Hundreds of Pakistani-American entrepreneurs met on Saturday, June 2, 2012 at Silicon Valley's Computer History Museum for this year's annual conference called OPEN Forum held each summer. It's organized by the Organization of Pakistani-American Entrepreneurs (OPEN) in Silicon Valley. The conference had a large number of sponsors, including dozens of Silicon Valley companies founded or managed by Pakistani-Americans.
Successful social entrepreneur Salman Khan of Khan Academy was the keynote speaker. There were also a number of parallel tracks on various topics of interest to the community. Panelists included venture capitalists, business executives, entrepreneurs, engineers, lawyers, scientists, editors and reporters.
I am sharing with my readers some of the highlights of the key sessions that I personally found interesting.
Photo by Ali Hasan Cemendtaur
INVESTMENT CLIMATE IN PAKISTAN – DO THE RETURNS OFFSET THE PERCEIVED RISKS?
It was moderated by Stephen West, Deputy Bureau Chief & Editor Bloomberg News, and included Sarfaraz Ahmed Rehman, CEO The Dawood Foundation, Junaid Qureshi, CEO, SSJD Group, Javed Hamid, Sr. MD, International Executive Service Corps, Former World Bank, Founder, LUMs and Naveed Sherwani, President & CEO at Open-Silicon as panelists.
Sarfaraz Ahmed Rehman represented Dawood Group includes Pakistani conglomerate Engro with multiple businesses ranging from consumer products to fertilizer and energy. Rehman talked about annual growth of as much as 45% per year in some of the product categories in Dawood's consumer product sales and profits. He said other consumer giants like Unilever Pakistan, Colgate-Palmolive and Nestle Pakistan are experiencing similar rapid growth as well. All of these companies are investing heavily to expand their FMCG offerings in Pakistan.
Naveed Sherwani of Silicon Valley based OpenSilicon talked about his reasons for setting up his company's chip design centers in Lahore and Islamabad by hiring 67 Pakistani design engineers. Sherwani said OpenSilicon considered adding staff at their existing design center in Bangalore, India and also considered Shanghai, China for expansion before choosing Pakistan. The key reasons include availability of top talent, lower turn-over and lower costs in Lahore and Islamabad. Comparing turn-over, he said it's about 15% in Pakistan versus 30% in India. Answering a question on power outages and security concerns, he said both are manageable. Stand-by generators alleviate the problems caused by load shedding. And, being a frequent visitor to Pakistan, he feels quite safe there.
GAME CHANGERS TELL ALL: “WORK? PLAY? THERE’S AN APP FOR THAT"
The panel was moderated by Umair Khan, CEO, SecretBuilders; Chairman, Folio3; Venture Partner, Entrepreneurs’ Fund and included
Joe Robinson: Product Lead, Square, Charles Huang: CEO Blue Goji; co-founder Red Octane (Guitar Hero), Zia Yusuf: CEO Streetline; former EVP SAP, Robert Martyn: Studio GM, Zynga; Executive Producer of SIMS, SimCity at EA, Omar Siddiqui: CEO Kiwi; former VP Playdom (Disney) as panelists.
The mobile apps market has exploded from almost zero to nearly $3 billion within just a few years as smartphones and tablets have become ubiquitous. Panelists represented a range of apps from gaming and social media to an application that allows people to find a parking spot while enabling the cities to raise their parking revenues.
The key question was how can developers effectively market their apps in such a crowded space. Zia quipped "Get Ashton Kutcher", referring to the use of celebrities to get attention. Another panelist suggested turning to new niches such as fitness and cycling to get a slice of the action by offering a piece of specialized hardware along with the application. One suggestion was to sell a hard-shell case for the mobile device and offer free download of a useful application for cyclists.
SALMAN KHAN'S KEYNOTE:
Defying tradition, Salman Khan chose an interview style format with Bay Area Journalist Thuy Vu who introduced Khan and played a CBS 60 Minutes segment on Khan Academy.
Thuy began by asking Khan if he was still recording his videos in his closet, and Khan said "No, I have come out of closet". Then he proceeded to offer to pay "market rate" for larger office; studio space in Palo Alto for Khan Academy.
In answer to a question about being "teacher to the world" in Bill Gates' words, Khan said he is aware that English language limits his ability to justify that title. He is working on broadening access to his tutorials in many parts of the world through translations in multiple languages ranging from Mongolian to Urdu. He showed a video clip of such translations.
Khan said the ubiquity and price declines of connected tablets make them ideal devices for watching and learning from his videos. With twenty students sharing a $100 tablet, the cost is only $5 per student, he said. In developing nations where electricity and Intranet infrastructure is not available everywhere, he supports the use of Internet cafes or off-line learning through kiosks supporting DVDs. He is prepared to license his video contents at no-cost for non-profit organizations seeking to educate the poor and the disadvantaged.
The conference was put together well by OPEN President Moazzam Chaudhry and his team. It provided a great opportunity for Pakistani-Americans to meet each other and learn about start-up opportunities and current entrepreneurial endeavors of the community members in Silicon Valley and Pakistan. I believe the conference clearly succeeded in its immediate objective of
bringing aspiring entrepreneurs of Pakistani origin together with many
investors and mentors in Silicon Valley, informing the audience and
stimulating discussion of new ideas and opportunities, and educating the
speakers and the attendees. But its real impact won't be apparent until
there is a significant critical mass with many more successful
Pakistani entrepreneurs inspired by what they saw and heard at OPEN
Acknowledgement: Asghar Aboobaker and Ali Hasan Cemendtaur contributed to this report. Photo taken by Ali Hasan Cemendtaur.
FMCG Profits in Pakistan
MIT Sloan Report on Pakistani Entrepreneurs
Pakistani-American Entrepreneurs Catch the Wave
Khan Academy Draws Pakistani Visitors
Minorities are Majority in Silicon Valley
Pakistani-American's Game-Changing Vision
US Firms Adding Jobs Overseas
Pakistan's Demographic Dividend
Pakistanis Study Abroad
Pakistan's Youth Bulge
Pakistani Diaspora World's 7th Largest
Pakistani-American NFL Team Owner
Pakistani-American Entrepreneurs Catch the Wave
Pakistani Graduation Rate Higher Than India's
Here's an FT report on Sweden's Pakistan Fund:
With Pakistan so much in the news for the above (negative) reasons it is no surprise that few fund managers have set up single country Pakistan funds.
However, newly established Swedish fund manager, Tundra Fonder, was determined to look beyond the headlines.
Tundra was founded in September last year by partners Johan Elmquist and Mattias Martinsson. By October the group had launched its first funds, one investing in Russia and the other in Pakistan. In February Tundra unveiled a third offering: the Global Emerging Markets Agri & Food Fund.
Launching Tundra Pakistanfond was a particular ambition for Mr Martinsson, the fund’s lead manager, who had formed a personal conviction in the country’s growth story. Even he has been taken by surprise, however, by how well things have gone. By last month, Mr Martinsson says, he and Mr Elmquist had noticed an extraordinary thing – the Tundra Pakistan fund was on top of the most clicked list, “Mest clickade fonder ” on the Swedish version of Morningstar, the fund news and data provider.
Investors have not only been clicking. They have been investing too. “We currently have approximately $65m in assets under management of which a little bit more than $50m right now is in the Pakistan fund,” says Mr Martinsson.
Early investors have already been rewarded. By May 31, year-to-date returns were 27.9 per cent, according to Morningstar.
Mr Martinsson says the strong inflows into Tundra’s Pakistan fund could be due to the structure being something that investors can understand and trust – it is Ucits IV compliant and open for daily trading. A buoyant period for Pakistan’s stock market (the KSE 100 has risen more than 20 per cent since January 1) might also have been helpful. But these factors cannot explain the whole story. The World Investment Oppportunities Funds – Pakistan, a Luxembourg registered Sicav still has only $1.75m in assets under management and it launched in 2008.
Here's an ET story about Pak tech companies with Si Valley connections:
With about 50 people assembled in one room to discuss seven start-up ideas, the general mood was ecstatic at The Second Floor (T2F), a project of PeaceNiche and a community space for open dialogue.
Budding entrepreneurs, technology geeks, fresh business graduates and app developers were there to participate in the first Entrepreneurs Roundtable Pakistan (ERT PK), an informal meeting of entrepreneurs to get instant feedback on their ideas from each other.
“It’s not about pitching your ideas as a salesman. The objective is to share these ideas with other entrepreneurs and get their feedback,” said Shirley Lin, who helped popularise the concept of informal meetings of entrepreneurs to share start-up ideas in cafes of Silicon Valley, while addressing the audience from California via Skype.
1 Doc Way
Danish Munir began his presentation by asking the audience if any of them found the procedure of getting a doctor’s appointment easy. Predictably, no one from the audience replied in the affirmative. Munir said his business aimed to help patients pay online visits to their doctors at their own convenience without worrying about the commute or time off work.
He said his website was generating revenues in the US, mainly because 60% of doctor-patient meetings in the country were conversational. “After the patient-doctor meeting on Skype, the doctor’s secretary calls the pharmacy and the patient can later collect the medicine,” Munir said.
Although the business model works differently in different countries, the website does not require patients to pay any additional charges.
Munir worked at Microsoft in Seattle, Washington, until eight months ago. He said he quit his “mundane job with a great package” for the love of entrepreneurship.
How many times have you been at a loss when deciding where to eat out when you have a certain amount of money to spare? “It’s either money or the location of the restaurant. Random searches on Google or even Karachi Snob don’t produce desired results most of the time,” said Zafar Syed, who is developing an advanced search engine by the name of “I’m confused.”
Syed said it would initially be focused on food and fashion outlets, adding the search engine would produce results according to prices one could afford to pay and look for such businesses within a defined area.
Pakistan’s Silicon Valley?
“People often say Lahore is to Pakistan what Bangalore is to India when it comes to the IT industry. But I think Karachi is swiftly catching up with Lahore. Both are neck and neck in terms of entrepreneurial activities,” said AR Rafiq, a California-based technologist, who organised the ERT PK along with the Pakistan Software Houses Association (P@SHA), while talking to The Express Tribune.
“There’re a lot of tech companies in America that have offices here, including Folio3, Whizz Systems, PalmChip, NexLogic and Inspurate,” he said, adding that Karachi’s IT professionals should now move away from the “outsourcing model” to the “equal partnership model” to reap the benefits of a truly globalised IT industry.
Major market research firm Ipsos comes to Pakistan, according to The News:
The launching ceremony of Ipsos, Pakistan was held at a local hotel of the city on Tuesday, hosting over 200 representatives of leading companies in Pakistan. The participants included CEOs, marketing and research heads of national and multinational companies from the FMCG and services sectors.
The chief guest of the event was the global founder and co-president of Ispos, Didier Truchot. He was accompanied by the chairman and CEO of Ipsos MENA, Edouard Monin and Global Group CFO Laurence Stoclet. While foreign investors are usually reluctant about investing in Pakistan, the launch of Ipsos in the country denotes the trust of the group’s stakeholders in the potential of marketing research business in Pakistan.
Didier Truchot said that he had high hopes for tapping the tremendous potential of the research industry in Pakistan owing to immense demographic dividends of the resource-rich country. “Ipsos believes in imparting knowledge and expertise across various countries it is working in. Our global presence gels in with the locally intelligent need gap assessment and deliverance of services accordingly. I am happy that Ipsos has already been well-received in Pakistan and is a critically acclaimed research company in terms of its futuristic and client-driven approach.” Ipsos co-president said that the success story narrated by Ipsos across the globe is the result of a vision held by sound intellectual deeds of professional researchers. “Ipsos is owned and run by researchers and this fact speaks volumes for its intellectual and professional supremacy over other competitors in Pakistan.”
Ipsos Pakistan is headed by Abdul Sattar Babar, a researcher. During his inaugural speech, he said: “This is a moment of pride for us that Ipsos is formally announcing its anchoring in Pakistan. I am happy that our global co-president made it to Pakistan to attend this event and his presence ensures transfer of knowledge and technology in a wide range of marketing research services that are not fully developed in Pakistan. Ipsos Pakistan is all geared up to make a headway in the industry based on trust, which certain clients had already conferred on us even prior to this formal launch.”
Here's an ET story on Google chairman Mike Schmitt's visit to Pakistan:
Schmidt said that the demographic composition of the Pakistani population was a great national asset and the Pakistani youth was talented and eager enough to get acquainted with information technology, often on their own.
He assured the Prime Minister that his company was willing to help Pakistan to spread information technology throughout the country. He said that improved connectivity facilitated the youth in getting themselves gainfully engaged, which in turn was critical to combat extremist tendencies in society.
Partnering with Google
The Prime Minister said that he recently announced a Venture Capital Fund of US $10 million and would like Google Inc. to also contribute to it besides its Social Innovation Fund.
“I have, recently, directed the establishment of Universal Service Centers at Union Council level across Pakistan. The aim of these centers is to provide Government to Citizen and Government to Business services acting as an IT hub in rural areas. I would also like your support to make these centers successful,” the Prime Minister added.
Schmidt said that it was also important to formulate an economic development strategy.
Google has faced action from Pakistan, including threats of being blocked if it failed to cooperate in restricting access to objectionable content available on Google and its various services including video sharing social network YouTube, which was blocked in 2010. Pakistan has also sought cooperation from Google to clamp down on accounts operated for and by terrorists.
Here's Google Chairman Eric Schmidt's assessment after his recent Pakistan visit--Part I:
Pakistan, a Muslim country, has spent about half of its independent life under military governments. Today, Pakistani leadership celebrates the ruling coalitions success in almost finishing the first five year term in history (previous leaders indicted by the courts, assassinated by extremists or brushed aside by the generals.) In meetings last week with the senior General, Prime Minister and the Foreign Minister, they made the case for a new and updated image of Pakistan: one of the largest democracies in the world, with a vibrant and open press, an upcoming demographic dividend of hardworking young people, and a highly educated elite leadership of the country. Islamabad and Lahore, where we visited, were relatively safe and certainly safer than Afghanistan. It was clear to us that Pakistan has an image problem.
Pakistan also has a power problem, as in electric power. Power is now off two hours out of three all day and all night. Estimates are that the country has enough generation capacity (hydro and oil based) to handle all the load, but corruption, power stealing, poor payment rates and the classic mistake of underpricing power compared to its real generation cost means that industrial production is threatened. Everyone of means has a UPS, and the air-conditioning seldom works on a 45 Celcius day. Our meetings often were literally in the dark, a common enough occurrence that people did not even remark about it.
Pakistanis are on their way to full mobile penetration with more than 110 million users, and all effective political communication programs now rely on SMS. 3G licenses are underway and the start of a real software industry can be seen.
Against this backdrop, another side of Pakistan emerges. The consensus is that the military drives the foreign policy of the country with unforeseen consequences. Alleged use of extremist groups to fight in Kashmir enables a criminal element to flourish, and the hosting of the Taliban in the autonomous regions (called FATA) to the north and west in the mountains turned an ungoverned area into a very dangerous area. The Army Generals explained the difference between fundamentalism (which they support) and extremism (which they fight), and the political leadership explained that the extremism now comes from “seminaries” where youth are indoctrinated, housed and fed in the rural areas where there are no opportunities at all.
Until recently a strong US ally, Pakistan is now on very good terms with China, and has improving relations with India (with whom they have had three wars.) The development of a nuclear stalemate between India and Pakistan seems to have forced them to pursue accommodation and trade is now increasing rapidly. The press are generally hyper-critical of the United States policies in the region and take the view that the India-US relationship is driving much of our countries behavior. The drone strikes are universally condemned as a violation of sovereignty and their constitution and are subject to much negotiation between the two countries. The bin Laden raid is viewed with strikingly different perspectives in the two countries.
Here's Google Chairman Eric Schmidt's assessment after his recent Pakistan visit--Part II:
...We met a number of impressive Pakistanis, none more so than Masarrat Misbah of Smile Again. Every year, hundreds of young rural women have acid thrown on their faces by men as punishment for some dishonor, including being raped by the men who pour acid on her. This horrific crime, which often leads to death or blindness, requires painful rehabilitation and rebuilding of the woman’s life. Masarrat Misbah’s home in Lahore provides a temporary safe house. The perpetrators, most often direct family members, are seldom prosecuted and almost never convicted of anything. I will never forget the faces of these shy, young women so grievously injured in such an evil way.
Much of what people say and think about Pakistan is absolutely true for most of the FATA provinces (autonomous areas) and for Baluchistan. Pakistan's image problem results from the fact that people outside the country believe the realities of North and South Waziristan and Quetta are reflective of what the larger country looks like. Islamabad and Lahore are certainly safer than people realize, unless you are a politician (many prominent politicians still suffer assassination attempts and threats inside these cities).
Pakistan's major security challenge comes from having two many fronts. FATA represents a Haqqani network and Taliban problem, threatening the establishment in Islamabad. Baluchistan is a persistent separatist movement. Afghanistan is a threat because Pashtuns are allowed to go back and forth undocumented. All of this, including India, is simply too much for a government like Pakistan to take on right now.
We ultimately see three Pakistans: 1) The places where the security issues are true (FATA, Baluchistan, parts of SWAT Valley, and Kashmir); 2) the rest of Pakistan for the average citizen, much larger than the first and which is reasonably misunderstood and relatively safe; 3) The politician's and military's Pakistan, which whether in FATA or Islamabad, is turbulent, unsafe, and complex.
There is a good case for optimism about Pakistan, simply because of the large emergent middle class (#2). The country, vast, tribal and complicated, can follow the more successful model of India. Connectivity changes the rural experience completely.. illiteracy at 43% can be overcome relatively quickly, and providing information alternatives can dissuade young males from a life of terrorism. The well educated elite can decide to further reform the countries institutions to increase confidence in the government. The war in Afghanistan, destabilizing to Pakistan in many ways, winds down after 2014 and buys time for Pakistan to address its real and continuing internal terrorism threat (more than 30,000 civilian terror deaths in the decade.)
Technology can help in other ways as well. The power problem is mostly a tracking problem (tracing corruption and mis-distribution). The problem of extreme crimes (like acid, or stoning) in poorly policed regions can be mitigated with videos and exposes that shame authorities into prosecution. The corruption problem can be tracked and traced using mobile money and transparent government finances. We met with clever Pakistani entrepreneurs who will build large, new businesses in Pakistan in the next few years and global multinational will locate sales and eventually manufacturing in the country.
The emergent middle class of Pakistan won’t settle for a corrupt system with constant terrorism and will push for reforms in a burgeoning democracy. Here’s to the new civil society of Pakistan, who will use connectivity, information and the Internet, to drive a peaceful revolution that brings Pakistan up to its true potential.
Here's an excerpt of State Bank of Pakistan's latest quarterly report:
If one looks objectively at
Pakistan’s economy, it is clear
that the system is facing serious
challenges. The list is familiar:
fiscal pressures that require an
increasing volume of domestic
financing; an energy shortage
that entails economic and social
costs; low investment that is
undermining future growth;
issues with law and order; and
the neighboring war in
At the risk of making too fine a
point on the matter, Pakistan’s
economic data appears to
suggest two things: first, that
Pakistan has fallen behind its neighbors in South Asia; and two, even this belowpotential
growth is quite impressive when seen in the context of the challenges
mentioned above. In our view, the latter point is not widely appreciated.
There is a growing sense that Pakistan’s undocumented economy (the informal
sector) is vibrant, and that official data understates the level of economic activity
that can be seen. In effect, there seems to be a disconnect.
It is a stylized fact that the informal sector in Pakistan is buoyant, and is
generating jobs; incomes; and demand for goods and services. This, in turn, is
spilling over into the real sector that is documented. Hence, as discussed in
Chapter 2, there are clear signs that construction is up, which is helping ancillary
sub-sectors like steel; cement; chemicals; wood; glass; paints; etc.
Many would argue that a vibrant informal sector is a blessing, as it is driving
formal economic activities, and keeping Pakistan from a full blown recession as
seen in Europe. Furthermore, the increasingly precarious social safety net that is
stoking public anger in Europe, may not be relevant in Pakistan where the
extended family and community steps in to take care of the elderly, the
unemployed, and the destitute. Although we would concede these points, it is
important to keep things in perspective.
While social institutions like the extended family; mosques; neighborhood
charities; ethnic/community organizations; etc., are robust and sustainable sources
of social and economic uplift, the role of the state (beyond official safety nets)
cannot be eliminated. More specifically, physical infrastructure and other public
goods (e.g. security; law enforcement; judicial services and contract enforcement;
recreational spaces; etc.) would be undersupplied by private organizations, which
are required to promote sustainable economic activities. If the mind-set of
absolute self-sufficiency becomes more entrenched, it may segment the economy.
Here's a report on rising auto & tractor sales in Pakistan:
As per the latest available data of auto sales, recently released by the Pakistan Automotive Manufacturers Association (PAMA), car and LCV sales witnessed a 15.1% YoY growth in 11MFY12. Segment-wise break-up reveals that the economy segment (less than 1,000cc) led the growth with sales increasing by 24.9% YoY during the period under review. This was followed by the 1,000-1,300cc segment, which witnessed sales growth of 19.2% YoY to 26,734 units. The high-end segment (1300cc+) meanwhile remained the sector’s laggard and sales grew by a meager 2.1% YoY to 58,458 units. This lackluster performance can mainly be attributed to the suspension of production at Honda Atlas Car’s (HCAR) plant from Dec-11 to Mar-12, and single-digit sales growth of Corolla. Sales of LCV’s and 4×4’s registered a healthy 27.4% YoY growth in 11MFY12, mainly due to a jump in Bolan (PSMC), Ravi (PSMC) and Hilux (INDU) sales.
Pakistan Suzuki Motor Company Limited (PSMC) witnessed a 31% YoY improvement in sales in 11MFY12 to 100,805 units. PSMC has benefitted from the Punjab Government’s Yellow Cab Scheme, which has resulted in sales of Mehran and Bolan to increase by 39% YoY and 54% YoY respectively. Sales of Swift, Cultus and Alto meanwhile, increased by 67% YoY, 23% YoY and 15% YoY respectively in 11MFY12. Total units sold by the company in May-12, increased by 20% MoM to 10,608 units. On a YoY basis, this figure is 34% higher than May-11’s sales of 7,920 units.
Sales of Indus Motor Company Limited (INDU) decreased by 7% MoM in May-12 to 4,846 units. The primary reason behind this decline is the discontinuation of Coure, with only 63 units being sold during the month. During 11MFY12, the company sold a total of 48,907 units, which is 6% higher on a YoY basis. Hilux has remained at the forefront (with respect to sales growth), and its sales are higher by 56% YoY to 3,625 units in 11MFY12. Sales of Corolla during 11MFY12 increased by 9% YoY to 41,720 units.
Honda Atlas Cars Pakistan Limited (HCAR) reported a 53% MoM increase in total units sold to 1,150 units. The company’s endeavors to clear the backlog of orders of its City model resulted in sales of the model to jump by 533% MoM to 1,050 units. In 11MFY12 however, the company was only able to sell 9,901 units (33% lower YoY) owing suspension of production due to floods affecting its primary parts supplier in Thailand last year.
Al-Ghazi Tractors Limited (AGTL) registered a healthy 20% MoM sales growth to 2,743 units in May-12, helping the segment attain an overall performance improvement of 10% MoM to 6,913 units. On a YoY basis however, the sector recorded 33% lower sales owing to the imposition of GST last year, which resulted in demand for the product drying and production being suspended as a consequence. Millat Tractors Limited meanwhile, reported a 4% MoM improvement in sales to 4,170 units. On a YoY basis, sales of AGTL and MTL declined by 42% and 28% respectively during 11MFY12. This was mainly on account of the suspension of production mentioned above..
Here's a Bloomberg report on FDI in Pakistan's energy sector:
Pakistan may receive the most overseas investment in four years as companies set up wind and coal generation plants, helping curb the nation’s record energy shortage, a government agency official said.
“Pakistan serves as the gateway to Iran, central Asia and even India so we have a lot of potential to attract foreign investment,” Mohammad Zubair Motiwala, chairman, Sindh Board of Investment, said in an interview in Karachi today. “Energy is a field where an investor can come and really make money.”
Pakistan needs to increase overseas investment to help meet an economic growth target of 4.3 percent in the year that began July 1. Power outages lasting as long as 18 hours a day have led to factory shutdowns and riots across the nation.
Foreign direct investment may rise to $2.5 billion in the year that began July 1, mostly in energy, said Motiwala, 56. That would be the highest since the 12 months ended June 30, 2009, when overseas companies invested $3.7 billion. Overseas investment declined 50 percent to $813 million in the year ended June 30, according to the central bank.
Norway’s NBT AS and Malaysia’s Malakoff Corp. Bhd signed an agreement with Pakistan yesterday to build a $600 million wind power plant in the southern province of Sindh that will generate 500 megawatts a day within 18 months, Motiwala said.
South Korea, China and India are among the countries “most interested” to invest in Pakistan, he said.
Pakistan’s $200 billion economy faces the fastest inflation in Asia, an insurgency on the Afghan border and reduced aid flows. Political tension has increased after a dispute between civilian leaders and the judiciary led to Yousuf Raza Gilani’s ouster as prime minister last month.
Here's a Bloomberg story on rapidly rising sales at Engro Foods:
Engro Foods Ltd. (EFOODS), Pakistan’s biggest maker of packaged milk, may record an 80 percent increase in net income this year as demand for dairy products rises, the chief executive officer said.
Profit may cross 1.6 billion rupees ($17 million) in the year ending Dec. 31 compared with 891 million rupees a year earlier, Muhammad Afnan Ahsan said in telephone interview from Karachi yesterday. Net income rose to 531.8 million rupees in the three months ended June 30, from 99.2 million rupees a year ago, the Karachi-based company said in a filing to the stock exchange yesterday.
Engro Foods, which has a 45 percent share of the milk market and a quarter of the ice cream trade, may introduce as many as 13 new products and lines, Muhammad Aliuddin Ansari Chief Executive Officer of Engro Corp., the parent company, said in an interview this month. The food business may become the largest segment by profit and sales and will be the dominant area in the next five years, he said.
Engro Foods, which has climbed threefold this year, compared with a 20 percent gain in the benchmark KSE100 index, increased as much as 1 percent to 67.83 rupees at 9:33 a.m. local time
Australian diplomat upbeat about Pakistan, reports Business Recorder:
Pakistan's natural and human resource potential was matchless, Economic Counseller of Australian High Commission, Melissa Kelly, said Thursday while declaring some of the recent signs of growth in Pakistan as very inspiring.
Melissa Kelly was talking to a delegation of Federal of Pakistan Chambers of Commerce and Industry (FPCCI) that included Chairman FPCCI Standing Committee on Diplomatic Affairs, Sheikh Humayun Sayeed and Chairman Media FPCCI, Malik Sohail.
"Despite numerous challenges Pakistan's economy was doing well which is very encouraging," she said and added "all major international investors and companies are making profits despite the security challenges."
The Economic Counsellor said Pakistan is the gateway to energy rich central Asian states, financially liquid Gulf states and economically advanced Far Eastern countries.
Besides, she said that Pakistan has world's second largest salt mine, fifth largest gold mine, fifth largest coal reserves, seventh largest copper mine; great consumer market and fourth largest competent workforce in the world.
Melissa Kelly said that an Australian delegation has just completed visit of Pakistan and they have decided to investment in the citrus sector including construction of a juice extraction plant.
She said that there is a great scope of cooperation between Pakistan and Australia in different sectors including energy, industry and agriculture.
On the occasion, Sheikh Humayun Sayeed highlighted the salient features of liberal and deregulated trade regime of Pakistan which offered enormous opportunities for foreign investors.
Stressing the promotion of economic links, Sayeed said that the two countries should boost exchange of delegations and expos which will bring business communities together that would lead to more trade in future.
Malik Sohail Hussain appreciated the role of Australian High Commission in promotion of trade and economic relations between the two friendly countries.
He said that Australia can get access to central Asia by using Pakistan as an economic bridge.
Malik Sohail said the perception about Pakistan is not what is portrayed as it better than most of the regional countries in case of doing business, strong infrastructure, fast growing middle class.
Australia is the third choice for Pakistan students studying abroad, incentives can help Canberra climb the ladder, he said.
Here's a report on S&P affirming "stable" outlook for Pakistan:
Ratings agency Standard and Poor’s on Friday affirmed a ‘stable’ outlook for Pakistan’s economy, a sharp contrast with its larger eastern neighbor.
In contrast, S&P earlier this year downgraded its outlook on India to ‘negative’, largely on account of a large fiscal deficit and the lack of economic reforms. And last month, it warned that India may become the first among the BRIC—Brazil, Russia, India and China—countries to lose its investment grade rating, citing slowing GDP growth and political roadblocks to economic policymaking as some of the factors that could lead to such an action.
“The sovereign ratings on Pakistan take into account the country's weak fiscal profile and associated high public and external leverage, low income level, as well as the underlying weak political and policy setting,” Standard and Poor’s said. However, the constraints are balanced against strong remittance inflows that help to sustain a still-adequate external liquidity position, the agency added. Foreign remittances from a large diaspora contribute about 5 per cent to Pakistan’s gross domestic product.
A key rating constraint, though, remains Pakistan's high public and external indebtedness. Net general government debt stands at an estimated 52 per cent of GDP in 2012, 40 per cent of which is external debt.
“The interest burden on this debt poses a great constraint on discretionary spending, given already sparse fiscal resources," said Standard & Poor's credit analyst Agost Benard. "The large interest bill and other expenditure-side rigidities against a narrow revenue base of about 12.5% of GDP result in ongoing fiscal slippages."
Here's a PakTribune report on new plant for producing BOPET for packaging of FMCG products in Pakistan:
Novatex Limited has successfully commissioned a project to produce Biaxially Oriented Poly Ethylene Terephthalate (BOPET) film.
This is a pioneer industry for Pakistan, bringing in technology and machinery, which is so far non-existent in the country.
Habib Bank Ltd, United Bank, Faysal Bank and Standard Chartered financed this project and the plant commenced operations in June 2012.
BOPET Polyester film, which will be produced by Novatex, has due to its superior attributes become a necessary packaging material for food, etc allowing the introduction of strong aroma retention and beautiful printed small as well as bulk pouches for tea, ketchup, mayonnaise, salad dressings, spices, fruit and vegetables packaging, food pastes as well as milk powder, good quality biscuits/snacks washing powder and shampoos, etc.
The current consumption of BOPET in Pakistan is over 16,000 tonnes and it will cross 20,000 tonnes following its availability locally.
Pakistan will become self sufficient in BOPET polyester film and save import of $40 million besides will generate export in excess of $30 million.
BOPET polyester film is also used for LCD/LED TV panels, solar panels, cable interior, salma sitara type decorations and x-ray film.
The project of Novatex has been set up with the latest German technology supplied by Lindauer Dornier of Germany.
It has a capacity to produce 31,000 tonnes BOPET per annum with 8.7 metre width and is the largest capacity and width currently available in the world for BOPET film lines.
Here are a few facts about Pakistani entrepreneurs in Si Valley based on my 30 year experience here:
1. Pakistani entrepreneurs are easily the third largest organized group in Si Valley after Chinese and Indians. Check out some of the names here: http://www.opensiliconvalley.org/charter-members/
2. Several Pakistani founded companies have gone IPO or been acquired by bigger companies in the last decades.
3. Some of the Pakistani founders' names well known to the Si Valley tech community include Safi Qureshi (AST computers founder), Raghib Hussain (Cavium founder), Atiq Raza (NextGen founder), Rehan Jalil (WiChous), Jauhar Zaidi (Palmchip), Sohaib Abbasi (Oracle), Naveed Sherwani (OpenSilicon), Idris Kothari (VPNet, VIA Technologies), Ashar Aziz (FireEye), Nazim Kareemi (Canesta), Safwan Shah (Infonox), Faraz Hoddbhoy (PixSense), and many many more.
Here's an ET story on US fund to support private investing in Pakistan:
The United States on Friday announced a multi-year Pakistan Private Investment Initiative worth $80 million in financial support to promote economic activities in the country.
Drawing on public-private partnerships, this initiative will spur job growth and economic development by expanding access to capital for Pakistan’s small to medium sized companies, according to a statement by the US embassy.
“Pakistan has a wealth of talented entrepreneurs that desperately needs capital to fully realise their potential,” said US Charge d’affaires in Pakistan, Richard E Hoagland.
He said that through this initiative, the United Stated can move beyond the traditional foreign assistance by playing a constructive role to help entrepreneurs expand their businesses, provide new jobs to Pakistan’s fast-growing population, and by improving lives in the country.
He said that market-oriented, commercial solutions which support Pakistan’s economic development have been a priority for the United States.
The US Charge d’affaires said that the “Pakistan Private Investment Initiative” will generate investment funds catalysed by US assistance.
The initiative seeks private or other qualified sources of capital for matching investments and funding management services. The investment funds will make equity investments in promising Pakistani companies, under-served by existing sources of capital.
The Pakistan Private Partnership Initiative welcomes proposals from qualified Pakistani, regional, and international fund managers keen on investments in Pakistan by October 12, 2012, said a statement of from the United States embassy.
Here's a Bloomberg story titled "Pakistan, Land of Entrepreneurs":
On a warm Sunday morning in November, Arif Habib leaves his posh home near the seafront in southern Karachi and drives across town in a silver Toyota Prado SUV. About half an hour later, he arrives to check up on his latest project: a 2,100-acre residential development at the northern tip of this city of 20 million. He hops out, shakes hands with young company call-center workers who are dressed for a cricket match, and joins them at the edge of the playing field for a traditional Pakistani breakfast of curried chickpeas and semolina pudding. After a quick tour of the construction site, he straps on his leg pads, grabs his bat, and heads onto the field. “The principles of cricket are very effective in business,” says Habib, 59. “The goal is to stay at the wicket, hit the right balls, leave the balls that don’t quite work, and keep an eye on the scoreboard. I feel that my childhood association with cricket has contributed to my success.”
Habib, who started as a stockbroker more than four decades ago, has expanded his Arif Habib Group into a 13-company business that has invested $2 billion in financial services, cement, fertilizer, and steel factories since 2004. His group and a clutch of others have become conglomerates of a kind that went out of fashion in the West but seem suited to the often chaotic conditions in Pakistan. Engro (ENGRO), a maker of fertilizer, has moved into packaged foods and coal mining. Billionaire Mian Muhammad Mansha, one of Pakistan’s richest men, is importing 2,500 milk cows from Australia to start a dairy business after running MCB Bank, Nishat Mills, and D.G. Khan Cement.
These companies have prospered in a country that, since joining the U.S. in the war on terror after Sept. 11, has lost more than 40,000 people to retaliatory bombings by the Taliban. Political violence in Karachi has killed 2,000 Pakistanis this year, and an energy crisis—power outages last as long as 18 hours a day—has led to social unrest. Foreign direct investment declined 24 percent to $244 million in the four months ended Oct. 31, according to the central bank.
At the same time, some 70 million Pakistanis—40 percent of the population—have become middle-class, says Sakib Sherani, chief executive of Macro Economic Insights, a research firm in Islamabad. A boom in agriculture and residential property, as well as jobs in hot sectors such as telecom and media, have helped Pakistanis prosper. “Just go to the malls and see the number of customers who are actually buying in upscale stores and that shows you how robust the demand is,” says Azfer Naseem, head of research for Elixir Securities in Karachi. “Despite the energy crisis, we have growth of 3 percent.”
Sherani of Macro Economic Insights estimates the middle class doubled in size between 2002 and 2012. “Those who understand the difference between the perception of Pakistan and the reality have made a killing,” Habib says. “Foreigners don’t come here, so the field is wide open.” The KSE100, the benchmark index of the Karachi Exchange, has risen elevenfold since mid-2001. Shares in the index are up 43 percent this year alone. Over the past decade, stocks have been buoyed by corporate earnings, which were bolstered in turn by rising consumer spending.
Today, Habib has 11,000 employees and annual revenue of 100 billion rupees. He plans to expand into commodities trading and warehousing. “I’ve created all my wealth in Pakistan and reinvested all of it here,” says Habib, who drives himself to his cricket matches and is never accompanied by security guards. In 1998, when Pakistan’s share index fell to a record low after the government tested nuclear weapons, Habib bought shares even though “people thought I was mad.”...
Here's an ET blog post taking media to task:
A recent article in Wired, Danger Room highlighted the resurgence of the US drone campaign in Pakistan. While it focuses on the war, a lot was left untold about the nation’s story that is as heartening as it is heartrending, and as inspiring as it is seemingly dismaying.
The story of four of these start-ups, that launched in 2012 speak volumes about the resilience, commitment and resourcefulness of its founders.
The first is Vital Agri Nutrients, a young, agricultural Research and Development focused company that is working on developing innovative products for farmers. It has had some recent breakthroughs with their micro-nutrients and soil amendments which are currently in field trials. Given the expected shortage of water and growing prices of fertilisers world-wide, the company and its products present a promising opportunity for small and large farmers to improve the crop yield and lower their input cost per acre by employing soil amendments that help with more efficient use of fertilisers and water in plants.
Next, four young entrepreneurs at Eyedeus, aided by decades of joint research in computer vision, have developed technology that enables mobile devices to have eyes and intelligently process real-world imagery using an increasingly powerful mobile processors. Unlike the cameras on mobile devices that just allow ‘dumb’ recording of images or videos, Eyedeus technology allows developers to augment the reality around users. The company’s first product, called ‘Groopic’ (beta available on the AppStore) is already getting rave reviews. Groopic allows group pictures to be taken in a way never before possible. The person taking the picture can now be part of the group picture, go figure!
Eyedeus, by the way, is part of a full-service technology incubator called Plan 9, that’s a visionary initiative of the government of Punjab, and it hosts at least a dozen other start-ups alongside Eyedeus, working on equally innovative products and services.
Similarly, Invest2Innovate is another accelerator that is supporting at least five entrepreneurial ventures focused on businesses with a large social impact.
Third is a new age production house called JugnooMedia, developing interactive, digital musical toys for mobile devices with an aim of providing toddlers and young children new avenues of learning that are more fun and effective than the traditional, classroom teaching. The demos of their first title are very impressive and the company has announced that it will be released on the Apple AppStore and Android Marketplace soon.
And finally, there is BLISS – a social venture that is aimed at improving the livelihood of women in Pakistan alongside educating them. BLISS has already done a pilot program in a small village of Pakistan where women were taught embroidery skills alongside formal school education in the first phase. In the second phase, BLISS provided the same women an opportunity to co-op with the company and develop handbags designed by professional designers which were then marketed by BLISS through its online store as well as an impressive list of global brand ambassadors. The women who made the bags got the lion’s share of the revenue from those sales and the rest of the money is being used to sustain the operations of the organisation and scale the program.
The next time a story is told about the problems Pakistan is having with the political instability, corruption, energy shortage and terrorism the world must know, that to the same land belong some of the best, battle-tested and inventive entrepreneurs working on shaping the future of the world!
Here's a San Francisco Chronicle story on an e-commerce entrepreneur in Pakistan:
Waqas Ali grew up in a small town in Pakistan called Punjab.
Ali studied physics while attending a university in Lahore, but eventually dropped out when he was inspired by a group of five craftsmen making handmade shoes in his home town, Ali writes on Medium.
So he started working on an online shoe store called HOMETOWN because he wanted to help those craftsmen build a sustainable business.
He ended up returning to Punjab to meet with a "shoe master" named M Hussain, who would become the official shoemaker. He got his friend Sidra Qasim to come on board as a co-founder, and in November 2012, he secured a $10,000 seed fund from P@SHA Social Innovation Fund.
The two eventually moved to Lahore so they could get in touch with designers, find high quality raw material, and start building the website.
But it wasn't easy. They were living in a hostel and using a Kentucky Fried Chicken restaurant as their office.
After about for months, Ali and his team were able to make super comfortable and lightweight shoes.
But selling those shoes proved to be more difficult than they expected. They spent about 60% of their money on building inventory, there wasn't much left for marketing and operations.
Since they were strapped for cash, they simply interacted with potential customers both online and offline. When they sold their first shoe, Ali wrote a handwritten letter to the customer, and he still does that to this day.
"Honest communication, delivering on promises, and most importantly showing human side of our business helped us increase both our traffic and sales," Ali writes.
In August 2012, Google and Punjab's government proclaimed HOMETOWN as an "Innovation Hero."
Now, Ali and his team are part of a Punjab-based incubator. Ali was also recently selected to be an Acumen Fund Pakistan Fellow.
Lots of places want to become the "next Silicon Valley." But that's much easier said than done, according to a new study from the Kauffman Foundation.
The study compares the nation's top 20 large metros in terms of high-tech start-up density in 1990 and 2010. San Jose leads in both periods. And although the order has shifted a bit, every single one of the top 10 metro areas in 2010 was among the top 20 in 1990. ...Only five of the top 20 in 2010 — Portland, Wilmington, Phoenix, Kansas City and New Orleans — weren't among the most tech-dense cities twenty years ago. Even metros that have begun to climb the high tech ranks recently, like Kansas City and Portland, really "owe their emerging entrepreneurial ecosystems to many years of spinoffs and entrepreneurial spawning," the report notes.
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