Wednesday, September 28, 2011

India Back to "Hindu Growth Rate" in 2012?

The "Hindu rate of growth" is a derogatory description of the low annual growth rate of the pre-1991 Indian economy, which stagnated around 3.5% from 1950s to 1980s, while per capita income growth averaged 1.3%. In what appears to be an exaggeration, the Financial Times in its latest issue has an article titled "India’s abject return to talk of Hindu growth rates".

Written by James Lamont, the FT story says that "India trails in terms of attracting foreign capital and beating inflation.... some economists and industrialists fear India’s economy could shrink back towards what was derisively called the “Hindu rate of growth” from initial projections of 9 to 7 per cent this year."



With the India story unraveling due to big corruption scandals and governance deficit this year, the FDI fell by 28%, the second consecutive year of decline and the first such large decline since the opening up of the economy in 1991-92. As a result of this decline, the present level of $27 billion of FDI inflows is the lowest in four years.

Spurred by a tidal wave of hot money from the US Federal Reserve stimulus, the big drop in Indian FDI has been largely offset by the surge in FII in the last two years. In fact, the outflow of $15 billion was more than made up by inflows of $29 billion — their highest ever — in 2009-10. This level was largely maintained in 2010-11 as well, with a small increase. These hot money inflows continue to be a source of instability in the face of the Indian Central Bankers attempts to cool rising inflation. Such hot money inflows accounted for 58% of India's forex reserves in March 2010 compared to 47.9% in 2009, according to the Financial Express.

Even after the central bank boosting interest rates six times this year to 8.25 percent, India’s benchmark wholesale-price inflation has accelerated to a 13-month high of 9.78 percent in August 2011, according to Bloomberg.

It is very likely that the Indian central bankers will continue to maintain a tight money policy in the foreseeable future, and slow down the economy further to fight continuing inflation. I do think, however, that the Indian policymakers will try and orchestrate a soft landing in 2011-12, while still maintaining significantly higher gdp growth rates than the pre-1991 "Hindu rate of growth".


Related Links:

Haq's Musings

India Story Unraveling

India Soft Landing in 2011?

Inaction Against Corruption in South Asia

2G Corruption Scandal in India

Musharraf at Davos 2008

Imran Khan at Davos 2011

Delhi in Davos: How India Built its Brand at the World Economic Forum

FDI India, Pakistan, China and Vietnam 2003-2010

China's Trade and Investment in South Asia

India and Pakistan at Davos 2009

India's Twin Deficits

Pakistan's Economy 2008-2010

Tuesday, September 27, 2011

Should Pakistan Tell America to Take its Aid and Shove it?

"Aid only postpones the basic solutions to crucial development problems by tentatively ameliorating their manifestations without tackling their root causes. The structural, political, economic, etc. damage that it inflicts upon recipient countries is also enormous.” These words were written in a letter to UN to refuse aid by Finance Minister Berhane Abrehe of Eritrea which is the 7th poorest nation in the world.

Can Pakistan (per capita annual income of $3000) do what Eritrea (per capita annual income of less than $700) has already done with UN aid? Say "No" to foreign aid?



Pakistan Movement for Justice party leader and cricket hero Imran Khan thinks so. Echoing the sentiments of the Eritrean minister, Imran Khan told the BBC recently that "if we don't have aid we will be forced to make reforms and stand on our own feet."



Let's examine in a little more detail the proposition that Pakistan should tell the United States to take its aid and shove it:

1. Only $179.5 million out of $1.51 billion in U.S. civilian aid to Pakistan was actually disbursed in fiscal 2010, according to a report by the United States Government Accountability Office.

2. Even if the entire $1.51 billion had been disbursed, it would account for only $8.39 per person, about 0.28%, a very tiny fraction of Pakistanis' per capita income of $3000 a year.

3. Pakistan ended last fiscal year in June 2011 with a small current account surplus of about half a billion US dollars. It received inflows over $40 billion in the form of export earnings ($25 billion), remittances from Pakistani diaspora ($10 billion), and FDI, FII and other accounts. The actual US aid of just $179.5 million out of over $40 billion in 2010-2011 is a negligible figure.

4. Of the $179.5 million received by Pakistan in 2010, $75 million of the US aid funds were transferred to bolster the Benazir Income Support Program, a social development program run by the Pakistani government. Another $45 million was given to the Higher Education Commission to support "centers of excellence" at Pakistani universities; $19.5 million went to support Pakistan's Fulbright Scholarship program; $23.3 million went to flood relief; $1.2 billion remained unspent.



Although refusing US aid will hurt the anti-poverty efforts, higher education and infrastructure development programs to some extent unless made up by raising greater tax revenues to replace it, it is theoretically possible to say No to the US aid without a big negative short-term impact on Pakistan's economy.

However, Pakistan would be well advised to not seek confrontation with Washington even after refusing US aid. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).

All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.

Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.

Here are some of my recommendations for Pakistanis to move toward greater self-reliance:

1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.

2. They must save more, a lot more than the current 10% of GDP, to have more money for investment in the future.

3. They must spend more on education and heath care and human development to develop the workforce for the 21st century.

4. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.

5. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.

No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.

Related Links:

Haq's Musings

Tax Evasion Fosters Foreign Aid Dependence

Aid, Trade, Investments and Remittances

Impact of Foreign Aid on Economic Development in Pakistan

Can Chinese Yuan Replace US Dollar?

Vito Corleone: Godfather Metaphor for Uncle Sam

Can US Aid Remake Pakistan?

South Asia Slipping in Human Development

Pakistan to Terminate IMF Bailout Early

Pakistani Military and Industrialization

Saturday, September 24, 2011

Pakistan Led South Asian Jobs Growth in 2000-2010

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".



Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.



The report says that nearly a third of workers in India and a fifth of workers in Bangladesh and Pakistan are casual laborers. Regular wage and salaried workers represent a fifth or less of total employment.

Analysis of the labor productivity data indicates that growth in TFP (total factor productivity) made a larger relative contribution to the growth of aggregate labor productivity in South Asia during 1980–2008 than did physical and human capital accumulation. In fact, the contribution of TFP growth was higher than in the high‐performing East Asian economies excluding China.



India's labor productivity growth since 1980 has been the highest in South Asia, followed by Sri Lanka and Pakistan. This was particularly the case in India where TFP rose by 2.6% versus 1.4% in Pakistan during this period.

The report argues that South Asia region needs to create a million jobs a month just to keep up with the growth of the workforce. In addition to corruption, conflicts and political instability, the report specifically mentions electricity shortage as a key factor inhibiting job growth in the region. Power sector financial losses across the region are large, resulting from the misalignment of tariffs, the high cost of power procurement, and high transmission and distribution losses. In India the combined cash loss of state-owned distribution companies is more than $20 billion a year, compared with $300 billion of investment needs in 2010–15. The sector deficit in Pakistan is estimated at about $2 billion a year, compared with $32 billion of investment needs in 2010–20.

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.

It's important for Pakistani government to seriously address the energy and security crises to restore investor confidence and bring back the strong economic growth necessary for creating millions of jobs for its growing youth population entering the workforce. The consequences of inaction on this front would be far more disastrous than the negative effects of the current Taliban insurgency.

Related Links:

Haq's Musings

More and Better Jobs in South Asia

Incompetence Worse Than Corruption in Pakistan

Pakistan's Circular Debt and Load Shedding

Pakistan Planning Commission

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

Friday, September 23, 2011

Pakistani Researchers at CERN Lab in Switzerland

One of the most important discoveries in Physics since Einstein's Theory of Relativity has possibly just been made at CERN and dozens of Pakistani scientists have contributed to it.

Scientists at CERN claim that they have discovered the Higgs field, also nicknamed the "God particle" that travels faster than light, thereby proving Einstein wrong, according to the Associated Press reports.

"The feeling that most people have is this can't be right, this can't be real," the AP story quotes James Gillies, a spokesman for the European Organization for Nuclear Research.



The most high-profile effort to find "God Particle" is taking place about 300 ft below ground in a tunnel at the French-Swiss border. Buried there is a massive particle accelerator and super collider called LHC (Large Hadron Collider) run by the Swiss lab CERN (European Organization of Nuclear Research), which has two beams of particles racing at nearly the speed of light in opposite directions and the resulting particles produced from collisions are being detected by massive detectors in the hope of experimentally finding the fundamental particle of which everything in the universe is built from: God Particle.



Among the world scientists working at CERN on LHC project is Professor Hafeez Hoorani of Pakistan's Quaid-e-Azam University in Islamabad. He is one of 27 Pakistani scientists at CERN.CERN is the most highly respected research lab in Switzerland responsible for LHC. He acknowledges that Pakistan government's support for Pakistani scientists' serious involvement at CERN materialized only after 1999, the year former President Musharraf's government assumed power. He also gives credit to Dr. Abdus Salam, Pakistan's only Nobel Laureate, for inspiring him and his colleagues to pursue serious scientific research. Here's what Professor Hoorani says about Pakistan's involvement in LHC and CERN:

When I first came to CERN, I was mainly working on technical things but became increasingly involved in political issues. In 1999, I went back to Pakistan to set up a group working on different aspects of the LHC project. There I had to convince my people and my government to collaborate with CERN, which was rather difficult, since nobody associated science with Switzerland. It is known as a place for tourism, for its watches, and nice places to visit.

However, Pakistan already had an early connection to CERN through the late Abdus Salam, the sole Nobel laureate from Pakistan in science and one of the fathers of the electroweak theory. CERN has been known to the scientific community of Pakistan since 1973 through the discovery of neutral currents which eventually led to the Nobel Prize for Salam. We are contributing much more now because of the students who worked with Salam, who know his theories and CERN, and who are now placed at highly influential positions within the government of Pakistan. They have helped and pushed Pakistan towards a very meaningful scientific collaboration with CERN. People now know that there is an organization called CERN. It took a long time to explain what CERN is about, and I brought many people here to show them, because they did not imagine CERN this way. Many people support us now which gives us hope…”



In addition to the 27 scientists, Pakistan has made material contributions to the tune of $10m. Pakistan signed an agreement with CERN which doubled the Pakistani contribution from one to two million Swiss francs. And with this new agreement Pakistan started construction of the resistive plate chambers required for the CMS muon system. While more recently, a protocol has been signed enhancing Pakistan’s total contribution to the LHC program to $10 million.

CERN is a pan-European effort and all of its member states are European. Pakistan, with all of its contributions to LHC project, is hoping to join the ranks of India, Israel, Japan, Russia, Turkey and United States as an observer state at CERN.

Pakistan has contributed the LHC in numerous ways including some of the following in particular:

1. Detector construction
2. Detector simulation
3. Physics analysis
4. Grid computing
5. Computational software development
6. Manufacturing of mechanical equipment
7. Alignment of the CMS (Compact Muon Solenoid) tracker using lasers
8. Testing of electronic equipment
9. Barrel Yoke: 35 Ton each feet made in Pakistan
10. Assembly of CF (Carbon Fiber) Fins for the Silicon Tracker’s TOB (Tracker Outer Barrel).
11. 245 of the 300 CMS chambers required were made in Islamabad.

The Higgs boson, also known as "God Particle", is a hypothetical massive scalar elementary particle predicted to exist by the Standard Model of particle physics. It is the only Standard Model particle not yet experimentally observed. An experimental observation of it would help to explain how otherwise massless elementary particles cause matter to have mass. More specifically, the Higgs boson would explain the difference between the massless photon and the relatively massive W and Z bosons. Elementary particle masses, and the differences between electromagnetism (caused by the photon) and the weak force (caused by the W and Z bosons), are critical to many aspects of the structure of microscopic (and hence macroscopic) matter; thus, if it exists, the Higgs boson is an integral and pervasive component of the material world.

The Standard Model of particle physics has its limits. It can't explain several big mysteries about the universe that have their roots in the minuscule world of particles and forces. If there's one truly extraordinary concept to emerge from the past century of inquiry, it's that the cosmos we see was once smaller than an atom. This is why particle physicists talk about cosmology and cosmologists talk about particle physics: Our existence, our entire universe, emerged from things that happened at the smallest imaginable scale. The big bang theory tells us that the known universe once had no dimensions at all—no up or down, no left or right, no passage of time, and laws of physics beyond our vision.

There have been many other efforts to build particle accelerators and supercolliders including SLAC (Stanford Linear Accelerator) and Fermi Collider, but none so ambitious and massive as the LHC. This discovery, if indeed confirmed, will advance human knowledge dramatically and eventually help treat diseases, improve the Internet, and open doors to travel through extra dimensions, according to the scientists associated with it.

Related Links:

Haq's Musings

Joint CERN-Pakistan Meeting 2011

Pakistanis Conducting Research in Antarctica

Pakistani Scientists at CERN

Pakistan's Story After 64 Years of Independence

Pakistan Ahead of India in Graduation Rates

Dr. Ata-ur-Rehman on HEC's Role in Pakistan

CERN Website

Wikipedia

CERN and the LHC Program

National Geographic

WTF Website

PAEC Newsletter

Saturday, September 17, 2011

Pakistan Ready to Part Ways With IMF

Citing significant improvements in Pakistan's current account balance, Pakistan's Finance Minister Dr Abdul Hafeez Shaikh has said that his government would not waste its energy on reviving the currently suspended IMF program that began in 2008, or seek a new IMF bailout, according to a report in Pakistan's Dawn newspaper.

Pakistan's decision follows the latest State Bank report of a current account surplus equivalent to 604 Million USD in the second quarter of 2011.



The surplus is the result of rising exports from Pakistan and growing remittances from Pakistani diaspora, the 7th largest in the world.

Pakistan's exports in the first two months of the current fiscal year (2011-12) surged by 20.26 percent over the corresponding period of last year. Exports during July-August (2011-12) were $4,167 million as compared to the exports of 3,465 million during July- August (2010-11, according to a GeoTV report citing data from Federal Bureau of Statistics (FBS).



According to official data as reported by Reuters, remittances rose 40.45 percent to $1.31 billion in August 2011, compared with $933.06 million in the same period last year.



Pakistan has about $18 billion in foreign exchange reserves, according to Dawn News. It's about 6 months worth of imports at the current rate.

Currency traders reacted negatively to the government's decision to part ways with the IMF as the Pakistani rupee hit its second record low against the dollar in two days on Friday, touching 87.92 before firming to 87.75/78 at the close.

Some analysts believe that the timing of the decision to free itself from the IMF is motivated by the ruling party's desire for more spending on populist programs to impress its voters before the coming elections. This is likely to make the budget deficits worse in the absence of IMF's demands for reforms to cut spending and raise revenues to narrow Pakistan's budget deficits to 4.5% of GDP.


Related Links:

Haq's Musings

Pakistani Diaspora Among the World's Largest

Pakistan's Rising Exports and Remittances

Pakistan Car Sales Up 61%

Pakistan to Swallow IMF's Bitter Medicine

IMF and Pakistan- A Case Study

Pakistan's Economic Performance 2008-2010

Wednesday, September 14, 2011

Growing Water Crisis Poses Existential Threat to Pakistan

Pakistan has increasingly been suffering from cycles of severe droughts followed by massive floods in the last few years. This recurring pattern of shortage and excess of water gives us a preview of the growing challenge of climate change. This situation calls for a comprehensive water management effort to deal with a potentially existential threat to Pakistan.

Flood-Drought Cycles:

Before the summer floods of 2010, the Indus had turned into a muddy puddle in parts of Sindh. Britain's Financial Times reported at the the time that "angry farmers marched through villages in Sindh demanding access to water. Those who can no longer turn a profit in the fields are increasingly resorting to banditry or migrating to urban shanties".

Earlier, there was a 2009 report by the Woodrow Wilson International Center saying that the melting Himalayan glaciers have exacerbated Pakistan’s shortages. And the World Bank warned that Pakistan could face a “terrifying” 30-40 per cent drop in river flows in 100 year’s time. Now large parts of Sindh are under water for the second year in a row, destroying lives and standing crops.

Growing Water Scarcity:



According to the United Nations' World Water Development Report, the total actual renewable water resources in Pakistan decreased from 2,961 cubic meters per capita in 2000 to 1,420 cubic meters in 2005. A more recent study indicates an available supply of water of little more than 1,000 cubic meters per person, which puts Pakistan in the category of a high stress country. Using data from the Pakistan's federal government's Planning and Development Division, the overall water availability has decreased from 1,299 cubic meters per capita in 1996-97 to 1,101 cubic meters in 2004-05. In view of growing population, urbanization and increased industrialization, the situation is likely to get worse. If the current trends continue, it could go as lows as 550-cubic meters by 2025. Nevertheless, excessive mining of groundwater goes on. Despite a lowering water table, the annual growth rate of electric tubewells has been 6.7% and for diesel tubewells about 7.4%. In addition, increasing pollution and saltwater intrusion threaten the country's water resources. About 36% of the groundwater is classified as highly saline.

So what can Pakistan do to manage these disastrous cycles of floods and droughts?

1. Build Dams and Dykes:



As the flood disaster takes its toll yet again, there are reports of USAID and ADB considering funding the $12 billion Bhasha Dam in Pakistan. The project is located on Indus River, about 200 miles upstream of the existing Tarbela Dam, 100 miles downstream from the Northern Area capital Gilgit in Gilgit-Baltistan region. The dam's reservoir would hold so much water that it could have averted last year's devastating floods. It would also provide enough electricity to end Pakistan's crippling shortages, according to a report in the Guardian newspaper. The massive dam on the Indus river would provide 4,500MW of renewable energy, making up for a shortfall causing up to 12 hours of load shedding on daily basis across Pakistan. The reservoir would be 50 miles long, holding 8.5 MAF (million acre feet) of water.

In addition to large dams, there is also a need to build and maintain dykes and start other flood-control projects in flood-prone areas like Badin and Thatta in Sindh.

2. Conserve Water:

Building Bhasha and several other proposed dams will help in dealing with water scarcity, but the growing population will continue put pressure on the vital resource.



Serious conservation steps need to be taken to improve the efficiency of water use in Pakistani agriculture which claims almost all of the available fresh water resources. A California study recently found that water use efficiency ranged from 60%-85% for surface irrigation to 70%-90% for sprinkler irrigation and 88%-90% for drip irrigation. Potential savings would be even higher if the technology switch were combined with more precise irrigation scheduling and a partial shift from lower-value, water-intensive crops to higher-value, more water-efficient crops. Rather than flood irrigation method currently used in Pakistani agriculture, there is a need to explore the use of drip or spray irrigation to make better use of nation's scarce water resources before it is too late. As a first step toward improving efficiency, Pakistan government launched in 2006 a US $1.3 billion drip irrigation program that could help reduce water waste over the next five years. Early results are encouraging. "We installed a model drip irrigation system here that was used to irrigate cotton and the experiment was highly successful. The cotton yield with drip irrigation ranged 1,520 kg to 1,680 kg per acre compared to 960 kg from the traditional flood irrigation method," according to Wajid Ishaq, a junior scientist at the Nuclear Institute for Agriculture and Biology(NIAB).





Beyond the government-funded experiments, there is a drip irrigation company called Micro Drip which is funded by the Acumen Fund. Micro Drip develops and provides products and services as poverty alleviation solutions to small farmers in Pakistan’s arid regions. It provides a complete drip irrigation system along with agricultural training and after-sales support to enable farmers to extract a higher yield from their land at a much lower cost of input.

So what is holding up Pakistan's progress on water management?

1. Lack of Funds:

Pakistani government revenues continue to be limited by slow economic growth and widespread culture of tax evasion. The biggest culprits are the ruling feudal politicians who oppose any attempt to levy taxes on their farm income. The limited resources the state does have are usually squandered on political patronage doled out to ruling politicians' supporters in the form of capricious grants, huge loans (defaulted with impunity), and plum jobs in bloated government and the money-losing state-owned enterprises. The result of this blatant abuse, waste and fraud is that the budget allocations for vital long-term investments in education, health care and infrastructure development projects are regularly slashed thereby shortchanging the future of the nation.

2. Corruption and Security Concerns:

The NY Times recently reported that "Washington’s fears of Pakistani corruption and incompetence has slowed disbursal of the money". The story reinforces the widely-held view that even after the funding is arranged, the corrupt and incompetent politicians and their hand-picked civilian administrators make any development progress slow and difficult. Such problems are further exacerbated by significant security issues in parts of the country severely plagued by ongoing militancy.

Existential Threat:

The Taliban who get all the coverage do not pose an existential threat to Pakistan. Generations of military families have periodically fought FATA insurgencies. For example, Shuja Nawaz, the author of Crossed Swords says that his grandfather, his uncle and his cousin have all been deployed in Waziristan by the British and later Pakistani governments in the last century and a half. American withdrawal from the region will eventually calm the situation in Waziristan, and the rest of the country.

Climate change and the growing water scarcity are the main long-term existential threats to Pakistan and the region. Water per capita is already down below 1000 cubic meters and declining
What Pakistan needs are major 1960s style investments for a second Green Revolution to avoid the specter of mass starvation and political upheaval it will bring.

Related Links:

Haq's Musings

Growing Water Scarcity in Pakistan

Political Patronage in Pakistan

Corrupt and Incompetent Politicians

Pakistan's Energy Crisis

Culture of Tax Evasion and Aid Dependence

Climate Change in South Asia

US Senate Report on Avoiding Water Wars in Central and South Asia

Tuesday, September 13, 2011

Pakistan Set to Unveil New Renewable Power Policy

Pakistan is set to raise feed-in tariffs (FITs) requiring electric supply companies to purchase electricity that guarantee up to 18% return to private producers of wind and solar power. This latest effort is to improve incentives over an earlier 2006 policy for individual consumers installing solar panels in their homes and for larger investors.

Ms. Rukhsana Zuberi, a fellow NEDUET alumnus and PPP senator, is pushing the required legislation through Pakistan's parliament for the new FIT policy.



In addition to her legislative efforts, Zuberi is also taking the lead in installing solar panels in several public buildings across the country. Some of high-profile locations where solar panels have so far been installed include the tombs of Pakistan's founder Quaid-e-Azam M.A. Jinnah and PPP leader Benazir Bhutto, University of Engineering Technology in Lahore, Abdullah Shah Ghazi's shrine, St. Patrick's Cathedral and Shri Swaminarayan Mandir in Karachi, Prime Minister's Office and Secretariat, Pakistan Supreme Court in Islamabad, and other important sites.

As the head of Pakistan Engineering Council, Zuberi first started with a program at the PEC facilities to install solar panels and reduce consumption by using more efficient LED light bulbs. Just changing light fixtures in the PEC auditorium reduced electricity consumption dramatically from 7860W to 336W with 20% more lumens.

I believe that the planned improvement in feed-in-tariff is a good start, but it needs to be followed up by other incentives such as tax rebates, subsidized solar panels and energy-efficient bulbs and appliances, and by ensuring that the aging power grid is sufficiently updated to handle multiple small sources of renewable power without breaking down.

Here's a video clip aired on GeoTV on this subject:



Related Links:

Haq's Musings

Pakistan Building 1000 MW Wind Farms

Pakistan Launches Wind Farm Projects

Renewable Energy to Solve Pakistan's Electricity Crisis

Electrification Rates By Country

Wind Turbine Manufacturing in Pakistan

Pakistan Pursues Hydroelectric Power Projects

Solar Energy for Sunny Pakistan

Wind Power Tariffs in Pakistan

Pakistan's Twin Energy Shortages

Pakistan Council of Renewable Energy Technology

Renewable Energy for Pakistan

Abundant Cheap Electricity From Pakistani Coal

Pakistan Policy on Renewable Technology

Sugarcane Ethanol Project in Pakistan

Community Based Renewable Energy Project in Pakistan

Sunday, September 11, 2011

Pakistani Women's Growing Particpation in Workforce

While Fareed Zakaria, Nick Kristoff and other talking heads are still stuck on the old stereotypes of Muslim women, the status of women in Muslim societies is rapidly changing, and there is a silent social revolution taking place with rising number of women joining the workforce and moving up the corporate ladder in Pakistan.



"More of them(women) than ever are finding employment, doing everything from pumping gasoline and serving burgers at McDonald’s to running major corporations", says a report in the latest edition of Businessweek magazine.



Beyond company or government employment, there are a number of NGOs focused on encouraging self-employment and entrepreneurship among Pakistani women by offering skills training and microfinancing. Kashf Foundation led by a woman CEO and BRAC are among such NGOs. They all report that the success and repayment rate among female borrowers is significantly higher than among male borrowers.



In rural Sindh, the PPP-led government is empowering women by granting over 212,864 acres of government-owned agriculture land to landless peasants in the province. Over half of the farm land being given is prime nehri (land irrigated by canals) farm land, and the rest being barani or rain-dependent. About 70 percent of the 5,800 beneficiaries of this gift are women. Other provincial governments, especially the Punjab government have also announced land allotment for women, for which initial surveys are underway, according to ActionAid Pakistan.



Both the public and private sectors are recruiting women in Pakistan's workplaces ranging from Pakistani military, civil service, schools, hospitals, media, advertising, retail, fashion industry, publicly traded companies, banks, technology companies, multinational corporations and NGOs, etc.



Here are some statistics and data that confirm the growth and promotion of women in Pakistan's labor pool:

1. A number of women have moved up into the executive positions, among them Unilever Foods CEO Fariyha Subhani, Engro Fertilizer CFO Naz Khan, Maheen Rahman CEO of IGI Funds and Roshaneh Zafar Founder and CEO of Kashf Foundation.

2. Women now make up 4.6% of board members of Pakistani companies, a tad lower than the 4.7% average in emerging Asia, but higher than 1% in South Korea, 4.1% in India and Indonesia, and 4.2% in Malaysia, according to a February 2011 report on women in the boardrooms.

3. Female employment at KFC in Pakistan has risen 125 percent in the past five years, according to a report in the NY Times.

4. The number of women working at McDonald’s restaurants and the supermarket behemoth Makro has quadrupled since 2006.



5. There are now women taxi drivers in Pakistan. Best known among them is Zahida Kazmi described by the BBC as "clearly a respected presence on the streets of Islamabad".



6. Several women fly helicopters and fighter jets in the military and commercial airliners in the state-owned and private airlines in Pakistan.

Here are a few excerpts from the recent Businessweek story written by Naween Mangi:

About 22 percent of Pakistani females over the age of 10 now work, up from 14 percent a decade ago, government statistics show. Women now hold 78 of the 342 seats in the National Assembly, and in July, Hina Rabbani Khar, 34, became Pakistan’s first female Foreign Minister. “The cultural norms regarding women in the workplace have changed,” says Maheen Rahman, 34, chief executive officer at IGI Funds, which manages some $400 million in assets. Rahman says she plans to keep recruiting more women for her company.

Much of the progress has come because women stay in school longer. More than 42 percent of Pakistan’s 2.6 million high school students last year were girls, up from 30 percent 18 years ago. Women made up about 22 percent of the 68,000 students in Pakistani universities in 1993; today, 47 percent of Pakistan’s 1.1 million university students are women, according to the Higher Education Commission. Half of all MBA graduates hired by Habib Bank, Pakistan’s largest lender, are now women. “Parents are realizing how much better a lifestyle a family can have if girls work,” says Sima Kamil, 54, who oversees 1,400 branches as head of retail banking at Habib. “Every branch I visit has one or two girls from conservative backgrounds,” she says.

Some companies believe hiring women gives them a competitive advantage. Habib Bank says adding female tellers has helped improve customer service at the formerly state-owned lender because the men on staff don’t want to appear rude in front of women. And makers of household products say female staffers help them better understand the needs of their customers. “The buyers for almost all our product ranges are women,” says Fariyha Subhani, 46, CEO of Unilever Pakistan Foods, where 106 of the 872 employees are women. “Having women selling those products makes sense because they themselves are the consumers,” she says.

To attract more women, Unilever last year offered some employees the option to work from home, and the company has run an on-site day-care center since 2003. Engro, which has 100 women in management positions, last year introduced flexible working hours, a day-care center, and a support group where female employees can discuss challenges they encounter. “Today there is more of a focus at companies on diversity,” says Engro Fertilizer CFO Khan, 42. The next step, she says, is ensuring that “more women can reach senior management levels.”





The gender gap in South Asia remains wide, and women in Pakistan still face significant obstacles. But there is now a critical mass of working women at all levels showing the way to other Pakistani women.

I strongly believe that working women have a very positive and transformational impact on society by having fewer children, and by investing more time, money and energies for better nutrition, education and health care of their children. They spend 97 percent of their income and savings on their families, more than twice as much as men who spend only 40 percent on their families, according to Zainab Salbi, Founder, Women for Women International, who recently appeared on CNN's GPS with Fareed Zakaria.

Here's an interesting video titled "Redefining Identity" about Pakistan's young technologists, including women, posted by Lahore-based 5 Rivers Technologies:



Related Links:

Haq's Musings

Status of Women in Pakistan

Microfinancing in Pakistan

Gender Gap Worst in South Asia

Status of Women in India

Female Literacy Lags in South Asia

Land For Landless Women

Are Women Better Off in Pakistan Today?

Growing Insurgency in Swat

Religious Leaders Respond to Domestic Violence

Fighting Agents of Intolerance

A Woman Speaker: Another Token or Real Change

A Tale of Tribal Terror

Mukhtaran Mai-The Movie

World Economic Forum Survey of Gender Gap

Saturday, September 10, 2011

Pakistan On Tenth Anniversary of Sept 11, 2001 Terror Attacks

Here are a few facts about Pakistan's role in the "war on terror" since Sept 11, 2001:

First, none of the terrorists who carried out the 911 attacks on the United States were from Pakistan.

Second, the former Pakistani President Musharraf condemned the 911 attacks and quickly allied his country with the United States in the coalition to fight the US-led "global war on terror".

Third, Pakistanis continue to pay the heaviest price among the US coalition partners ten years after 911.



Would Pakistanis have been better off if President Musharraf had kept his country neutral after President George W. Bush delivered the following ultimatum to the entire world: "You are either with us, or against us?" Before answering this key question, let us examine the heavy toll the "war on terror" has taken on Pakistan:

1. Before 9/11, Pakistan had suffered just one suicide bombing — a 1995 attack on the Egyptian Embassy in the capital, Islamabad, that killed 15 people. In the last decade, suicide bombers have struck Pakistani targets more than 290 times, killing at least 4,600 people and injuring 10,000, according to data reported by the Los Angeles Times.



2. Pakistan averaged nearly six terrorist attacks of various kinds each day in 2010, according to a report by the Pakistan Institute of Peace Studies.

3. As of April 25, 2011, the Pakistani military has confirmed that since 2004, 2,795 of its soldiers have been killed in the war and another 8,671 have been wounded. There have also been 21,672 civilian casualties (at least 7,598 of these were killed) since September 11, 2001, up to February 18, 2010, according to the military.

4. Pakistan's current leadership says that the alliance with the U.S. against Islamic militants has destroyed the country's investment climate, caused widespread unemployment and ravaged productivity. The government estimates the alliance has cost it $67 billion in direct losses over the last 10 years.

5. There have been incalculable indirect costs of massive war-related societal divisions and disruptions caused by acceleration of internal displacements and migration and proliferation of guns, drugs and violence in major urban centers of Pakistan since 911, the most striking being the increasingly destabilizing violence in Karachi.

Now let's turn to the "what-if" analysis of the road not taken by Pakistan after 911 and ponder the following:

1. Would Pakistanis have been better off by snubbing the world's sole superpower which Musharraf described as a "wounded bear" after 911 attacks?

2. Would Pakistan not have been isolated as a pariah state by the United States with support from the international community by slapping the most stringent international sanctions imaginable?

3. Would Pakistan not have faced the combined military might of the US and India if it had not allowed American troops on its territory to fight Taliban in Afghanistan after 9/11 terror attacks?

4. Would parts of Pakistan not have been heavily bombed into "stone age" with some parts of the country occupied by US military to facilitate NATO supply lines into Afghanistan?

5. Would there not have been an even more violent insurgency against foreign occupation and more frequent suicide bombings with even more horrible consequences for the civilian population of Pakistan?

As mightily as Pakistan has suffered at the hands of the Taliban and al Qaeda terrorists and their affiliates since 911, I do believe that Pakistanis would have been much worse off if Musharraf had not sided with the United States when asked after the worst terror attacks on US mainland.

As the only nation in the history of the world to have used nuclear weapons against civilian targets, I have to agree with Stratfor's George Friedman's characterization of America as "barbaric", particularly when it feels threatened by any external force. I believe the United States would not have hesitated one bit in using all of its political, economic and military might against nuclear-armed Pakistan had Musharraf's decision been any different.

Related Links:

Haq's Musings

Jihadis Growing in Tenth Year of Afghan War

Daily Carnage in Pakistan

The Next 100 Years

Seeing Bin Laden's Death in Wider Perspective

Musharraf's Legacy

Saturday, September 3, 2011

Pakistani Diaspora's Role in National Development

Nearly 5 million Pakistani emigrants make up the world's 7th largest disapora, according to the World Bank Factbook 2011. Adding the foreign-born children of these Pakistani emigres to the tally pushes the total figure up to about 7 million. The top five nations that the Pakistani diaspora calls home include the United Kingdom (1.2 million), The Kingdom of Saudi Arabia (1.2 million), the United Arab Emirates (1.1 million), the United States (700,000) and Canada (300,000), according to Pakistan's Dawn newspaper.

The nations ranking ahead of Pakistan are Mexico at #1, India at #2, Russia at #3, China at #4, Ukraine at #5 and Bangladesh at #6. Both the UK and Pakistan are tied at #7 with 4.7 million emigres, according to the World Bank.

World's Top 10 Diasporas:

Here are the top 10 national diasporas:

1. Mexico 11.9 million

2. India 11.4 million

3. Russia 11.1 million

4. China 8.3 million

5. Ukraine 6.6 million

6. Bangladesh 5.4 million

7. Pakistan 4.7 million

7. United Kingdom 4.7 million

8. Philippines 4.3 million

8. Turkey 4.3 million

9. Egypt 3.7 million

9. Kazakhstan 3.7 million

10. Germany 3.5 million

10. Italy 3.5 million

Diaspora Remittances:

The World Bank's Migration and Remittances Factbook 2011 ranks Pakistan at #11 in 2010 for remittances of $9.4 billion sent home by its diaspora. The State Bank of Pakistan reported that overseas Pakistanis sent home $5.291 billion during six months from July to Dec, 2010, an increase of $761 million or 17 per cent year over year, according to Pakistan's Dawn newspaper.

India tops this list with remittances of $55 billion sent home in 2010, followed by China ($51 billion), Mexico ($22.6 billion), Philippines ($21.3 billion), France ($15.9 billion), Germany ($11.6 billion), Bangladesh ($11.1 billion), Belgium ($10.4 billion), Spain ($10.2 billion), Nigeria ($10 billion) and Pakistan ($9.4 billion).

Per Capita Remittances:

In terms of per capita remittances based the World Bank data, China leads the world with an average of $6,100 sent home by each member of the Chinese diaspora, followed by the Philippines ($4,953), India ($4,824), Bangladesh ($2055), Pakistan ($2000), Mexico ($1904), UK ($1,574), Ukraine ($803) and Russia ($504). These per capita figures are an indication of the wealth of each diaspora and the extent of the brain drain experienced by these nations.

Top Immigration Countries:

With 42.8 million immigrants, the United States is home to the world's largest immigrant population. India and Pakistan also have the distinction of being on the list with 5.4 million immigrants in India at #10 and Pakistan with 4.2 million immigrants at #13. Other nations on this list include Russia at #2 (12.3 million immigrants), Germany at #3 (10.8 million), Saudi Arabia at #4 (7.3 million), Canada at #5 (7.2 million), the UK at #6 (7 million), Spain at #7 (6.9 million), France at #8 (6.7 million) and Australia at #9 (5.5 million).

Examples of Diaspora's Role:

Diasporas of various nations are mutually beneficial to both the sending and the receiving countries. They send home the money to help their families and friends financially. And they often acquire advanced education and technical, professional and managerial skills and contribute to solving problems in their host nations in the West. And given the right political and policy context, the members of the diaspora can also help their countries of origin by using their deep knowledge of their home countries and by offering advanced skills, experience and knowledge acquired in more developed nations.

In terms of development help with the skills and capital of the diaspora for their home nations, there are three examples of fairly old and mature diasporas: China, India and Armenia. While China and India have benefited greatly from their diasporas, Armenia has lagged badly, according to a World Bank report titled "Work Globally, Develop Locally: Diaspora Networks as Springboards of Knowledge-Based Development".

Pakistani Diaspora's Role:

In Pakistan's case, growing remittances amounting to 5% of its gdp in 2010 from the nation's diaspora provided an important lifeline for the state of Pakistan in funding its large current account deficit and in helping the individuals and families receiving the funds to supplement their incomes.

Remittances are a source of income for households in Khyber Pakhtunkhwa (KP) and other provinces in Pakistan, according to a 2010 World Bank report titled "Poverty fell in Pakistan in 2001-08 partly because of remittances". A recent Asian Development Bank study found that foreign remittances constituted 9.4 percent of household income in KP, compared to 5.1% for Punjab, 1.5% for Baluchistan, and 0.7% for Sindh.

Beyond the remittances, can Pakistan also benefit from its growing diaspora like India and China have from theirs? With millions of Pakistanis in Europe and America, many of them highly skilled entrepreneurs and business and technology professionals, Pakistani diaspora can be very helpful to their home country in its business, economic, social, political, educational and technological development. The realization of such great potential will only be possible if Pakistani government's public policy, public-private partnerships and state-to-state relations with the West create the necessary conditions for it to happen. Existing organizations of Pakistanis, such as OPEN Silicon Valley, APPNA, and PakAlumni Worldwide, can be helpful in such an endeavor.



Among the emerging diaspora networks, the effort of South African Network of Skills Abroad (SANSA), established by the University of Cape Town’s Science and Technology Policy Research Center, is worth watching. SANSA aims to promote collaboration between highly skilled expatriate scientists and technologists and their counterparts in South Africa. The target group is alumni of all major South African universities working in the West.

Related Links:

Haq's Musings

PakAlumni Worldwide

Pakistani-American's Game-Changing Vision

OPEN Forum 2010

Pakistani-American in $500 Million NFL Deal

Is Pakistan Too Big to Fail?

Pakistani-American Elected Mayor

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

Social Entrepreneurs Target India, Pakistan