Wednesday, April 30, 2014

World Bank Report: Pakistan PPP GDP $788 Billion, Per Capita GDP $4,450

Pakistan is the second least expensive country in the world. Pakistan's GDP is $788 billion as of 2011 based on purchasing power parity (PPP), according to International Comparisons Program (ICP) findings 2011 released yesterday by the World Bank.

World Bank's International Comparison Program (ICP) does a detailed study of a list of around 800 household and nonhousehold products to compare real purchasing power for trans-national income comparison program (ICP). The latest ICP findings conclude that Pakistan's per capita income is US$4,450.00, just slightly below India's US$4,735.00

ICP Based GDP Per Capita. Source: World Bank


At US$4,450 per capita, Pakistan's PPP GDP works out to US$788 billion for 2011, and more than a trillion US dollars now.

The results of an earlier ICP program for 2005 and 2006 released by Asian Development Bank in 2009 concluded that Pakistan's per capita income was HK$ 13,528.  It reported India’s per capita as HK $12,090.

Price Level Index Rankings. Source: World Bank


The ICP program uses Price Level Index (PLI) as an indicator of cost of living in a country. It defines PLI as the ratio of a PPP (purchasing power parity) to a corresponding exchange rate. An index over 100 means prices are higher on average than in the world, and one less than 100 means prices are relatively lower. Pakistan's PLI of 28.2 ranks it at 176, just above the last-ranked Egypt's PLI of 27.2 at 177. India's PLI of 32.4 ranks it at 127.

23 economies are showing a PLI of 50 or below. The cheapest economies are Egypt, Pakistan, Myanmar, Ethiopia and Lao People's Democratic Republic, with indices ranging from 35 to 40.

The most expensive economies in GDP terms are Switzerland, Norway, Bermuda, Australia and Denmark, with indices ranging from 210 to 185. The United States ranked 25th in the world, lower than most other high-income economies, including France, Germany, Japan, and the United Kingdom.

Here are some of the other major findings of World Bank ICP 2011:

1. The six largest middle income economies – China, India, Russia, Brazil, Indonesia and Mexico – account for 32.3 percent of world GDP, whereas the 6 largest high income economies – United States, Japan, Germany, France, United Kingdom, and Italy – account for 32.9 percent.

2. Asia and the Pacific, including China and India, accounts for 30 percent of world GDP, Eurostat-OECD 54 percent, Latin America 5.5 percent (excluding Mexico, which participates in the OECD and Argentina, which did not participate in the ICP 2011), Africa and Western Asia about 4.5 percent each.

3. China and India make up two-thirds of the Asia and the Pacific economy, excluding Japan and South Korea, which are part of the OECD comparison.

4. Russia accounts for more than 70 percent of the CIS, and Brazil for 56 percent of Latin America.

5. South Africa, Egypt, and Nigeria account for about half of the African economy.

Last week, another survey done by Cato Institute found that Pakistan fares better than its neighbors on world misery index. Back in 1960s, distinguished American economist Arthur Okun defined misery index as sum of inflation and unemployment rates. America's high misery index was cited by candidate Jimmy Carter as a reason to elect him president in his 1976 presidential race against President Gerald R. Ford. The Cato Institute has now revived it by adding interest rates to the sum of inflation and unemployment rates and subtracting per capita GDP growth rate from it.

Pakistan (score 21.9) at 28 ranks below Iran (score 61.6) at 2 and India (score 25.6) at 19 on world misery index rankings for 2013 compiled by Washington's Cato Institute. Other nations worse off than Pakistan on the list include Serbia, Argentina, Jamaica, Egypt, Spain, South Africa, Brazil, Greece, Macedonia, Palestine, Turkey, Cyprus, Croatia, Dominican Republic, Georgia, Nicaragua, Honduras, Costa Rica, Jordan, Ukraine, Peru, Uruguay, Portugal and Barbados. Indonesia (score 21.6) at 29 is only slightly better off than Pakistan.

Earlier this year, Economist Intelligence Unit's latest Worldwide Cost of Living survey revealed that Pakistan’s Karachi is the second cheapest city of the world in 2014 while India’s Mumbai is the cheapest. The top 10 cheapest cities include Mumbai, Karachi, New Delhi, Kathmandu, Damascus, Algiers, Bucharest, Panama City, Jeddah and Riyadh in that order, according to EIU.

Related Links:

Haq's Musings

Pakistan's Per Capita Income

Pakistan Fares Better Than Neighbors on World Misery Index

Pakistan's Underground Economy

India Pakistan Comparison 

Pakistan Economic History\

Pakistan's Expected Demographic Dividend



Tuesday, April 29, 2014

Pakistan's Activist Judges Hurting Business and Investment

Organization of Pakistani-American Entrepreneurs (OPEN) Silicon Valley has just announced a panel discussion featuring Pakistan's former Chief Justice Iftikhar Chaudhry and former attorney general Munir Malik.

Pakistan's Ex-Chief Justice Iftikhar Chaudhry
This discussion is titled "The Pakistani Legal Code And How It Impacts Investors And Entrepreneurs". It is scheduled  for 10:15 AM at "OPEN Forum 2014", the organization's annual conference on Saturday, May 10, 2014, at the Santa Clara Marriott in Silicon Valley

If I were asked to moderate this panel, I would not treat it as an abstract discussion of how rule of law impacts investors and entrepreneurs anywhere in general. Instead, I would focus on how Justice Iftikhar Mohammad Chaudhry conducted himself and how his conduct affected the investment climate and the economy in Pakistan during his tenure as Chief Justice of Pakistan.

Foreign Direct Investment in Pakistan:

World Bank's data shows that foreign direct investment (FDI) in Pakistan reached a peak of over $5 billion (3.6% of GDP) in 2007 and then fell sharply in the wake of Justice Chaudhry's reversal of the privatization of Pakistan Steel Mills. FDI has essentially dried up and the Pakistan Steel Mills Corporation has accumulated losses over Rs. 100 billion in spite of multiple bailouts at taxpayers expense. It is currently operating at just 3% of capacity and its monthly payroll adds up to Rs. 500 million, according to Dawn.

FDI as % of GDP in Pakistan Source: World Bank

Canceled Privatization Deals:

Huge subsidies are being given at taxpayers' expense to Pakistan Steel Mills and several other state-owned enterprises which take resources away from more pressing needs for spending on education, health care and infrastructure. In fact, Pakistan Education Task Force Report 2011 reported that "under 1.5% of GDP [is] going to public schools that are on the front line of Pakistan's education emergency, or less than the subsidy for PIA, Pakistan Steel, and Pepco."

Speaking at a recent international judicial conference in Islamabad, Dr. Ishrat Hussain, current dean of the Institute of Business Administration and former governor of The State Bank of Pakistan, said there has not been a single privatization deal in Pakistan since the Supreme Court's 2006 decision voiding the steel mill transaction.

Dr Hussain said that despite fulfilling the legal requirements, the fear that the country’s courts may take suo motu notice of the transaction, and subsequently issue a stay order, deters businesses from investing in Pakistan, according to a report in The Express Tribune. “A large number of frivolous petitions are filed every year that have dire economic consequences. While the cost of such filings is insignificant the economy suffers enormously,” he added.

Crucial Projects Delayed:

Among other projects, Dr. Hussain particularly cited Reko Diq and LNG projects which could not proceed because of judicial activism of Pakistan Supreme Court judges.

The lack of progress on liquefied natural gas (LNG) deal has exacerbated Pakistan's energy crisis. It would have brought in 400 million cubic feet of gas per day to bridge the growing supply-demand gap now crippling Pakistan's economy.

The invalidation of Reko Diq license to  Tethyan, joint venture of Canada's Barrick and Chile's Antofagasta, has turned away Pakistan's single largest foreign investment deal to date. The deposit in Balochistan was expected to produce about 200,000 tons of copper and 250,000 ounces of gold annually. Under the deal Baluchistan province would hold a 25 percent stake in the project, with Tethyan holding the remaining 75 percent.

Militants Released:

In addition to activist judges intervention in economic matters, there have also been many instance in which known militants have been released by Pakistani courts. Those released have then committed acts of terror which have also scared away investors, both foreign and local.

Summary:

Dr. Hussain closed his speech by pleading with Pakistan's judges "with all the humility and without sounding arrogant or offending anyone’s sensibilities, that economic decision are highly complex and its repercussions are interlinked both in time as well as space.”

I hope that this opportunity to question the former chief justice is not wasted by an adoring crowd asking him soft-ball questions at the OPEN conference on  May 10, 2014. It's important that we, including the honorable judge, do an honest assessment of our past mistakes to learn from them.

Related Links:

Haq's Musings

Shaukat Aziz's Economic Legacy in Pakistan

Saving Pakistan's Education, Steel Mill, Railway and PIA

Politics of Patronage Trumps Public Policy 

Iftikhar Chaudhry is no Angel

Musharraf Earned Legitimacy by Good Governance

Vindictive Judges Pursue Musharraf

Rare Earths at Reko Diq?

Saturday, April 26, 2014

World Misery Index: Pakistanis Better Off Than 27 on a List of 90 Nations

Pakistan (score 21.9) at 28 ranks below Iran (score 61.6) at 2 and India (score 25.6) at 19 on world misery index rankings for 2013 compiled by Washington's Cato Institute. Other nations worse off than Pakistan on the list include Serbia, Argentina, Jamaica, Egypt, Spain, South Africa, Brazil, Greece, Macedonia, Palestine, Turkey, Cyprus, Croatia, Dominican Republic, Georgia, Nicaragua, Honduras, Costa Rica, Jordan, Ukraine, Peru, Uruguay, Portugal and Barbados. Indonesia (score 21.6) at 29 is only slightly better off than Pakistan.

What is Misery Index?

Back in 1960s, distinguished American economist Arthur Okun defined misery index as sum of inflation and unemployment rates. America's high misery index was cited by candidate Jimmy Carter as a reason to elect him president in his 1976 presidential race against President Gerald R. Ford. The Cato Institute has now revived it by adding interest rates to the sum of inflation and unemployment rates and subtracting per capita GDP growth rate from it.

Source: Cato Institute


Cato's 2013 Ranking:

According to the analysis published by the Cato Institute, Venezuela tops the list of 90 countries as the most miserable nation in the world. The countries listed in the misery index were selected based on data from the Economist Intelligence Unit and calculations from Steve Hanke, a professor of Applied Economics at Johns Hopkins University.

Venezuela's misery score of 79.4 is far above the second-ranked Iran (61.6) with the rest of the top 22 countries scoring above 25 on the index. Inflation is the major contributing factor plaguing three of the top four nations listed. The other countries are either hampered by high unemployment or interest rates.

Summary:

In spite of Pakistan's multiple crises including the economic crisis, Pakistanis can take some solace in the fact that they are not alone in their misery. There are at least 27 nations, including their neighbors India and Iran, where people are economically suffering more than they are.

Related Links:

Haq's Musings

Pakistanis Happier Than Neighbors

Farmers Suicides in India

World's Largest Population of Poor, Hungry and Illiterates

World Bank on Job Growth in South Asia

Pakistan Offers Higher Economic Mobility Than US and China

Upwardly Mobile Pakistan




Friday, April 11, 2014

Pakistani-American Dr. Asad Qamar Among Top Earners in America

Dr. Asad Qamar, a graduate of Lahore's King Edwards Medical College, received $18.2 million in payments from US Medicare program in 2012, making him the second highest billing doctor in America. Dr. Qamar is a member of APPNA, Association of Physicians of Pakistani Descent in North America. He was a candidate for the presidency of APPNA in 2013.

Asad Qamar M.D.

Dr. Qamar, a Pakistani-American cardiologist, and his family have given at least $300,000 to politicians and political causes in the 2012 election cycle and in 2013, according to contribution disclosure records reported by Reuters. Dr. Asish Pal, a Florida-based Indian-American, is the second highest billing cardiologist in America. Dr. Pal was paid $4.5 million by Medicare.

Dr. Qamar has been subjected to lengthy reviews of his billing practices by US Department of Health and Human Services. He has complained to President Obama and other officials that the contractors conducting the reviews for the HHS were slow and unresponsive. Dr. Qamar told New York Times that his payments were high because his practice, which has 150 employees and a caseload of 23,000 patients, routinely handles complicated procedures like opening blocked arteries in the legs of older patients, which normally would be billed by a hospital.

Only Dr. Salomon Melgen, a Florida Ophthalmologist, billed Medicare for a larger amount than Dr. Qamar did in 2012. Dr. Melgen, too, is a major contributor to Democratic party. Dr. Melgen’s firm donated more than $700,000 to Majority PAC, a super PAC run by former aides to the Senate majority leader, Harry Reid, Democrat of Nevada. The super PAC then spent $600,000 to help re-elect Senator Robert Menendez, Democrat of New Jersey, who is a close friend of Dr. Melgen’s. Last year, Mr. Menendez himself became a target of investigation after the senator intervened on behalf of Dr. Melgen with federal officials and took flights on his private jet, according to The Times story.

Top Medicare Billers. Source: Washington Post

The top 1% of 825,000 individual medical doctors accounted for 14% of the $77 billion in billing recorded in the data. There is a pattern of of large Medicare payments and six-figure political donations among several of the doctors whose payment records were released for the first time this week by the Department of Health and Human Services in response to a lawsuit filed The Wall Street Journal. Health-care economists say the data—despite several limitations—could help identify doctors who perform far more surgeries, procedures and other services than their peers, according to The Wall Street Journal.

President Barack Obama's Affordable Healthcare Act ( also known as Obamacare) is aimed at achieving universal health care coverage for all Americans. However, as the name indicates, it is also an attempt to make such coverage more affordable, a goal that will remain elusive unless waste, fraud and abuse are brought under control.

Related Links:

Haq's Musings

Pakistani-American Demographics

Pakistani-American Shahid Khan is the Richest South Asian in America

Minorities Are Majority in Silicon Valley

Atiq Raza Fined By Securities and Exchange Commission

Silicon Valley Pakistani-American is Mr. 30 Percent

Indian-Americans Found Guilty of Insider Trading

US Mortgage Fraud Funded Bollywood

Sicko Challenges the Power of US Healthcare Lobby


Tuesday, April 8, 2014

Pakistan Technologist Seeks Support in Silicon Valley

Umar Saif was invited by Organization of Pakistani-American Entrepreneurs (OPEN) to an event yesterday at the Palo Alto offices of Pillsbury Winthrop Shaw Pitman Law Firm  in Silicon Valley to talk about the state of technology in Pakistan. The event was appropriately titled: "Presenting Umar-The Force Behind Plan 09- Pakistan's Leading Incubator For Startups"


Umar Saif is just 35 years old and his name is already synonymous with technology in Pakistan. He was named a Young Global Leader by the World Economic Forum in 2010, selected as one of top 35 young innovators in the world by MIT Technology Review in 2011 and received a Google faculty research award in 2011.

Saif got his PhD in computer science from England's University of Cambridge at 22. Then he joined Massachusetts Institute of Technology to do post-doctoral research. He worked at the MIT Computer Science and Artificial Intelligence Laboratory where he was part of the core team that developed system technologies for the $50 million Project Oxygen.

Saif now wears multiple hats in Pakistan; he is an associate professor at Lahore University of Management Science (LUMS); he works for the Punjab government as the head of Punjab Information Technology Board (PITB); he is vice chancellor of Information Technology University and he is the founder of Plan 9, a government-financed tech startup incubator in Lahore. He says there is a possibility that he might soon move to Islamabad to work for the federal government as its Chief Technology Officer.

PITB's work in Pakistani Punjab under Saif has been described in recent World Bank report as "unprecedented in the public sector in developing countries". The objective of these efforts is to reduce corruption, increase productivity and improve service delivery in both private and public sectors. Saif said other provincial governments, particularly KPK's PTI-led govt, are now asking for his advice and help for similar projects in their provinces. 

After a brief introduction by OPEN's Riaz Karamali, Saif started his presentation by talking about his work on SMSall messaging platform and how it has been used by relief workers, protest movements, political campaigns and social activists in the country. In particular, he mentioned Imran Khan's PTI's extensive use of his platform as a tool to organize the party's election campaign last year.

The featured speaker then briefly described a couple of companies in Plan 9 incubator: Groopic and Tunacode. Both of these companies are in a Silicon Valley Immersion Program funded by Google. He said Plan 9 offers facilities such as free office space on the 9th floor in Arfa Karim IT Park, a modern building in Lahore. In addition, there are monthly stipends,  free laptops, uninterrupted power supply, internet connectivity, mentoring, training workshops, legal advice, connection with potential investors and customers, etc.

Story of Pakistan's Plan9 Incubator


Saif then sought the help of his Silicon Valley audience in promoting technology. In the ensuing discussion, a number of audience members pointed out some of the work that Saif seemed unaware of.

I mentioned a Forbes story in its current issue that talks about Pakistan as one of a dozen countries where Sequoia Capital funded companies' founders were born. Fireeye and OpenSilicon are two such Sequoia-funded companies with Karachi-born founders. OpenSilicon has a design center in Pakistan. Rehan Jalil, a Pakistani-born Silicon Valley entrepreneur who graduated from NED University of Engineering and Technology, has a development center in Karachi for his latest cloud security startup Elastica. Wichorus, Jalil's earlier startup later acquired by Tellabs for $150 million, also employed engineers in Karachi.  Idris Kothari's Vertical Systems Inc. (VSI), a hospitality IT company, does most of its engineering work in Karachi, Pakistan.

Sajid Sohail of Jadoo TV, who was in the audience, pointed out that his company employs 100 engineers in Pakistan to do the development work for his streaming TV box and network that delivers Urdu channels. Muhammad Irfan, CEO of Whizz Systems, said he too has engineering offices in Pakistan.

As the meeting came to a close, there was broad agreement that Silicon Valley Pakistani-Americans can and should do more to help promote technology in Pakistan. Muhammad Irfan of Whizz Systems suggested setting up a basic legal framework and a transparent process to fund young companies in Pakistan through a Pakistani-Americans' angel network. In my view, the first steps toward this goal should be as follows:          

1. Analyze risks, allow the usual risks associated with tech startups and offer legal and financial protection against unacceptable risks from terrorism, violence, corruption and malfeasance.

2. Look at a Silicon Valley style term sheet for high-tech venture capital investors and build a legal and policy framework to ensure enforceability of its terms.

Without creating adequate investment environment, it will be difficult, if not impossible, to attract private venture capital in Pakistan.

Related Links:

Haq's Musings

Pakistan Deploys IT Apps in Public Sector

Arfa Karim's Inspirational Legacy

Two Pakistani Tech Start-ups in Silicon Valley Immersion Program

NEDian Rehan Jalil's Startup Elastica Gets $6.3 Million VC Funding

Pakistani-American Stars in HBO Comedy "Silicon Valley"

Pakistani-American's Fireeye Goes Public

Organization of Pakistani-American Entrepreneurs 

US Promoting Venture Capital in Pakistan

Thursday, April 3, 2014

Pakistani-American Plays Silicon Valley Techie in HBO Comedy Show

“This guy’s a really good programmer, so that makes him arrogant, because of his skills in a very specific world. And then I take that arrogance and apply it to every other aspect of his life that he’s not good at. So I think that guy’s funny ’cause he’s arrogant — about everything, about how he thinks he is with the ladies. He’s not good with the ladies. You know, all that stuff. He thinks he’s cool. He’s not cool. He’s only good at programming.” Kumail Nanjiani on his role in HBO's "Silicon Valley"


Kumail Nanjiani, born in Karachi, Pakistan, has found success as a stand-up comedian in the United States. After completing high school in Pakistan, he attended Grinnell College in Iowa where he graduated in 2001. His comedy has been featured on a number of popular television shows including the Late Show with David Letterman, Late Night with Jimmy Fallon, and Conan. He has written for and acted on "Michael & Michael Have Issues" and has appeared on The Colbert Report and Burning Love.

Kumail's latest work is HBO’s new comedy, “Silicon Valley”, a half hour live action series that takes a light-hearted look at the start-up culture of Silicon Valley. The show, which premieres on Sunday, April 6, is written and directed by Mike Judge, who was also behind “Beavis and Butt-head,” “Office Space” and “King of the Hill.”  Kumail plays Dinesh Chugtai, an Islamabad-born Pakistani-American character, working as a lead engineer in a fictional start-up tech company called "The Pied Piper". The San Francisco Chronicle has praised it not only one of the best shows of the season, but the “best tech show yet” and “a Silicon Valley rarity: a start-up that’s a sure thing.” Here's an excerpt of San Francisco Chronicle's review of "Silicon Valley":

"“Silicon Valley” is full of quips and jabs that those familiar with the tech industry will find amusing, but it’s also broad enough to lure in average HBO watchers in the mood for a comedy. The show debuts on April 6 right after "Game of Thrones" on HBO."

Marvel Entertainment has recently introduced a new Ms. Marvel, a 16-year-old Pakistani-American superhero named Kamala Khan. Shahid Khan, a Pakistani-American businessman, became the first non-white owner of an NFL team two years ago. It's good to see Pakistani-Americans making their mark in sports and entertainment in addition to more traditional occupations like engineering and medicine.

Here's a video clip of Kumail Nanjiani's act:


Related Links:

Haq's Musings

Burka Avenger: Pakistani Female Superhero 

Burka Avenger  Videos on Vimeo Channel

UN Malala Day

Pakistan's Cowardly Politicians

Pakistani-American Ashar Aziz's Fireeye Goes Public

Pakistani-American Shahid Khan Richest South Asian in America

Two Pakistani-American Silicon Valley Techs Among Top 5 VC Deals

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