South Asia Investor Review

India's Debt Up, Forex Reserves Down

2012-01-30T20:18:00.000-08:00

India’s total external public debt has risen to $326 billion while foreign exchange reserves have dropped to $293 billion, according to the RBI data reported by the Indian Express newspaper.

The Reserve Bank of India is concerned over the increasing shift from equity to debt to fill India's widening current account gap. The latest available data indicates that foreign debt inflows in January so far have amounted to $3.21 billion versus $1.7 billion through equity inflows.

Recent $1.1 billion bail-out of Reliance Communications by state-owned Chinese banks is the clearest indication yet that the situation is also becoming dire in India's private sector with its mounting foreign debt.

This is not the first instance of Chinese banks coming to the aid of an Indian company. Last November, Sasan Power, the project company for the Sasan ultra mega power plant and a subsidiary of RComm affiliate Reliance Power, completed a $2.2 billion refinancing, including a $1.114 billion 13-year tranche. Bank of China, CDB and Chexim took $1.06 billion of that tranche, for which Chinese export credit agency Sinosure provided insurance.

Reliance Com is not alone in facing cash crunch in their ability to service debt. More than two dozen Indian companies included in the BSE-500 index face redemptions on foreign currency convertible bonds worth a combined Rs330 billion ($6.5 billion) by March 2013, according to brokerage Edelweiss. These include RComm’s US$925m outstanding CB, which the loan will repay.

Unless other Indian borrowers can somehow find lenders, they will be facing deteriorating debt market conditions that have led to shrinking liquidity in the loan markets and a rise in pricing.

“Top-tier Indian firms will have to pay between 250 basis points (2.5%) and 300 basis points (3.0%) over LIBOR (London Inter-bank Borrowing Rate) to borrow five-year money offshore. Even at that kind of pricing, there isn’t a lot of liquidity available,” said a Hong Kong-based lender quoted by International Financing Review. Over $20 billion worth of Indian debt is set to mature in 2012 and, of that, about $6 billion each of convertible bonds and rupee loans are up for redemption, with the balance in offshore loans.

India continues to run huge twin deficits of current account and budget. It depends heavily on foreign inflows. United Nations data shows that India received less than $20 billion in FDI in the first six months of 2011, compared to more than $60 billion in China while Brazil and Russia took in $23 billion and $33 billion respectively. Stocks in all four countries have underperformed relative to the broader emerging markets equity index, as well as the markets in the developed nations. Pakistan's KSE-100 has significantly outperformed all BRIC stock markets over the ten years since BRIC was coined.

Noting India's significant dependence on foreign capital inflows, Jim O'Neill recently raised concern about the potential for current account crisis. "India has the risk of ... if they're not careful, a balance of payments crisis. They shouldn't raise people's hopes of FDI and then in a week say, 'we're only joking'". "India's inability to raise its share of global FDI is very disappointing," he said.

In addition to Jim O'Neill, a range of investment bankers are turning bearish on India. UBS sent out an email headlined "India explodes" to its clients. Deutsche Bank published a report on November 24 entitled, "India's time of reckoning."

"Suddenly everything seems to be coming to a head in India," UBS wrote. "Growth is disappearing, the rupee is in disarray, and inflation is stuck at near-record levels. Investor sentiment has gone from cautious to outright scared."

India's current account deficit swelled to $14.1 billion in its fiscal first quarter, nearly triple the previous quarter's tally. The full-year gap is expected to be around $54 billion.

Its fiscal deficit hit $58.7 billion in the April-to-October period. The government in February projected a deficit equal to 4.6 percent of gross domestic product for the fiscal year ending in March 2012, although the finance minister said on Friday that it would be difficult to hit that target.

As explained in a series of earlier posts here on this blog, India has been relying heavily on portfolio inflows -- foreign purchases of shares and bonds -- as a means of covering its rising current account gap. Those flows are called "hot money" and considered highly unreliable.

Indian policy makers face a significant dilemma. If they do nothing to defend the Indian currency, the downward spiral could make domestic inflation a lot worse than it already is, and spark massive civil unrest. If they intervene in the currency market aggressively by buying up Indian rupee, the RBI's dollar reserves could decline rapidly and trigger the balance of payment crisis Goldman Sachs' O'Neill hinted at.

Related Links:

Haq's Musings

India Disappoints Goldman Sachs

India's Twin Deficits

Karachi Tops Mumbai in Stock Performance

India Returning to Hindu Growth Rate

Soft or Hard Landing For Indian Economy?

Karachi Stocks Outperform Mumbai, BRICs

High Environmental Pollution in India and Pakistan

2012-01-28T09:09:00.000-08:00

With a score of just 3.73 out of 100, India ranks as the worst country for the ill effects of toxic air pollution on human health among 132 nations, according to a report presented at the World Economic Forum 2012. India's neighbors also score poorly for toxic air pollution, but still significantly better than India. For example China scores 19.7, followed by Pakistan (18.76), Nepal (18.01) and Bangladesh (13.66).

In the overall rankings based on 22 policy indicators, India finds itself ranked at 125 among the bottom ten environmental laggards such as Yemen, South Africa, Turkmenistan, Uzbekistan and Iraq while Pakistan ranks slightly better at 120. The indicators used for this ranking are in ten major policy categories including air and water pollution, climate change, boidiversity, and forest management.

These rankings are part of a joint Yale-Columbia study to index the nations of the world in terms of their overall environmental performance. The Yale Center for Environmental Law and Policy and Columbia's Center for International Earth Science Information Network have brought out the Environment Performance Index rankings every two years since 2006.

The Yale-Columbia study confirms that environmental problems in South Asia are growing rapidly. The increasing consumption by rapidly growing population is depleting natural resources, and straining the environment and the infrastructure like never before. Soil erosion, deforestation, rapid industrialization, urbanization, and land and water degradation are all contributing to it.

It's important to remember that Bhopal still remains the worst recorded industrial accident in the history of mankind. As India, Pakistan and other developing nations vie for foreign direct investments by multi-national companies seeking to set up industries to lower their production costs and increase their profits, the lessons of Bhopal must not be forgotten.

It is the responsibility of the governments of the developing countries to legislate carefully and enforce strict environmental and safety standards to protect their people by reversing the rapidly unfolding environmental degradation. Public interest groups, NGOs and environmental and labor activists must press the politicians and the bureaucrats for policies to protect the people against the growing environmental hazards stemming from growing consumption and increasing global footprint of large industrial conglomerates.

Related Links:

Haq's Musings

Pak Entrepreneur Recycles Trash into Energy and Fertilizer

Bhopal Disaster

Environmental Pollution in India

Rising Population, Depleting Resources

India Leads the World in Open Defecation

Heavy Disease Burdens in South Asia

Arfa Karim's Inspirational Legacy as Youngest Software Pro

2012-01-17T10:44:00.001-08:00

Arfa Karim Randhawa passed away at the tender age of just 16. Inna Lillah Wa Inna Elaih Rajeon!

Born in 1995, she achieved celebrity status after becoming the world's youngest computer expert at the age of 9, passing a tough series of Microsoft tests designed for software professionals. Her success brought her an invitation to Microsoft headquarters in Seattle, where she met its chairman, Bill Gates, and discussed her idea for a self-navigating car in 2005.

She spent the last month of her short life in a Lahore hospital after reportedly suffering an epileptic seizure and cardiac arrest. Two weeks ago her prognosis appeared to improve. In recent weeks, Microsoft stepped in to help provide expert medical care.

Todd Bishop, a Seattle-based newspaper reporter covering her Redmond visit, wrote about her as follows: "She made an impression through a combination of charm, flattery and boldness uncommon for someone her age. For example, during Arfa’s meeting with Gates, she presented him with a poem she wrote that celebrated his life story. But she also questioned him about what she perceived to be the relatively small proportion of women on the campus."

When a younger 9-year-old Indian girl M. Lavinashree broke her record a few years ago by becoming the youngest Microsoft Software professional, Bishop told Arfa about it and got the following response from her:

“This is the first time I’ve seen this story. But I must say that I’m really happy to have read it. This is exactly what I had been wishing for ever since I got to bring laurels for my country. I am very glad to see that people are following what I did and have succeeded in beating me. I don’t know whether you’ve heard or not but a boy, named Bilal, from Gujranwala in Pakistan also became a Microsoft Certified Professional at the age of nine. I would say that the other youngsters should follow suit, thereby convincing the people to take us kids seriously. Our generation is very talented and so should be promoted.”

Arfa's untimely death at such a young age is a tragic loss for her family and for Pakistan. Her legacy, however, will live on. I hope and expect that many more Lavinashrees and Bilals will be inspired by her memory to accomplish whatever they set their mind to, including but not limited to achieving celebrity as Microsoft professionals.

Here's a video clip of Arfa Karim's Interview:

Related Links:

Haq's Musings

Pakistan's Demographic Dividend

Pakistani Software Expert Helps Fight Terror

Pakistan IT Industry

Pakistan Leads Asia in Biometric IT Services

Pakistanis Studying Abroad

Pakistan Working Women

Quality of Higher Education in India and Pakistan

Developing Pakistan's Intellectual Capital

Intellectual Wealth of Nations

Pakistan Leads the World in Low Cost Texting

2012-01-12T22:24:00.000-08:00

Pakistan's 152 billion text messages and Rs. 40 billion in texting revenue in 2009-10 put it among the top-ranking nations for sms traffic, says a report produced by Pakistan Telecommunications Authority (PTA).

The main driver for growth of texting in Pakistan has been its low cost compared with voice calls, a key reason for many users, including illiterate phone users, to be attracted to using text messages to communicate, according to a study done by Alex Gilchrist and Jim Linton Williams of the UK-based Popular Policy Engagement Lab. They start by asking literate relatives and friends to read text messages to them, and sometimes ask them to type messages for them as well. Gradually, they also learn to read and type text messages themselves.

Education:

A recent Brookings Institution paper titled A New Face of Education: Bringing Technology into the Classroom in the Developing World compared the effective use of cell phone text messaging in Pakistani schools with the failure of One-Laptop-Per Child (OLPC) scheme in Peruvian schools. It highlights Mobilink-UNESCO program to using text messaging increase literacy skills among rural girls in Pakistan. Each girl in the program uses her mobile phone to send an SMS message in Urdu to her teacher. After sending, she receives messages from her teacher in response, which she copies by hand in her notebook to practice her writing skills. Here's how Brookings paper describes the results:

"Initial outcomes look positive; after four months, the percentage of girls who achieved an A level on literacy examinations increased from 27 percent to 54 percent. Likewise, the percentage of girls who achieved a C level on examinations decreased from 52 percent to 15 percent. The power of mobile phone technology, which is fairly widespread in Pakistan, appears in this case to help hurdle several education barriers by finding new ways to support learning for rural girls in insecure areas—girls who usually have limited opportunities to attend school and who frequently do not receive individual attention when they do. Often they live in households with very few books or other materials to help them retain over summer vacation what they learned during the school year."

The Brookings report compares the use of low-cost, simple and ubiquitous cell phone technology for education in Pakistan with the deployment of relatively more expensive, more complicated and much less ubiquitous laptops to educate children as part of One-Laptop-Per-Child program in Peru. Here's how Brookings paper describes it:

"In Peru, a number of colorful laptops sit in a corner of a classroom covered with dust. Given to the school through a One Laptop Per Child program arranged by the Ministry of Education, the laptops were intended to improve students’ information communication technology (ICT) skills, as well as their content-related skills. Without the proper support for teacher training in how the laptops are used, with no follow-up or repair and maintenance contingencies, and with outdated and bug-infested software, the laptops are seen as unusable and serve little purpose. In this case, technology has not helped improve the educational experience of learners."

Health Care:

Mobile communications service provider Mobilink has recently partnered up with the United Nations Population Fund (UNFPA), Pakistan's Ministry of Health (MoH) and GSMA Development Fund in an innovative pilot project which offers low cost mobile handsets and shared access to voice (PCOs) to Lady Health Workers delivering community-based health care in remote parts of the country. Mobilink hopes to bridge the communication gap between the LHW and their ability to access emergency health care and to help the worker earn extra income through the Mobilink PCO (Public Call Office).

Civil Society:

A recent study of the use of cell phones found that mobile phones are enabling low cost access to community members across class, linguistic and geographical boundaries to build and strengthen a strong civil society across the nation. They are an effective tool for educators, community organizers, NGOs, health care providers, social and political activists and businessmen to communicate with a large cross section of people in Pakistan, as well as to learn from them, and even collaborate with them. Here are some interesting highlights of the Gilchrist-Williams study which focuses on it:

1. 37 percent of the poorest 60 percent of Pakistan’s adults owned a mobile phone; that the majority had regular access to a mobile phone despite not owning one; and that 47 percent of phone-owners used SMS.

2. Just as many women as men have access to a mobile phone through one means or another – but that whereas men tend to own a phone, or to use the phone of a friend or of a Public Call Office, women tend to use a phone owned by an adult male family member.

3. Viral text messaging is widespread in Pakistan. The remarkably low cost of text messages in Pakistan allows this one-to-one viral transmission to achieve quite considerable scale. Jokes, proverbs, quotations, news and religious injunctions are all frequently forwarded, and are often adapted by users with unpredictable effect.

Summary:

Deployment of simple, cheap and ubiquitous mobile phone technology and related services are helping Pakistan develop in ways that could not have been imagined just a few years ago. While there are some reported instances of the abuse of mobile phones by criminals and terrorists to harm people, I believe the net result has been that it is empowering individuals and society to become better educated, healthier, more informed and more productive to build a better Pakistan.

Related Links:

Haq's Musings

Cell Phones for Mass Literacy in Pakistan

Pakistan's Lady Health Workers Best in the World

Pakistan Tops Text Messaging Growth

Media and Telecom Boom in Pakistan

Pakistan 100 Mbps FTTH Launch

Pakistan Ranks High on Philanthropy

2012-01-09T15:38:00.001-08:00

"Righteousness is not that ye turn your faces towards the east or the west, but righteousness is, one who believes in God, and the last day, and the angels, and the Book, and the prophets, and who gives wealth for His love to kindred, and orphans, and the poor, and the son of the road, beggars, and those in captivity; and who is steadfast in prayers, and gives alms." Quran 2:177

More Pakistanis gave to charities and the country saw the "largest jump in the rankings globally of 108 places, moving from 142nd to 34th in 2011", according to World Giving Index 2011. The report compiled by Charities Aid Foundation points out that "the floods did not lead to Pakistan's twenty-six percentage point rise in its World Giving Index score" because the survey was conducted before the 2010 floods.

World Giving Index Rankings in South Asia

The United States is ranked as the most generous in the world for charitable giving. Sri Lanka, ranking 8th in the world, leads philanthropy South Asia region. It is followed by Pakistan (ranked 34th globally) in second place, Bangladesh (ranked 78 globally) in third place, Nepal (ranked 84 globally) in fourth place, and India (ranked 91 globally) in last place.

It appears that the country scores in the World Giving Index reflect the breadth of participation rather than the amount of money given as percentage of income or gdp. Here's how the report explains it:

In order to reflect a culturally diverse planet, the report looks at three aspects of giving behavior. The questions that feed the report are:

1. Donated money to a charity?
2. Volunteered your time to an organization?
3. Helped a stranger, or someone you didn't know who needed help?

Pakistan does well in South Asia in terms of the percentage of gdp given as charity as well. Given the lack of full documentation, the estimates of giving in Pakistan range from a low of 1% to a high of 5% of GDP. The upper end of 5% is more than twice the 2.2% of gdp annually contributed by Americans who lead in the world in giving.

The low end of the estimate is by PCP that says Pakistanis contributed Rs.140 billion (US$1.7 billion), nearly 1% of the nation's gross domestic product of $170 billion in 2009.

The upper end of the estimate of 5% of GDP comes from Professor Anatol Lieven in his book Pakistan-A Hard Country. Lieven argues that the "levels of trust in Pakistani state institutions are extremely low, and for good reason. Partly in consequence, Pakistan has one of the lowest levels of tax collection outside Africa. On the other hand, charitable donations, at almost 5% of GDP, is one of the highest rates in the world".

The donations help organizations like Khana Ghar that feeds the hungry, Edhi Foundation which operates non-profit ambulance service, The Citizens Foundation which runs 700 schools serving 100,000 poor students, and Human Development Foundation which builds and operates schools and clinics for the poor.

Lieven lauds the work of TCF and several other charitable organizations, but he singles out Edhi Foundation for his most effusive praise of Pakistan's strong civil society filling the gaps left by the corrupt and incompetent government:

"There is no sight in Pakistan more moving than to visit some dusty, impoverished small town in arid wasteland, apparently abandoned by God and all sensible men and certainly abandoned by the Pakistani state and its own elected representatives- to see the flag of the Edhi Foundation flying over a concrete shack with a telephone, and the only ambulance in town standing in front. Here, if anywhere in Pakistan, lies the truth of human religion and human morality".

Related Links:

Haq's Musings

Philanthropy in Pakistan

Pakistan-A Hard Country

World Giving Index Report 2011

How Can Overseas Pakistanis Help Flood Victims?

Light a Candle, Don't Curse Darkness

Pakistan Center for Philanthropy

An Overview of Indian Philanthropy

Aaker Patel on Philathropy

Orangi Pilot Project

Three Cups of Tea

Volunteerism in America

Dr. Akhtar Hamid Khan's Vision

IBL to Raise Quality of Education in Pakistan

2012-01-07T09:19:00.000-08:00

Tell me and I forget, show me and I remember, involve me and I understand.

Improving quality of education is just as important as broadening access to it for Pakistan to reap full demographic dividend of its young population. Inquiry-based learning is an important pillar of the efforts undertaken by Pakistan Science Foundation (PSF) and The Citizens Foundation (TCF) to improve quality of education.

Inquiry-based learning is a method developed during the discovery learning movement of the 1960s. It came in response to a perceived failure of more traditional rote learning. Inquiry-based learning is a form of active learning, where progress is assessed by how well students develop experimental, analytical and critical thinking skills rather than how many facts they have memorized.

Pakistan Science Foundation (PSF) has initiated “La Main a La Pate” – an Inquiry-Based Learning program in Pakistan with the support of the French government. First launched in France in 1996, the program is aimed at renovating and revitalizing the teaching of science in primary schools. In Pakistan, the PSF has organized three workshops to train teachers since the Pakistan launch of “La Main a La Pate” in 2010. The most recent workshop was in December 2011 that was conducted by two French trainers, Michel Ouliac and Patrick Marcel. It was attended by 30 teachers from Islamabad, Kot Addu, Rawalpindi and Karachi, according to a report in The Express Tribune newspaper.

A similar inquiry-based teaching effort has been undertaken by The Citizens Foundation (TCF), a non-profit organization running 730 schools serving over 100,000 students in different parts of Pakistan. It is described in a recent book "Back to Pakistan: A Fifty-Year Journey" by Leslie Noyes Mass. Mass was in US Peace Corp who served as a young volunteer back in 1960s in Pakistan. The well-written book is about her return to Pakistan and her impressions of the country 50 years later. In 2009, Mass found a very different Pakistan: more education for children, a much larger population, and a place not nearly as friendly to the United States as it was when she first went there in 1960s.

Here's how Mass describes inquiry-based methods used at a summer science camp for TCF children at primary and secondary levels:

"Inquiry is a form of active learning where progress is assessed by how well students develop experimental and analytical skills rather than by how much knowledge they possess. In a science curriculum, this means that students are presented with a problem and the teacher guides them to solve it without making the solution explicit. This requires students to work together, to think critically, and to search for solutions based on the evidence rather than the predefined "correct" answer."

Then she goes on to describe the details of the experiments used to teach primary and secondary students.

Both PSF and TCF deserve kudos for promoting inquiry-based methods to encourage more active learning and critical thinking at an early age. These skills are essential to prepare Pakistani youngsters to be capable of facing the challenges of living in a highly competitive world in which the wealth of nations is defined in terms of human capital.

Related Links:

Haq's Musings

Pasi Sahlberg on why Finland leads the world in education

Intellectual Wealth of Nations

Pakistan Primary Education Crisis

Indian Students' Poor Performance on PISA and TIMSS

Pakistan's Demographic Dividend

India Shining, Bharat Drowning

PISA's Scores 2011

Teaching Facts versus Reasoning

Poor Quality of Education in South Asia

Infections Cause Low IQs in South Asia, Africa?

Peepli Live Destroys Western Myths About India

PISA 2009Plus Results Report

Solar Power in Pakistani Homes, Schools and Factories

2012-01-05T10:06:00.001-08:00

“I use the solar light for cooking at night. We save money because we had to buy candles and kerosene before. We also use it to charge our mobile phones.” Marvi, Yousaf Babar Village in Sindh, Pakistan

About 250 schools and 12,000 homes in Pakistani villages have so far been lit by solar lights. The program is funded by the UK's Department for International Development (DfID) to help flood-affected people in rural Sindh and Punjab.

Plan International Pakistan and the Punjab education department have rebuilt 400 schools destroyed by floods, and implemented solar panels in 250 schools that did not have electricity. In addition to the solar panel installation, the DfID funded project also provided water and sanitation, school furniture, school paper, schoolbags and uniforms, sports equipment and health education for 54,000 primary school children.

The solar lights cost about $15 each and give sustainable, free light for up to 10 hours after each charge, and can last for up to five years. The cost is recouped within a couple of months, providing excellent value for money, according to DfID sources.

The solar technology is also used for recharging mobile phones, which provide vital communication lifelines in rural areas, enabling people to keep in touch with family and community. The mobile phones are helping reunite displaced families and communities, and helping people to try to get back to a normal life.

In addition to growing number solar energy users in Pakistani villages, the city dwellers are also increasingly turning to solar to cope with frequent power cuts, and gas shortages. There is growing demand for low cost Chinese solar products such as solar street lights, solar garden lights, solar generators, solar heaters, solar water heaters and solar water collectors for industry, according to a report in Pakistan's Express Tribune newspaper. Many consumers told ET they prefer solar over UPS (un-interruptible power supplies) and diesel or gas generators.

“Sales of solar energy panels have increased about 40 per cent compared to winter of last year. Sunshine in Pakistan remains for approximately 10 hours a day, which is enough to produce 1,000 watts per square meter. Producing electricity from the sun is very easy,” the paper quotes Tariq Nurani, a solar products dealer, as saying.

The Express Tribune story also features Khawaja Cotton Industries CEO Muhammad Amjad Khawaja who said he invested Rs 5 million for solar water boilers which helped deal with increasing gas load shedding in the textile manufacturing sector.

The rapid cost declines and increasing availability of solar equipment are enabling energy-starved but resilient Pakistanis to cope with the twin shortages of gas and electricity.

Related Links:

Haq's Musings

Shakti Solar Model For Pakistan

Pakistan's New FIT Policy For Alternative Energy

Media & Telecom Revolution in Pakistan

Pakistan Building 1000 MW Wind Farms

Pakistan Launches Wind Farm Projects

Renewable Energy to Solve Pakistan's Electricity Crisis

Electrification Rates By Country

Wind Turbine Manufacturing in Pakistan

Pakistan Pursues Hydroelectric Power Projects

Solar Energy for Sunny Pakistan

Wind Power Tariffs in Pakistan

Pakistan's Twin Energy Shortages

World Class Education at Karachi Business School

2012-01-03T12:02:00.000-08:00

Cambridge University's Judge Business School and Karachi Education Initiative are launching Karachi School for Business & Leadership (KSBL) in 2012.

Karachi Education Initiative, which is providing the initial core funding for KSBL, is a non-profit group of leading industrialists and businessmen of Karachi. The group has committed to raising a permanent endowment fund to support the education of deserving students at KSBL, as well as for the provision of resources, facilities and buildings required to create a world-class institution.

The school is headed by Dean Robert Wheeler III who has served at the Pennsylvania State University, University of Texas at Austin and Georgetown University in key positions like assistant dean and director of MBA program. Spread over three acres, the main campus of KSBL is now under construction on Stadium Road in Karachi. The construction phase will be over in July 2012 and the first group of students will be admitted in September. Initially, KSBL will offer a full-time, 21-month MBA program in general management only.

KSBL's MBA curriculum has been designed in collaboration with Judge Business School of Cambridge University in England. In addition to conventional teaching methods involving lectures and case studies, KSBL will use videoconferencing to let its students attend live lectures from American and British universities.

Wheeler told Express Tribune that the core faculty of KSBL would be of Pakistani origin with PhD degrees from foreign universities. “We’ll cut back on the administrative work that faculty is often required to do in Pakistan and encourage them to do applied research that could be used in the industry, government and business.” In many classes, especially those on entrepreneurship, Wheeler said more than one person would co-teach students via videoconferencing to provide them with a combination of academic and professional perspectives.

KSBL will join the ranks of other major business schools such as Karachi's Institute of Business Administration (IBA) and Lahore University of Management Sciences (LUMS) to deliver world class business education for meeting the growing demand for professional management in the industrial and service sectors of Pakistan's economy.

The history of advanced business management education began with the founding of the Institute of Business Administration (IBA) in 1955 in Karachi, Pakistan, in collaboration with the top-ranked Wharton School of Finance & Commerce at University of Pennsylvania. Additional help and support came from University of Southern California and USAID to set up facilities and train faculty.

As the contribution of agriculture dropped from 50% of GDP in 1950s to about 20% of Pakistan's economy in 2000s and Pakistan began to urbanize and industrialize, the demand for business professionals grew significantly, as did the number of schools offering business education. As of 2004, there were 87 business schools recognized by the Higher Education Commission of Pakistan, according to stats compiled by Dr. Jamshed Hasan Khan of LUMS. Of these, 28 were in the public sector and the rest in private sector.

The rapid expansion of business education has raised concerns about the quality of such education. The HEC is responding to such concerns by standardization of business curricula and accreditation requirements. A number of programs have been initiated by the HEC to improve business faculty, including scholarships for advanced training and education in Pakistan and universities in the West.

Business schools in Pakistan have produced highly competent men and women executives who have proved themselves by managing significant topline growth and increasing profitability in banking, telecom, FMCG, automobiles and other sectors in very difficult circumstances. I am optimistic that the addition of business schools like the KSBL will further enhance the capacity of future managers to deal with such challenges.

Related Links:

Haq's Musings

Pakistan's Demographic Dividend

FMCG Consumption Boom in Pakistan

Pakistan's Financial Services Sector

Pakistan's Growing Middle Class Consumption

IBA's Entrepreneurship Study Flawed

Pakistan's Media and Telecom Revolution

Pakistanis Study Abroad

Pakistan's Youth Bulge

Pakistani Diaspora World's 7th Largest

Pakistani Graduation Rate Higher Than India's

India and Pakistan Contrasted in 2011

Educational Attainment Dataset By Robert Barro and Jong-Wha Lee

Quality of Higher Education in India and Pakistan

Developing Pakistan's Intellectual Capital

Intellectual Wealth of Nations

Pakistan's Story After 64 Years of Independence

Pakistan Ahead of India on Key Human Development Indices

Working Women in Pakistan

Pakistan Youth Roundtable

Scholarships at Foreign Universities

Institute of International Education--Open Doors

UK's Higher Education Statistics Agency Report

Austrade on Education in Pakistan

Resilient Pakistan's Year 2011 in Review

2012-01-01T11:33:00.000-08:00

“You tend to hear the worst 5% of the Pakistan story 95% of the time.” Pakistani Entrepreneur Monis Rahman

Most of the reviews of Pakistan's Year 2011 fit the above description of how Pakistan's story is told by foreign and domestic media engaged in the 24X7 news cycle.

So let me get the worst 5% of the story out of the way before telling you the rest of the 95% of it.

The Worst 5% of Pakistan's Story in 2011:

Pakistan added to the list of multiple serious crises of energy, economy, education, security and the worst ever governance by adding one more--a civilian-military conflict created by the hubris, incompetence and corruption of the ruling Peoples' Party leadership. This ongoing crisis now threatens to discredit and derail democracy yet again with the rapidly declining popularity of the Zardari-Gilani government and growing favorability ratings of the Pakistani military and its leadership.

Now the Rest of the Pakistan Story in 2011:

Politics:

1. The current PPP-led coalition reached a key milestone of becoming the longest-serving elected civilian government in Pakistan's history.

2. Deep dissatisfaction with PPP-PML(N) duopoly gave rise to a credible third option with the emergence of Pakistan Tehrik-e-Insaf (PTI) party, led by the popular cricketer-turned politician Imran Khan. PTI particularly gained considerable momentum with successful political rallies in Lahore and Karachi.

Education:

1. Early childhood education received a significant boost with the launch of Sim Sim Hamara, Pakistani adaptation of the popular Sesame Street TV show for pre-school children.

2. Pakistan continued to be ahead of India in graduation rates at all levels, according to 2011 update published by Harvard researchers Robert Barro and Jong-Wha Lee.

3. Pakistan achieved the distinction of having the world's largest Fulbright Foundation program in 2011, with about 200 scholarships for advanced degrees during the year.

4. Punjab government launched elite Danish School system for high-achieving but poor college-bound students in Southern Punjab region. Public-sector Danish schools are intended as an alternative to the best available private schools which are beyond the reach of the poor rural students. There are currently two schools each in Chistian, Hasilpur and Rahim Yar Khan, and ambitious plans for over 600 such schools in the future.

5. The Citizens Foundation (TCF), a private foundation, continued to expand its network of schools, reaching a total of 730 well-equipped schools as of April, 2011, serving over 100,000 mostly underprivileged students. 71 of these TCF schools have been built are being operated with funds from Pakistani-American donors.

6. The British government announced $1 billion in aid for improving primary education in Pakistan over a four year period. The money will fund education for up to 4 million students, train 9,000 teachers, purchase 6 million new text books and build 8,000 schools by 2015.

Healthcare:

1. Pakistan's lady health workers were described as "the best in the world" by a Boston University researcher and author of a community-based health care delivery study in Pakistan.

Women at Work:

1. The year 2011 saw a silent social revolution in Pakistan with rising number of women joining the workforce and moving up the corporate ladder. "More of them(women) than ever are finding employment, doing everything from pumping gasoline and serving burgers at McDonald’s to running major corporations", said a 2011 report in Businessweek magazine.

2. Women now make up 4.6% of board members of Pakistani companies, a tad lower than the 4.7% average in emerging Asia, but higher than 1% in South Korea, 4.1% in India and Indonesia, and 4.2% in Malaysia, according to a February 2011 report on women in the boardrooms.

3. In rural Sindh, the government started granting over 212,864 acres of government-owned agriculture land to landless peasants in the province. Over half of the farm land being given is prime nehri (land irrigated by canals) farm land, and the rest being barani or rain-dependent. About 70 percent of the 5,800 beneficiaries of this gift are women. Other provincial governments, especially the Punjab government have also announced land allotment for women, for which initial surveys are underway, according to ActionAid Pakistan.

Economy:

1. Middle class consumers started spending again in 2011. over 10,000 more units of locally assembled cars were sold in July-November 2011 with sales hitting 62,353 units compared with 52,200 units in the same period of 2010. Auto sales in Pakistan hit a two year high, jumping 61% in July, 2011 to 17,563 units from 10,942 units in the same month of last year. Pak Suzuki Motor Company led the auto sales up with 116 percent rise to 11,997 units from 4,503 seen in the same period last year.

2. Away from the violence and the troubles of the big cities, the economy of rural Pakistan experienced a boom. Flush with cash from bumper crops at record commodity prices, the farmers spent on tractors, cars, motorcycles, mobile phones, personal grooming items, packaged foods and beverages and other consumer products like never before. Higher crop prices increased farmers’ incomes in Pakistan by Rs. 342 billion in the 12 months through June, according to a government economic survey. That was higher than the gain of Rs. 329 billion in the preceding eight years, according to a report by Bloomberg News. Companies like Millat tractors, Honda Atlas Motorcycles, Pak Suzuki Motors, Engro Foods, Telnor, Nestle, Colgate-Palmolive, and Unilever have been big beneficiaries of the rural consumption boom.

3. Pakistan's key share index KSE-100 dropped about 5% in 2011, significantly less than most the emerging markets around the world. Mumbai's Sensex, by contrast, lost about 25% of its value, putting it among the worst performing markets in the world.

Energy:

1. Significant new investments were announced in the renewable energy sector, particular hydroelectric power plants and wind farms. WAPDA announced 28% completion of the 969 MW Neelum-Jhelum hydroelectric project, and ADB took the lead financier role in the 4500 MW Diamer-Bhasha dam project. Pakistan has about 1000 MW of wind power plants at various stages of planning and construction, and another 498.5 megawatts of wind programs announced, mostly in Jhimpir, Gharo, Keti Bandar and Port Qasim wind corridors along the Arabian Sea coast in Sindh.

2. In addition to billions of tons of coal deposits in Sindh, exploration confirmed the presence of upwards of 60 trillion cubic feet of shale gas in Pakistan, enough for 20 years or more.

Declining Violence:

1. As US-Pakistan relations sank to new lows, there were tentative signs that Pakistan's fight against Tehrik-e-Taliban Pakistan (TTP) is beginning to succeed. There have been no major terrorist attacks in Pakistan since the the Mehran Naval Base siege in Karachi in May, 2011.

2. Death toll from terrorism declined for the third year in row, according to South Asia Terrorism Portal. After hitting a peak of 11,704 in 2009, number of deaths fell to 7,435 in 2010 and 6,048 in 2011.

3. Huge political rallies in 2011 passed off without violence, helping boost confidence in the security situation in major Pakistani cities.

Conclusion:

While deep concerns remain about Pakistanis' ability to overcome the myriad crises they face today, the year 2011 showed that the people continue to be undaunted and resilient. A significant number of them, like Edhi Foundation, The Citizens Foundation, Pakistan Lady Health Workers and others are showing the way by lighting candles rather than cursing darkness.

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India Ranks Near Bottom on Education

2011-12-29T11:29:00.000-08:00

Indian students rank near the bottom on PISA, a global test of learning standards conducted in 74 nations this year. TIMSS, another standardized international test, produced similar results earlier in 2003.

This is the first time that Indian students participated in PISA. Students from Himachal Pradesh and Tamil Nadu took the Program for International Student Assessment (PISA) test, coordinated by the Paris-based Organization for Economic Co-operation and Development (OECD). Prior to this participation, students from Indian states of Orissa and Rajasthan took a similar test called Trends in International Mathematics and Science Study (TIMSS) in 2003.

Tamil Nadu and Himachal Pradesh rank high on human development indicators among Indian states. The India Human Development Report 2011, prepared by the Institute of Applied Manpower Research (IAMR), categorized them as “median” states, putting them significantly ahead of the national average. IAMR is an autonomous arm of India's Planning Commission.

Himachal Pradesh ranked 4 and Tamil Nadu 11 in literacy rates on India's National Family Health Survey released in 2007. However, in the PISA study, Tamil Nadu ranked 72 and Himachal Pradesh 73, just ahead of the bottom-ranked Kyrgyzstan in mathematics and overall reading skills. Shanghai, China's biggest city, topped the PISA rankings in all three categories—overall reading skills, mathematical and scientific literacy. The new entrants included Costa Rica, Georgia, India (Himachal Pradesh & Tamil Nadu), Malaysia, Malta, Mauritius, Venezuela (Miranda), Moldova, United Arab Emirates. PISA 2009+ involved testing just over 46 000 students across these ten economies, representing a total of about 1,377,000 15-year-olds.

In Tamil Nadu, only 17% of students were estimated to possess proficiency in reading that is at or above the baseline needed to be effective and productive in life. In Himachal Pradesh, this level is 11%. “This compares to 81% of students performing at or above the baseline level in reading in the OECD countries, on an average,” said the study.

The average Indian child taking part in PISA2009+ is 40 to 50 points behind the worst students in the economic superstars. Even the best performers in Tamil Nadu and Himachal Pradesh - the top 5 percent who India will need in science and technology to complete globally - were almost 100 points behind the average child in Singapore and 83 points behind the average Korean - and a staggering 250 points behind the best in the best.

The average child in HP & TN is right at the level of the worst OECD or American students (only 1.5 or 7.5 points ahead). Contrary to President Obama's oft-expressed concerns about American students ability to compete with their Indian counterparts, the average 15-year-old Indian placed in an American school would be among the weakest students in the classroom, says Lant Pritchett of Harvard University. Even the best TN/HP students are 24 points behind the average American 15 year old.

The 2003 TIMSS study ranked India at 46 among 51 countries. Indian students' score was 392 versus average of 467 for the group. These results were contained in a Harvard University report titled "India Shining and Bharat Drowning".

These results are not only a wake-up call for the "India Shining" brigade, but also raise serious questions about the credibility of India's western cheerleaders like Indian-American journalist Fareed Zakaria and New York Times' columnist Tom Friedman.

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IBA Study Ignores Grassroots Entrepreneurship in Pakistan

2011-12-25T18:27:00.000-08:00

A recent report by the Center for Entrepreneurial Development (CED) of the Institute of Business Administration (IBA) finds that Pakistanis are less entrepreneurial than their counterparts in the majority of 59 member nations of Global Entrepreneurship Monitor (GEM), according to Express Tribune newspaper. The report says that the new business ownership rate, which is the percentage of owner-managers of a business that is three to 42 months old, is 2.7% in Pakistan, "considerably less" than the average rate for factor-driven economies (11.8%).

The results of this IBA CED study, as reported by the media, run counter to the findings of a recent World Bank report titled "More and Better Jobs in South Asia" which shows that 63% of Pakistan's workforce is self-employed, including 13% high-end self-employed. Salaried and daily wage earners make up only 37% of the workforce.

Even if one chooses to consider just the 13% who are high-end self-employed as entrepreneurs, it's still much higher than the 2.7% figure reported by CED, and higher than the 11.8% average reported for factor-driven economies covered by GEM.

It seems to me that this discrepancy stems from a very narrow and limited definition of entrepreneurship used in the IBA study which ignores the following realities:

1. The rapid urbanization from massive ongoing rural-to-urban migration in Pakistan is spawning a whole generation of small entrepreneurs who end up working for themselves as small vendors selling their wares on the streets and independent service providers who do basic chores like cooking and cleaning for dozens of clients. Each of these individuals is an entrepreneur by definition. Some of them have also found their way to other nations in Europe and the Middle East where they are earning a good living as street vendors. I saw a recent example of a Pakistani street vendor in Italy who earned enough to send his children to universities....a luxury he didn't have himself.

2. There are many small groups of men and women who are starting businesses at home in both urban and rural areas of the country to sell groceries, sew clothes, raise animals for milk, grow and sell fruits and vegetables, cater cooked food, etc. These small entrepreneurs are managing to put food on their families' tables and put children through good schools. Some of them are being funded and trained by microfinance institutions like Kashf Foundation and others.

People at academic institutions like the IBA who talk about entrepreneurship must research examples like Kraft Foods and Carl's Junior, both of which had humble beginnings on the streets of the United States.

James L. Kraft started Kraft foods by selling milk and cheese from a horse-drawn cart in Chicago in 1903; its first year of operations was "dismal", losing US$3,000 and a horse. Today, Kraft Foods is a multi-billion dollar multinational corporation selling a variety of food products around the globe, including Pakistan.

Carl's Jr, a multi-national fast food giant which operates Hardy's restaurants in Pakistan, began life as a hot dog stand in southern California 1941 with $311 in capital. One cart grew to four, and within five years, Carl's Drive-In Barbecue opened with hamburgers on the menu.

I believe that most Pakistanis are not risk-averse. What is lacking is a supportive environment to help nurture millions of small entrepreneurs to enable them to realize their dreams. The efforts of microfinance sector need to be supported by both the public and private sector through skills training, mentoring and greater funding. Each of us who can afford to help can do so by joining microfinance networks like Kiva.org to lend to such entrepreneurs in Pakistan.

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Economic Comparison Between Bangladesh & Pakistan

2011-12-17T18:25:00.000-08:00

Economic gap between East and West Pakistan in 1960s is often cited as a key reason for the secessionist movement led by Shaikh Mujib's Awami League and the creation of Bangladesh in 1971. This disparity has grown over the last 40 years, and the per capita income in Pakistan now stands at 1.7 times Bangladesh's in 2011, slightly higher than 1.6 as it was in 1971.

Forty years after the Fall of Dhaka and the creation of Bangladesh on Dec 16, 1971, there's still much talk about it. The Daily Star, a Bangladeshi newspaper, has published a piece on the subject by Akbar Ali Khan marking the 40th anniversary of Bangladeshi independence. In his Op ED, Mr. Khan argues that "political independence provided much more conducive environment for growth in Bangladesh than united Pakistan. Though economic growth in East Pakistan was revived during Ayub Khan's so-called decade of reforms, growth rate in erstwhile East Pakistan was much lower than that of West Pakistan".

In his zeal to rationalize independence based on the economic argument, Mr. Khan has clearly ignored the following facts:

1. In 1969-70, the ratio of per capita incomes between West and East Pakistan was 1.6, as detailed by Mr. Khan. In 2011, however, this ratio has increased to 1.7, according to the IMF data.

2. Bangladesh is still categorized by the World Bank among low income and least developed countries of the world, while Pakistan is a middle income country and classified well above the list of least developed countries of the world.

3. Bangladesh is ranked as 11th poorest country in the world by the World Bank in terms of the percentage of population living on $1.25 or less a day. Neighboring India is the 14th poorest on this list, while Pakistan does not show up on it. The rest of the nations on this list are all in sub-Saharan Africa.

3. In 1947, East Pakistan started with a lower economic base than West Pakistan, and the loss of its Hindu Bengali business elite in 1947 left it worse off. It also didn't have the benefit of the large number of Muslim businessmen who migrated to West Pakistan, particularly Karachi, after partition of India in 1947.

4. Pakistani economist Dr. Ishrat Husain explains it well when he says that "although East Pakistan benefited from Ayub’s economic reforms in 1960s, the fact that these benefits were perceived as a dispensation from a quasi-colonial military regime to its colony—East Pakistan—proved to be lethal."

It must, however, be acknowledged that Bangladeshi economy has been outperforming Pakistan's in the last few years, particularly since President Musharraf's departure in 2008. Bangladesh has also made significant strides on various social indicators and it now ranks just one notch below Pakistan on human development index 2011. Bangladesh's family planning efforts have been remarkably successful in lowering the fertility rate of Bangladeshi women, an area where Pakistan significantly lags behind the rest of South Asia.

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Pakistani-American Makes History as First Non-white NFL Owner

2011-12-15T20:56:00.000-08:00

NFL owners are the oldest and whitest of old white guy clubs. Drew Magary

Pakistani-American Shahid Khan made history this week by becoming the first minority owner of a National Football League team. All 31 other owners of NFL teams are white. The deal to purchase Jacksonville Jaguar is for an estimated $760 million and the ownership transfer will be complete Jan. 4, 2012, according to Associated Press. Earlier, Khan agreed in February 2010 to buy a controlling interest in the St. Louis Rams before billionaire Stan Kroenke exercised an option to purchase the 60 percent of the club he didn’t own.

NFL has highly lucrative business because of the extraordinary popularity of football in the United States. Over nine years, starting in 2014, CBS, Fox and NBC will together will pay an average of about $3 billion a year, more than 50 percent higher than their current deals, according to a report in New York Times. Altogether, the four networks, in addition to DirecTV, which pays $1 billion a year for its Sunday Ticket satellite package, will pay the N.F.L. more annually in TV rights than any sports league has ever been paid.

Shahid Khan, a mechanical engineering graduate of University of Illinois, Urbana-Champaign, made his fortune in the auto business. Almost two-thirds of all North American-built pick- up trucks and sports utility vehicles have bumper systems based on Khan’s designs, according to figures released by the Jaguars. Khan bought Flex-N-Gate in 1980 and the company now has more than 10,000 employees at 48 manufacturing plants with annual sales exceeding $3 billion.

Shahid Khan joins the illustrious list of Pakistani-Americans that includes Shering-Plough CEO Fred Hassan, Edible Arrangements Founder & CEO Tariq Farid, former CEO of Healthnet Dr. Malik Hasan, global hedge fund manager Mansoor Ijaz, Founder and Former CEO of AST Research Safi Qureshi, Mayor Haroon Saleem of of Granite Falls, Washington, Hilary Clinton aide Huma Abedin Weiner, novelists Bapsi Sidhwa and Daniyal Mueenuddin, Emmy nominee singer-songwriter Nadia Ali, and many other prominent Pakistani-American business executives, entrepreneurs, public servants, politicians and performers who have made their name in their adopted country.

Although Pakistani-Americans are still a miniscule fraction of the overall US population, their numbers have more than doubled in the last decade due to increased immigration, according to US Census 2010 data. With 100% increase since 2000, Pakistanis are the second fastest growing Asian immigrant group in the United States.

Here are some of the highlights of Pakistani-American data from US Census 2010 as gleaned from a report titled "A Community of Contrasts Asian Americans in the United States: 2011" published by Asian-American Center For Advancing Justice:

1. There are 409,163 Pakistani-Americans in 2010, the 7th largest Asian-American community in America.

2. Pakistani-American population doubled from 2000 (204,309) to 2010 (409,163), the second largest percentage increase after Bangladeshis' 157% increase in the same period.

3. 6% of Pakistani-American population is mixed race.

4. 65% of Pakistanis in America are foreign-born. 57% of foreign-born Pakistani-American population is made up of naturalized citizens.

5. There are 120,000 Pakistani legal permanent residents of which 42% are eligible to naturalize.

6. There were 69,202 immigrant visas issued to Pakistanis from 2001 to 2010, the 5th highest among Asian nations.

7. 28% of Pakistanis have limited English proficiency.

8. Average per capita income of Pakistani-Americans is $24,663.00

9. 15% of Pakistanis are classified as poor; only 1% of them are on public assistance.

10. 8% of Pakistanis are unemployed, a figure lower than the general population of Americans.

11. 55% of Pakistanis own their own homes.

12. 55% of Pakistanis have a bachelor's degree or higher.

13. Median age of Pakistanis in America is only 29 years, lower than most of the Asian groups and the national median age of 36.8 years.

Pakistani-American community is still relatively young when compared with other immigrant groups. More of the Pakistanis in America are college educated than the general population of whites and various immigrant groups. The youthful energy and higher education levels of Pakistani-Americans are opening doors for them to rise and shine in America, in spite of the current economic difficulties in their adopted land of opportunities.

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Hospital Fire Casts Shadow on India Medical Tourism

2011-12-12T18:34:00.000-08:00

A deadly hospital fire claiming 91 patients' lives in India last week is raising serious concerns about the safety of foreigners being wooed by the nation's growing medical tourism industry.

The fire swept through AMRI, a 180-bed, state-of-the-art facility regarded as one of the best hospitals in India. There were no exit doors or evacuation plan, the windows were sealed, and the local fire department took more than 90 minutes to arrive. Trapped, many of the patients died from smoke inhalation, according to a report in Christian Science Monitor. Most died in their beds, unable to escape the inferno that raged for hours. Residents living in the neighborhood accused the hospital guards of not taking any measures to control the fire and of even preventing others from rushing to the rescue of the victims who were abandoned by the hospital staff. The hospital is known to attract many foreign patients. However, it's too early to tell if any foreigners died in the blaze because most of the charred remains have yet to be identified.

“Large numbers of hospitals are coming up in a big way across India. What we need to look into when issuing the licenses for running the hospitals is that building construction has complied to safety building codes and a safety plan is in place in case of fire,” said Dr. Muzzafer Ahmed, a member of the country's National Disaster Management Authority, speaking to the media.

Though Indians remain among the most under-served in the world in terms of health care, growing for-profit Indian hospital industry has been promoting itself as an inexpensive alternative to high-cost surgery in the United States and Europe. There are a large number of foreign-trained highly-skilled physicians and surgeons in India. And the heart bypass surgery that costs $6,000 in India costs more than $20,000 in the US, according to Yaleglobal. There are similar deep discounts available for joint replacement, in vitro fertilization (IVF), and surrogate mothers' womb rental services.

Many Indians are expecting exponential growth in foreign demand to take advantage of the opportunity to combine medical treatment with vacations at significantly lower costs. "With health care costs going north," says Dr Alok Roy of Fortis Hospital, one of the leading service providers in the medical tourism sector, "patients are compelled to look at cost-effective destinations for medical treatments. And what could be better if they can combine that with sightseeing at scenic locations?"

The safety concerns about India go beyond the fear of being burned in a fire. Other major concerns include:

1. Fake pharmaceuticals are a big worry. In fact, 75 percent of counterfeit drugs supplied world over have origins in India, according to a report released by the Organization for Economic Co-operation and Development (OECD).

2. Lack of proper hygiene contributes to a large number of infections in hospital settings. A recent investigation into the death of 13 women in a Rajasthan hospital found that the poor hygiene standard in the hospital were flagrantly overlooked, according to Times of India.

Will the latest incident at AMRI in Kolkatta, combined with general concerns about unhygienic practices and widespread use of fake pharmaceuticals, hurt India's efforts at growing its medical tourism industry? The short answer is yes. However, the growth prospects could improve in the future when the Indian government and the hospital industry begin to improve the safety situation to regain the trust of prospective foreign customers.

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India "Time of Reckoning" as its Economy "Explodes"

2011-12-11T09:34:00.000-08:00

For at least two years in a row, BRIC has, in the words of SGS's Albert Edwards, stood for Bloody Ridiculous Investment Concept, not an acronym for populous emerging markets of Brazil, Russia, India and China as Goldman Sachs' Jim O'Neill saw it ten years ago.

In fact, O'Neill has himself expressed disappointment in India, one of the BRICs, a designation that has boosted foreign investment in India and helped accelerate its economic growth since 2001.

"All four countries have become bigger (economies) than I said they were going to be, even Russia. However there are important structural issues about all four and as we go into the 10-year anniversary, in some ways India is the most disappointing," said O'Neill as quoted by Reuters.

Noting India's significant dependence on foreign capital inflows, Jim O'Neill went further and raised a concern about the potential for current account crisis. "India has the risk of ... if they're not careful, a balance of payments crisis. They shouldn't raise people's hopes of FDI and then in a week say, 'we're only joking'". "India's inability to raise its share of global FDI is very disappointing," he said.

United Nations data shows that India received less than $20 billion in FDI in the first six months of 2011, compared to more than $60 billion in China while Brazil and Russia took in $23 billion and $33 billion respectively. Stocks in all four countries have underperformed relative to the broader emerging markets equity index, as well as the markets in the developed nations. Pakistan's KSE-100 has significantly outperformed all BRIC stock markets over the ten years since BRIC was coined.

As India's twin deficits continue to grow and the Indian rupee hits record lows relative to the US dollar, there is pressure on Reserve Bank of India to defend the Indian rupee against currency speculators who may precipitate a financial crisis similar to the Asian crisis of 1997.

In addition to Jim O'Neill, a range of investment bankers are turning bearish on India. UBS sent out an email headlined "India explodes" to its clients. Deutsche Bank published a report on November 24 entitled, "India's time of reckoning."

"Suddenly everything seems to be coming to a head in India," UBS wrote. "Growth is disappearing, the rupee is in disarray, and inflation is stuck at near-record levels. Investor sentiment has gone from cautious to outright scared."

India's current account deficit swelled to $14.1 billion in its fiscal first quarter, nearly triple the previous quarter's tally. The full-year gap is expected to be around $54 billion.

Its fiscal deficit hit $58.7 billion in the April-to-October period. The government in February projected a deficit equal to 4.6 percent of gross domestic product for the fiscal year ending in March 2012, although the finance minister said on Friday that it would be difficult to hit that target.

As explained in a series of earlier posts here on this blog, India has been relying heavily on portfolio inflows -- foreign purchases of shares and bonds -- as a means of covering its rising current account gap. Those flows are called "hot money" and considered highly unreliable.

Indian policy makers face a significant dilemma. If they do nothing to defend the Indian currency, the downward spiral could make domestic inflation a lot worse than it already is, and spark massive civil unrest. If they intervene in the currency market aggressively by buying up Indian rupee, the RBI's dollar reserves could decline rapidly and trigger the balance of payment crisis Goldman Sachs' O'Neill hinted at.

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Lahore Company Recycles Waste Profitably

2011-12-02T17:07:00.000-08:00

Asif Farooqui is making millions of dollars by turning thousands of tons of waste in Lahore into liquefied petroleum products and fertilizer for farmlands.

Words like "clean" and "green" are not usually associated with the streets of major South Asian cities, but Farooqui's Waste Busters, a successful waste management business, is slowly changing the image of the Pakistani city of Lahore, according to an Aljazeera report.

The business started modestly a few years ago with just six donkey carts and a few workers to collect the trash and manually process it. Today, it has 200 garbage collection vehicles, several waste management plants and employs over 3000 people. Its plants separate garbage in to organics, plastics and metals to produce LPG products, fertilizer, and recyclables for reprocessing and reuse. And it is being done profitably.

An example of reprocessing and reuse is a Lahore-based company called Green Earth Recycling which turns shopping bags and other plastic scrap into beautiful green "plastic wood" furniture.

Other cities and communities in Pakistan are looking at the Lahore example and working on duplicating it. Waste Buster has already won contracts in communities in Karachi, Quetta, Rawalpindi, Peshawar and other cities.

Like it not, western style consumption patterns are happening in Pakistan, and these require western style professional management of the environment. With the rapid growth of urban middle class and its rising consumption of packaged products bringing fast proliferation of FMCG brands and big box retailers in Pakistan, it is becoming absolutely essential to deal effectively with the increasing amounts of trash being produced in big cities. Waste Busters sets a good example of what needs to be done on a much bigger scale to keep Pakistan's cities clean, environmentally safe and livable.

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American Multi-nationals Moved 1.5 Million US Jobs to India and China

2011-11-22T22:04:00.000-08:00

American corporations created 453,000 jobs in India, a whopping 642% increase in a decade that saw the same corporations cut 846,000 jobs at home.

Overall, US multinational corporations 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.

From 1999 to 2009, the multinational companies also reduced capital-investment spending in the U.S. at an annual rate of 0.2% and increased it at a 4.0% annual rate abroad. This occurred in spite of huge Bush era tax cuts for the rich.

Bulk of the increase in overseas investment and hiring by U.S. multinationals has been in the service sector where most of the American middle class jobs have been lost. Among U.S. multinational firms in manufacturing, about 60% of employment is still in the U.S. But the manufacturers cut their U.S. payrolls by 2.1 million in the 2000s and added 230,000 workers overseas.

While the U.S. multinational manufacturers employ 6.9 million workers in the U.S. and 4.6 million abroad as of 2009, the trend clearly indicates the balance shifting in favor of overseas jobs at the expense of jobs in America.

The irony of it is that the vast majority of average citizens of nations like India where jobs have been created by American corporations have not benefited either. After the decade of job creation by US multi-nationals, India still remains home to the world's largest population of poor, hungry and illiterates. Bulk of the benefits of globalization have gone to a few dozen powerful Indian oligarchs in "the world's largest democracy".

Looking at this jobs data, it's clear to me that the foolish and short-sighted actions of the American MNCs are undermining the very system that has nurtured and enriched them by creating middle class American consumers and voters whose jobs they are killing.

It's the middle class America that has supported the system of American democracy and free markets; destroying middle class America by taking their jobs overseas will only lead to rising instability that will threaten the very foundations of this system....the growing "Occupy" movement across major American cities and university campuses is only the tip of the iceberg of rising discontent.

It's time to save democracy and capitalism from the American capitalists!

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Sharing Blaochistan's Vast Mineral Wealth

2011-11-15T21:16:00.000-08:00

The US state of Alaska has a small population of only 680,000 people and vast territory measuring 1.5 million square kilometers. The state is endowed with tremendous mineral wealth--particularly oil and gas. Alaska Permanent Fund was set up in 1976 to ensure that ordinary Alaskans get a share of this natural wealth. Currently the fund has assets of over $38 billion and each Alaskan will receive $1,174.00 in cash from it for 2011.

Pakistan's Balochistan province shares some similarities with the US state of Alaska. It is the largest of Pakistan's four provinces in terms of area (347,190 square kilometers) but the smallest in terms of population (6.6 million). With large reserves of copper, gold and natural gas, it is probably the richest of Pakistan's provinces in terms of its natural resources.

Most of the grievances of the people of Balochistan stem from a sense that they have not benefited from the resources under their land. Powerful tribal chieftains in the province have exploited this sense of deprivation to demand and receive significant funds for themselves while ordinary Balochis have remained among the poorest and most backward in Pakistan.

As Pakistan moves forward with vast new mineral discoveries such as Reko Diq in Balochistan, it's essential that there be a mechanism to equitably share with ordinary Balochis the billions of dollars in revenue expected to flow from these resources.

Balochistan Fund can be modeled on Alaska Permanent Fund. It is a constitutionally established and professionally managed fund which is run by a semi-independent corporation. Shortly after the oil from Alaska's North Slope began flowing to market through the Trans-Alaska Pipeline System, the Permanent Fund was created by an amendment to the constitution of the U.S. state of Alaska to be an investment for at least 25% of proceeds from some minerals [such as oil and gas] sale or royalties.

Similar funds should be established for other provinces as well. For example, energy-rich Sindh has large coal deposits and huge shale gas reserves which are worth at least hundreds of billions of dollars. Revenues from these resources should be shared equitably to benefit ordinary citizen of Sindh province.

Sharing of the wealth with the people in each province will give them a tangible stake in national development. It will help bring and maintain peace and stability necessary to attract badly needed investments for developing Pakistan's vast mineral resources.

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US Role as Nuclear Proliferator to India

2011-11-12T22:54:00.000-08:00

The story of how India acquired nuclear weapons gets almost no attention in the Western media as they continue to focus on nuclear proliferation by Pakistan's AQ Khan.

The nuclear proliferation narrative in the mainstream American and European media begins with A.Q. Khan's network rather than the actors in North America and Europe as the original proliferators of nuclear weapons equipment, materials and technology to India in 1960s and 1970s. These nuclear exports from US to India continued for several years even after the Indian nuclear test in 1974.

The real story, as recounted by Paul Leventhal of The Nuclear Control Institute, begins with the US and Canada supplying nuclear reactors and fuel to India in 1960s. As the story unfolds, we learn that the spent fuel from Canadian Cirus reactor was reprocessed into bomb-grade plutonium using a reprocessing plant provided by an American-European consortium, and later used to explode India's first atom bomb at Pokhran in 1974. This is the key event in South Asia that led to Pakistan's pursuit of nuclear weapons culminating in nuclear tests by both India and Pakistan in 1998.

Here are some key excerpts from Paul Leventhal's presentation to Center for Nonproliferation Studies in Washington DC on December 19, 2005:

CIRUS (Canadian reactor supplied to India) holds a very special place in nonproliferation history and the development of US nonproliferation policy. This needs to be understood if we are to do the right thing in working out a new nuclear relationship with India.

My own personal involvement in this history and policy began with a telephone call I received 31 years ago on a May morning in 1974 when I was a young staffer on the U.S. Senate Government Operations Committee. It was from a Congressional liaison officer of the U.S. Atomic Energy Commission who said he was calling to inform me that India had just conducted a nuclear test and to assure me that "the United States had absolutely nothing to do with it."

At that time, I was working on legislation to reorganize the AEC into separate regulatory and promotional agencies. I had begun investigating the weapons potential of nuclear materials being used in the U.S. Atoms for Peace program, both at home and abroad. The official wanted me to know there was no need to consider remedial legislation on nuclear exports because the plutonium used in India's test came not from the safeguarded nuclear power plant at Tarapur, supplied by the United States, but from the unsafeguarded Cirus research reactor near Bombay, supplied by Canada. "This is a Canadian problem, not ours," he said.

It took me two years to discover that the information provided me that day was false. The United States, in fact, had supplied the essential heavy-water component that made the Cirus reactor operable, but decided to cover up the American supplier role and let Canada "take the fall" for the Indian test. Canada promptly cut off nuclear exports to India, but the United States did not.

In 1976, when the Senate committee uncovered the U.S. heavy-water export to India and confronted the State Department on it, the government's response was another falsehood: the heavy water supplied by the U.S., it said, had leaked from the reactor at a rate of 10% a year, and had totally depleted over 10 years by the time India produced the plutonium for its test.

But the committee learned from Canada that the actual heavy-water loss rate at Cirus was less than 1% a year, and we learned from junior-high-school arithmetic that even a 10%- a-year loss rate doesn't equal 100% after 10 years. Actually, more than 90% of the original U.S. heavy water was still in the Cirus reactor after 10 years, even if it took India a decade to produce the test plutonium---itself a highly fanciful notion.

We also learned that the reprocessing plant where India had extracted the plutonium from Cirus spent fuel, described as "indigenous" in official U.S. and Indian documents, in fact had been supplied by an elaborate and secret consortium of U.S. and European companies.

Faced with this blatant example of the Executive Branch taking Congress for the fool, the Senate committee drafted and Congress eventually enacted the Nuclear Non-Proliferation Act of 1978. And the rest, as they say, is history.

Paul Leventhal's story about India's diversion of civilian nuclear programs to build weapons is corroborated by other sources such as the Bulletin of Atomic Scientists and the Wisconsin Project.

Unfortunately, not much has changed in Washington since 1974 as the duplicitous US policy of "non-proliferation" continues to this day. Washington never talks about the Israeli nuclear weapons and the US administration continues to raise objections to the Chinese sale of nuclear power plants to Pakistan which is suffering from crippling energy deficits. Meanwhile, the 2009 US-India nuclear deal legitimizes India as a nuclear weapons state and encourages continuing Indian buildup of its nuclear arsenal even as the US targets Iran for its alleged efforts to build nuclear weapons.

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Pakistan's Largest City Karachi Ranks High on Human Development

2011-11-09T21:41:00.000-08:00

While Pakistan's HDI of 0.504 (2011) ranks it among UNDP's low human development countries, its largest city Karachi's HDI of 0.7885 (2005) is closer to the group of nations given high human development rankings.

In a regional human development analysis for Pakistan done by Haroon Jamal and Amir Jahan Khan of the Social Policy and Development Centre (SPDC), Karachi ranks at the top with HDI of 0.7885, followed by Jhelum district's 0.7698 and Haripur's 0.7339. Lahore has HDI score of 0.6882 and Rawalpindi 0.638.

Majority of the nations ranked as high human development are less populated than Karachi with its 15 million+ inhabitants, and none is experiencing the massive waves of poor rural migrants from some of the least developed areas of Pakistan which Karachi continues to absorb after each disaster in other parts of the country, natural or otherwise.

Karachi often makes news for its recurring episodes of violence which claim many innocent lives. Yet, the city continues to be a big draw for large numbers of rural migrants looking for better economic opportunities. In spite of the many problems they face, it's a fact that even the slums in Karachi offer them better access to education and health care--basic ingredients for human development.

When visitors see a squatter city in India or Pakistan or Bangladesh, they observe overwhelming desperation: rickety shelters, little kids working or begging, absence of sanitation, filthy water and air. However, there are many benefits of rural to urban migration for migrants' lives, including reduction in abject poverty, empowerment of women, increased access to healthcare and education and other services. Historically, cities have been driving forces in economic and social development. As centers of industry and commerce, cities have long been centers of wealth and power. They also account for a disproportionate share of national income. The World Bank estimates that in the developing world, as much as 80 percent of future economic growth will occur in towns and cities. Nor are the benefits of urbanization solely economic. Urbanization is associated with higher incomes, improved health, higher literacy, and improved quality of life. Other benefits of urban life are less tangible but no less real: access to information, diversity, creativity, and innovation.

In a 2009 interview published by Wired Magazine, Stewart Brand, "the pioneering environmentalist, technology thinker", and founder of the Whole Earth Catalog summed up the positive aspects of urban slums, and made a counterintuitive case that the booming slums and squatter cities in and around Mumbai, Nairobi, and Rio de Janeiro are net positives for poor people and the environment. Wired asked him to elaborate. Here are a few excerpts:

Wired: What makes squatter cities so important?

Stewart Brand: That's where vast numbers of humans—slum dwellers—are doing urban stuff in new and amazing ways. And hell's bells, there are a billion of them! People are trying desperately to get out of poverty, so there's a lot of creativity; they collaborate in ways that we've completely forgotten how to do in regular cities. And there's a transition: People come in from the countryside, enter the rickshaw economy, and work for almost nothing. But after a while, they move uptown, into the formal economy. The United Nations did extensive field research and flipped from seeing squatter cities as the world's great problem to realizing these slums are actually the world's great solution to poverty.

Wired: Why are they good for the environment?

Brand: Cities draw people away from subsistence farming, which is ecologically devastating, and they defuse the population bomb. In the villages, women spend their time doing agricultural stuff, for no pay, or having lots and lots of kids. When women move to town, it's better to have fewer kids, bear down, and get them some education, some economic opportunity. Women become important, powerful creatures in the slums. They're often the ones running the community-based organizations, and they're considered the most reliable recipients of microfinance loans.

Wired: How can governments help nurture these positives?

Brand: The suffering is great, and crime is rampant. We made the mistake of romanticizing villages, and we don't need to make that mistake again. But the main thing is not to bulldoze the slums. Treat the people as pioneers. Get them some grid electricity, water, sanitation, crime prevention. All that makes a huge difference.

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Pakistani Fulbright Scholar Joins Fight Against Terror

2011-11-04T09:27:00.000-07:00

Simulation software developed by Fulbright scholar Zeeshan Usmani is helping investigators analyze bombings and pursue perpetrators of terror in Pakistan. Usmani is the product of currently the world's biggest Fulbright program being offered in Pakistan, with approximately 200 scholarships for advanced degrees in 2011 alone.

Usmani collaborated with Daniel Kirk at Florida Institute of Technology to develop Usmani-Kirk model for analyzing suicide bomb blasts. The model uses various inputs like before-and-after video footage, bombing debris, chemical residues, victims' injuries, casualty patterns, autopsy data and other available clues about suspects and forensic data to piece together the details of each incident and to help identify the cause and the perpetrators.

Upon returning to Pakistan with a doctoral degree, Usmani was introduced by a business executive Adnan Asdar to Karachi's senior police officials who were investigating the Ashura bombing of 28 December, 2009. The police immediately asked him to help.

Before Usmani showed up at the scene, Pakistan's Interior Minister Rahman Malik had already told the media that it was a suicide bombing orchestrated by the TTP (Tehrik-e-Taliban Pakistan), and the TTP had accepted responsibility for the "suicide bombing". Usmani took one look at the scene near the banyan tree at the Lighthouse Center and concluded that the casualty pattern did not support Malik's conclusion. Usmani's assertion gained support when Faisal Edhi, son of Abdus Sattar Edhi of Edhi Foundation, and later FIA investigators noticed a large quantity of heavy steel nuts strewn at the scene, according to Steve Inskeep who has described the incident in his recent book about Karachi titled "The Instant City". The steel nuts were too heavy to have been carried by suicide bombers who typically use ball bearings as shrapnel in their explosive vests to inflict maximum casualties. Other metal fragments found at the scene were understood to have come from a metal box that could be seen next to an Edhi ambulance before the blast but not in the post-blast video footage. This metal box apparently contained the explosives and the steel nuts. A body believed by the police to be of the suicide bomber was later confirmed as the body of a boy scout killed in the blast.

Usmani's analysis and detailed presentation persuaded the investigators that it was a remote controlled bomb rather than a suicide bomber that did the damage, and it was most likely perpetrated by a local sectarian outfit, not the TTP who target the security forces rather than ordinary citizens.

Faced with the ruthless and resourceful enemies of the state, Pakistani law-enforcement is in serious need of good intelligence work and competent professional investigators equipped with modern tools and capabilities to bring a semblance of peace and security in Pakistan. What Usmani is doing needs to be developed and replicated across the country. I hope Pakistani state will identify and make full use of all available talent in this area of expertise.

Here's a video of Usmani's presentation at TEDx Lahore:

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Pakistan Poised to Reap Huge Demographic Dividend

2011-10-27T20:41:00.000-07:00

Pakistan has the world’s sixth largest population, seventh largest diaspora and the ninth largest labor force. With rapidly declining fertility and aging populations in the industrialized world, Pakistan's growing talent pool is likely to play a much bigger role to satisfy global demand for workers in the 21st century and contribute to the well-being of Pakistan as well as other parts of the world.

With half the population below 20 years and 60 per cent below 30 years, Pakistan is well-positioned to reap what is often described as "demographic dividend", with its workforce growing at a faster rate than total population. This trend is estimated to accelerate over several decades. Contrary to the oft-repeated talk of doom and gloom, average Pakistanis are now taking education more seriously than ever. Youth literacy is about 70% and growing, and young people are spending more time in schools and colleges to graduate at higher rates than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee. Vocational training is also getting increased focus since 2006 under National Vocational Training Commission (NAVTEC) with help from Germany, Japan, South Korea and the Netherlands.

Pakistan's work force is over 60 million strong, according to the Federal Bureau of Statistics. With increasing female participation, the country's labor pool is rising at a rate of 3.5% a year, according to International Labor Organization.

With rising urban middle class, there is substantial and growing demand in Pakistan from students, parents and employers for private quality higher education along with a willingness and capacity to pay relatively high tuition and fees, according to the findings of Austrade, an Australian govt agency promoting trade. Private institutions are seeking affiliations with universities abroad to ensure they offer information and training that is of international standards.

Trans-national education (TNE) is a growing market in Pakistan and recent data shows evidence of over 40 such programs running successfully in affiliation with British universities at undergraduate and graduate level, according to The British Council. Overall, the UK takes about 65 per cent of the TNE market in Pakistan.

It is extremely important for Pakistan's public policy makers and the nation's private sector to fully appreciate the expected demographic dividend as a great opportunity. The best way for them to demonstrate it is to push a pro-youth agenda of education, skills development, health and fitness to take full advantage of this tremendous opportunity. Failure to do so would be a missed opportunity that could be extremely costly for Pakistan and the rest of the world.

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Pakistan Ranks Among Fastest Growing Broadband Markets

2011-10-24T12:40:00.000-07:00

High-speed broadband expansion led by PTCL 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. Serbia leads all countries surveyed with a 68% annual growth rate from Q1 2010 to Q1 2011. Thailand (67%), Belarus (50%), Pakistan (46%), and Jordan (44%) follow Serbia. India is in 14th place worldwide with a 35% annual growth rate.

Leading the charge is PTCL (Pakistan Telecommunications Ltd.), Pakistan's state-owned telecommunications company, which recently launched 100 Mbps fiber to the home broadband service using Gigabit Passive Optical Network (GPON) technology. Earlier this year PTCL rolled out bonded VDSL2 technology to deliver 50 Mbps to its existing DSL customers, five times the top speed of the nation's highest level of service at the time, at a construction cost of just $200-300 per home passed.

Nearly 200,000 new subscribers signed up for broadband from the end of Feb to the end of May. At the end of May 2011, Pakistan had 1.4 million broadband subscribers, up from 1.2 million in February, according to figures from Pakistan Telecommunication Authority (PTA). The number of DSL subscribers rose to 654,000 compared with 595,038 in Feb, while the number of Wimax internet users stood at 397,155, up from 338,962 Wimax users in February. Some 294,161 people connected to the internet via EV-DO, up from 234,113 in Feb, and 42,490 people used HFC (Hybrid Fiber Coax, or cable) to access the internet, compared with 43,193 HFC users in February. Fiber is growing as well, and there were 6,222 FTTH users in March, up from 5,818 in Feb, and 1,873 broadband subscribers used other technologies.

In addition to GPON and VDSL2, PTCL offers DSL and EVO broadband services as well. PTCL's EVO-WiFi Cloud at 3G speeds (upto 3.1 Mbps) offers a mobile hotspot that intelligently converts your home/work/vehicle space into a personalized wifi zone anywhere in over 100 Pakistani cities and towns covered by EVO service. The EVO-WiFi cloud device costs Rs. 7000 upfront with Rs. 2000 a month for unlimited service.

PTCL has recently launched an Android based thin Apple iPAD2 like tablet computer with EVO 3G and WiFi connectivity built-in. 3G EVO Tab is a 7 inch touch screen tablet with built-in EVO service to offer wireless broadband internet on the go in more than 100 cities and towns across Pakistan. Powered by Google Android Froyo 2.2 Operating system, 3G EVO Tab offers support for both 3G and Wi-Fi for an un-interrupted on-the-go connectivity. With a 5 MegaPixel Camera, a variety of built-in applications, 3G EVO Tab lets users browse, snap, share, communicate, navigate, play games and do a lot more on-the go, thereby making it an ideal connectivity solution for users looking for high speed on-the-go 3G connectivity on an Android platform. PTCL 3G EVO Tab offers convenience and speed with three diverse economy packages to suit individual needs and pockets. Its 12-month bundle offer has been very successful with majority sales in this bracket.Customers can get EVO Tab for as low as Rs 7,999 plus 12-month unlimited EVO service, all at Rs 31,999. In addition to the 12-month contract, EVO Tab offers bundled packages based on 3 and 6 month contracts at Rs 27,999 and Rs 29,999, respectively with 3 and 6 month of unlimited EVO service.

Growing broadband and Internet access by itself is of no value. However, such capabilities can enable huge opportunities for education, communication, business and entertainment. Take distance learning as an example. 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.

There are many online learning channels, like the Khan Academy, which help advance learning at secondary and tertiary levels. For those interested in vocational training and specialized work-related skills, there are plenty of Youtube channels and videos which are becoming accessible with increasing bandwidth of connections available to people at their homes, schools and offices.

In summary, I believe that the growing bandwidth available for the Internet users in Pakistan, with all its great applications for learning, work and play, is good news for the future of Pakistan. It will open a whole new world of opportunities for the nation's youth and ultimately produce significant demographic dividend.

Here's a video clip about PTCL's EVO 3G tablet:

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Pakistan's Growing Education Market

2011-10-21T21:50:00.000-07:00

Although the growth in the total number Pakistanis studying abroad has slowed since the terrorist attacks of Sept 11, 2001 in the United States, the world's sixth most populous nation continues to be among the leading sources of foreign students in America, Europe, Australia and new emerging higher education destinations in Asia.

As the number of Pakistani students in the United States has declined from a peak of 8,644 students (ranked 13th) in 2001-02 to 5,222 in 2009-10 (ranked 23rd), English-speaking OECD nations of the United Kingdom and Australia have become the biggest beneficiaries getting increasing market share of the Pakistan education market. Both nations have benefited in spite of the fact that the UK and Australian visa rejection rates for Pakistanis are higher than for students from other nations.

A recent British Council report says that 9,815 Pakistani students (Source: HESA) put Pakistan among one of the top six countries which account for 54 percent of the UK’s (non-EU) international students. Since September 2001, it has become the market leader, a place previously held by the US. In addition to Canada in North America, several Northern European countries, including Sweden and Finland, have also become quite active in marketing their education in Pakistan. As a result, these nations are attracting thousands of Pakistani students to their universities.

There is also an upward trend in Pakistani students studying in Australia. 8,458 Pakistani students studied in Australia in 2009/2010, increase of 11/4% over 2008/2009 (Source: AEI).

The US is beginning to pick up more of the Pakistani education market share after a significant decline since 911, with its simplified visa procedures and increased marketing efforts, and the excellent scholarship opportunities that they have to offer Pakistani students. Pakistan now has the world's largest Fulbright Scholarship Program with over 200 scholarships offered to Pakistani students for advanced degrees in 2011.

Beyond the traditional destinations in OECD nations, newly industrialized countries such as Thailand, Malaysia and Singapore are more visible in Pakistan and perceived as offering quality education at lower prices.

Pakistanis take education seriously. They spend more time in schools and colleges and graduate at a higher rates than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee.

With rising urban middle class, there is substantial and growing demand in Pakistan from students, parents and employers for private quality higher education along with a willingness and capacity to pay relatively high tuition and fees, according to the findings of Austrade, an Australian govt agency promoting trade. Private institutions are seeking affiliations with universities abroad to ensure they offer information and training that is of international standards.

Trans-national education (TNE) is a growing market in Pakistan and recent data shows evidence of over 40 such programs running successfully in affiliation with British universities at undergraduate and graduate level, according to The British Council. Overall, the UK takes about 65 per cent of the TNE market in Pakistan.

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Educational Attainment Dataset By Robert Barro and Jong-Wha Lee

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Developing Pakistan's Intellectual Capital

Intellectual Wealth of Nations

Pakistan's Story After 64 Years of Independence

Pakistan Ahead of India on Key Human Development Indices

Institute of International Education--Open Doors

UK's Higher Education Statistics Agency Report

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Pakistani Punjab's Rejection of US Aid Hurts the Poor

2011-10-19T22:46:00.001-07:00

The Punjab government led by PML's Shahbaz Sharif spurned 20 billion rupees ($232.55 million) in US aid slated for welfare projects in Pakistan's most populous province in the next three years, according to a report in Dawn newspaper. The popular move was motivated by politics to capitalize on a wave of anti-American anger following the US raid that killed Osama Bin Laden in Abbottabad, Pakistan.

While the amount of aid rejected is relatively small, the decision's outsized impact on the poor is now coming to light. Here are some of the projects most impacted:

1. U.S. aid could have transformed Punjab Government's Lady Willingdon Hospital in Lahore, where rats run through the halls, patients sleep three to a bed, women who require C-sections aren't getting them because only one operating room is functioning, and premature babies risk death because of a shortage of incubators, according to the Associated Press.

The hospital struggles to provide even basic care. Built by the British in the 1930s before Pakistan's independence, it was meant for 80 patients. The country's population has since exploded, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings. Patients are forced to share beds, and sometimes women who are close to giving birth have to sit on the floor for lack of space. It has only one functioning operating room, leaving women lined up to receive cesarean sections.

The hospital has only three working infant incubators, which were donated by NGOs. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease. The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities.

2. Another $100 million of US aid was to be used to rebuild schools in southern Punjab province that were destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.

3. The loss of aid for Shamaspura, a poor neighborhood in Lahore, means that its 15,000 residents will not get their only road paved, nor will they get a new sewer system.

Batool Akhtar, a poor but feisty woman quoted by the AP story, summed it up well when she said: "This is rich people denying aid meant for the poor. The government should have taken the money."

As Pakistan's ruling elite and its ghairat brigade, led by PML's Sharif brothers, engage in loud empty rhetoric about infringement of their national sovereignty by the United States, here is something to ponder:

Pakistan runs chronic budget deficits of around 5% of its GDP, and its government collects less than 10% of GDP in tax revenue which is among the lowest in the world. A big share of these deficits is funded by foreign aid and loans, making Pakistanis beholden to the interests and whims of major foreign donors and lenders.

Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin. The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs.

Given the unwillingness of Pakistan's ruling elite to pay more in taxes, I agree with the decision of the other three provincial governments to continue to accept US economic aid. As the Punjab examples above show, refusing such aid clearly hurts the poor the most.

Pakistan would be well advised to not seek confrontation with Washington. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).

All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.

Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.

Here are some of my recommendations for Pakistanis to move toward greater self-reliance:

1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.

2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.

3. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.

4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.

No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.

Related Links:

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America's Cyber War Against Pakistan?

2011-10-19T10:58:00.000-07:00

After a reportedly successful US-Israeli stux-net cyber attack on Iranian nuclear installations last year, there is now a report in the New York Times that the Obama administration has considered deploying cyber warfare against Pakistan as well.

The New York Times quotes unnamed US officials as acknowledging that the US "military planners suggested a far narrower computer-network attack to prevent Pakistani radars from spotting helicopters carrying Navy Seal commandos on the raid that killed Osama bin Laden on May 2." It says the idea of cyber attack on Pakistani air defense system was dropped, and radar-evading Black Hawk helicopters and stealthy RQ-170 Sentinel surveillance drone were instead used to for the raid in the Pakistani town of Abbottabad. The CIA spied on Osama bin Laden’s compound in Pakistan by video transmitted from a new bat-winged stealth drone, the RQ-170 Sentinel, which hovered high above Abbottabad for weeks before the raid. There are speculations that the US might be doing such aerial surveillance in other parts of Pakistan, particularly on Pakistan's nuclear installations.

Recently, officials at Creech Air Force Base in Nevada acknowledged a virus infecting the drone “cockpits” there, according to Wired magazine. The source of the virus has not been identified. Back in 2009, the Wall Street Journal reported that militants in Iraq used $26 off-the-shelf software to intercept live video feeds from U.S. Predator drones, potentially providing them with information they needed to evade or monitor U.S. military operations.

At the 2009 World Economic Forum, the U.S.-based security software firm McAfee's CEO Dave Walt reportedly told some attendees that China, the United States, Russia, Israel and France are among 20 countries locked in a cyberspace arms race and gearing up for possible Internet hostilities. He further said that the traditional defensive stance of government computer infrastructures has shifted in recent years to a more offensive posture aimed at espionage, and deliberate disruption of critical networks in both government and private sectors. Such attacks could disrupt not only command and control for modern weapon systems such as ballistic missiles, but also critical civilian systems including banking, electrical grid, telecommunications, transportation, etc, and bring life to a screeching halt.

In a Sept 2010 report, the Wall Street Journal quoted cyber security specialists saying that "many countries including the U.S., Russia, China, Israel, the U.K., Pakistan, India and North and South Korea have developed sophisticated cyber weapons that can repeatedly penetrate and have the ability to destroy computer networks".

Last year, Chinese hackers apparently succeeded in downloading source code and bugs databases from Google, Adobe and dozens of other high-profile companies using unprecedented tactics that combined encryption, stealth programming and an unknown hole in Internet Explorer, according to new details released by the anti-virus firm McAfee and reported by Wired magazine. These hack attacks were disguised by the use of sophisticated encryption, and targeted at least 34 companies in the technology, financial and defense sectors, exploiting a vulnerability in Adobe’s Reader and Acrobat applications.

While the Chinese cyber attacks on US and India often get wide and deep coverage in the western media, a lower profile, small-scale cyber warfare is also raging in the shadows between India and Pakistan, according to some reports. These reports indicate that around 40-50 Indian sites are being attacked by Pakistani hackers on a daily basis whereas around 10 Pakistani sites are being hit by their Indian counterparts.

Here is how Robert X. Cringeley described the potential effects of full-scale India-Pakistan cyber war in a June 2009 blog post captioned "Collateral Damage":

"Forget for the moment about data incursions within the DC beltway, what happens when Pakistan takes down the Internet in India? Here we have technologically sophisticated regional rivals who have gone to war periodically for six decades. There will be more wars between these two. And to think that Pakistan or India are incapable or unlikely to take such action against the Internet is simply naive. The next time these two nations fight YOU KNOW there will be a cyber component to that war.

And with what effect on the U.S.? It will go far beyond nuking customer support for nearly every bank and PC company, though that’s sure to happen. A strategic component of any such attack would be to hobble tech services in both economies by destroying source code repositories. And an interesting aspect of destroying such repositories — in Third World countries OR in the U.S. — is that the logical bet is to destroy them all without regard to what they contain, which for the most part negates any effort to obscure those contents."

Coming back to the US, it is no secret that the Pentagon and the CIA have increasingly been using America's significant technology edge for war fighting in many parts of the world in recent years. One example is the growing fleet of the remotely controlled stealthy drones being deployed in Afghanistan, Pakistan, Iraq, Yemen and elsewhere for espionage and attacks. Among other new developments, the modern drone is just one of the ways to fight wars covertly in remote places at low cost to America in terms of dollars and casualties, often without so munch as declaring such wars.

The Pentagon now has some 7,000 UAVs, compared with fewer 50 just 10 years ago. The US Air Force is now anticipating a decrease in manned aircraft but expects its number of “multirole” aerial drones like the Reaper — the ones that spy as well as strike — to nearly quadruple, to 536, according to NY Times. Already the Air Force is training more remote pilots, 350 this year alone, than all of the fighter and bomber pilots combined.

The covert nature of drone warfare is particularly true outside Afghanistan and Iraq which are declared wars. In Pakistan, for instance, the secret war is being fought by the CIA, an intelligence agency, not the American military. This war is not even publicly acknowledged by the US administration, and it's a clear violation of international laws and all conventions of war.

The US politicians, spies and generals seem to be calculating that the American people would be more willing to support such wars if they don't bust the US budget and result in as few American body bags as possible. However, this calculation ignores the basic fact that most international conflicts, including terrorism, are essentially political in nature, and must be solved by political rather than the military means.

Related Links:

Haq's Musings

Cyber Attacks in India, Pakistan and China

Nature of Future India-Pakistan Warfare

ITU Internet Access Data by Countries

Foreign Origin of India's Agni Missiles

Pakistan's Space Capabilities

Seeing Bin Laden's Death in Wider Perspective

Pakistan's Multi-Billion Dollar IT Industry

John Arquilla: Go on the Cyberoffensive

Pakistan Defense Industry Going High Tech

India-Pakistan Military Balance

21st Century High Tech Warfare

Hunger Worsening in Pakistan in 2011

2011-10-17T17:58:00.000-07:00

World hunger data collected from 2006 to 2009 shows that Pakistan's hunger index score has worsened this year to 20.7 (based on 2009 data and reported in 2011) after three prior consecutive years of improvement. International Food Research Institute's GHI (Global Hunger Index) score for Pakistan improved from 21.7 in 2008 to 21.0 in 2009 to 19.1 in 2010, and its world ranking has dropped to 59 in 2011 from 52 in 2010. It was ranked 61 in 2008 and 58 in 2009 on a list of 81+ nations.

Global Hunger Index Scores and Rankings For Selected Countries

Among other South Asian nations, India's GHI score improved to 23.7 in 2011 to where it was in three years earlier in 2008 after worsening from 23.7 (2008) to 23.9 (2009) to 24.1 (2010). India's ranking remained at 67 in 2011, the same as it was in 2010 but worse than 66 in 2008 and 65 in 2009.

Year..2008(2006).....2009(2007).....2010(2008)......2011(2009)

Pakistan GHI...21.7...............21.0.................19.1..................20.7

Pak Ranking....61.................58...................52....................59

India GHI......23.7...............23.9.................24.1..................23.7

India Ranking..66.................65....................67...................67

Since taking the reins of power more than three years ago, the coalition government in Islamabad, which is led by the Pakistan Peoples' Party, has been increasing the support prices of wheat and other agricultural commodities every year, a policy at least partly driven by politics of patronage to enrich the PPP's rural landowning constituency.

In 2008, the current government pushed the procurement price of wheat up from Rs. 625 per 40 kg to Rs. 950 per 40 kg. This action immediately triggered inflationary pressures that have continued to persist as food accounts for just over 40% of Pakistan's consumer price index. According to State Bank of Pakistan (SBP) analysis, cumulative price of wheat surged by 120 per cent since 2008, far higher than the 40 per cent between 2003 and 2007. it is also many times greater than the international market price increase of 22 per cent for wheat in the same period. Similarly, sugar prices have surged 184 per cent higher since 2008, compared with 46 per cent increase during 2003-07.

The World Food Program (WFP) officials agree that decline in food security in Pakistan is now an issue of affordability rather than availability. With stagflation and rising unemployment, growing numbers of people simply lack the income to buy sufficient food for themselves and their families, resulting in under-nutrition and growing hunger.

Related Links:

Haq's Musings

Pakistan's Rural Economy Showing Strength

Politics of Patronage in Pakistan

IMF Country Report on Pakistan Poverty

Musharraf's Coup Revived Pakistan's Economy

Twelve Years Since Musharraf's Coup

State Bank of Pakistan Quarterly Reports

World Bank Poverty Report on Pakistan

Musharraf's Economic Legacy

Ishrat Husain: Structural Reforms in Pakistan's Economy

Pakistan's Economic Performance 2008-2010

Incompetence Worse Than Corruption in Pakistan

Pakistan's Circular Debt and Load Shedding

US Fears Aid Will Feed Graft in Pakistan

Pakistan Swallows IMF's Bitter Medicine

Shaukat Aziz's Economic Legacy

Pakistan's Energy Crisis

Karachi Tops Mumbai in Stock Performance

India Pakistan Contrasted 2010

Pakistan's Foreign Visitors Pleasantly Surprised

The "Poor" Neighbor by William Dalrymple

Pakistan's Modern Infrastructure

Video: Who Says Pakistan Is a Failed State?

India Worse Than Pakistan, Bangladesh on Nutrition

UNDP Reports Pakistan Poverty Declined to 17 Percent

Pakistan's Choice: Talibanization or Globalization

Pakistan's Decade 1999-2009

Pakistan's Economic History 1947-2010

South Asia Slipping in Human Development

BSE-Key Statistics

Pakistan Energy Crisis

IMF-Pakistan Memorandum of Economic and Financial Policies

2011 World Hunger Index Report

Pakistan's Electricity Sector in Financial Crisis

2011-10-15T11:07:00.000-07:00

In spite of the injection of government's subsidies of $7.4 billion since 2008, the power crisis in Pakistan continues to worsen, according to credible reports attributed to Pakistan's Ministry of Finance.

The poster child of the waste, fraud and abuse is the Turkish Karkey rental power ship deal which sinks Rs. 780 million or nearly $9 million per month of public funds for providing very little power because of lack of sufficient fuel supply, according to The News.

There were credible reports in 2009 that the ruling PPP politicians, particularly President Zardari and his inner circle, ignored former Finance Minister Shaukat Tarin's key recommendations to address the acute power shortages in the country. Zardari's insistence on pushing rental power projects, rather than fix the huge circular debt problem in the energy sector first, specially frustrated the nation's former finance chief, and he eventually quit last year.

What is becoming increasingly clear is that the government's corruption and incompetence in the power sector, not just insufficient installed generating capacity blamed on Musharraf, are at the heart of the deteriorating energy situation in Pakistan.

Nine Independent Power Producers (IPPs), with a combined power generation capacity of 1,800MW, have now notified the government and central power purchasing agency (CPPA) that they are invoking sovereign guarantees for the recovery of their dues amounting to Rs. 31 billion.

The much-heralded reforms of the power sector designed to attract more private investment are stalled, and the current financial mess is scaring away potential investors. With circular debt touching Rs. 250 billion, or nearly 40% of the sector's annual revenue as estimated by ADB, new investors are hesitant to risk their capital. As a result, neither the short-term relief from load shedding nor the long term improvements in the energy sector appear to be on the horizon.

In addition to the long delayed structural reforms in the power sector, there is a total lack of will to tackle the widespread problem of power theft and the mounting unpaid electricity bills which account for as much as 40% of the industry revenue. This deprives the crucial sector of the cash it needs to operate as a sustainable and responsive business capable of satisfying its customers' requirements of reliable electricity service. Rather than deal with these underlying issues, the government is choosing to apply the temporary band-aid of uncertain periodic subsidies and repeated rate hikes.

The recent electricity riots and the approaching elections now appear to be having the effect of adding some sense of urgency at the cabinet level to deal with the long festering crisis. The Cabinet Committee on Restructuring (CCoR) on power sector Thursday approved the creation of a holding company to be led by an independent board of directors to finalize the restructuring of four power generation companies (GENCOs).

This holding company will supervise the management of four GENCOs to be managed in the private sector and would try will make sure of fresh investment in such GENCOs to improve power generation from existing 3,500 megawatts (MW) to 4,800 MW in near future to bridge the demand and supply gap, according to a report in Daily Times.

The paper also reported that the PEPCO (Pakistan Electric Power Co) would be dissolved by October 30, 2011 and replaced by CPPA (Central Power Purchasing Agency) with private management would be its successor. He said that role of the ministries in power sector would be minimized and private sector would have complete administrative and financial authority under the reform process to improve the system.

It's absolutely essential that highly competent and fully empowered leadership be brought in urgently to lead the power industry from the dire straits it's in today. The political leadership in Islamabad must understand the following very clearly: Without first repairing the power sector, there can be no hope of fixing the economy and spur growth before the next elections.

Related Links:

Haq's Musings

Pakistan's Worsening Power Crisis

Circular Debt and Load Shedding

Musharraf's Economic Legacy

Pakistan's Tops Jobs Growth in South Asia

World Bank Report on Jobs in South Asia

Pakistan's Twin Energy Crises

Pakistan's Worsening Electricity Crisis

Pakistan's Struggling Economy

Lahore School of Economics Paper on Circular Debt

Are Goldman Sachs Critics Anti-Semitic?

2011-10-13T22:51:00.000-07:00

Goldman Sachs is often used as the poster child for some of the most egregious practices on Wall Street that are believed to have set off the current economic crisis now sweeping much of America and Europe. This sentiment was summarized in an article Matt Taibi wrote for Rolling Stone Magazine as follows: "The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money."

Taibi's criticism of Goldman Sachs immediately drew charges of antisemitism from some American Jewish leaders. And as the "Occupy Wall Street" movement gathers momentum, similar charges are now flying against the protesters who are joining this movement. Some of the Jewish media outlets, like Yeshiva World News, are using video footage of individual protesters to editorialize the claim that “many Jews” are feeling a bit uncomfortable with the growing protests.

“The reasons for these ‘uncomfortable feelings’ don’t need to be elaborated on this page,” the editorial reads. “Suffice to say that Jews have been blamed for the world’s troubles for thousands of years, and many are nervous that this finger-pointing will soon start — or , maybe it already has.”

I, for one, do not believe that the protests are motivated by antisemitism, and such charges are a great disservice to ordinary middle class Americans who have been forced to take to the streets.

From what I can tell, "Occupy Wall Street" appears to be a genuine grass roots movement that stems from a sense of deep dissatisfaction with the way the majority of American politicians of all parties have aided and abetted in the misdeeds committed by the big Wall Street firms. Some of these misdeeds have been laid bare by a number of authors, including Michael Lewis most recently in his two books on the subject. The actions of Goldman Sachs and other big Wall Street firms have led to massive job losses, growing homelessness, and deep concerns among middle class Americans about their own future and the future of this country. A similar situation is now gripping Europe as well.

I think President Obama should seize this opportunity to tap into this anger and use it to push new legislation to bail out the middle class and put an end to the excesses committed by the big business including the Wall Street banks and their highly-paid executives.

Related Links:

Are Jews Culprits of Collapse on Wall Street?

Financial Crisis Brings Out Anti-Semites

Wall Street's WMDs

Jewish Power Growing in US Congress

Schumer's Phony Outrage

Buffet Warns of Financial weapons of Mass Destruction

Who Rules America?

Will American Capitalism Survive?

China's Nuclear Option

Senator Schumer: The Champion of Wall Street on the Hill

Pay to Play is the Name of the Game in Washington

Are Jews Culprits of Collapse on Wall Street?

Keynes on Jews

Democrats and Republicans Share Blame for Financial Collapse

Jewish Network in US Congress

Jewish Power Dominates at Vanity Fair

Jewish Power Grows in US Congress

Did Schumer and Emanuel Sink Freeman?

Review of Musharraf's Era on 12th Anniversary of 1999 Coup

2011-10-12T22:45:00.001-07:00

Musharraf's policies helped create 13 million new jobs, cut poverty in half and halved the country's total debt burden in the period from 2000 to 2007.

Musharraf Government's Accomplishments:

Thanks to the dynamic economy under President Musharraf's rule, Pakistan created more jobs, graduated more people from schools and colleges, built a larger middle class and lifted more people out of poverty as percentage of its population than India in the last decade. And Pakistan has done so in spite of the huge challenges posed by the war in Afghanistan and a very violent insurgency at home.

The above summary is based on volumes of recently released reports and data on job creation, education, middle class size, public hygiene, poverty and hunger over the last decade that offer new surprising insights into the lives of ordinary people in two South Asian countries. It adds to my previous post on this blog titled "India and Pakistan Contrasted in 2010".

The current PPP government summed up General Musharraf's accomplishments well when it signed a Memorandum of Understanding with the International Monetary Fund which said:

"Pakistan's economy witnessed a major economic transformation in the last decade. The country's real GDP increased from $60 billion to $170 billion, with per capita income rising from under $500 to over $1000 during 2000-07". It further acknowledged that "the volume of international trade increased from $20 billion to nearly $60 billion. The improved macroeconomic performance enabled Pakistan to re-enter the international capital markets in the mid-2000s. Large capital inflows financed the current account deficit and contributed to an increase in gross official reserves to $14.3 billion at end-June 2007. Buoyant output growth, low inflation, and the government's social policies contributed to a reduction in poverty and improvement in many social indicators". (see MEFP, November 20, 2008, Para 1)

Pre-Musharraf Decade:

Before the coup, Pakistan was approaching the end of what is now remembered as The Lost Decade of the 1990s when PPP's Benazir Bhutto and PML's Nawaz Sharif played musical chairs, while the economy stagnated and the people suffered.

Summing up the economic situation after the PPP-PML coalition took office in 2008, the Economist magazine in its June 12 issue summed it up as follows: "Before Mr Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. But since then, as the IMF remarked in a report in January, there has been a transformation. Pakistan attracted over $5 billion in foreign direct investment in the 2006-07 fiscal year, ten times the figure of 2000-01. The government's debt fell from 68% of GDP in 2003-04 to less than 55% in 2006-07, and its foreign-exchange reserves reached $16.4 billion as recently as in October." Please read "Pakistani Economy Returning to the Bad Old Days".

Criticisms of Musharraf Government:

Among the various criticisms of Musharraf's rule, there are two that particularly stand out:

1. Musharraf's Support For US War on Terror:

Musharraf has been heavily criticized for siding with the United States and angering the Taliban and their sympathizers who have been attacking and terrorizing Pakistani state and its people. As mightily as Pakistan has suffered at the hands of the Taliban and al Qaeda terrorists and their affiliates since 911, I do believe that Pakistanis would have been much worse off if Musharraf had not sided with the United States when asked after the worst terror attacks on US mainland. The consequences of refusal to help the US would have ranged from direct and massive NATO attack (probably with Indian help) on Pakistan to crippling sanctions and complete political and diplomatic isolation on the world stage.

2. Musharraf's Failure to Increase Energy Supply:

There was double digit annual growth in industrial production in Pakistan from 2000-2007, and the rising incomes and standards of living put pressure on energy supplies, particularly electricity. However, the situation was being managed to assure only short interruptions in supply to maintain and ration insufficient power generation capacity. For example, in June 2007, the power cuts in Pakistan lasted no more than 3 or 4 hours a day. Today, the situation is far worse with 10-12 hrs or more of load shedding every day, in spite of an stagnant economy.

It is becoming increasingly clear that it is the total absence of financial management, not just insufficient installed generating capacity, that is the crux of the worsening energy problems in Pakistan.

Riots have broken out as the Punjab, Pakistan's largest province, finds itself in the midst of the worst ever electricity crisis in the nation's history. The power shortfall has reached almost 9000 megawatts across the country, over half of the total demand of about 17000 MW.

Many public and private power producers have shut down their power plants due to the suspension of fuel supply by Pakistan State Oil, the state-owned oil company, according to a report in the Express Tribune. The oil company is demanding payment of Rs. 155 billion in outstanding dues from the power producers before resuming fuel supply.

Summary:

Musharraf era was the best era in terms of improving the lives of the ordinary folks in Pakistan since the Ayub-era in the 1960s. Strong economy helped create millions of new jobs and lifted millions out of poverty. Social indicators improved significantly and the the size of the middle class grew dramatically. So why is it that there are so many people who continue to condemn Musharraf?

I think Musharraf's critics can be divided in two categories:

1. Self-serving politicians and their supporters under their patronage who deny Musharraf's accomplishments because any admission of reality would be seen as a confession of their own incompetence.

2. Those who acknowledge Musharraf's economic legacy but would still prefer elected civilian government for ideological reasons. They are perfectly willing to sacrifice economic growth in the hope of hastening a better democratic future for Pakistan.

I, too, want to see a democratic Pakistan, but I strongly disagree with both the above categories. In my view, the best way to usher in genuine and successful democratic rule in any developing nation is to first unleash East and South East Asian style rapid economic growth which was brought about by dictators like General Park Chung-hee of South Korea, Mahathir Mohammad of Malaysia and General Suharto of Indonesia. Each of these autocrats served long enough to bring their nations in to the modern industrial era and created a large urban middle class which is now sustaining democratic rule. Until such time as Pakistan has a well educated and politically empowered urban middle class making up more than half of its population, the electoral process will continue to result in patronage-based feudal democracy of the kind that exists today.

Related Links:

Haq's Musings

Musharraf's Legacy

Pakistan's Economic Performance 2008-2010

Role of Politics in Pakistan Economy

India and Pakistan Compared in 2011

Musharraf's Coup Revived Pakistan's Economy

What If Musharraf Had Said No?

Political Patronage Trumps Politics in Pakistan

ASEAN Architect Suharto Passes On

India and Pakistan Contrasted in 2011

2011-10-09T21:23:00.000-07:00

Pakistan has created more jobs, graduated more people from schools and colleges, built a larger middle class and lifted more people out of poverty as percentage of its population than India in the last decade. And Pakistan has done so in spite of the huge challenges posed by the war in Afghanistan and a very violent insurgency at home.

The above summary is based on volumes of recently released reports and data on job creation, education, middle class size, public hygiene, poverty and hunger over the last decade that offer new surprising insights into the lives of ordinary people in two South Asian countries. It adds to my previous post on this blog titled "India and Pakistan Contrasted in 2010".

Pakistan Created More Jobs:

Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".

Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.

Pakistan Graduated More People:

Although India has higher rates of literacy and enrollment than Pakistan, Pakistanis spend more time in schools and colleges and graduate at a higher rate than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee.

In a recent Op Ed titled "Preparing the Population for a Modern Economy" published by Pakistan's Express Tribune, Pakistani economist Shahid Burki wrote as follows:

"Pakistan does well in one critical area — the drop-out rate in tertiary education. Those who complete tertiary education in Pakistan account for a larger proportion of persons who enter school at this level. The proportion is much higher for girls, another surprising finding for Pakistan."

Upon closer examination of Barro-Lee data on "Educational Attainment for Total Population, 1950-2010", it is clear that Pakistani students stay in schools and colleges longer to graduate at higher rates than Indian students at all levels--primary, secondary and tertiary. While India's completion rate at all levels is a dismal 22.9%, the comparable completion rate in Pakistan is 45.7%.

Here is a summary of Barro-Lee's 2010 data in percentage of 15+ age group students who have enrolled in and-or completed primary, secondary and tertiary education:

Education Level.......India........Pakistan

Primary (Total)........20.9..........21.8

Primary (Completed)....18.9..........19.3

Secondary(Total).......40.7..........34.6

Secondary(Completed)...0.9...........22.5

College(Total).........5.8...........5.5

College(Completed).....3.1...........3.9

Pakistan Has Larger Middle Class:

Over the last two decades, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report on Asia's rising middle class released recently.

An ADB report on Asia's rising middle class released this month confirms that Pakistan's middle class has grown to 40% of the population, significantly larger than the Indian middle class of about 25% of its population, and it has been growing faster than India's middle class. The other significant news reported by Wall Street Journal says the vast majority of what is defined as India's middle class is perched just above $2 a day, making it vulnerable to various shocks. This is also true of Pakistan.

Pakistan Has Less Hunger and Poverty:

In spite of recent poverty declines with its rapid economic expansion, India still has higher poverty rates than Pakistan, according to a 2011 World Bank report titled "Perspectives on poverty in India : stylized facts from survey data" released in 2011.

Overall, the latest World Bank data shows that India's poverty rate of 27.5%, based on India's current poverty line of $1.03 per person per day, is more than 10 percentage points higher than Pakistan's 17.2%. Assam (urban), Punjab and Himachal Pradesh are the only three Indian states with lower poverty rates than Pakistan's.

Based on hunger data collected from 2003 to 2008, IFPRI reported that Pakistan's hunger index score improved over the last three consecutive years reported since 2008 from 21.7 (2008) to 21.0 (2009) to 19.1 (2010) and its ranking rose from 61 to 58 to 52. During the same period, India's index score worsened from 23.7 to 23.9 to 24.1 and its ranking moved from 66 to 65 to 67 on a list of 84 nations.

India's Economic Growth Outpaces Pakistan's

Indian economy has been growing faster than Pakistan for several years. The nominal per capita incomes in the two nation are still about the same at just over $1200, according to 2011 data released by Economic Survey of India and Economic Survey of Pakistan.

Nominal per capita incomes in both India and Pakistan stand at just over $1200 a year, according to figures released in May and June of 2011 by the two governments. This translates to about $3100 per capita in terms of PPP (purchasing power parity). Using a more generous PPP correction factor of 2.9 for India as claimed by Economic Survey of India 2011 rather than the 2.5 estimated by IMF for both neighbors, the PPP GDP per capita for Indian and Pakistan work out to $3532 and $3135 respectively.

Nominal per capita income of Indians grew by 17.9 per cent to Rs 54,835, or $1218, in 2010-11 from Rs 46,492 in the year-ago period, according to the revised data released by the government in May, 2011 as reported by Indian media.

Pakistan Has Better Public Hygiene:

India has the worst public sanitation situation in the world today, according to a recent UNICEF survey. In terms of open defecation, India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.

18 percent of urban India still defecates in open while the percentage of rural India is as high as 69 percent of the population. It is the key reason why India carries among the highest infectious disease burdens in the world.

To conclude, let me share with you an except from a piece written by Mudassar Mazhar Malik, an MIT (Sloan) and LSE (London) educated Pakistani economist and investment banker,on his assessment of Pakistan today:

"First, despite seven changes in government in the past twenty years, Pakistan has maintained an average growth rate of 5 percent per annum. Until recently, Pakistan was being touted as one of the most dramatic turn-around stories of the last decade. Driven by domestic demand and population growth, GDP growth averaged over 6% a year from 2003-2008. This translated into an investment and infrastructure led growth cycle cycle fueling expansion in the housing, health care, education, food, infrastructure, energy, telecommunications, IT and financial services sector. This has meant that Pakistan's economy has moved progressively from its traditional agricultural base to manufacturing and increasingly to services. In that sense, Pakistan's economic structure is closer to that of India and China, and is unlike many smaller Asian countries, which are more dependent on export growth."

While it still has a very long way to go to improve its ordinary citizens' lives, resilient Pakistan has done reasonably well in terms of economic and social indicators over the last decade in spite of huge challenges. Just imagine how much better Pakistan could have done if it had any semblance of political stability and security.

Related Links:

Haq's Musings

Pakistan Tops Job Growth in South Asia

Pakistan Ahead of India in Graduation Rates

Public Sanitation Worst in India

Pakistan's Middle Class

Per Capita Incomes in India and Pakistan

The Pakistan Story After 64 Years

Resilient Pakistan Defies Doomsayers

India Public Hygiene Worst in the World

2011-10-07T10:48:00.000-07:00

India's rivers have been turned into open sewers by 638 million Indians without access to toilets, according to rural development minister Jairam Ramesh. He was reacting a UNICEF report that says Indians make up 58% of the world population which still practices open defection, and the sense of public hygiene in India is the worst in South Asia and the world.

India(638m) is followed by Indonesia (58m), China (50m), Ethiopia (49m), Pakistan (48m), Nigeria (33m) and Sudan (17m). In terms of percentage of each country's population resorting to the unhygienic practice, Ethiopia tops the list with 60%, followed by India 54%, Nepal 50%, Pakistan 28%, Indonesia 26%, and China 4%.

18 percent of urban India still defecates in open while the percentage of rural India is as high as 69 percent of the population. It is the key reason why India carries among the highest infectious disease burdens in the world.

The number of open defecators in rural India alone is more than twice those in the whole of sub-Saharan Africa, according to a report by DFID, the UK's Department for International Development.

The World Bank has estimated that open defecation costs India $54 billion per year or $48 per head. This is more than the Government of India’s entire budget for health.

The UNICEF report says that with only four more years to go until 2015, a major leap in efforts and investments in sanitation is needed to reach the targets of Millennium Development Goals.

After the embarrassing headlines, it appears that Minister Ramesh is ready to step up the efforts to improve sanitation. He is quoted by Times of India as saying that "we are going to focus now on `nirmal gram abhiyan' -- today 25,000 nirmal grams are a tiny fraction of 6 lakh villages. These nirmal grams are in Maharashtra and Haryana. Maharashtra is a success of social movements while Haryana an example of determined state government action."

Here's a video clip of Indian environment minister Jairam Ramesh saying "if there was a Nobel Prize for dirt and filth, India would win it hands down":

Related Links:

Haq's Musings

Fixing Sanitation Crisis in India

Food, Clothing and Shelter in India and Pakistan

Heavy Disease Burdens in South Asia

Peepli Live Destroys Indian Myths

India After 63 Years of Independence

Poverty Across India 2011

India and Pakistan Contrasted

Consumer Boom in Pakistani Villages

2011-10-05T12:05:00.000-07:00

Away from the violence and the troubles of the big cities, the economy of rural Pakistan is booming. Flush with cash from bumper crops at record commodity prices, the farmers are spending on tractors, cars, motorcycles, mobile phones, personal grooming items, packaged foods and beverages and other consumer products like never before.

Higher crop prices have increased farmers’ incomes in Pakistan by Rs. 342 billion in the 12 months through June, according to a government economic survey. That was higher than the gain of Rs. 329 billion in the preceding eight years, according to a report by Bloomberg News. Companies like Millat tractors, Honda Atlas Motorcycles, Pak Suzuki Motors, Engro Foods, Telnor, Nestle, Colgate-Palmolive, Proctor and Gamble and Unilever have been big beneficiaries of the current rural consumption boom.

Nestle Pakistan's chief Ian Donald has summed up the rising demand for his company's products as follows: “It’s a common perception that China and India are much bigger in terms of growth than Pakistan. But for Nestle, the per capita consumption of our products in Pakistan is twice as much as we have in China and India.” It should be noted that Nestle is the world's largest packaged food company, and Pakistanis' per capita consumption of milk and dairy products is about 2.5 times higher than in India. According to the FAO, the average dairy consumption of the developing countries is still very low (45 kg of all dairy products in liquid milk equivalent), compared with the average of 220 kg in the industrial countries. Few developing countries have per capita consumption exceeding 150 kg (Argentina, Uruguay and some pastoral countries in the Sudano-Sahelian zone of Africa). Among the most populous countries, only Pakistan, at 153 kg per capita, has such a level. In South Asia, where milk and dairy products are preferred foods, India has only 64 kg and Bangladesh 14 kg. East Asia has only 10 kg.

Here are a few key points excerpted from a recent Businessweek story on rise of the rural consumer in Pakistan:

1. Unilever and Colgate-Palmolive Co. are sending salespeople into rural areas of the world’s sixth most-populous nation, where demand for consumer goods such as Sunsilk shampoo, Pond’s moisturizers and Colgate toothpaste has boosted local units’ revenue at least 15 percent.

2. “The rural push is aimed at the boisterous youth in these areas, who have bountiful cash and resources to increase purchases,” Shazia Syed, vice president for customer development at Unilever Pakistan Ltd., said in an interview. “Rural growth is more than double that of national sales.”

3. Consumer-goods companies forecast growth in Pakistan even as an increase in ethnic violence in Karachi has made 2011 the deadliest in 16 years for the country’s biggest city and financial center.

4. Nestle Pakistan Ltd. is spending 300 million Swiss francs ($326 million) to double dairy output in four years, boosted sales 29 percent to 33 billion rupees ($378 million) in the six months through June. “We have been focusing on rural areas very strongly,” Ian Donald, managing director of Nestle’s Pakistan unit, said in an interview in Lahore. “Our observation is that Pakistan’s rural economy is doing better than urban areas.”

5. Haji Mirbar, who grows cotton on a 5-acre farm with his four brothers, said his family’s income grew fivefold in the year through June, allowing him to buy branded products. He uses Unilever’s Lifebuoy for his open-air baths under a hand pump, instead of the handmade soap he used before. “We had a great year because of cotton prices,” said Mirbar, 28, who lives in a village outside south Pakistan’s Matiari town. “As our income has risen, we want to buy nice things and live like kings.”

6. Sales for the Pakistan unit of Unilever rose 15 percent to 24.8 billion rupees in the first half. Colgate-Palmolive Pakistan Ltd.’s sales increased 29 percent in the six months through June to 7.6 billion rupees, according to data compiled by Bloomberg. “In a generally faltering economy, the double-digit growth in revenue for companies servicing the consumer sector has come almost entirely from the rural areas,” said Sakib Sherani, chief executive officer at Macroeconomic Insights Pvt. in Islamabad and a former economic adviser to Pakistan’s finance ministry.

7. Unilever is pushing beauty products in the countryside through a program called “Guddi Baji,” an Urdu phrase that literally means “doll sister.” It employs “beauty specialists who understand rural women,” providing them with vans filled with samples and equipment, Syed said. Women in villages are also employed as sales representatives, because “rural is the growth engine” for Unilever in Pakistan, she said in an interview in Karachi. While the bulk of spending for rural families goes to food, about 20 percent “is spent on looking beautiful and buying expensive clothes,” Syed said.

8. Colgate-Palmolive, the world’s largest toothpaste maker, aims to address a “huge gap” in sales outside Pakistan’s cities by more than tripling the number of villages where its products, such as Palmolive soap, are sold, from the current 5,000, said Syed Wasif Ali, rural operations manager at the local unit.

9. Its detergents Bonus Tristar and Brite are packed in sachets of 20 grams or less and priced as low as five rupees (6 cents), to boost sales among low-income consumers hurt by the fastest pace of inflation in Asia after Vietnam. Unilever plans to increase the number of villages where its products are sold to almost half of the total 34,000 within three years. Its merchandise, including Dove shampoo, Surf detergent and Brooke Bond Supreme tea, is available in about 11,000 villages now.

10. Pakistan, Asia’s third-largest wheat grower, in 2008 increased wheat prices by more than 50 percent as Prime Minister Yousuf Raza Gilani sought to boost production of the staple.“The injection of purchasing power in the rural sector has been unprecedented,” said Sherani, who added that local prices for rice and sugarcane have also risen.

11. Telenor Pakistan Pvt. is also expanding in Pakistan’s rural areas, which already contribute 60 percent of sales, said Anjum Nida Rahman, corporate communications director for the local unit of the Nordic region’s largest phone company.

While the presence of multinational consumer product giants like Nestle and Unilever receive more coverage in the western media, the Euromonitor report finds that Pakistani FMGC companies like Engro Foods, Haleeb Foods, Shezan, Tapal, Shan and others dominate the packaged food business in Pakistan. Here's an excerpt from a recent Euromonitor report on Pakistan:

Although multinationals are paving the way for innovations and taking into account consumers’ demands by launching new products and advertising them heavily, it is usually the domestic companies which win the competitive battle in volume terms as they focus less on expensive and more conventional items which already have a consumer base. Nevertheless, multinationals carry strong brand names and target the higher class with premium products, thus taking their reasonable share in value terms.

Supermarkets/hypermarkets is the most steadily growing distribution channel with a new player Hyperstar. As urbanization is increasing, people tend to leave their families and live separately and therefore there is sometimes no housewife at home to be responsible for the purchase of fresh items close to home. Supermarkets/hypermarkets became more popular over the review period, being gradually considered more convenient as this channel can offer a wide selection of products in one place. Pakistanis are becoming more used to planning their meals for several days and supermarkets/hypermarkets work on offering as wide an assortment as possible. Nevertheless, traditional retail outlets such as independent and small grocery retailers continue to have a good name not just because of the lower unit prices offered but also because of their selection as most of them are specialized.

Pakistan continues to face major problems as it deals with the violent Taliban insurgency and multiple internal and external threats and crises of stagnant economy, scarcity of energy and the lack of sense of security. However, it is clear from the consumer spending data that Pakistanis are a resilient people, and they continue to defy the persistent prophecies of doom and gloom.

Pakistan is just too big to fail. I fully expect Pakistan to survive the current crises, and then begin to thrive again in the near future.

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Financial Mismanagement Worsening Power Cuts in Pakistan

2011-10-03T09:09:00.000-07:00

It is becoming increasingly clear that it is the total absence of financial management, not just insufficient installed generating capacity, that is the crux of the worsening energy problems in Pakistan.

Riots have broken out as the Punjab, Pakistan's largest province, finds itself in the midst of the worst ever electricity crisis in the nation's history. The power shortfall has reached almost 9000 megawatts across the country, over half of the total demand of about 17000 MW.

Many public and private power producers have shut down their power plants due to the suspension of fuel supply by Pakistan State Oil, the state-owned oil company, according to a report in the Express Tribune. The oil company is demanding payment of Rs. 155 billion in outstanding dues from the power producers before resuming fuel supply.

The key players in this "circular debt" trap are the federal and provincial governments as the biggest deadbeats, the power distributors like LESCO and KESC, the power producers like Pepco and Hubco, and the fuel suppliers like government-owned Pakistan State Oil (PSO) and partially state-owned Pak-Arab Refinery Ltd (PARCO). This debt circle begins with the government as the biggest debtor and ends with a government-owned entity as the biggest creditor. So the obvious question is: If the government is both the biggest debtor and the biggest creditor, then why is it that the government leaders can not solve the problem? Is it the lack of will? or the lack of competence?

Increased load shedding in Pakistan has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's 13 million jobs in the decade of 2000-2010 were created from 2000-2007 when the economy showed robust gdp growth.

Clearly, the circular debt problem has assumed alarming proportions, threatening Pakistan's future. The IMF and the US officials in their recent meetings with Pakistan government have described the circular debt as a significant threat to the country’s economy.

Unless the government urgently takes serious steps to manage and resolve this worsening electricity crisis by putting a fully empowered competent team in charge, it will only get worse and make life impossible for both businesses and consumers, and cause a total collapse of an already struggling national country.

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Haq's Musings

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Lahore School of Economics Paper on Circular Debt

India Back to "Hindu Growth Rate" in 2012?

2011-09-28T20:54:00.000-07:00

The "Hindu rate of growth" is a derogatory description of the low annual growth rate of the pre-1991 Indian economy, which stagnated around 3.5% from 1950s to 1980s, while per capita income growth averaged 1.3%. In what appears to be an exaggeration, the Financial Times in its latest issue has an article titled "India’s abject return to talk of Hindu growth rates".

Written by James Lamont, the FT story says that "India trails in terms of attracting foreign capital and beating inflation.... some economists and industrialists fear India’s economy could shrink back towards what was derisively called the “Hindu rate of growth” from initial projections of 9 to 7 per cent this year."

With the India story unraveling due to big corruption scandals and governance deficit this year, the FDI fell by 28%, the second consecutive year of decline and the first such large decline since the opening up of the economy in 1991-92. As a result of this decline, the present level of $27 billion of FDI inflows is the lowest in four years.

Spurred by a tidal wave of hot money from the US Federal Reserve stimulus, the big drop in Indian FDI has been largely offset by the surge in FII in the last two years. In fact, the outflow of $15 billion was more than made up by inflows of $29 billion — their highest ever — in 2009-10. This level was largely maintained in 2010-11 as well, with a small increase. These hot money inflows continue to be a source of instability in the face of the Indian Central Bankers attempts to cool rising inflation. Such hot money inflows accounted for 58% of India's forex reserves in March 2010 compared to 47.9% in 2009, according to the Financial Express.

Even after the central bank boosting interest rates six times this year to 8.25 percent, India’s benchmark wholesale-price inflation has accelerated to a 13-month high of 9.78 percent in August 2011, according to Bloomberg.

It is very likely that the Indian central bankers will continue to maintain a tight money policy in the foreseeable future, and slow down the economy further to fight continuing inflation. I do think, however, that the Indian policymakers will try and orchestrate a soft landing in 2011-12, while still maintaining significantly higher gdp growth rates than the pre-1991 "Hindu rate of growth".

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Should Pakistan Tell America to Take its Aid and Shove it?

2011-09-27T19:56:00.000-07:00

"Aid only postpones the basic solutions to crucial development problems by tentatively ameliorating their manifestations without tackling their root causes. The structural, political, economic, etc. damage that it inflicts upon recipient countries is also enormous.” These words were written in a letter to UN to refuse aid by Finance Minister Berhane Abrehe of Eritrea which is the 7th poorest nation in the world.

Can Pakistan (per capita annual income of $3000) do what Eritrea (per capita annual income of less than $700) has already done with UN aid? Say "No" to foreign aid?

Pakistan Movement for Justice party leader and cricket hero Imran Khan thinks so. Echoing the sentiments of the Eritrean minister, Imran Khan told the BBC recently that "if we don't have aid we will be forced to make reforms and stand on our own feet."

Let's examine in a little more detail the proposition that Pakistan should tell the United States to take its aid and shove it:

1. Only $179.5 million out of $1.51 billion in U.S. civilian aid to Pakistan was actually disbursed in fiscal 2010, according to a report by the United States Government Accountability Office.

2. Even if the entire $1.51 billion had been disbursed, it would account for only $8.39 per person, about 0.28%, a very tiny fraction of Pakistanis' per capita income of $3000 a year.

3. Pakistan ended last fiscal year in June 2011 with a small current account surplus of about half a billion US dollars. It received inflows over $40 billion in the form of export earnings ($25 billion), remittances from Pakistani diaspora ($10 billion), and FDI, FII and other accounts. The actual US aid of just $179.5 million out of over $40 billion in 2010-2011 is a negligible figure.

4. Of the $179.5 million received by Pakistan in 2010, $75 million of the US aid funds were transferred to bolster the Benazir Income Support Program, a social development program run by the Pakistani government. Another $45 million was given to the Higher Education Commission to support "centers of excellence" at Pakistani universities; $19.5 million went to support Pakistan's Fulbright Scholarship program; $23.3 million went to flood relief; $1.2 billion remained unspent.

Although refusing US aid will hurt the anti-poverty efforts, higher education and infrastructure development programs to some extent unless made up by raising greater tax revenues to replace it, it is theoretically possible to say No to the US aid without a big negative short-term impact on Pakistan's economy.

However, Pakistan would be well advised to not seek confrontation with Washington even after refusing US aid. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).

All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.

Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.

Here are some of my recommendations for Pakistanis to move toward greater self-reliance:

1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.

2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.

3. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.

4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.

No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.

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Pakistan Led South Asian Jobs Growth in 2000-2010

2011-09-24T16:28:00.000-07:00

Pakistan's employment growth has been the highest in South Asia region since 2000, followed by Nepal, Bangladesh, India, and Sri Lanka in that order, according to a recent World Bank report titled "More and Better Jobs in South Asia".

Total employment in South Asia (excluding Afghanistan and Bhutan) rose from 473 million in 2000 to 568 million in 2010, creating an average of just under 800,000 new jobs a month. In all countries except Maldives and Sri Lanka, the largest share of the employed are the low‐end self-employed.

The report says that nearly a third of workers in India and a fifth of workers in Bangladesh and Pakistan are casual laborers. Regular wage and salaried workers represent a fifth or less of total employment.

Analysis of the labor productivity data indicates that growth in TFP (total factor productivity) made a larger relative contribution to the growth of aggregate labor productivity in South Asia during 1980–2008 than did physical and human capital accumulation. In fact, the contribution of TFP growth was higher than in the high‐performing East Asian economies excluding China.

India's labor productivity growth since 1980 has been the highest in South Asia, followed by Sri Lanka and Pakistan. This was particularly the case in India where TFP rose by 2.6% versus 1.4% in Pakistan during this period.

The report argues that South Asia region needs to create a million jobs a month just to keep up with the growth of the workforce. In addition to corruption, conflicts and political instability, the report specifically mentions electricity shortage as a key factor inhibiting job growth in the region. Power sector financial losses across the region are large, resulting from the misalignment of tariffs, the high cost of power procurement, and high transmission and distribution losses. In India the combined cash loss of state-owned distribution companies is more than $20 billion a year, compared with $300 billion of investment needs in 2010–15. The sector deficit in Pakistan is estimated at about $2 billion a year, compared with $32 billion of investment needs in 2010–20.

Increased load shedding in Pakistan alone has cost 400,000 jobs in recent years, according to the World Bank. Although the World Bank report does not address it directly, the anecdotal evidence suggests that almost all of Pakistan's job growth for the decade occurred from 2000-2007 when the economy showed robust gdp growth. During 2000-2007, Pakistan's economy became one of the four fastest growing economies in Asia with its growth rate averaging 7.0 per cent per year for most of this period. As a result of strong economic growth, Pakistan succeeded in reducing poverty by one-half, creating almost 13 million jobs, halving the country's debt burden, raising foreign exchange reserves to a comfortable position and propping the country's exchange rate, restoring investors' confidence and most importantly, taking Pakistan out of the IMF Program. Contrary to its public criticism of the Musharraf-era economy, the preceding facts were acknowledged by the current government in a Memorandum of Economic and Financial Policies (MEFP) for 2008/09-2009/10, while signing agreement with the IMF on November 20, 2008.

It's important for Pakistani government to seriously address the energy and security crises to restore investor confidence and bring back the strong economic growth necessary for creating millions of jobs for its growing youth population entering the workforce. The consequences of inaction on this front would be far more disastrous than the negative effects of the current Taliban insurgency.

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Pakistani Researchers at CERN Lab in Switzerland

2011-09-23T20:25:00.000-07:00

One of the most important discoveries in Physics since Einstein's Theory of Relativity has possibly just been made at CERN and dozens of Pakistani scientists have contributed to it.

Scientists at CERN claim that they have discovered the Higgs field, also nicknamed the "God particle" that travels faster than light, thereby proving Einstein wrong, according to the Associated Press reports.

"The feeling that most people have is this can't be right, this can't be real," the AP story quotes James Gillies, a spokesman for the European Organization for Nuclear Research.

The most high-profile effort to find "God Particle" is taking place about 300 ft below ground in a tunnel at the French-Swiss border. Buried there is a massive particle accelerator and super collider called LHC (Large Hadron Collider) run by the Swiss lab CERN (European Organization of Nuclear Research), which has two beams of particles racing at nearly the speed of light in opposite directions and the resulting particles produced from collisions are being detected by massive detectors in the hope of experimentally finding the fundamental particle of which everything in the universe is built from: God Particle.

Among the world scientists working at CERN on LHC project is Professor Hafeez Hoorani of Pakistan's Quaid-e-Azam University in Islamabad. He is one of 27 Pakistani scientists at CERN.CERN is the most highly respected research lab in Switzerland responsible for LHC. He acknowledges that Pakistan government's support for Pakistani scientists' serious involvement at CERN materialized only after 1999, the year former President Musharraf's government assumed power. He also gives credit to Dr. Abdus Salam, Pakistan's only Nobel Laureate, for inspiring him and his colleagues to pursue serious scientific research. Here's what Professor Hoorani says about Pakistan's involvement in LHC and CERN:

When I first came to CERN, I was mainly working on technical things but became increasingly involved in political issues. In 1999, I went back to Pakistan to set up a group working on different aspects of the LHC project. There I had to convince my people and my government to collaborate with CERN, which was rather difficult, since nobody associated science with Switzerland. It is known as a place for tourism, for its watches, and nice places to visit.

However, Pakistan already had an early connection to CERN through the late Abdus Salam, the sole Nobel laureate from Pakistan in science and one of the fathers of the electroweak theory. CERN has been known to the scientific community of Pakistan since 1973 through the discovery of neutral currents which eventually led to the Nobel Prize for Salam. We are contributing much more now because of the students who worked with Salam, who know his theories and CERN, and who are now placed at highly influential positions within the government of Pakistan. They have helped and pushed Pakistan towards a very meaningful scientific collaboration with CERN. People now know that there is an organization called CERN. It took a long time to explain what CERN is about, and I brought many people here to show them, because they did not imagine CERN this way. Many people support us now which gives us hope…”

In addition to the 27 scientists, Pakistan has made material contributions to the tune of $10m. Pakistan signed an agreement with CERN which doubled the Pakistani contribution from one to two million Swiss francs. And with this new agreement Pakistan started construction of the resistive plate chambers required for the CMS muon system. While more recently, a protocol has been signed enhancing Pakistan’s total contribution to the LHC program to $10 million.

CERN is a pan-European effort and all of its member states are European. Pakistan, with all of its contributions to LHC project, is hoping to join the ranks of India, Israel, Japan, Russia, Turkey and United States as an observer state at CERN.

Pakistan has contributed the LHC in numerous ways including some of the following in particular:

1. Detector construction
2. Detector simulation
3. Physics analysis
4. Grid computing
5. Computational software development
6. Manufacturing of mechanical equipment
7. Alignment of the CMS (Compact Muon Solenoid) tracker using lasers
8. Testing of electronic equipment
9. Barrel Yoke: 35 Ton each feet made in Pakistan
10. Assembly of CF (Carbon Fiber) Fins for the Silicon Tracker’s TOB (Tracker Outer Barrel).
11. 245 of the 300 CMS chambers required were made in Islamabad.

The Higgs boson, also known as "God Particle", is a hypothetical massive scalar elementary particle predicted to exist by the Standard Model of particle physics. It is the only Standard Model particle not yet experimentally observed. An experimental observation of it would help to explain how otherwise massless elementary particles cause matter to have mass. More specifically, the Higgs boson would explain the difference between the massless photon and the relatively massive W and Z bosons. Elementary particle masses, and the differences between electromagnetism (caused by the photon) and the weak force (caused by the W and Z bosons), are critical to many aspects of the structure of microscopic (and hence macroscopic) matter; thus, if it exists, the Higgs boson is an integral and pervasive component of the material world.

The Standard Model of particle physics has its limits. It can't explain several big mysteries about the universe that have their roots in the minuscule world of particles and forces. If there's one truly extraordinary concept to emerge from the past century of inquiry, it's that the cosmos we see was once smaller than an atom. This is why particle physicists talk about cosmology and cosmologists talk about particle physics: Our existence, our entire universe, emerged from things that happened at the smallest imaginable scale. The big bang theory tells us that the known universe once had no dimensions at all—no up or down, no left or right, no passage of time, and laws of physics beyond our vision.

There have been many other efforts to build particle accelerators and supercolliders including SLAC (Stanford Linear Accelerator) and Fermi Collider, but none so ambitious and massive as the LHC. This discovery, if indeed confirmed, will advance human knowledge dramatically and eventually help treat diseases, improve the Internet, and open doors to travel through extra dimensions, according to the scientists associated with it.

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Pakistan Ready to Part Ways With IMF

2011-09-17T10:53:00.000-07:00

Citing significant improvements in Pakistan's current account balance, Pakistan's Finance Minister Dr Abdul Hafeez Shaikh has said that his government would not waste its energy on reviving the currently suspended IMF program that began in 2008, or seek a new IMF bailout, according to a report in Pakistan's Dawn newspaper.

Pakistan's decision follows the latest State Bank report of a current account surplus equivalent to 604 Million USD in the second quarter of 2011.

The surplus is the result of rising exports from Pakistan and growing remittances from Pakistani diaspora, the 7th largest in the world.

Pakistan's exports in the first two months of the current fiscal year (2011-12) surged by 20.26 percent over the corresponding period of last year. Exports during July-August (2011-12) were $4,167 million as compared to the exports of 3,465 million during July- August (2010-11, according to a GeoTV report citing data from Federal Bureau of Statistics (FBS).

According to official data as reported by Reuters, remittances rose 40.45 percent to $1.31 billion in August 2011, compared with $933.06 million in the same period last year.

Pakistan has about $18 billion in foreign exchange reserves, according to Dawn News. It's about 6 months worth of imports at the current rate.

Currency traders reacted negatively to the government's decision to part ways with the IMF as the Pakistani rupee hit its second record low against the dollar in two days on Friday, touching 87.92 before firming to 87.75/78 at the close.

Some analysts believe that the timing of the decision to free itself from the IMF is motivated by the ruling party's desire for more spending on populist programs to impress its voters before the coming elections. This is likely to make the budget deficits worse in the absence of IMF's demands for reforms to cut spending and raise revenues to narrow Pakistan's budget deficits to 4.5% of GDP.

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Growing Water Crisis Poses Existential Threat to Pakistan

2011-09-14T22:09:00.000-07:00

Pakistan has increasingly been suffering from cycles of severe droughts followed by massive floods in the last few years. This recurring pattern of shortage and excess of water gives us a preview of the growing challenge of climate change. This situation calls for a comprehensive water management effort to deal with a potentially existential threat to Pakistan.

Flood-Drought Cycles:

Before the summer floods of 2010, the Indus had turned into a muddy puddle in parts of Sindh. Britain's Financial Times reported at the the time that "angry farmers marched through villages in Sindh demanding access to water. Those who can no longer turn a profit in the fields are increasingly resorting to banditry or migrating to urban shanties".

Earlier, there was a 2009 report by the Woodrow Wilson International Center saying that the melting Himalayan glaciers have exacerbated Pakistan’s shortages. And the World Bank warned that Pakistan could face a “terrifying” 30-40 per cent drop in river flows in 100 year’s time. Now large parts of Sindh are under water for the second year in a row, destroying lives and standing crops.

Growing Water Scarcity:

According to the United Nations' World Water Development Report, the total actual renewable water resources in Pakistan decreased from 2,961 cubic meters per capita in 2000 to 1,420 cubic meters in 2005. A more recent study indicates an available supply of water of little more than 1,000 cubic meters per person, which puts Pakistan in the category of a high stress country. Using data from the Pakistan's federal government's Planning and Development Division, the overall water availability has decreased from 1,299 cubic meters per capita in 1996-97 to 1,101 cubic meters in 2004-05. In view of growing population, urbanization and increased industrialization, the situation is likely to get worse. If the current trends continue, it could go as lows as 550-cubic meters by 2025. Nevertheless, excessive mining of groundwater goes on. Despite a lowering water table, the annual growth rate of electric tubewells has been 6.7% and for diesel tubewells about 7.4%. In addition, increasing pollution and saltwater intrusion threaten the country's water resources. About 36% of the groundwater is classified as highly saline.

So what can Pakistan do to manage these disastrous cycles of floods and droughts?

1. Build Dams and Dykes:

As the flood disaster takes its toll yet again, there are reports of USAID and ADB considering funding the $12 billion Bhasha Dam in Pakistan. The project is located on Indus River, about 200 miles upstream of the existing Tarbela Dam, 100 miles downstream from the Northern Area capital Gilgit in Gilgit-Baltistan region. The dam's reservoir would hold so much water that it could have averted last year's devastating floods. It would also provide enough electricity to end Pakistan's crippling shortages, according to a report in the Guardian newspaper. The massive dam on the Indus river would provide 4,500MW of renewable energy, making up for a shortfall causing up to 12 hours of load shedding on daily basis across Pakistan. The reservoir would be 50 miles long, holding 8.5 MAF (million acre feet) of water.

In addition to large dams, there is also a need to build and maintain dykes and start other flood-control projects in flood-prone areas like Badin and Thatta in Sindh.

2. Conserve Water:

Building Bhasha and several other proposed dams will help in dealing with water scarcity, but the growing population will continue put pressure on the vital resource.

Serious conservation steps need to be taken to improve the efficiency of water use in Pakistani agriculture which claims almost all of the available fresh water resources. A California study recently found that water use efficiency ranged from 60%-85% for surface irrigation to 70%-90% for sprinkler irrigation and 88%-90% for drip irrigation. Potential savings would be even higher if the technology switch were combined with more precise irrigation scheduling and a partial shift from lower-value, water-intensive crops to higher-value, more water-efficient crops. Rather than flood irrigation method currently used in Pakistani agriculture, there is a need to explore the use of drip or spray irrigation to make better use of nation's scarce water resources before it is too late. As a first step toward improving efficiency, Pakistan government launched in 2006 a US $1.3 billion drip irrigation program that could help reduce water waste over the next five years. Early results are encouraging. "We installed a model drip irrigation system here that was used to irrigate cotton and the experiment was highly successful. The cotton yield with drip irrigation ranged 1,520 kg to 1,680 kg per acre compared to 960 kg from the traditional flood irrigation method," according to Wajid Ishaq, a junior scientist at the Nuclear Institute for Agriculture and Biology(NIAB).

Beyond the government-funded experiments, there is a drip irrigation company called Micro Drip which is funded by the Acumen Fund. Micro Drip develops and provides products and services as poverty alleviation solutions to small farmers in Pakistan’s arid regions. It provides a complete drip irrigation system along with agricultural training and after-sales support to enable farmers to extract a higher yield from their land at a much lower cost of input.

So what is holding up Pakistan's progress on water management?

1. Lack of Funds:

Pakistani government revenues continue to be limited by slow economic growth and widespread culture of tax evasion. The biggest culprits are the ruling feudal politicians who oppose any attempt to levy taxes on their farm income. The limited resources the state does have are usually squandered on political patronage doled out to ruling politicians' supporters in the form of capricious grants, huge loans (defaulted with impunity), and plum jobs in bloated government and the money-losing state-owned enterprises. The result of this blatant abuse, waste and fraud is that the budget allocations for vital long-term investments in education, health care and infrastructure development projects are regularly slashed thereby shortchanging the future of the nation.

2. Corruption and Security Concerns:

The NY Times recently reported that "Washington’s fears of Pakistani corruption and incompetence has slowed disbursal of the money". The story reinforces the widely-held view that even after the funding is arranged, the corrupt and incompetent politicians and their hand-picked civilian administrators make any development progress slow and difficult. Such problems are further exacerbated by significant security issues in parts of the country severely plagued by ongoing militancy.

Existential Threat:

The Taliban who get all the coverage do not pose an existential threat to Pakistan. Generations of military families have periodically fought FATA insurgencies. For example, Shuja Nawaz, the author of Crossed Swords says that his grandfather, his uncle and his cousin have all been deployed in Waziristan by the British and later Pakistani governments in the last century and a half. American withdrawal from the region will eventually calm the situation in Waziristan, and the rest of the country.

Climate change and the growing water scarcity are the main long-term existential threats to Pakistan and the region. Water per capita is already down below 1000 cubic meters and declining
What Pakistan needs are major 1960s style investments for a second Green Revolution to avoid the specter of mass starvation and political upheaval it will bring.

Related Links:

Haq's Musings

Growing Water Scarcity in Pakistan

Political Patronage in Pakistan

Corrupt and Incompetent Politicians

Pakistan's Energy Crisis

Culture of Tax Evasion and Aid Dependence

Climate Change in South Asia

US Senate Report on Avoiding Water Wars in Central and South Asia

Pakistan Set to Unveil New Renewable Power Policy

2011-09-13T16:18:00.000-07:00

Pakistan is set to raise feed-in tariffs (FITs) requiring electric supply companies to purchase electricity that guarantee up to 18% return to private producers of wind and solar power. This latest effort is to improve incentives over an earlier 2006 policy for individual consumers installing solar panels in their homes and for larger investors.

Ms. Rukhsana Zuberi, a fellow NEDUET alumnus and PPP senator, is pushing the required legislation through Pakistan's parliament for the new FIT policy.

In addition to her legislative efforts, Zuberi is also taking the lead in installing solar panels in several public buildings across the country. Some of high-profile locations where solar panels have so far been installed include the tombs of Pakistan's founder Quaid-e-Azam M.A. Jinnah and PPP leader Benazir Bhutto, University of Engineering Technology in Lahore, Abdullah Shah Ghazi's shrine, St. Patrick's Cathedral and Shri Swaminarayan Mandir in Karachi, Prime Minister's Office and Secretariat, Pakistan Supreme Court in Islamabad, and other important sites.

As the head of Pakistan Engineering Council, Zuberi first started with a program at the PEC facilities to install solar panels and reduce consumption by using more efficient LED light bulbs. Just changing light fixtures in the PEC auditorium reduced electricity consumption dramatically from 7860W to 336W with 20% more lumens.

I believe that the planned improvement in feed-in-tariff is a good start, but it needs to be followed up by other incentives such as tax rebates, subsidized solar panels and energy-efficient bulbs and appliances, and by ensuring that the aging power grid is sufficiently updated to handle multiple small sources of renewable power without breaking down.

Here's a video clip aired on GeoTV on this subject:

Related Links:

Haq's Musings

Pakistan Building 1000 MW Wind Farms

Pakistan Launches Wind Farm Projects

Renewable Energy to Solve Pakistan's Electricity Crisis

Electrification Rates By Country

Wind Turbine Manufacturing in Pakistan

Pakistan Pursues Hydroelectric Power Projects

Solar Energy for Sunny Pakistan

Wind Power Tariffs in Pakistan

Pakistan's Twin Energy Shortages

Pakistan Council of Renewable Energy Technology

Renewable Energy for Pakistan

Abundant Cheap Electricity From Pakistani Coal

Pakistan Policy on Renewable Technology

Sugarcane Ethanol Project in Pakistan

Community Based Renewable Energy Project in Pakistan

Pakistani Women's Growing Particpation in Workforce

2011-09-11T12:12:00.000-07:00

While Fareed Zakaria, Nick Kristoff and other talking heads are still stuck on the old stereotypes of Muslim women, the status of women in Muslim societies is rapidly changing, and there is a silent social revolution taking place with rising number of women joining the workforce and moving up the corporate ladder in Pakistan.

"More of them(women) than ever are finding employment, doing everything from pumping gasoline and serving burgers at McDonald’s to running major corporations", says a report in the latest edition of Businessweek magazine.

Beyond company or government employment, there are a number of NGOs focused on encouraging self-employment and entrepreneurship among Pakistani women by offering skills training and microfinancing. Kashf Foundation led by a woman CEO and BRAC are among such NGOs. They all report that the success and repayment rate among female borrowers is significantly higher than among male borrowers.

In rural Sindh, the PPP-led government is empowering women by granting over 212,864 acres of government-owned agriculture land to landless peasants in the province. Over half of the farm land being given is prime nehri (land irrigated by canals) farm land, and the rest being barani or rain-dependent. About 70 percent of the 5,800 beneficiaries of this gift are women. Other provincial governments, especially the Punjab government have also announced land allotment for women, for which initial surveys are underway, according to ActionAid Pakistan.

Both the public and private sectors are recruiting women in Pakistan's workplaces ranging from Pakistani military, civil service, schools, hospitals, media, advertising, retail, fashion industry, publicly traded companies, banks, technology companies, multinational corporations and NGOs, etc.

Here are some statistics and data that confirm the growth and promotion of women in Pakistan's labor pool:

1. A number of women have moved up into the executive positions, among them Unilever Foods CEO Fariyha Subhani, Engro Fertilizer CFO Naz Khan, Maheen Rahman CEO of IGI Funds and Roshaneh Zafar Founder and CEO of Kashf Foundation.

2. Women now make up 4.6% of board members of Pakistani companies, a tad lower than the 4.7% average in emerging Asia, but higher than 1% in South Korea, 4.1% in India and Indonesia, and 4.2% in Malaysia, according to a February 2011 report on women in the boardrooms.

3. Female employment at KFC in Pakistan has risen 125 percent in the past five years, according to a report in the NY Times.

4. The number of women working at McDonald’s restaurants and the supermarket behemoth Makro has quadrupled since 2006.

5. There are now women taxi drivers in Pakistan. Best known among them is Zahida Kazmi described by the BBC as "clearly a respected presence on the streets of Islamabad".

6. Several women fly helicopters and fighter jets in the military and commercial airliners in the state-owned and private airlines in Pakistan.

Here are a few excerpts from the recent Businessweek story written by Naween Mangi:

About 22 percent of Pakistani females over the age of 10 now work, up from 14 percent a decade ago, government statistics show. Women now hold 78 of the 342 seats in the National Assembly, and in July, Hina Rabbani Khar, 34, became Pakistan’s first female Foreign Minister. “The cultural norms regarding women in the workplace have changed,” says Maheen Rahman, 34, chief executive officer at IGI Funds, which manages some $400 million in assets. Rahman says she plans to keep recruiting more women for her company.

Much of the progress has come because women stay in school longer. More than 42 percent of Pakistan’s 2.6 million high school students last year were girls, up from 30 percent 18 years ago. Women made up about 22 percent of the 68,000 students in Pakistani universities in 1993; today, 47 percent of Pakistan’s 1.1 million university students are women, according to the Higher Education Commission. Half of all MBA graduates hired by Habib Bank, Pakistan’s largest lender, are now women. “Parents are realizing how much better a lifestyle a family can have if girls work,” says Sima Kamil, 54, who oversees 1,400 branches as head of retail banking at Habib. “Every branch I visit has one or two girls from conservative backgrounds,” she says.

Some companies believe hiring women gives them a competitive advantage. Habib Bank says adding female tellers has helped improve customer service at the formerly state-owned lender because the men on staff don’t want to appear rude in front of women. And makers of household products say female staffers help them better understand the needs of their customers. “The buyers for almost all our product ranges are women,” says Fariyha Subhani, 46, CEO of Unilever Pakistan Foods, where 106 of the 872 employees are women. “Having women selling those products makes sense because they themselves are the consumers,” she says.

To attract more women, Unilever last year offered some employees the option to work from home, and the company has run an on-site day-care center since 2003. Engro, which has 100 women in management positions, last year introduced flexible working hours, a day-care center, and a support group where female employees can discuss challenges they encounter. “Today there is more of a focus at companies on diversity,” says Engro Fertilizer CFO Khan, 42. The next step, she says, is ensuring that “more women can reach senior management levels.”

The gender gap in South Asia remains wide, and women in Pakistan still face significant obstacles. But there is now a critical mass of working women at all levels showing the way to other Pakistani women.

I strongly believe that working women have a very positive and transformational impact on society by having fewer children, and by investing more time, money and energies for better nutrition, education and health care of their children. They spend 97 percent of their income and savings on their families, more than twice as much as men who spend only 40 percent on their families, according to Zainab Salbi, Founder, Women for Women International, who recently appeared on CNN's GPS with Fareed Zakaria.

Here's an interesting video titled "Redefining Identity" about Pakistan's young technologists, including women, posted by Lahore-based 5 Rivers Technologies:

Related Links:

Haq's Musings

Status of Women in Pakistan

Microfinancing in Pakistan

Gender Gap Worst in South Asia

Status of Women in India

Female Literacy Lags in South Asia

Land For Landless Women

Are Women Better Off in Pakistan Today?

Growing Insurgency in Swat

Religious Leaders Respond to Domestic Violence

Fighting Agents of Intolerance

A Woman Speaker: Another Token or Real Change

A Tale of Tribal Terror

Mukhtaran Mai-The Movie

World Economic Forum Survey of Gender Gap

Pakistan On Tenth Anniversary of Sept 11, 2001 Terror Attacks

2011-09-10T09:38:00.001-07:00

Here are a few facts about Pakistan's role in the "war on terror" since Sept 11, 2001:

First, none of the terrorists who carried out the 911 attacks on the United States were from Pakistan.

Second, the former Pakistani President Musharraf condemned the 911 attacks and quickly allied his country with the United States in the coalition to fight the US-led "global war on terror".

Third, Pakistanis continue to pay the heaviest price among the US coalition partners ten years after 911.

Would Pakistanis have been better off if President Musharraf had kept his country neutral after President George W. Bush delivered the following ultimatum to the entire world: "You are either with us, or against us?" Before answering this key question, let us examine the heavy toll the "war on terror" has taken on Pakistan:

1. Before 9/11, Pakistan had suffered just one suicide bombing — a 1995 attack on the Egyptian Embassy in the capital, Islamabad, that killed 15 people. In the last decade, suicide bombers have struck Pakistani targets more than 290 times, killing at least 4,600 people and injuring 10,000, according to data reported by the Los Angeles Times.

2. Pakistan averaged nearly six terrorist attacks of various kinds each day in 2010, according to a report by the Pakistan Institute of Peace Studies.

3. As of April 25, 2011, the Pakistani military has confirmed that since 2004, 2,795 of its soldiers have been killed in the war and another 8,671 have been wounded. There have also been 21,672 civilian casualties (at least 7,598 of these were killed) since September 11, 2001, up to February 18, 2010, according to the military.

4. Pakistan's current leadership says that the alliance with the U.S. against Islamic militants has destroyed the country's investment climate, caused widespread unemployment and ravaged productivity. The government estimates the alliance has cost it $67 billion in direct losses over the last 10 years.

5. There have been incalculable indirect costs of massive war-related societal divisions and disruptions caused by acceleration of internal displacements and migration and proliferation of guns, drugs and violence in major urban centers of Pakistan since 911, the most striking being the increasingly destabilizing violence in Karachi.

Now let's turn to the "what-if" analysis of the road not taken by Pakistan after 911 and ponder the following:

1. Would Pakistanis have been better off by snubbing the world's sole superpower which Musharraf described as a "wounded bear" after 911 attacks?

2. Would Pakistan not have been isolated as a pariah state by the United States with support from the international community by slapping the most stringent international sanctions imaginable?

3. Would Pakistan not have faced the combined military might of the US and India if it had not allowed American troops on its territory to fight Taliban in Afghanistan after 9/11 terror attacks?

4. Would parts of Pakistan not have been heavily bombed into "stone age" with some parts of the country occupied by US military to facilitate NATO supply lines into Afghanistan?

5. Would there not have been an even more violent insurgency against foreign occupation and more frequent suicide bombings with even more horrible consequences for the civilian population of Pakistan?

As mightily as Pakistan has suffered at the hands of the Taliban and al Qaeda terrorists and their affiliates since 911, I do believe that Pakistanis would have been much worse off if Musharraf had not sided with the United States when asked after the worst terror attacks on US mainland.

As the only nation in the history of the world to have used nuclear weapons against civilian targets, I have to agree with Stratfor's George Friedman's characterization of America as "barbaric", particularly when it feels threatened by any external force. I believe the United States would not have hesitated one bit in using all of its political, economic and military might against nuclear-armed Pakistan had Musharraf's decision been any different.

Related Links:

Haq's Musings

Jihadis Growing in Tenth Year of Afghan War

Daily Carnage in Pakistan

The Next 100 Years

Seeing Bin Laden's Death in Wider Perspective

Musharraf's Legacy

Pakistani Diaspora's Role in National Development

2011-09-03T19:05:00.000-07:00

Nearly 5 million Pakistani emigrants make up the world's 7th largest disapora, according to the World Bank Factbook 2011. Adding the foreign-born children of these Pakistani emigres to the tally pushes the total figure up to about 7 million. The top five nations that the Pakistani diaspora calls home include the United Kingdom (1.2 million), The Kingdom of Saudi Arabia (1.2 million), the United Arab Emirates (1.1 million), the United States (700,000) and Canada (300,000), according to Pakistan's Dawn newspaper.

The nations ranking ahead of Pakistan are Mexico at #1, India at #2, Russia at #3, China at #4, Ukraine at #5 and Bangladesh at #6. Both the UK and Pakistan are tied at #7 with 4.7 million emigres, according to the World Bank.

World's Top 10 Diasporas:

Here are the top 10 national diasporas:

1. Mexico 11.9 million

2. India 11.4 million

3. Russia 11.1 million

4. China 8.3 million

5. Ukraine 6.6 million

6. Bangladesh 5.4 million

7. Pakistan 4.7 million

7. United Kingdom 4.7 million

8. Philippines 4.3 million

8. Turkey 4.3 million

9. Egypt 3.7 million

9. Kazakhstan 3.7 million

10. Germany 3.5 million

10. Italy 3.5 million

Diaspora Remittances:

The World Bank's Migration and Remittances Factbook 2011 ranks Pakistan at #11 in 2010 for remittances of $9.4 billion sent home by its diaspora. The State Bank of Pakistan reported that overseas Pakistanis sent home $5.291 billion during six months from July to Dec, 2010, an increase of $761 million or 17 per cent year over year, according to Pakistan's Dawn newspaper.

India tops this list with remittances of $55 billion sent home in 2010, followed by China ($51 billion), Mexico ($22.6 billion), Philippines ($21.3 billion), France ($15.9 billion), Germany ($11.6 billion), Bangladesh ($11.1 billion), Belgium ($10.4 billion), Spain ($10.2 billion), Nigeria ($10 billion) and Pakistan ($9.4 billion).

Per Capita Remittances:

In terms of per capita remittances based the World Bank data, China leads the world with an average of $6,100 sent home by each member of the Chinese diaspora, followed by the Philippines ($4,953), India ($4,824), Bangladesh ($2055), Pakistan ($2000), Mexico ($1904), UK ($1,574), Ukraine ($803) and Russia ($504). These per capita figures are an indication of the wealth of each diaspora and the extent of the brain drain experienced by these nations.

Top Immigration Countries:

With 42.8 million immigrants, the United States is home to the world's largest immigrant population. India and Pakistan also have the distinction of being on the list with 5.4 million immigrants in India at #10 and Pakistan with 4.2 million immigrants at #13. Other nations on this list include Russia at #2 (12.3 million immigrants), Germany at #3 (10.8 million), Saudi Arabia at #4 (7.3 million), Canada at #5 (7.2 million), the UK at #6 (7 million), Spain at #7 (6.9 million), France at #8 (6.7 million) and Australia at #9 (5.5 million).

Examples of Diaspora's Role:

Diasporas of various nations are mutually beneficial to both the sending and the receiving countries. They send home the money to help their families and friends financially. And they often acquire advanced education and technical, professional and managerial skills and contribute to solving problems in their host nations in the West. And given the right political and policy context, the members of the diaspora can also help their countries of origin by using their deep knowledge of their home countries and by offering advanced skills, experience and knowledge acquired in more developed nations.

In terms of development help with the skills and capital of the diaspora for their home nations, there are three examples of fairly old and mature diasporas: China, India and Armenia. While China and India have benefited greatly from their diasporas, Armenia has lagged badly, according to a World Bank report titled "Work Globally, Develop Locally: Diaspora Networks as Springboards of Knowledge-Based Development".

Pakistani Diaspora's Role:

In Pakistan's case, growing remittances amounting to 5% of its gdp in 2010 from the nation's diaspora provided an important lifeline for the state of Pakistan in funding its large current account deficit and in helping the individuals and families receiving the funds to supplement their incomes.

Remittances are a source of income for households in Khyber Pakhtunkhwa (KP) and other provinces in Pakistan, according to a 2010 World Bank report titled "Poverty fell in Pakistan in 2001-08 partly because of remittances". A recent Asian Development Bank study found that foreign remittances constituted 9.4 percent of household income in KP, compared to 5.1% for Punjab, 1.5% for Baluchistan, and 0.7% for Sindh.

Beyond the remittances, can Pakistan also benefit from its growing diaspora like India and China have from theirs? With millions of Pakistanis in Europe and America, many of them highly skilled entrepreneurs and business and technology professionals, Pakistani diaspora can be very helpful to their home country in its business, economic, social, political, educational and technological development. The realization of such great potential will only be possible if Pakistani government's public policy, public-private partnerships and state-to-state relations with the West create the necessary conditions for it to happen. Existing organizations of Pakistanis, such as OPEN Silicon Valley, APPNA, and PakAlumni Worldwide, can be helpful in such an endeavor.

Among the emerging diaspora networks, the effort of South African Network of Skills Abroad (SANSA), established by the University of Cape Town’s Science and Technology Policy Research Center, is worth watching. SANSA aims to promote collaboration between highly skilled expatriate scientists and technologists and their counterparts in South Africa. The target group is alumni of all major South African universities working in the West.

Related Links:

Haq's Musings

PakAlumni Worldwide

Pakistani-American's Game-Changing Vision

OPEN Forum 2010

Pakistani-American in $500 Million NFL Deal

Is Pakistan Too Big to Fail?

Pakistani-American Elected Mayor

Fighting Poverty Through Microfinance in Pakistan

Silicon Valley Summit of Pakistani Entrepreneurs

Pakistan's Multi-Billion Dollar IT Industry

Media and Telecom Sectors Growing in Pakistan

Pakistan's Middle Class Growth in 1999-2009

Social Entrepreneurs Target India, Pakistan

Nexus of Crime and Politics Hurting Pakistan Economy

2011-08-31T20:31:00.000-07:00

Former Sindh Home Minister Zulfiqar Mirza's dramatic August 28 press conference with a copy of the Holy Quran in his hand has become the center of news media attention in recent days.

Following this highly emotion-charged press conference which was carried live by almost all of the mainstream TV channels, Mirza has been hailed as a hero by some of the most popular TV talking heads for railing against MQM's top leadership, and for singling out Pakistan Peoples Party leader and Federal Home Minister Rehman Malik for his harshest accusations.

To assess the extent of Mirza's credibility, it is important to understand the following:

1. What triggered the latest of Mirza's outbursts? Was it Malik's decision to send the Rangers in to the Lyari neighborhood of Karachi?

2. When Mirza used a copy of the Holy Quran in the month of Ramadan to convey his sincerity, did he really tell the whole truth? or did he leave out the ugly truths about the horrific crimes committed by Karachi's armed gangs controlled by him and his ANP political allies?

The answer to both of the above questions can be found in the fact that Mirza's press conference occurred soon after he learned about the Pakistan Rangers' operation to clean out gang-infested Lyari. This operation was authorized by Rehman Malik over the objections of Mirza and without Mirza's prior knowledge to prevent him tipping off his gangster allies in Lyari.

During the Lyari operation, the Rangers discovered the horror chambers that were used to torture and kill people in recent weeks. The badly mutilated bodies of these torture victims were stuffed in bags and dumped in various parts of the city to create widespread fear. The perpetrators were none other than Mirza's allies who falsely labeled their gangs as "People's Amn (Peace) Committee" or PAC.

The Rangers also arrested 133 suspects and seized automatic weapons and ammunition that were concealed in a ditch inside a house. They also found rockets, grenades, nine sub-machine guns and hundreds of bullet rounds once they dug out the makeshift arsenal, according to the Express Tribune newspaper report.

The torture cells were found in the Nayyabad area of Lyari. One was underground while the other was on the first floor. Both were outfitted with chains, chairs, tape for gagging victims, ropes, and power tools to dismember bodies. Jackets, sacks and documents were strewn on the floor along with the uniform an indicating the identity of the victims as members of the MQM's Khimat-e-Khalq Foundation.

The TV news-anchors, talk-show hosts, and the print media reporters must not give Zulfikar Mirza a free pass when he tells the truth only selectively to hide his own misdeeds and the crimes of his political allies in patronizing criminal gangs. Nor should other politicians be spared the tough questions about their culpability in destroying Karachi's peace, and for seriously undermining Pakistan's economy. Pakistan's media must play their crucial role in exposing the growing nexus between crime and politics in Karachi, and the rest of Pakistan.

We must not forget that sunlight is the best disinfectant.

Related Links:

Haq's Musings

MQM Worried By Karachi's Demographic Changes

Karachi Tops World's Largest Cities

Karachi Tops Mumbai in Stock Performace

Eleven Days in Karachi

Pakistan Most Urbanized in South Asia

Karachi: The Urban Frontier

Do Asia's Urban Slums Offer Hope?

Orangi is Not Dharavi

Climate Change Could Flood Karachi Coastline

Karachi Fourth Cheapest For Expats

Karachi City Government

Karachi Dreams Big

Pakistan Census 2011

Jinnah's Vision of Pakistan

High Cost of Failure to Aid Flood Victims

World Memon Organization

Urbanization in Pakistan Highest in South Asia

More Pakistanis Complete Education Than Indians

2011-08-23T21:22:00.000-07:00

Pakistanis spend more time in schools and colleges and graduate at a higher rate than their Indian counterparts in 15+ age group, according to a report on educational achievement by Harvard University researchers Robert Barro and Jong-Wha Lee.

In a recent Op Ed titled "Preparing the Population for a Modern Economy" published by Pakistan's Express Tribune, Pakistani economist Shahid Burki wrote as follows:

"Pakistan does well in one critical area — the drop-out rate in tertiary education. Those who complete tertiary education in Pakistan account for a larger proportion of persons who enter school at this level. The proportion is much higher for girls, another surprising finding for Pakistan."

Upon closer examination of Barro-Lee data on "Educational Attainment for Total Population, 1950-2010", it is clear that Pakistani students stay in schools and colleges longer to graduate at higher rates than Indian students at all levels--primary, secondary and tertiary. While India's completion rate at all levels is a dismal 22.9%, the comparable completion rate in Pakistan is 45.7%.

Here is a summary of Barro-Lee's 2010 data in percentage of 15+ age group students who have enrolled in and-or completed primary, secondary and tertiary education:

Education Level.......India........Pakistan

Primary (Total)........20.9..........21.8

Primary (Completed)....18.9..........19.3

Secondary(Total).......40.7..........34.6

Secondary(Completed)...0.9...........22.5

College(Total).........5.8...........5.5

College(Completed).....3.1...........3.9

It shows the following:

1. India's overall schooling rate of 67.4% exceeds Pakistan's 61.9% in 15 and over age group.

2. Pakistan's primary schooling rate of 21.8% is slightly higher than India's 20.9% of 15+ age group

3. India has a big edge with its secondary enrollment of 40.7% over Pakistan's 34.6%, but India's completion rate at this level is a dismal 0.9% versus Pakistan's 22.5% of the population of 15+ age group.

4. India's tertiary education enrollment rate of 5.8% is higher than Pakistan's 5.5%, but Pakistan's college and university graduation rate of 3.9% is higher than India's 3.1% of 15+ age group.

5. Pakistan's combined graduation rate at all three levels is 45.7% versus India's 22.9% among the population age group of 15 years or older.

Barro-Lee data also shows that the percentage of 15+ age group with no schooling has gone down in both nations in the last decade, particularly in Pakistan where it dropped dramatically by a whopping 22% from 60.2% in 2000 to 38% in 2010. In India, this percentage with no schooling dropped from 43% to 32.7% of 15+ age group.

The Aug 23 & 30, 2010 issue of Newsweek had a cover story titled "The Best Country in he World is...". It ranked top 100 nations of he world based on education, health, quality of life, economy and politics. On education, Newsweek ranked Pakistan 86 and India 88 among 100 nations it included.

Clearly, both India and Pakistan have made significant progress on the education front in the last few decades. However, the Barro-Lee dataset confirms that the two South Asian nations still have a long way to go to catch up with the nations of East Asia and the industrialized world.

Related Links:

Haq's Musings

India and Pakistan Contrasted in 2010

Educational Attainment Dataset By Robert Barro and Jong-Wha Lee

Quality of Higher Education in India and Pakistan

Developing Pakistan's Intellectual Capital

Intellectual Wealth of Nations

Pakistan's Story After 64 Years of Independence

Pakistan Ahead of India on Key Human Development Indices

India and Pakistan 2010-11 Incomes Roughly Equal at $3,100 Per Capita

2011-08-18T22:17:00.000-07:00

Nominal per capita incomes in both India and Pakistan stand at just over $1200 a year, according to figures released in May and June of 2011 by the two governments. This translates to about $3100 per capita in terms of PPP (purchasing power parity). Using a more generous PPP correction factor of 2.9 for India as claimed by Economic Survey of India 2011 rather than the 2.5 estimated by IMF for both neighbors, the PPP GDP per capita for Indian and Pakistan work out to $3532 and $3135 respectively.

Nominal per capita income of Indians grew by 17.9 per cent to Rs 54,835, or $1218, in 2010-11 from Rs 46,492 in the year-ago period, according to the revised data released by the government in May, 2011 as reported by Indian media.

In June 2011, Economic Survey of Pakistan reported that the nominal per capita income of Pakistanis rose 16.9 percent to $1,254 in 2010-11, up from $1,073 in 2009-2010.

Neither of these figures are adjusted for inflation which has been running in high single digits in India (about 9%) and double digits in Pakistan (about 14%).

Economic Survey of Pakistan 2010-11 puts the nation's population at 177 million and nominal gdp at $222 billion. In terms of purchase power parity with the PPP correction factor of 2.5, it works out to $555 billion PPP GDP.

Looking at the increase in nominal GDP alone can be quite misleading in judging the health of any economy. Other indicators, such as real GDP growth and investments, show that the state of Pakistan's economy is very poor. The nation's GDP grew only 2.4% in real terms in 2010-2011. Domestic investment dropped to a 40-year low of 13.4% of GDP, and foreign direct investment (FDI) declined by 29 percent to $1.232 billion during July-April 2010-11 from $1.725 million in the same period a year earlier.

In addition to improved security environment, Pakistan has an urgent need for serious economic reform, greater social justice and better governance. Unless the PPP government acts to improve this situation, no amount of foreign aid, external loans and other help will suffice. The first step in the process is for the ruling elite to lead by example by paying their fair share of taxes and adopting less extravagant personal lifestyles to get Pakistan's fiscal house in order.

Related Links:

Haq's Musings

Economic Survey of Pakistan 2010-11

Pakistan's Per Capita Income Exceeds $3,100 in 2010-2011

Pakistan's Story After 64 Years of Independence

India and Pakistan Contrasted in 2010

Oligarchs of India and Pakistan