2014:

"The wireless penetration rate is still low in Pakistan at approximately 60% in 2009, and we expect that the country's wireless market will continue to show strong growth. Our model forecasts that total mobile subscribers in Pakistan will increase from 96 million in 2009 to 134.8 million in 2014," said Nizar Assanie, Vice President (Research) at IEMR. "Mobilink will continue to be the largest player in Pakistan's mobile operator space over the next five years. We expect that Mobilink will have 36 million mobile subscribers in 2014. Also, given the latest quarter numbers, our model predicts that Ufone will have 25.8 million, Telenor will have 29 million, and Warid will have 25.3 million mobile subscribers by the end of 2014." "ARPU levels remain low in Pakistan's mobile operator space. We expect that the industry average ARPU will remain in the range of US$ 2 - US$ 3 over the next five years. Our model predicts that, in 2014, Mobilink's monthly ARPU will be at highest among operators at US$ 2.64. The operator with the lowest monthly ARPU will be Warid Telecom with US$ 1.67 in 2014," said Mr. Assanie.

IEMR's Pakistan Mobile Operator Forecast covers up to 50 financial and operational metrics on wireless operators in Pakistan - Mobilink (Pakistan Mobile Communications Limited), Ufone GSM, China Mobile Ltd. (Zong, formerly Paktel), Instaphone, Telenor ASA, and Warid Telecom International. Notable highlights of the 1Q10 Pakistan Mobile Operator Forecast include: * In terms of shares of total subscribers, we expect that Mobilink's market share will decline over the next five years, from 30% in 2009 to 26.7% in 2014. On the other hand, we expect China Mobile Pakistan's market share to increase from 8% in 2009 to 13.7% in 2014. We also forecast that market shares at Ufone, Telenor, and Warid will be approximately 19.2%, 21.6% and 18.8% respectively in 2014.

* Given the excellent performance by Norway's Telenor in Pakistan's wireless market in the recent past, our model forecasts that its EBITDA margin (calculated as EBITDA / reported revenue) will be increasing from about 23% in 2009 to 35% in 2014. On the other hand, we think that Mobilink will maintain its EBITDA margin of approximately 35% over the forecast period, 2010 - 2014.


Here's a video titled "I Am Pakistan":



Related Links:

Poverty Reduction Through Telecom Access

Pakistan's Telecom Boom

Pakistan Tops Text Message Growth

WiMax Rollout in Pakistan

Mobile Internet in Pakistan

Low Literacy Threatens Pakistan's Future

Gender Gap in South Asia

Mobil e Financial Services in Pakistan

Financial Services in Pakistan

Distance Learning in Pakistan

Top 5 ICT4D Trends in 2010

ICT4D in Pakistani Hospital

ITCN Asia 2010 Conference in Karachi

State of Telecom Industry in Pakistan

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