Monday, March 14, 2016

Bangalore & Mumbai Cheaper Than Karachi

It costs less to live in Bangalore, India's high-tech capital, and Bombay, India's financial capital, than to live in Pakistan's megacity of Karachi, according to the 2016 Economist Intelligence Unit (EIU) report. The survey says Karachi's cost of living index is 44 while Bangalore's is 42 and Mumbai's 43. The survey bases it on New York City's cost of living set at 100. Lusaka, Zambia, is the cheapest with cost of living index measured at 41.

World's Cheapest Cities Source: EIU. Courtesy: Metro

In fact, there are four Indian cities and just one Pakistani city among the cheapest cities in the world, according to the latest EIU survey. The complete list of the World's Cheapest Cities is as follows:

1. Lusaka, Zambia
2. Bengaluru (Bangalore), India
3. Mumbai (Bombay), India
4. Almaty, Kazakhstan
5. Algiers, Algeria
6. Chennai (Madras), India
7. Karachi, Pakistan
8. New Delhi, India
9. Damascus, Syria
10. Caracas, Venezuela

Seven of the world's cheapest cities are in Asia, one in South America and two in Africa.

The EIU surveyed 133 cities and measured the cost of 160 items. These include food, drink, clothing, household supplies and personal care items, home rents, transport, utility bills, private schools, domestic help and recreational costs.

The survey allows for city-to-city comparisons, but for the purpose of this report all cities are compared to a base city of New York, which has an index set at 100. The survey has been carried out for more than 30 years.

EIU ranks Singapore (index 116) as the world's most expensive city. It's followed by Zurich (114), Hong Kong (114), Geneva (108), Paris (107), London (101), New York (100), Seoul (99), Copenhagen (99) and Los Angeles (99). Three of the top 10 most expensive cities are in Asia, 5 in Europe and 2 in the United States, and none in Africa.

Related Links:

Haq's Musings

Live Large for Less in Delhi, Dhaka, Karachi and Mumbai 

Karachi is the World's Fastest Growing Megacity

Eleven Days in Karachi

Indian Visitors Share "Eye Opener" Stories About Pakistan 

Gangs of Karachi

Saturday, March 12, 2016

Chinese Money Fueling FDI in Pakistan

Pakistan is seeing soaring foreign direct investment (FDI) with improving security and the start of several major energy and infrastructure projects as part of China-Pakistan Economic Corridor (CPEC), according to the UK's Financial Times business newspaper.

A New High in FDI:

The year 2015 was a bumper year for foreign investment  pouring into Pakistan, says the Financial Times. The country saw 39 greenfield investments adding up to an estimated $18.9 billion last year, according to fDi Markets, an FT data service. This is a big jump from 28 projects for $7.6 billion started in 2014, and marks a new high for greenfield capital investment into the country since fDi began collecting data in 2003.

Pakistan FDI Source: FT.com


The number of projects in 2015 is the largest since Pakistan attracted 57 greenfield projects back in 2005 on President Musharraf's watch.  China is now the top source country for investment into the country, surpassing the second-ranked United Arab Emirates, primarily due to its investments in power.

Top 10 Destinations of Chinese FDI 2012-14. Source: UNESCAP


Major CPEC Projects: 

China's Shanghai Electric, a power generation and electrical equipment manufacturing company, announced plans last year to establish a 1,320 megawatt coal-based power project in Thar desert using domestic coal, scheduled to launch in 2017 or 2018. Traditional energy and power projects made up two-thirds of last year’s total greenfield investment into Pakistan at $12.9 billion with alternative energy bringing in a further $1.8 billion.

CPEC Projects

Among the more notable projects, UAE-based Metal Investment Holding Corporation announced plans to partner with Power China E & M International to invest $5 billion to build three coal-fired plants at Karachi’s Port Qasim. In addition, the transportation sector is also showing promise, with 12 projects totaling $3 billion being announced or initiated last year.

Special Economic Zones:

Beyond the initial phase of power and road projects, 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

Pak Army Completes Half of CPEC Western Route

IPPs Enjoy Record Profits While Pakistan Suffers 

Can Pakistan Say No to US Aid?

Pak-China Defense Industry Collaboration Irks West

President Musharraf Accelerated Human & Financial Capital Growth in Pakistan

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