Monday, April 24, 2017

Pakistani Diaspora Bucks Global Trend With 2.8% Higher Remittances in 2016

Pakistani diaspora bucked the 2016 global decline in remittances with a modest 2.8% increase over 2015, according to a recently released World Bank report. An estimated $19.8 billion remitted to Pakistan amounted to 6.9% of the country's GDP. This is a welcome relief coming on the heels of the State Bank of Pakistan report indicating the country's current account deficit widened to $6.13 billion or 2.6% of GDP in the first 9 months of fiscal 2017.

2016 Remittances to South Asia. Source: World Bank

Global Decline:

Meanwhile, global remittance flows to developing countries registered a decline for two successive years, said the report.  Remittances declined by an estimated 2.4 percent, to $429 billion, in 2016, after a decline of 1 percent in 2015. India, the largest remittance-receiving country worldwide, led the fall with a decrease of 8.9 percent in remittance inflows.

South Asia Region:

Remittances to India declined by 8.9 percent in 2016, to $62.7 billion, ranking the country as the top recipient of such inflows.  In Bangladesh, remittances declined by an estimated 11.1 percent in 2016. In Pakistan, the 12 percent growth witnessed in 2015 moderated to an estimated 2.8 percent in 2016. Nepal experienced unusually high growth in remittances, at 14.3 percent in 2015, due to emigrants sending financial assistance after the earthquake. In 2016, remittance flows to Nepal declined by an estimated 6.7 percent from the previous year’s high level. In Sri Lanka, remittance growth was estimated at 3.9 percent in 2016.

Next Year Forecast:

The World Bank says the remittance growth in the region is projected to remain muted, because of low growth and fiscal consolidation in GCC countries with low energy prices. An increase of only 2.0 percent is expected in 2017. Bangladesh’s remittance growth in 2017 is forecast at 2.4 percent, India’s at 1.9 percent, Pakistan’s at 1.4 percent, and Sri Lanka’s at 1.3 percent.

Summary:

World Bank report says Pakistani diaspora bucked the 2016 global decline in remittances with a modest 2.8% increase over 2015. An estimated $19.8 billion remitted to Pakistan amounted to 6.9% of the country's GDP. This is a welcome relief coming on the heels of the State Bank of Pakistan report indicating the country's current account deficit widened to $6.13 billion or 2.6% of GDP in the first 9 months of fiscal 2017. Future growth in remittances is likely to remain muted. Slowing growth in such inflows will further increase pressure on Pakistan to work on enhancing exports and attracting more foreign direct investment.

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Sunday, April 23, 2017

Panama Verdict; US-India H1B Dispute; Trump NSA in South Asia

What are the implications of the split Pakistan Supreme Court verdict recently announced in Panama Case filed against Prime Minister Nawaz Sharif by PTI Chief Imran Khan, JI Chief Siraj ul Haq and AML chief Shaikh Rasheed? Why did 3 out of 5 judges not vote to disqualify Mr. Sharif from holding office under Articles 62 and 63 of the Pakistan constitution? Has the Prime Minister not committed perjury, a felony in Pakistani law, by offering multiple conflicting explanations for the source of funds used to buy London flats? Does the Joint Investigation Team (JIT) appointed by the Supreme Court have the independence and the skill set to find credible evidence of wrongdoing by Mr. Sharif? Will Nawaz Sharif survive the JIT and serve out his term scheduled to end in mid-2018?


Why has President Donald J. Trump tightened H1B temporary work visa requirements with an executive order calling for "Buy American, Hire American"? How will it impact India, the biggest beneficiary of the lion's share of the 85,000 US H1B visas issued each year? Are these visas being abused to bring in lower paid foreign workers to replace American workers? How will India respond? Will the Indian government retaliate against US products/services imported by India as suggested by the Indian trade minister Nirmala Sitharaman? How will India deal with similar other restrictions on temporary work visas recently announced by Australia, New Zealand and other industrialized nations?

What took President Trump's National Security Advisor General H.R. McMaster to Afghanistan, India and Pakistan? Why did Mr. Trump announce his request for increased US aid to Pakistan just prior to General McMaster's South Asia trip? Did General McMaster threaten Pakistan to "cooperate or else" as being reported by the Afghan and the Indian media?

Viewpoint From Overseas host Misbah Azam discusses these questions with panelists Ali H. Cemendtaur and Riaz Haq (www.riazhaq.com)

https://youtu.be/HR8JYfPgFOI




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Talk4Pak Youtube Channel

Wednesday, April 19, 2017

Bollywood Business in Sharp Decline: Down 12% in 2016

Bollywood movie revenue suffered 12% drop in 2016 to $338 million, the sharpest decline ever, according to Reuters news agency. Meanwhile, the global movie revenue rose just 1% to a record $38.6 billion last year, according to a report by Motion Pictures Association of America.

Box office sales hit a record $11.4 billion in the United States and Canada, up 2% from 2015, thanks to blockbusters such as “Rogue One: A Star Wars Story,” “The Secret Life of Pets,” and “Captain America: Civil War”, according to a report in Los Angeles Times.

By contrast, the Bollywood revenue, a tiny fraction of the global film market,  has been in decline since 2014. It fell from $413 million in 2014 to $385 million in 2015 to $338 million in 2016, down 6.7% from 2014 to 2015 and then again dropping 12% from 2015 to 216.

While Bollywood business is in sharp decline, the Pakistani cinema, though small, is growing very rapidly with the explosive growth of multiplex theater screens. Pakistan's "The News Sunday" estimates that box office receipts in the country jumped 28 per cent in 2015 as compared to 2014 and this figure is only expected to grow in coming years.

Here's how Indian media and entertainment analyst Akar Patel describes Bollywood's business opportunity in Pakistan:

"In Pakistan, there is a big market for Indian movies in their multiplexes. For decades this revenue was lost to Bollywood because the movies were pirated. Under former president Pervez Musharraf, the official screening of movies was allowed, benefiting both nations. Today all Bollywood movies are shown there. Unfortunately, the current state of ties between the two countries has been allowed to deteriorate so much that we should not be surprised if Musharraf's wise decision is reversed."

It can be a win-win arrangement with Pakistani artists working with their Indian counterparts in Indian movies and increasing Bollywood revenue from the growing Pakistan market that is already the second largest market for Bollywood entertainment. However, the powerful Hindu Nationalists appear to be succeeding in thwarting this partnership.

If the anti-Pakistan rhetoric and the attacks on Pakistani artists in Mumbai continue, it is very likely that Pakistan will respond by reimposing the ban on showing of Indian films in a rapidly expanding market market for Bollywood entertainment. In addition to increasing estrangement between the two neighbors, stopping cooperation and collaboration will be a significant blow for the entertainment industries in both India and Pakistan.

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Saturday, April 15, 2017

Pakistani-American's Tech Unicorn Files For IPO at $1.6 Billion Valuation

Washington D.C. based AI technology firm Afiniti, founded by serial Pakistani-American entrepreneur Zia Chishti, has filed for initial public offering (IPO) at $1.6 billion valuation, according to VentureBeat.

Zia Chishti founded his first company Align Technology in 1997 in Silicon Valley. It creates clear plastic braces for straightening teeth by using advanced 3-D computer imaging. The technology now trademarked as Invisalign has helped millions of people straighten their teeth for a beautiful smile without enduring the pain and unsightly looks of the traditional steel brackets and wires used in orthodontics. Align Technology is now valued at $10 billion.

Afiniti:

Afiniti uses artificial intelligence (AI) algorithms to enable real-time, optimized pairing of individual call center agents with individual customers in large enterprises for best results. When a customer contacts a call center, Afiniti matches his or her phone number with any information related to it from up to 100 databases, according to VentureBeat. These databases carry purchase history, income, credit history, social media profiles and other demographic information. Based on this information, Afiniti routes the call directly to an agent who has been determined, based on their own history, to be most effective in closing deals with customers who have similar characteristics.

Investors in Afiniti's latest round include GAM; McKinsey and Co; the Resource Group (TRG); G3 investments (run by Richard Gephardt); Elisabeth Murdoch; Sylvain Héfès; John Browne, former CEO of BP; Ivan Seidenfeld; and Larry Babbio, a former president of Verizon. The company has now raised more than $100 million, including the money previously raised, according to VentureBeat's sources.

Zia Chishti and Kelsey Wirth
Align Technology:

After graduating from Stanford Business School, Chishti wore braces when working as an investment banker at Morgan Stanley. When his braces were removed he wore a clear plastic retainer. He noticed that when he did not wear the retainer for several days his teeth would move. However, putting the retainer back on helped bring his teeth to their desired, straightened state. It was this observation that a clear plastic device was capable of moving his own teeth that led to Chishti to conceive a process that became the Invisalign System.

Out-of-the-Box Thinking:

A background in computer science gave Chishti the insight that it was possible to design and manufacture an entire series of clear orthodontic devices similar to the retainer he wore, using 3- D computer graphics technology to straighten teeth. He and his co-founder Kelsey Wirth started Align Technology in 1997 to realize this vision. The process has now evolved to make extensive use of 3D printing for creating a series of braces to apply gentle pressure to straighten teeth over several months. In 2012 alone, the company printed 17 million transparent dental braces for patients.

Afiniti Target:

Afiniti has deployed over 150 programs for some of the world’s largest businesses, according to the company website.  The company says "we work with some of the biggest global brands across a wide range of sectors, including Airlines, Financial Services, Hospitality, Insurance, Politics, Retail, Satellite TV, Social Media, Telecommunications, and Utilities".

Big Names Board:

The company's board of directors includes heavyweights such as former Spanish Prime Minister Jose Maria Aznar,  former US Treasury Secretary John Snow, Shine Group’s founder and former Chairman Elisabeth Murdoch and Ivan Seidenberg, the former chief executive officer of Verizon Communications Inc.

Summary:

Zia Chishti is a serial entrepreneur of Pakistani origin. Prior to Afiniti, he founded or cofounded Align Technology, OrthoClear and The Resource Group (TRG). Afiniti, Zia's latest venture, has filed for IPO to raise additional funds at $1.6 billion valuation.

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Monday, April 10, 2017

Pakistani Stock Market Still Offers Great Value After Stellar Performance in 2016

Pakistan's KSE-100 continues to offer attractive valuations for investors in 2017.  Its equities are trading at a forward price-earnings ratio of just 9.1, according to Pakistani brokerage firm Arif Habib Limited.

Pakistani shares are on offer at a deep discount to the Indian shares trading at 17.3 price-earnings multiple. While India's stock market is among the world's most expensive, the Pakistani market is among the cheapest.  Pakistani shares are now trading at 47.3% discount to Indian shares.


In spite KSE-100's major run up of 46% in 2016, far outpacing India's Sensex's 2.57% rise and MSCI emerging market's 8.42% increase, Pakistani equities (PE ratio 9.1) are still cheaper than Asian emerging markets (12.1) and China (11.9), according to published data.

 Pakistani shares are now trading at 47.3% discount to Indian shares, 31% discount to Asia Emerging Market index and 23.5% discount to Chinese shares.

Consumer confidence index in Pakistan jumped five point from the prior quarter to reach 106 in Q4/2016, according to Nielsen’s global survey of consumer confidence for 63 countries released recently.

Source: Nielsen

Here's an excerpt of Nielsen's report Africa/Middle East region that includes Pakistan:

"Consumer confidence in the Africa/Middle East region declined in the fourth quarter, falling four points to 83, the lowest level in more than three years. Confidence was highest in United Arab Emirates, which held steady from the third quarter at 108. Pakistan was the only country where consumer confidence moved in a positive direction, rising five points from the third quarter to 106, the highest score for the country since it was added to the survey in 2008."

The share of Pakistani respondents worried about job security dropped to 21%.  51% of Pakistanis said they are optimistic about better job opportunities in the next 12 months, according to the survey.

“The findings of the consumer confidence reflect a favorable atmosphere in Pakistan. The set of factors that influence the confidence levels of Pakistani consumers goes beyond economics and business, and is reflective of improved security conditions, increased energy availability and low inflation rates,” reported the survey.

China-Pakistan Economic Corridor (CPEC) has also led to a higher activity in large-scale manufacturing and construction, opening more investment opportunities,” said Nielsen Pakistan Managing Director Quratulain Ibrahim, according to Pakistan's Express Tribune newspaper.  “We hope to see this optimism among Pakistani consumers during the coming months.”

Pakistani banks have boosted lending to businesses and consumers. Large-scale manufacturing sector borrowed Rs. 225 billion in 2016, up from Rs 119 billion in 2015. Consumer loans have jumped from Rs. 29 billion in 2015 to Rs. 70 billion in 2016. Auto financing soared 32% to Rs 30.7 billion in 2016, according to the State Bank of Pakistan as reported by Daily Times.

Pakistani consumers and businesses are feeling increasingly confident with improved overall security, rising foreign and domestic investments and  better employment prospects. They are earning, borrowing and spending more to further stimulate the economy thereby creating a virtuous cycle. Low oil prices and relatively subdued inflation are also helping. It's now up to Pakistan's political, economic and military leadership to maintain this growth momentum.

Related Links:

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Sunday, April 2, 2017

Pakistani Students Team Wins First Place in Stanford Design Contest

A 3-person team of Pakistani students, including a female student from Islamabad's National University of Science and Technology (NUST), won first place in a contest organized by Stanford Center of Longevity. The team's entry is a device they designed and prototyped that enables tremor patients to perform daily routine tasks.

The Purpose: 

The purpose of the contest is to encourage innovation to help improve the quality of life of aging populations in the West and the rest of the world.

The 2017 Stanford Longevity Design Challenge had the following goals:

1. Create well-designed, practical solutions that address key issues associated with aging

2. Encourage a new generation of students to become knowledgeable about aging issues

3. Provide promising designers with a path to drive change in the world


2017 Stanford Longevity Design Challenge Winners
The Winners: 

NUST's Hooriya Anam, Awais Shafique, and Arsalan Javed defeated teams from around the world with their anti-tremor prototype project TAME. The team from famed Massachusetts Institute of Technology (MIT) placed second while Virginia Tech team stood third, according to results announced by the Center.
NUST's Stanford Challenge Winners From L to R: Arsalan Javed, Hooriya Anam, Awais Shafique

The Competitors:  

In addition to NUST, MIT and Virginia Tech teams, there were other teams from Cornell University, University of Sao Paolo Brazil,  China's Beijing University and Silicon Valley's Stanford University who also competed in the contest.

The winners received $17,000 in cash prizes along with paid travel to Stanford where they presented their designs to industry, academic, and government leaders.

College and University Enrollment in Pakistan:

Wins such as the Stanford Challenge are the result of improvements in higher education in Pakistan since the year 2000.

There are over 3 million students enrolled in grades 13 through 16 in Pakistan's 1,086 degree colleges and 161 universities, according to Pakistan Higher Education Commission report for 2013-14.  The 3 million enrollment is 15% of the 20 million Pakistanis in the eligible age group of 18-24 years.  In addition, there are over 255,000 Pakistanis enrolled in vocational training schools, according to Technical Education and Vocational Training Authority (TEVTA).

Graduation Day at NED Engineering University For 1300 Graduates in 2013
Pakistani universities have been producing over half a million graduates, including over 10,000 IT graduates, every year since 2010, according to HEC data. The number of university graduates in Pakistan increased from 380,773 in 2005-6 to 493,993 in 2008-09. This figure is growing with rising enrollment and contributing to Pakistan's growing human capital.

Source: UNESCO's Global Education Digest 2009






Higher education in Pakistan has come a long way since its independence in 1947 when there was only one university, the University of Punjab. By 1997, the number of universities had risen to 35, of which 3 were federally administered and 22 were under the provincial governments, with a combined enrollment of 71,819 students. A big spending boost by President Pervez Musharraf helped establish 51 new universities and awarding institutions during 2002-2008. This helped triple university enrollment from 135,000 in 2003 to about 400,000 in 2008, according to Dr. Ata ur Rehman who led the charge for expanding higher education during Musharraf years. There are 161 universities with 1.5 million students enrolled in Pakistan as of 2014.

R&D Investment: 

Rise of research and publications at Pakistani universities began during Musharraf years when the annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. Government R&D spending jumped seven-fold as percentage of GDP from 0.1% of GDP in 1999 to 0.7% of GDP in 2007. It has since declined as percentage of GDP.

Summary:

Pakistani students, scientists and researchers are continuing to produced highly recognized and cited research in spite of serious economic and security challenges. Enrollment in higher education is rising and giving a boost to innovation. With better policy focus and more investment in higher education, Pakistan  can make an even greater impact with its young demographics.

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