Sunday, December 28, 2014

India's Exploding Book Market Promotes Anti-Pakistan Authors, Publishers

Have you ever wondered why the publication of anti-Pakistan books has become a major growth industry today? The answer is simple: Authors and publishers of books about Pakistan know where the money is. It's in India where the book sales are rising rapidly in the midst of continuing global decline. Strong profit motive drives them to write what Indians want to read. Those, like Professor Wendy Doniger of University of Chicago, who ignore this reality are punished by having their books withdrawn and pulped. No publisher wants to take this risk now. And authors who wish to get published have to understand it too.

Indian Book Market:

India's English language book market is the world's third largest, behind that of the United States at the top and of the United Kingdom at number 2.  It is the fastest growing market today which will make India the world's number 1 market in the next ten years.  It could happen sooner if the book sales in the US and the UK decline faster or those in India grow more rapidly than they are already.


India's Pakistan Narrative:

The best way to understand the Indian narrative about Pakistan today is to read "The Warrior State: Pakistan in the Contemporary World" by Canada's McGill University Professor Thazha Varkey Paul, a graduate of India's Jawaharlal Nehru University, who describes Pakistan as a "warrior state" and a "conspicuous failure". It is among a slew of recently published anti-Pakistan books by mainly Indian and western authors which paint Pakistan as a rogue state which deserves to be condemned, isolated and sanctioned by the international community.  Others, including Christine Fair and Husain Haqqani have also used the same narrative to get a lot of buzz and sell books in India and the West.

Christine Fair's About-Face:

C. Christine Fair is an assistant professor in the Center for Peace and Security Studies (CPASS), within Georgetown University’s Edmund A. Walsh School of Foreign Service. She has only recently wised up to the opportunity to sell lots of books in India.

Before writing and promoting "Fighting to the End: The Pakistan Army's Way of War", an anti-Pakistan book, American analyst and author Christine Fair said this in 2009: "Having visited the Indian mission in Zahedan, Iran, I can assure you they are not issuing visas as the main activity! Moreover, India has run operations from its mission in Mazar (through which it supported the Northern Alliance) and is likely doing so from the other consulates it has reopened in Jalalabad and Qandahar along the border. Indian officials have told me privately that they are pumping money into Baluchistan".

Husain Haqqani's Double Game:

Husain Haqqani, former Pakistani ambassador to US, has been the darling of India and the West since the publication of his book "Pakistan: Between Mosque and Military" in 2005. He has recently followed it up with another Pakistan-bashing book "Magnificent Delusions" in which he accuses Pakistan of lying and playing a double-game with the West.

Washington Post's Richard Lieby's review summed up the book in the following words: "Read his book and you might think Husain Haqqani, Pakistan’s ambassador to Washington from 2008 to 2011, is no friend of his homeland. Its leaders are liars, double-dealers and shakedown artists, he says. They have been this way for decades, and, as Haqqani ably documents, the United States often has served as Pakistan’s willing dupe. But for all its criticism of Pakistan, “Magnificent Delusions”is a necessary prescriptive: If there’s any hope of salvaging what seems like a doomed relationship, it helps to know how everything went so wrong. Haqqani is here to tell us."

If one really analyses Haqqani's narrative, one has to conclude that Pakistanis are extraordinarily clever in deceiving the United States and its highly sophisticated policymakers who have been taken for a ride by Pakistanis for over 6 decades. It raises the following questions:

Question 1: Given the belief that Pakistan would not survive, how did the country defy such expectations? What role did its "villainous" military play in its political and economic survival? What does the history say about rapid economic development of Pakistan under military regimes?

Question 2: Wouldn't any country that suffered a military invasion by its much larger neighbor and its break-up be justified in feeling threatened? Wouldn't such a country build deterrence against further adventures by its bigger neighbor?

Question 3:  If the standard western narrative is correct, why have successive US administrations been so naive and gullible as to be duped by Pakistan's politicians and generals for such a long period of time? Is it not an indictment of all US administrations from Harry S. Truman's to Barack H. Obama's?

Question 4:  What role did Pakistan play in the defeat of the Soviet Union in Afghanistan and the subsequent break-up of the Soviet Union?

 Question 5:  What price has Pakistan paid for facilitating US military operations in Afghanistan? How many Pakistani soldiers and civilians have lost their lives since 911?

Debunking TV Paul's Narrative: 

TV Paul describes Pakistan as a "warrior state" and a "conspicuous failure". Is it really?

Let's do a point-by-point examination of Paul's narrative:

1. Paul argues: Seemingly from its birth, Pakistan has teetered on the brink of becoming a failed state.

In 1947 at the time of independence, Pakistan was described as a "Nissen hut or a tent" by British Viceroy of India Lord Mountbatten in a conversation with Jawarhar Lal Nehru. However, Pakistan defied this expectation that it would not survive as an independent nation and the partition of India would be quickly reversed. Pakistan not only survived but thrived with its economic growth rate easily exceeding the "Hindu growth rate" in India for most of its history.

Agriculture Value Added Per Capita in 2000 US $. Source: World Bank


Even now when the economic growth rate has considerably slowed, Pakistan has lower levels of poverty and hunger than its neighbor India, according UNDP and IFPRI. The key reason for lower poverty in Pakistan is its per capita value added in agriculture which is twice that of India. Agriculture employs 40% of Pakistanis and 60% of Indians. The poor state of rural India can be gauged by the fact that an Indian farmer commits suicide every 30 minutes.

2. Paul: Its economy is as dysfunctional as its political system is corrupt; both rely heavily on international aid for their existence.

The fact is that foreign to aid to Pakistan has been declining as a percentage of its GDP since 1960s when it reached a peak of 11% of GDP in 1963. Today, foreign aid makes up less than 2% of its GDP of $240 billion.

Foreign Aid as Percentage of Pakistan GDP. Source: World Bank


3. Paul: Taliban forces occupy 30 percent of the country.

 The Taliban "occupy" a small part of FATA called North Waziristan which is about 4,700 sq kilometers, about 0.5% of its 796,000 sq kilometers area. Talking about insurgents "occupying" territory, about 40% of Indian territory is held by Maoist insurgents in the "red corridor" in Central India, according to Indian security analyst Bharat Verma.

4. Paul: It possesses over a hundred nuclear weapons that could easily fall into terrorists' hands.

A recent assessment by Nuclear Threat Initiative ranked Pakistan above India on "Nuclear Materials Security Index".

5. Paul: Why, in an era when countries across the developing world are experiencing impressive economic growth and building democratic institutions, has Pakistan been such a conspicuous failure?

Pakistan's nominal GDP has quadrupled from $60 billion in 2000 to $240 billion now. Along with total GDP, Pakistan's GDP per capita has also grown significantly over the years, from about $500 in Year 2000 to $1000 per person in 2007 on President Musharraf's watch, elevating it from a low-income to a middle-income country in the last decade.I wouldn't call that a failure.


Pakistan Per Capita GDP 1960-2012. Source: World Bank 


Goldman Sachs' Jim O'Neill, the economist who coined BRIC, has put Pakistan among the Next 11 group in terms of growth in the next several decades.

6. Paul argues that the "geostrategic curse"--akin to the "resource curse" that plagues oil-rich autocracies--is at the root of Pakistan's unique inability to progress. Since its founding in 1947, Pakistan has been at the center of major geopolitical struggles: the US-Soviet rivalry, the conflict with India, and most recently the post 9/11 wars.

Pakistan is no more a warrior state that many others in the world. It spends no more than 3.5% of its GDP on defense, lower than most of the nations of the world.

7. Paul says: No matter how ineffective the regime is, massive foreign aid keeps pouring in from major powers and their allies with a stake in the region.The reliability of such aid defuses any pressure on political elites to launch the far-reaching domestic reforms necessary to promote sustained growth, higher standards of living, and more stable democratic institutions.

"Massive foreign aid" adds up to less than 1% of Pakistan's GDP. Pakistan's diaspora sends it over 5% of Pakistan's GDP in remittances.

8. Paul: Excessive war-making efforts have drained Pakistan's limited economic resources without making the country safer or more stable. Indeed, despite the regime's emphasis on security, the country continues to be beset by widespread violence and terrorism.

Pakistan Defense Spending as % of GDP Source: World Indicators


 In spite of declining military spending which is just 3.5% of its GDP now which is average for its size, Pakistan has achieved strategic parity with India by developing nuclear weapons. It has since prevented India from invading Pakistan as it did in 1971 to break up the country. Pakistani military has shown in Swat in 2009 that it is quite capable of dealing with insurgents when ordered to do so by the civilian govt.

Growth in Asia's Middle Class. Source: Asian Development Bank


While it is true that Pakistan has not lived up to its potential when compared with other US Cold War allies in East and Southeast Asia, it is wrong to describe it as "conspicuous failure". Pakistan should be compared with other countries in South Asia region, not East Asia or Southeast Asia. Comparison with its South Asian neighbors India and Bangladesh shows that an average Pakistani is less poor, less hungry and more upwardly mobile, according to credible data from multiple independent sources.

Conclusion: 

Pakistan is neither a "warrior state" nor a "conspicuous failure" as argued by Professor TV Paul. To the contrary, it has been the victim of the invading Indian Army in 1971 which cut off  its eastern wing. Pakistan has built a minimum nuclear deterrent in response to India's development of a nuclear arsenal. Pakistan has responded to the 1971 trauma by ensuring that such a tragedy does not happen again, particularly through a foreign invasion.

Pakistan is a complex country. It is much more upwardly mobile than many of its neighbors, including India.  While the country is suffering growing pains like any other developing nation, the false narrative of exaggeration of its difficulties being promoted by a flurry of books bashing Pakistan is driven more by desire for commerce than by serious academic search for truth. Assertions made in such books fall apart when subjected to the close scrutiny that I have done in this post.

Today, Pakistan faces some of the toughest challenges of its existence. It has to deal with the Taliban insurgency and a weak economy. It has to solve its deepening energy crisis. It has to address growing water scarcity. While I believe Pakistanis are a very resilient and determined people, the difficult challenges they face will test them, particularly their leaders who have been falling short of their expectations in recent years.


Related Links:

Haq's Musings

Debunking TV Paul

Challenging Gall-Haqqani-Paul Narrative

Looking Back at 1940 Lahore Resolution

Pakistan's Economic History

History of Literacy in Pakistan

Upwardly Mobile Pakistan

Asian Tigers Brought Prosperity

Value Added Agriculture in Pakistan

Are India and Pakistan Failed States?

Musharraf Accelerated Growth of Pakistan's Financial and Human Capital

Pakistan's Nuclear Program

Pakistan on Goldman Sachs' BRIC+N11 Growth Map

Wednesday, December 17, 2014

E-Commerce Comes to Pakistan

Guest Post by Monis Rahman
Founder, Chairman and CEO of Rozee.pk

Pakistan is late to the party. E-commerce is booming throughout our immediate region. India's leading e-commerce website, Flipkart, recently raised a record $1 Billion in new investment, handling 5 Million shipments each month. The website sees so much potential in mobile shopping that it has a stated goal of becoming "the mobile e-commerce company of the future".


To our north, China's e-commerce leader, Alibaba, set a global record when it listed its shares on the New York Stock Exchange in September. Alibaba's Initial Public Offering raised a staggering $25 Billion, making its record-breaking IPO the biggest in the world. Today the Chinese e-commerce giant's market capitalization is over $250 Billion exceeding that of Wal-Mart, the world's largest old economy retailer. The market value of e-commerce companies in Pakistan's immediate vicinity including Turkey, the Middle East, India and China exceeds half of a trillion dollars.



But the party has indeed finally started in Pakistan as well. By 2017, the size of our e-commerce market is expected to reach over $600 Million from it's current size of $30 Million spent on online purchases annually. There are several factors driving this growth, which will dramatically change the way we buy things over the next several years.
Growth of Internet Penetration

Pakistan's Internet penetration rate historically exceeded that of India until 2009. In 2009, India launched 3G and its Internet penetration sky-rocketed. The same hockey stick growth took place in Sri Lanka's after its 3G launch in 2006. With Pakistan's long awaited entry into the 3G club a few months ago, there will be a similar burst of Internet accessibility which will further catapult online purchases.



Following the pattern of our neighbors, Pakistan's Internet enabled population will increase from 30 Million users today to 56 Million in 2019. Over the next five years, 28% of the country's citizens will have Internet access. This unprecedented reach will transform not just how consumers purchase goods, but will also significantly impact several other industries. My own online jobs classifieds site, ROZEE.PK, today processes 40,000 job applications a day and has helped over 1 Million people find jobs. Social media sites including Facebook and Twitter are transforming how we consume news and shape opinions.

Ubiquity of Access through Mobile

Along with the rise of Internet accessibility through 3G, Pakistan is simultaneously witnessing a surge in smartphone usage. There are an estimated 9 Million smartphone users in Pakistan, using handsets that are fully equipped with web browsers and online connectivity. Smartphones have become increasingly sophisticated, not only substituting many functions previously only capable through desktop and laptop computers, but also greatly increasing the ease of going online. Not only is the Internet becoming more accessible to consumers, consumers are also becoming more accessible to Internet merchants through the ubiquity of the smartphones in our pockets.

While the growth of smartphones in Pakistan is linked to the rise of Internet penetration, it is more so driven by the declining cost of increasingly sophisticated devices. Chinese companies which have traditionally manufactured devices for the world's leading mobile phone brands including Apple and Samsung, are now OEM'ing their own handsets for a fraction of the cost powered by Google's Android operating system. So significant is this trend that Samsung's third quarter profits fell by 50% as its mobile business continued to lose ground to low-cost Chinese smartphone makers.

The sub Rs. 5,000 price point of relatively powerful smartphones in Pakistan is enabling online accessibility to penetrate a lower untapped income strata of society. My cook now downloads recipes from the Internet on his smartphone.

India's Flipkart sees so much potential in mobile shopping that it has a stated goal of becoming "the mobile e-commerce company of the future".

Online Payment Initiatives Are Mushrooming

While over 95% of online purchases are fulfilled through Cash on Delivery (COD) in Pakistan, several promising initiatives are underway which will make it easier to pay directly online. Many banks and telcos alike have launched branchless banking and m-commerce initiatives ranging from MCB Banks's MCBLite, Telenor's Easy Paisa, Mobilink's Mobicash, Zong and Askari Bank's Timepay, UBL's Netbanking and others. The number of branchless banking agents which facilitate offline payments for online purchases tripled from 41,000 in 2012 to 125,000 in 2013, making it increasingly easier and more convenient to transfer money.

One of the most frequent complaints from Pakistan's online sellers of not being able to get merchant accounts that allow them to card payments online, has been abated. While Citibank Pakistan was once the only bank in the country to offer online merchant accounts, it was also notoriously difficult for businesses to get approved. When the bank wrapped up its consumer banking operations in 2012, it left its approximately paltry 14 approved merchants high and dry without an online card processing facility. However, UBL has since launched its Go Green Internet Merchant Account product for businesses which is far more reasonable in its on-boarding criteria. Online merchants can now potentially collect payments electronically from 12 Million debit cards in Pakistan.

Perhaps the most successful online payment solution currently available in the country is Inter Bank Fund Transfer (IBFT). A large volume of payments are made by consumers directly going to their bank's website to electronically transfer funds to online stores. Most banks are now offering their customers net banking IBFT payment facilities through their websites, bringing a majority of the country's banked population into the fold of electronic payments.

Maturing Logistics and Parcel Delivery Infrastructure

Currently 95% of online purchases are paid for through COD at the time the parcel is delivered to customer. TCS, BlueEX, Leopards and other couriers are providing COD delivery services across over 150 cities in the country. This becomes especially relevant when considering that approximately 35% of the the country's monthly 70,000 COD shipments are delivered to cities outside the three main urban centers of Karachi, Lahore and Islamabad. While urban shoppers are more online as a percentage of population, the value for rural shoppers is higher as many products are not available in their local markets. This implies a huge untapped segment of the population that will increasingly transition to online shopping.


Growing Trust in Online Storefronts

One of the main obstacles to the growth of e-commerce is the lack of consumer trust in purchasing from the "cloud". As a dotcom entrepreneur in Silicon Valley during the 1990's, I recall the prevailing conventional wisdom at the time: people would never give their credit card information on the Internet to buy items. Today, over 72% of Internet users in the US are digital shoppers. This contrasts sharply with less than 3% of Pakistani Internet users who have bought goods online. Although we have a long way to go, there is correspondingly huge upside potential as well.

After initial hesitation, an inflection point in consumer behavior was reached in the US during the late nineties with strong online storefront brands such as Amazon taking to mainstream media. The large amount of investment these sites were able to raise, coupled with highly professional teams, led to positive shopping experiences for the risk averse early adopters who ventured to buy online. We will see this same pattern in Pakistan.

For the first time in the country's history, we are seeing online brands deploying significant advertising budgets for mainstream media advertising. Deep pocketed general classifieds sites like OLX, funded by the South African mega media group Naspers, and Asani, a Schibsted funded company from Norway, have embarked in our online industry's first media war with ads competing for our eyeballs. Rocket Internet, which runs Daraz and Kaymu in Pakistan, recently completed an $8.2 Billion IPO in October of this year. Daraz and Kaymu are well funded and will be pouring capital into the Pakistani e-commerce market in a magnitude not seen here before. Several other Pakistani online players will be launching their TV ads in the coming months, giving new credibility to the online medium and e-commerce.

All of these developments will lead to a rapid increase in trust as first time online shoppers experience e-commerce and generate acceptance through word-of-mouth.

Pakistani E-Commerce Companies


Big foreign investors are a swooping in to become first movers in key verticals in the world's sixth most populous country with the goal of claiming online thrones. Visionary local players like Home shopping, Shophive and Symbios are organically emerging from our ecosystem and bootstrapping to success. This is a winner-takes-all market: the largest marketplaces grow the fastest making it unviable for new entrants as the industry heats up. And this industry has a voracious appetite for capital. The e-commerce party has started.


The Author is Chairman and CEO of Naseeb Networks and is one of Pakistan's most prolific Internet entrepreneurs. He runs leading online job classifieds sites ROZEE.PK in Pakistan and Mihnati.com in Saudi Arabia. 

This post reflects the author's assessment of the e-commerce scene he sees in Pakistan. The owner of this blog does not necessarily agree with the contents of this guest post. 

Here's a couple of video clip on e-commerce company leaders in Pakistan:

https://www.youtube.com/watch?v=ehNY5GuY8Vw



http://www.dailymotion.com/video/x1aoyc7_daraz-pk-co-founder-farees-shah-on-ecommerce-in-pakistan-at-ptvworld-part-1-4_tech


Thursday, December 11, 2014

High-Tech Startup Investment Opportunities in Pakistan

Guest Post by Khurram Zafar

I believe that the technology entrepreneurship ecosystem in Pakistan is at a tipping point! There are a number of factors at play that make Pakistan so ripe for both local and international investors looking to invest in the tech space:
  • Quickly growing internet adoption currently estimated to be 25 million internet users and 15 million mobile internet users;
  • Cheap smart phone devices costing under $50;
  • 3G and 4G rollouts;
  • Massive amounts of marketing and media spend by companies like Rocket Internet, Schibsted, and Naspers that’s targeted to make Pakistani consumers comfortable transacting online;
  • Development of platforms like The Foundation at LUMS Center for Entrepreneurship and Plan9 that are supporting passionate entrepreneurs during their formative years;
  • Slow but steady investments flowing into startups at seed (e.g. Kima Ventures investment into Eyedeus Labs) and early stage (Frontier Digital Venture’s US$3.5 Million investment into PakWheels.com) from local and foreign angels as well as early-stage funds;
  • Tens of millions of dollars being poured into developing pervasive electronic and online payment infrastructure in Pakistan (you have to take my word for it, but telcos and major banks will soon start announcing these plays);
  • Successful entrepreneurs returning from abroad and providing mentoring to startups and building bridges for them outside of Pakistan;
  • Gradual realization by seasoned businessmen and young aspiring entrepreneurs alike that internet has a massive equalizing power and they can tap into a global market of billions through online channels;
  • Low cost of starting a technology business due to easy access to cloud computing platforms; massive distribution channels like the PlayStoreAppStore and Facebook; ability to create very targeted online marketing campaigns; inexpensive outsourcing of development tasks to freelancers; and quick feedback from customers to iterate and improve the products and services;
  • Ease of doing a tech business in Pakistan compared to the red tape and bureaucracy that has to be dealt with while setting up an industry (in fact, software exports still enjoy a complete tax holiday in Pakistan);
  • Excellent leverage on HR that tech (product) businesses provide compared to any other business and we all know that good HR is a constraint anywhere in the world;
  • And lastly, because tech businesses are not as widely impacted by security, electric power shortfalls, gas load-shedding and others infrastructure issues plaguing the rest of the industries in Pakistan.
You inject a bit of capital to catalyze all this further in the 6th most populous (196 Million) country in the world, and we can have a perfect storm that can turn the Pakistani technology startups of today into the giant global businesses of tomorrow!
How long will you keep pumping money in sugar and textile mills? Let me share something that might shed some light on the opportunity that I am ranting about. The following chart compares the annual profit before taxes of a single games company based in Finland, a country with half the population of Lahore, employing only 120 people (which recently took over Nokia’s old R&D facility) with multiple publicly listed companies in Pakistan belonging to various industrial segments. Here are some eye opening inferences in case they are not readily evident:
  • One mobile gaming company in a country with half the population of Lahore makes more profit before taxes than ten of the largest cement companies in Pakistan
  • One mobile gaming company in a country with half the population of Lahore makes more profit before taxes than two companies that distribute natural gas to the entire Pakistan
  • One mobile gaming company in a country with half the population of Lahore makes more profit before taxes than five power generation companies and two oil refineries combined
  • One mobile gaming company in a country with half the population of Lahore makes more profit before taxes than nine of the top textile mills, five automobile companies and 5 sugar mills combined
Mobile Gaming vs Multiple Industries
Comparison of profit before taxes (FY2013) of a single mobile gaming company with various industries in Pakistan
Here is another chart to drive home the point.
  • One mobile gaming company in a country with half the population of Lahore makes more profit before taxes than any one of the largest banks in Pakistan
  • One mobile gaming company in a country with half the population of Lahore makes 6 times more profit before taxes than National Bank of Pakistan
One Mobile Gaming vs Multiple Banks
Comparison of profit before taxes (FY2013) of a single mobile gaming company with various banks in Pakistan
Alright, so I have used one of the most successful games development companies for comparison, but that is besides the point. The point is, the next big games development company could be Mindstorm Studios based right here, in Lahore. The fact that it’s based in Pakistan does not minimize its chances of success. It’s as good an investment opportunity as Supercell of Finland!
One of the incubated companies at the LUMS Center for Entrepreneurship, interaCta, has developed tech to make all TV and radio broadcast interactive without the need of additional hardware, just requiring smart phones. Imagine the implications! It can disrupt the TV, Radio, Advertisement, Ratings industries just to name a few. A potential acquirer wouldn’t care whether the tech was developed at Xerox or LUMS. Eyedeus Labs, another team of LUMS students, recently raised money from Kima Ventures. They are looking to disrupt online video advertisement market by introducing non-intrusive advertisement methods in the videos that do not distract the viewer. Then there is SavareeBizCloutBurq SolutionsJewelryDesignProP for Plan and the list goes on. All of these are great investment opportunities seeking capital. And these are just a few of the seed stage investment opportunities.
I repeat. This is a great time to enter Pakistan. Equity in technology companies is relatively cheap, assets are portable (predominantly intellectual property) in case one gives too much weight to country risk, operations are already on cloud platforms outside of Pakistan for many, and exit opportunities exist globally. The fundamentals of the on-ground businesses are already very strong. The Karachi Stock Market index has been growing north of 40% for the past few years (30%+ in $ terms) and broke the highest ever 32,000 KSE 100 index points barrier a few days ago. Most of that is driven by foreign investment into rock solid businesses by investors who can see past the FOX news propaganda and realize that the nation, that is often deemed to be on the brink of extinction since its founding in 1947, is as resilient as it is resourceful!
It is time local investors join the party as well. Pakistan is a gold mine of opportunities for the truly visionary, local investors with large balls and an appetite for risk looking for big rewards – people who can consider and invest in the opportunities lurking underneath the veil of ‘mostly perception based’ geo-political and security issues. If you are it, sign up as an investor at http://lce.lums.edu.pk/contact-form for starters.
Disclaimer: The author advises, mentors or has some sort of a non-compensatory advisory relationship with almost all the local startups listed in this article. This post reflects the author's assessment of the tech startup scene and the investment opportunities he sees in Pakistan. The owner of this blog does not necessarily agree with the contents of this guest post. 

The author is Executive Director, LUMS Center for Entrepreneurship.
This post was first published on techies.pk

Related Links:

Haq's Musing

Pakistani Brothers Spawned Multi-billion dollar security software industry

Pakistani Technologist Umar Saif in Silicon Valley

Two Pakistani Tech Start-ups in Silicon Valley Immersion Program







Wednesday, December 10, 2014

China-Pakistan Industrial Corridor Will Boost FDI and Exports

Industrial parks and special economic zones are part of the China-Pakistan Economic Corridor memoranda of understanding recently agreed between the leaders of the two countries. The key pre-requisites for  the establishment of these zones are resolution of the energy crisis and building of a competitive infrastructure in Pakistan.

Energy and Infrastructure:

The first phase of the economic corridor is focused on $45.6 billion worth of energy and infrastructure projects. China's state-owed banks will finance Chinese companies to fund, build and operate $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years, according to Reuters. Major Chinese companies investing in Pakistan's energy sector will include China's Three Gorges Corp which built the world's biggest hydro power project, and China Power International Development Ltd.



Under the agreement signed by Chinese and Pakistani leaders at a Beijing summit recently, $15.5 billion worth of coalwind, solar and hydro energy projects will come online by 2017 and add 10,400 megawatts of energy to the national grid.  An additional 6,120 megawatts will be added to the national grid at a cost of $18.2 billion by 2021.



The transport and communication infrastructure—roads, railways, cable, and oil and gas pipelines—will stretch 2,700 kilometers from Gwadar on the Arabian Sea to the Khunjerab Pass at the China-Pakistan border in the Karakorams.

Starting in 2015, the Chinese companies will invest an average of over $7 billion a year until 2021, a figure exceeding the previous record of $5.5 billion foreign direct investment in 2007 in Pakistan.

Special Economic Zones:

Beyond the initial phase, there are plans to establish special economic zones in the Corridor where Chinese companies will locate factories. Extensive manufacturing collaboration between the two neighbors will include a wide range of products from cheap toys and textiles to consumer electronics and supersonic fighter planes.

The basic idea of an industrial corridor is to develop a sound industrial base, served by competitive infrastructure as a prerequisite for attracting investments into export oriented industries and manufacturing. Such industries have helped a succession of countries like Indonesia, Japan, Hong Kong,  Malaysia, South Korea, Taiwan, China and now even Vietnam rise from low-cost manufacturing base to more advanced, high-end exports.  As a country's labour gets too expensive to be used to produce low-value products, some poorer country takes over and starts the climb to prosperity.

Once completed, the Pak-China industrial corridor with a sound industrial base and competitive infrastructure combined with low labor costs is expected to draw growing FDI from manufacturers in many other countries looking for a low-cost location to build products for exports to rich OECD nations.

Key Challenges:

While the commitment is there on both sides to make the corridor a reality, there are many challenges that need to be overcome. The key ones are  maintaining security and political stability, ensuring transparency, good governance and quality of execution. These challenges are not unsurmountable but overcoming them does require serious effort on the part of both sides but particularly on the Pakistani side. Let's hope Pakistani leaders are up to these challenges.

Summary: 

Pak-China economic corridor is a very ambitious effort by the two countries that will lead to greater investment and rapid industrialization of Pakistan. Successful implementation of it will be a game-changer for the people of Pakistan in terms of new economic opportunities leading to higher incomes and significant improvements in the living standards for ordinary Pakistanis. It will be in the best interest of all of them to  set their differences aside and work for its successful implementation.

Related Links:

Haq's Musings

Chinese to Set New FDI Record For Pakistan

US-Pakistan Ties and New Silk Route

IPPs Enjoy Record Profits While Pakistan Suffers 

Can Pakistan Say No to US Aid?

Obama's Pakistan Connections

Seeing Bin Laden's Death in Wider Perspective

China's Investment and Trade in South Asia

China Signs Power Plant Deals with Pakistan

Soaring Imports from China Worry India

China's Checkbook Diplomacy

Yuan to Replace Dollar in World Trade?

China Sees Opportunities Where Others See Risk

Chinese Do Good and Do Well in Developing World

Can Chimerica Rescue the World Economy?

Wednesday, December 3, 2014

Apple iPhone 6, 6Plus Launched in Pakistan

Pakistani cell phone service operator Ufone has partnered with Apple to launch iPhone 6 and iPhone 6Plus smartphones in Pakistan. Ufone customers can register online for iPhone 6 and iPhone 6 Plus at the company’s website.

Smartphone sales have accelerated in recent months after the roll-out of 3G and 4G services in Pakistan. The number of 3G subscribers has reached 4 million mark, apparently surpassing all other broadband technologies in the country, within the first three months of the issuance of 3G and 4G licenses in the country. There are around 3.7 million broadband subscriptions in Pakistan for all technologies combined including WiMAX, DSL, EvDO, FTTH, Satellite, HFC and others till May this year.

Total number of mobile subscribers in Pakistan is over 150 million. A growing number of these subscribers are smartphone owners who are using web services like e-commerce and social media. Gertjan van Laar, an app developer who recently published a report on smartphone usage in Pakistan, told Tech in Asia that smartphone penetration has reached between 7 and 10 percent of the population – in contrast to the general mobile penetration rate of 80 percent.

Here are some of the highlights of the report on smartphones in Pakistan:

1. Android is Pakistan’s top smartphone OS with 68 percent share just among smartphone users

2. Apple iOS is second with 24 percent share; Windows Phone is third at eight percent

3. Samsung is the top brand; iPhone is second; homegrown phone-maker QMobile is third

4.  35 percent  of smartphone users in Pakistan own a low-cost phone.

Growing availability of smartphones  and 3G/4G services is enabling Pakistani apps developers to build and offer a wide range of apps, including everything from the most-used messaging apps to social networking, games, entertainment, government, banking, business and finance, navigation and utility apps, such as budgeting and data backing, according to a report in The Express Tribune newspaper. In addition to software houses, an active community of mostly self-taught freelance app developers is also bidding for projects listed on global online platforms, such as oDesk, Elance, Guru and Freelancer, the paper adds.

Increasing access to advanced smartphones and mobile broadband augurs well for innovation and investment in Pakistan.

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