Friday, February 15, 2013

World's Tallest Skyscraper Planned in Pakistan

Bahria Town and Abu Dhabi Group agreed to invest $45 billion in real estate in Pakistan. After signing the investment deal, Malik Riaz and Shaikh al-Nahyan announced that Karachi, not Dubai nor Shanghai, will soon boast having the world's tallest building.

Representing the largest foreign investment to date in Pakistan, there will be $35 billion invested in several  large commercial and residential real estate projects in  Karachi, and another $10 billion in Lahore and Islamabad. It's expected to create 2.5 million new jobs in the country.

His Highness Sheikh Nahyan bin Mubarak al Nahyan, Chairman of Abu Dhabi Group, was quoted by Express Tribune as saying, “I am genuinely happy that in this historic project of Pakistan we are working with the visionary Malik Riaz Hussain, this guarantees that not only the project will be delivered beyond our expectations but also before time. We will Inshallah be welcoming first residents in next 3-4 years.”

Why is Abu Dhabi Group interested in investing in Pakistan?  Why not put all or most of these $45 billion in GCC or other Middle East nations?  Answering a reporter's question about the growth prospects of GCC (oil-rich nations of Gulf Cooperation Council) at a recent investment conference in Dubai, Golman Sachs' Jim O'Neill said: "Some GCC countries are well placed to be hubs for the BRIC and N-11-influenced world. I often think of Dubai as a kind of N-11 center, even the capital of the N-11 world, given its business adjacency to Egypt, Pakistan, Iran, Turkey, and, of course, India and Russia."

Pakistan is already experiencing a renewed construction boom with cement sales rising by double digits. Domestic cement consumption surged 10.10% in Pakistan in January 2013, according to All Pakistan Cement Manufacturers Association. On top of 8% increase in Fiscal Year 2011-12, it jumped another 8% for the first seven months of Fiscal Year 2012-13.

There is a lot of privately funded real estate development activity visible in all major cities of the country. Big real estate developers like Bahria Town and Habib Construction are developing both commercial and housing projects in Islamabad, Karachi and Lahore. Other cities like Faisalabad, Hyderabad, Larkana, Multan, Mirpur, Peshawar and Quetta are also seeing new housing communities, golf courses, hotels, office complexes, restaurants, shopping malls, etc.

Cement consumption is an important barometer of national economic activity,  according to a research report compiled by a Credit Suisse analyst.  Last year, CS analyst Farhan Rizvi said in his report that "higher PSDP (Public Sector Development Program) spending has led to a resurgence in domestic cement demand in FY12 (+8%) and with increased PSDP allocation for FY13 (+19%) and General Elections due in 2013, domestic demand is likely to remain robust over the next six-nine months".  This latest investment will add to it. It will give a big boost to the national economy.

The Abu Dhabi Group is a major investor in Al-Falah Bank and United Bank in Pakistan. It recently announced acquisition of all of SingTel’s shares in Warid Telecom, a mobile telephone service operator in Pakistan. With the agreement, the group has become the sole owner with equity holding of 100% in the Pakistani telecom company. Abu Dhabi Group said it plans to improve Warid Telecom’s operations in Pakistan by introducing new technologies, services and packages.

Back in 2008, there was a lot of excitement in Pakistan when  Dubai developer Emaar announced a massive real estate project valued at $43b to develop two island resorts near Karachi. That investment never materialized. Let's hope this time will be different. Let's hope Abu Dhabi Group and Bahria Town will follow through on their commitments.

Here's a video of Malik Riaz speaking with Dunya News:



Related Links:

Haq's Musings

Renewed Construction Boom Pushes Cement Sales in Pakistan

DCK Green City in Karachi, Pakistan

Pakistan on Goldman Sachs' Growth Map

Investment Analysts Bullish on Pakistan

Precise Estimates of Pakistan's Informal Economy

Comparing Pakistan and Bangladesh in 2012

Pak Consumer Boom  Fuels Underground Economy

Rural Consumption Boom in Pakistan

Pakistan's Tax Evasion Fosters Aid Dependence

Poll Finds Pakistanis Happier Than Neighbors

Pakistan's Rural Economy Booming

Pakistan Car Sales Up 61%

Resilient Pakistan Defies Doomsayers

Wednesday, February 6, 2013

Pakistan's Double Digit Growth in Cement Demand in January

Domestic cement consumption surged 10.10% in Pakistan in January 2013, according to All Pakistan Cement Manufacturers Association. On top of 8% increase in Fiscal Year 2011-12, it jumped another 8% for the first seven months of Fiscal Year 2012-13.

Cement production is an important barometer of national economic activity,  according to a research report compiled by a Credit Suisse analyst.  Last year, CS analyst Farhan Rizvi said in his report that "higher PSDP (Public Sector Development Program) spending has led to a resurgence in domestic cement demand in FY12 (+8%) and with increased PSDP allocation for FY13 (+19%) and General Elections due in 2013, domestic demand is likely to remain robust over the next six-nine months".

Ongoing public sector projects include new large and small dams, irrigation canals, power plants, highways, rapid transit systems, flyovers, airports, seaports, etc. Most of these were already in the pipeline when the PPP government assumed control in 2008. Recent pre-election increases in PSDP funding allowed work to resume on these projects in 2011-12.

 In addition to public sector infrastructure projects, there is a lot of privately funded real estate development activity visible in all major cities of the country.

Ocean Tower Karachi
Among the high-profile new construction projects completed this month is Ocean Tower in Karachi. At 393 feet high with 30 floors, it is now the tallest building in Pakistan. Ocean Tower has a shopping mall, food courts, corporate offices, a business club, car-parking area and 4 cinemas.

The Centaurus Islamabad
The Centaurus, at 361 feet, is another new project in Islamabad completed this month. It consists of three towers---office tower, residential tower and a 5-star hotel. The three will be linked by a shopping mall.

Big real estate developers like Bahria Town and Habib Construction are developing both commercial and housing projects in Islamabad, Karachi and Lahore. Other cities like Faisalabad, Hyderabad, Larkana, Multan, Mirpur, Peshawar and Quetta are also seeing new housing communities, golf courses, hotels, office complexes, restaurants, shopping malls, etc.

Per capita cement consumption in Pakistan was only 70 Kg in 2003. It has more than doubled in the last decade.  With back-to-back increases in domestic cement demand, per capita consumption has now risen to 154 Kg which is still below average for Asia. But the rising demand is a good sign of economic recovery since 2009 when the GDP growth hit a low of 1.7%.

Centaurus Mall Opening Day


Credit Suisse is bullish on Pakistan's cement sector in particular and Pakistani shares in general.

CS analyst Farhan Rizvi has initiated coverage with "an OVERWEIGHT stance, as we believe compelling valuations, improving domestic demand outlook, better pricing power and easing cost pressures make the sector an attractive investment proposition. Despite better growth prospects (3-year CAGR of 17% over FY12-15E) and improving margins, the sector trades at an attractive FY13E EV/EBITDA of 3.8x, 49% discount to the historical average multiple of 7.4x. Moreover, FY13E EV/tonne of US$74 is approximately 29% discount to historical average EV/tonne of US$104 and 50% discount to the region".

A New Housing Construction Project in Rawalpindi


Another CS analyst Farrukh Khan, based in Credit Suisse’ Asia Pacific headquarters in Singapore,says in his research report that “liquidity in 2012 has been concentrated in stocks offering positive earnings surprises (e.g., United Bank, Lucky Cement, DG Khan Cement and Bank Alfalah), enabling them to be strong outperformers. With further improvements in liquidity, we expect a broad-based price discovery to take hold in attractively valued oil and fertilizer stocks as well.”

 A string of strong earnings announcements by Karachi Stock Exchange listed companies and the Central Bank's 1.5% rate cut have already helped Karachi's KSE-100 index surge nearly 50% (37% in US $ terms) in 2012 to top all Asian market indices. It was followed by Bangkok's SET index which advanced 36%. It also easily beat India's Sensex index which was the top performer among BRICs with 25.19% annual gain.

Related Links:

 Haq's Musings

Pakistan's GDP Grossly Underestimated, Shares Highly Undervalued

Investment Analysts Bullish on Pakistan

Precise Estimates of Pakistan's Informal Economy

Comparing Pakistan and Bangladesh in 2012

Pak Consumer Boom  Fuels Underground Economy

Rural Consumption Boom in Pakistan

Pakistan's Tax Evasion Fosters Aid Dependence

Poll Finds Pakistanis Happier Than Neighbors

Pakistan's Rural Economy Booming

Pakistan Car Sales Up 61%

Resilient Pakistan Defies Doomsayers

Land For Landless Women in Pakistan

Pakistan's Circular Debt and Load-shedding

Sunday, February 3, 2013

12 Year-Old Pak Girl Helps Promote MOOCs at Davos

Khadija Niazi, a 12-year old from Lahore, Pakistan, is taking online courses offered by a new wave of cyber-based educational platforms like Coursera and Udacity.  She was recently interviewed by New York Times columnist Tom Friedman at World Economic Forum 2013 at Davos, Switzerland.

 Khadija was the featured guest in a session on online education sponsored by Victor Pinchuk Foundation. She was joined on stage at WEF by Bill Gates, Larry Summer, Daphne Koller (Coursera co-founder), Rafael Reif (President of MIT), Jimmy Wales (Wikipedia founder), Peter Thiel and other dignitaries.

Coursera and Udacity offer massive open online courses (MOOCs) in a variety of subjects to large numbers of students from around the world. MOOC courses are often taught by professors who have been teaching for years at elite universities in the United States. Top academic institutions are in the forefront of online learning. For example, Harvard and M.I.T. have joined hands to introduce EdX, which offers free online courses from each university. About 753,000 students have enrolled, with India, Brazil, Pakistan and Russia among the top 10 countries from which people are participating, according to NY Times

Khadija attends a local school in Lahore. She was only 10 years old when she first took the Artificial Intelligence online course on Udacity. She managed to finish the course and, the following year, Khadijah completed Udacity’s Physics course with highest distinction. She now plans to take courses in Astrobiology.

Enabling virtual education is the high-speed broadband expansion led by PTCL which has propelled Pakistan to become the fourth fastest growing broadband market in the world and the second fastest in Asia, according to a recent industry report.

Source: OECD Global Education Digest 2009

The quickest and the most cost-effective way to broaden access to education at all levels is through online schools, colleges and universities. Sitting at home in Pakistan, self-motivated learners can watch classroom lectures at world's top universities including UC Berkeley, MIT and Stanford. More Pakistanis can pursue advanced degrees by enrolling and attending the country's Virtual University that offers instructions to thousands of enrolled students via its website, video streaming and Youtube and television channels.

The concept of virtual instruction is finding its way to K-12 education as well. Increasing number of Pakistanis are drawn to the Khan Academy channel on YouTube making Pakistanis among its top users. Virtual Education for All is a local Pakistani initiative extending the concept to primary level.

All of these technological developments and open courseware initiatives are good news for making education available and accessible to satisfy the growing needs in Pakistan and other emerging countries around the world seeking to develop knowledge-based economies of the 21st century.

Here's a video of Khadija's interview with Tom Friedman at Davos:



Related Links:

Haq's Musings

Pakistan's Youngest Computer Prodigy

Khan Academy Draws Pakistanis

Pakistan Virtual University Wins Top OCW Award 

Pakistan Rolls Out 50Mbps Broadband Service

More Pakistan Students Studying Abroad

Inquiry Based Learning in Pakistan

Mobile Internet in South Asia

Allama Iqbal Open University

Online Courses at Top International Universities

Pakistan Virtual University

Pasi Sahlberg on why Finland leads the world in education

Intellectual Wealth of Nations


Saturday, February 2, 2013

Pakistani Entrepreneurs Top VC Charts in Silicon Valley

Latest funding of Ashar Aziz's FireEye and Zia Yusuf's Streetline rank #1 and #4 among top 5 VC deals in Silicon Valley announced in January 2013, according to Silicon Valley Business Journal.


FireEye is riding high on a wave of growing cyber security concerns amidst increasing cyber attacks being reported almost daily from around the globe. FireEye's founder Asgar Aziz is among the top recognized experts in the field of Internet and computer security. With the recent $50 million round from top investors, the company has raised $100 million to date. The new funding comes from new and existing investors — including Sequoia Capital, Norwest Venture Partners, Goldman Sachs, Juniper Networks, Silicon Valley Bank, and others.

Streetline is offering smartphone applications to help drivers find the increasingly scarce parking spots in crowded places. The company bills itself as "the leading provider of smart parking solutions to cities, garages, airports, universities and other private parking providers". The company has raised $25 million in January, 2013 from True Ventures, with participation by new investors Qualcomm Ventures and Citi and existing investors Sutter Hill Ventures, RockPort Capital Partners and Fontinalis Partners. The company has now raised a total of $40 million, and it says it recently obtained a $25 million credit facility from Citi, too.

Another Pakistani-American who has been in the news is Rayid Ghani who served as the Chief Scientist in President Obama's re-election campaign organization. Before joining the Obama Campaign, Ghani worked for Accenture as Chief Scientist  and developed tools to mine mountains of private data of client corporations to find statistical patterns that could forecast consumer behavior. Instead of just using Facebook for posting messages and tracking its followers’ feelings, Ghani's team turned social media into a tool for efficiently recruiting the human resources it needed leading into the election’s home stretch.

Using Ghani's tools, the Obama campaign was able to match up supporters’ friends' profiles with voting lists and decide how it should reach out to supporters to reach their friends through micro-targeting. If someone was going to spread a message to 10 people, the campaign wanted to ensure they reached 10 people most likely to take actions such as donate money, get active knocking on doors or even to switch sides.

Pakistani-Americans Ashar, Ghani, Zia and many other entrepreneurs and professionals like them from Asia represent a dramatic shift in   Silicon Valley's racial mix over the last few  decades. I have been a witness to this historic change. When I arrived here to join Intel in 1981, there were few non-whites in the Valley. In fact, I was the only nonwhite person in a picture of the six-member award winning Intel 80386 CPU design team which was published by the PC Magazine in 1988.


Stdg: L to R: Riaz Haq, Jan Prak, Gene Hill, Pat Gelsinger, John Crawford     Stg: Dave Vannier


My experience of the demographic changes in this high-tech valley is not just anecdotal. It's supported by data compiled by the local San Jose Mercury newspaper in 2010. The data shows that 49% of Intel employees are now Asian, a full 7% more than whites. In Silicon Valley, the difference is even more pronounced with Asians accounting for 53.9% of the employees versus 37.6% white workers.
 

 With Asians accounting for just 15.5% of the high-tech work force nationally, Silicon Valley's high-tech racial mix is also very different from the rest of the country. Silicon valley's employee pool also differs in terms of under-representation of Blacks, Hispanics and women relative the national averages.

 Among Asian-Americans, Pakistani-Americans are the 7th largest community in America, according to a report titled "A Community of Contrasts Asian Americans in the United States: 2011" published by Asian-American Center For Advancing Justice.  Pakistani-American population has doubled from 204,309 in 2000 to 409,163 in 2010, the second largest percentage increase after Bangladeshis' 157% increase in the same period.

The total fertility rate in the United States is now at 2.06, just enough to maintain the current level of US population. It's possible mainly due to the history of relatively liberal US immigration policy. If US immigration policy is tightened in response to pressures from various labor organizations and the traditional anti-immigration groups, the US fertility rate is likely to dip and hurt the US economy which needs more workers to pay for the retiree benefits of the growing population of senior citizens. Already, many US multinational corporations have added 1.5 million workers to their payrolls in Asia and the Pacific region from 1999 to 2009, and 477,500 workers in Latin America, according to US Commerce Dept data as reported by the Wall Street Journal. If the businesses can not find workers in the United States, they are more likely to continue to accelerate moving jobs elsewhere, depriving the US government the revenue it needs to balance its budget.

Related Links:

Haq's Musings

Pakistani-American's Game-Changing Vision 

Minorities Are Majority in Silicon Valley 

US Promoting Venture Capital & Private Equity in Pakistan

Pakistani-American Population Growth Second Fastest Among Asian-Americans

Edible Arrangements: Pakistani-American's Success Story

Pakistani-American Elected Mayor

Upwardly Mobile Pakistan

US Firms Adding Jobs Overseas 

Pakistan's Demographic Dividend

Pakistanis Study Abroad

Pakistan's Youth Bulge

Pakistani Diaspora World's 7th Largest

Pakistani-American NFL Team Owner

Pakistani-American Entrepreneurs Catch the Wave

Pakistani Graduation Rate Higher Than India's