Wednesday, May 29, 2013

Pak Girl's Journey: Karachi Slum to Harvard Business School

Anum Fatima, a resident of Ibrahim Goth slum located near Karachi's Steel Town, is making history; she is going to Harvard  Business School this summer as part of a student exchange program.

Anum's father is employed as a driver and her mother works as a maid. The slum school she attended is run by The Citizen's Foundation (TCF), a private foundation. From 5 schools in Karachi in 1995, TCF has expanded to 910 purpose-built schools with 126,000 students in 97 towns and cities across Pakistan.

Institute of Business Management (IoBM) Karachi


After graduating from the TCF school located near her slum, Fatima has completed her BBA in Human Resource. She is currently attending College of Business Management (CBM) of  the Institute of Business Management (IoBM), a private Business School in Karachi.


Anum is breaking many stereotypes about Pakistani women, particularly poor women, by studying business management at top business schools in Pakistan and the United States. She told a news reporter that when she broke the news to her father, he did not know what Harvard was. “When he went to work that day, he asked his boss, who told him what a tremendous achievement it was,” she said.

Although it's the first time that a TCF grad is going to Harvard, the Foundation schools have had many success stories of its graduates from poor families who have gone on to attend professional schools to become doctors, engineers, lawyers, teachers and business executives.

In spite of its many failings in adequately funding human development, Pakistan has continued to offer much greater upward economic and social mobility to its citizens than neighboring India over the last two decades. Since 1990, Pakistan's middle class had expanded by 36.5% and India's by only 12.8%, according to an ADB report titled "Asia's Emerging Middle Class: Past, Present And Future.

New York Times' Sabrina Tavernise described the rise of Pakistan's middle class in a story from Pakistani town of Muzaffargarh in the following words:

For years, feudal lords reigned supreme, serving as the police, the judge and the political leader. Plantations had jails, and political seats were practically owned by families.

Instead of midwifing democracy, these aristocrats obstructed it, ignoring the needs of rural Pakistanis, half of whom are still landless and desperately poor more than 60 years after Pakistan became a state.

But changes began to erode the aristocrats’ power.
Cities sprouted, with jobs in construction and industry. Large-scale farms eclipsed old-fashioned plantations. Vast hereditary lands splintered among generations of sons, and many aristocratic families left the country for cities, living beyond their means off sales of their remaining lands. Mobile labor has also reduced dependence on aristocratic families.

In Punjab, the country’s most populous province, and its most economically advanced, the number of national lawmakers from feudal families shrank to 25 percent in 2008 from 42 percent in 1970, according to a count conducted by Mubashir Hassan, a former finance minister, and The New York Times.

“Feudals are a dying breed,” said S. Akbar Zaidi, a Karachi-based fellow with the Carnegie Foundation. “They have no power outside the walls of their castles.”


GeoTV is illustrating  this welcome phenomenon of upward social mobility in Pakistan with a series of motivational "Zara  Sochiey" videos on young men and women who have risen from humble origins to achieve significant successes in recent years. Each individual portrayed in the series has overcome adversity and  focused on acquiring education as a ticket to improve his or her economic and social situation.

GeoTV videos feature a number of young men and women, including Saima Bilal, Kashif Faiq,  Qaisar Abbas and many others, to inspire and encourage other Pakistanis to pursue their dreams against all odds.

Contrary to the incessant talk of doom and gloom, the fact is that the level of educational attainment has been rising in recent decades.  In fact, Pakistan has been increasing enrollment of students in schools at a faster rate since 1990 than India, according to data compiled and reported by Harvard University researchers Robert Barro and Jhong-Wa Lee . In 1990, there were 66.2% of Pakistanis vs 51.6% of Indians in 15+ age group who had had no schooling. In 2000, there were 60.2% Pakistanis vs 43% Indians with no schooling. In 2010, Pakistan reduced it to 38% vs India's 32.7%.
 

As of 2010, there are 380 (vs 327 Indians) out of every 1000 Pakistanis age 15 and above who have never had any formal schooling. Of the remaining 620 (vs 673 Indians) who enrolled in school, 22 (vs 20 Indians) dropped out before finishing primary school, and the remaining 598 (vs 653 Indians) completed it. There are 401 (vs 465 Indians) out of every 1000 Pakistanis who made it to secondary school. 290 (vs 69 Indians) completed secondary school  while 111 (vs. 394 Indians) dropped out. Only 55 (vs 58 Indians)  made it to college out of which 39 (vs 31 Indians) graduated with a degree.



Education and development efforts  are beginning to bear fruit even in remote areas of Pakistan, including Federally Administered Tribal AreasThe Guardian newspaper recently reported that FATA's Bajaur agency alone has 616 school with over 60,000 boys and girls receiving take-home rations. Two new university campuses have been approved for FATA region and thousands of kilometers of new roads are being constructed. After a recent visit to FATA, Indian journalist Hindol Sengupta wrote in The Hindu newspaper that "even Bajaur has a higher road density than India"

 Prior to significant boost in public spending on education during Musharraf years, the number of private schools in Pakistan grew 10 fold from about 3000 in 1983 to over 30,000 in 2000. Primary school enrollment in 1983 has increased 937%, far greater than the 57% population increase in the last two decades.

With current public education funding at just 2% of GDP, the Pakistani government is clearly abdicating its responsibility of educating poor children. Fortunately, there are a number of highly committed individuals and organizations like The Citizens Foundation (TCF) and the Human Development Foundation (HDF) which are very active in raising funds and building and operating schools to improve the situation in Pakistan. It is important that all of us who care for the future of Pakistan should generously help these and similar other organizations.

Related Links:

Haq's Musings

Pakistan Must Fix Primary Education

Pakistan Human Development Since 1980s

Working Women in Pakistan

Pakistan's Out-of-School Children 

Pakistan's Human Capital

Status of Women in Pakistan

Upwardly Mobile Pakistan

Teach For Pakistan

Business Education in Pakistan

Developing Pakistan's Intellectual Capital

Intellectual Wealth of Nations

Resilient Pakistan Defies Doomsayers

Sunday, May 26, 2013

PTI vs. MQM: Altaf's Angry Response to Imran's Selective Outrage

What is the reason for Imran Khan's selective and misplaced outrage against MQM on Zahra Shahid Husain's murder while ignoring the Taliban killings of ANP and MQM members?

Why is the PTI continuing its sit-in campaign against alleged rigging?

How to explain political parties' militant wings,  MQM's use of violence in politics and what triggered the current crisis within MQM?

 What is the significance of Chinese Premier Li's visit  to Pakistan?

What is Pak-China Economic Corridor project?

What to make of  Zardari-Nawaz meeting and what should be the new government’s priorities? In the following video, Viewpoint from Overseas host Faraz Darvesh discusses  the above with Riaz Haq, Sabahat Ashraf, and Ali Hasan Cemendtaur.

This show was recorded at 12:30 pm PST on Thursday, May 23, 2013.

Pakistani Elections 2013, NA-250 re-elections, Zahra Shahid Hussain murder, Pakistan Tehreek e Insaf, PTI, Imran Khan, MQM, Altaf Hussain, Chinese Premier in Pakistan, Gwadar Port, China’s Energy Security, Riaz Haq, Sabahat Ashraf, iFaqeer, Ali Hasan Cemendtaur, WBT-TV, Viewpoint from Overseas, Pakistanis in the US, Silicon Valley Pakistanis, San Francisco Bay Area Pakistanis

این اے ۲۵۰ میں مکرر انتخابات، زہرہ شاہد حسین کا قتل، ایم کیو ایم، الطاف حسین، پاکستان تحریک انصاف، عمران خان، چینی صدر کا دورہ پاکستان، ترقیاتی منصوبے، گوادر، بلوچستان، پاکستان کے اصل مساءل، امن عامہ، ریاض حق، صباحت اشرف، آءی فقیر، علی حسن سمندطور، ڈبلیو بی ٹی ٹی وی، ویو پواءنٹ فرام اوورسیز، امریکہ میں پاکستانی، سلیکن ویلی، سان فرانسسکو بے ایریا

 पाकिस्तान, कराची, विएव्पोइन्त फ्रॉम ओवरसीज , फ़राज़ दरवेश, रिअज़ हक , सबाहत अशरफ , ई फ़क़ीर, अली हसन समंदतौर, दब्लेव बी टी टीवी, सिलिकॉन वेली, कैलिफोर्निया, फार्रुख शाह खान, फार्रुख खान
পাকিস্তান, করাচী, ক্যালিফর্নিয়া, সিলিকোন ভ্যালি, ভিয়েব্পৈন্ট ফরম ওভারসিস Виещпоинт фром Оверсеас, Цалифорния, Карачи, Пакистан, Фараз Дарвеш, Риац Хак, Сабахат Ашраф, И-фаяеер, Али Хасан Цемендтаур

 ، رياض حق ، إي فقير ، صباحات أشرف ، علي حسن سمند طور ، فيوبوينت فروم أفرسيس ، كاليفورنيا، كراتشي ، باكستان ،

പാക്കിസ്ഥാൻ കറാച്ചി കാലിഫോര്ണിയ വീവ്പൊഇന്റ് ഫ്രം ഓവർസീസ്‌ ഫരശ് ദര്വേഷ് രിഅശ് ഹഖ് അലി ഹസാൻ സമണ്ട്ടൂർ ഐ ഫഖീർ സബഹറ്റ് അഷ്‌റഫ്‌ પાકિસ્તાન, કરાચી, ફરાઝ દરવેશ, રીઅઝ હક, સબાહત અશરફ, અલી હસન સમાંન્દ્તૌર, કાલીફોર્નિયા, વિએવ્પોઇન્ત ફ્રોમ ઓવેર્સેઅસ पाकिस्तान, कराची, विएव्पोइन्त फ्रोम ओवेर्सेअस, कॅलिफोर्निया, फराज दरवेश, रिअश हक़, साबाहत अश्रफ, ई फ़क़ॆर, आली हसन समंद तूर



NA 250 re-elections, MQM vs. PTI, Chinese Premier in Pakistan, Zardari-Nawaz meeting from WBT TV on Vimeo.

Related Links:

Haq's Musings

Gangster Politicians of Karachi

Resolving Pakistan's Electricity Crisis

Pakistan Elections 2013 Results Who Will Win Pak Elections 2013 and Form Next Government

Musharraf's Coup Revived Pak Economy

Judicial Coup in Pakistan

Media and Telecom Revolution in Pakistan

Impact of Youth Vote and Taliban Violence on Elections 2013


Taliban vs. Pakistan in Elections 2013

Friday, May 24, 2013

Pakistanis Suffer Load-shedding While Power Companies' Profits Surge

Pakistan's installed generating capacity is about 20,000 MW. It exceeds current demand of 17,000 MW and actual supply of just 10,000 MW. The capacity utilization is only 50% mainly because the producers do not buy sufficient fuel and choose to operate at only 50% of capacity and still enjoy soaring profits. A third of the installed generating capacity is owned by the independent power producers (IPPs). The current IPP contracts guarantee payments and profits with no requirement for fuel efficiency.



Most private investors have built oil-powered inefficient plants because of their low construction costs and short lead times, and the oil price has skyrocketed since these plants were built in 1990s. The result is 18-20 hours of load shedding across most of Pakistan in the scorching summer heat in spite of the fact the taxpayers have shelled out billions of dollars in subsidies to the power sector since 2008.

According to an AP report, the Pakistan's government has assumed $3.6 billion of the power industry's debt. The government-owned power grid owes another $2.5 billion to private-sector generators, even as the government, according to Finance Ministry figures, spent at least $7.4 billion on electricity subsidies during the 2008-2010 period.


Here's Arif Habib Securities investment analysis of the IPPs sector:

All power companies from Arif Habib Limited research coverage witnessed surprising growth (36-58%) in net profitability. HUBC led the flock with 58% YoY jump in profit after tax, attributable to the growing indexation factors and ROE component. On the other hand, lower payables to fuel supplier and resultantly lower penal interest provided major support to KAPCO, pushing the net profitability up by 36% YoY. As far as Nishat group companies are concerned, rising fuel cost magnified the impact of fuel efficiency, which combined with O and M savings further improved the profitability. However, dividend from KAPCO and NPL disappointed the optimistic investors. Arif Habib Limited believes the dividends to rise in 2HFY13 for these companies, providing investor with greater value at the financial year end.


Source: IMF Pakistan


Pakistani government buys electricity from IPPs at a rate of Rs. 12.50 per KWhr while the consumers pay an average of Rs. 9.00, leaving a short-fall of Rs 3.50 per unit which is subsidized by the taxpayers. It adds up to hundreds of billions of rupees a year. Power subsidy target for FY 2012-13 was set at Rs 185 billion, 60 percent lower than the actual subsidy provided during FY12. The subsidy provided year-to-date (YTD) is Rs 311 billion, already having exceeded the target by 68 percent, according to PakTribune.

A significant part of the problem is the IPP contracts which guaranteed a 12 to 15 per cent annual return (indexed in dollars, not rupees), gave tax breaks and paid interest on private funding – more expensive for the government than providing the funding itself.  In addition, there are no incentives for the private power producers to produce power efficiently.

In a blog post published in Financial Times, Dr. Kamal Munir of Cambridge University's Judge Business School blames the IPP contracts signed as part of the power privatization in 1990s.

“The 1994 privatization of the energy sector offered investors generous returns and created pricey overcapacity,” he told Financial Times. “This created an expensive legacy which is the real problem of today’s energy crisis.” Unless that problem is dealt with, he sees no light at the end of the energy tunnel.

He says Pakistan’s government, helped by the World Bank, “sweetened” its energy privatisation with attractive conditions, fearing it wouldn’t be able to attract investors otherwise. It guaranteed a 12 to 15 per cent annual return (indexed in dollars, not rupees), gave tax breaks and paid interest on private funding – more expensive for the government than providing the funding itself. ”The deal was too good to be true for investors,” Munir says.

Munir says the model turned out to be badly constructed in terms of creating value for the government and people of Pakistan. Even in an environment of economic growth and efficient energy generation, it would have been hard for the government to finance the plan. But since both have been absent, it became nearly impossible to pay for privatised energy.

Since there were no incentives to be fuel-efficient, most private investors chose to build  plants using furnance oil as fuel because of their low construction costs and short lead times. This backfired as the oil price has trebled since the 1990s. Variable costs, and therefore prices to consumers, are at unsustainable levels. “No wonder many consumers can’t afford to pay their bills,” Munir says.

To make things worse, the government neglected to step on the brakes when its generous conditions attracted too many investors. Assuming economic growth would continue, it allowed too much capacity to be built and guaranteed the same return on that extra capacity, whether it was used or not.

Munir says the government should develop new power plants using cheaper fuels, and that this shouldn’t be a problem in a country with an abundance of coal, waterways and sun.

But Pakistan must first escape its vicious payment cycle.

“We need to get out of the the current deals,” says Munir. But at what cost, and does this imply default? “Your guess is as good as mine,” the academic admits.

Still, he felt it was time to make his point. “I’m not defending people who don’t pay bills and I’m not promoting government subsidies to keep prices low,” Munir says. “But why isn’t anyone talking about the policy that led to this situation to begin with?”

Fuel Cost per million BTU
The key to solving the problem is to renegotiate the old IPP contracts with new terms that reward lower fuel costs and higher efficiency. In addition to that, Pakistan's incoming government of Prime Minister Nawaz Sharif's has to explore multiple fuel options to meet the nation's growing energy needs. Some of the fuel options are as follows:

1. Developing its shale gas reserves estimated 51 trillion cubic feet near Karachi in southern Sindh province. The US experience has shown that investment in shale gas can increase production quite rapidly and prices brought down from about $12 per mmBTU in 2008 to under $2 per mmBTU recently. Pursuing this option requires US technical expertise and significant foreign investment on an accelerated schedule.



 2. Increasing production of gas from nearly 30 trillion cubic feet of remaining conventional gas reserves. This, too, requires significant investment on an accelerated schedule.

3. Converting some of the idle power generation capacity from oil and gas to imported coal to make electricity more available and affordable.

4. Utilizing Pakistan's vast coal reserves in Sindh's Thar desert.

5. Hydroelectric and other renewables including wind and solar. Several of these projects are funded and underway but it'll take a while to bring them online to make a difference.

In my view, the newly-elected government should pursue all of the above options with options 1, 2 and 3 as a priority for now. Its best interests will be served by developing its own cheap domestic shale gas on an accelerated schedule with Saudi investment and US tech know-how.

Related Links:

Haq's Musings

Comprehensive Energy Policy for Pakistan

IPP Contracts in Pakistan

Pakistan Needs Shale Gas Revolution

US Census Bureau's International Stats 

Pakistan's Vast Shale Gas Reserves

US AID Overview of Pakistan's Power Sector

US Can Help Pakistan Overcome Energy Crisis

Abundant and Cheap Coal Electricity

US Dept of Energy Report on Shale Gas

Pakistan's Twin Energy Crises

Pakistan's Electricity Crisis

Pakistan's Gas Pipeline and Distribution Network

Pakistan's Energy Statistics

US Department of Energy Data

Electrification Rates By Country

CO2 Emissions, Birth, Death Rates By Country

China Signs Power Plant Deals in Pakistan

Pakistan Pursues Hydroelectric Projects

Pakistan Energy Industry Overview

Water Scarcity in Pakistan

Energy from Thorium

Comparing US and Pakistani Tax Evasion

Thursday, May 23, 2013

How Strategic Are Pakistan-China Ties?

China's new Prime Minister Mr. Li KeQiang has just ended a two-day visit to Pakistan. Speaking to the Senate, Li declared that "the development of China cannot be separated from the friendship with Pakistan". To make it more concrete, the Chinese Premier brought with him a 5-points proposal which emphasizes "strategic and long-term planning", "connectivity and maritime sectors" and "China-Pakistan economic corridor project".

Source: China Daily



From L to R: Premier Lee, President Zardari and Prime Minister Khoso
Here's a recent report by  China's State-owned Xinhua News Agency that can help put the Chinese premier's speech in context:

“As a global economic power, China has a tremendous number of economic sea lanes to protect. China is justified to develop its military capabilities to safeguard its sovereignty and protect its vast interests around the world."

The Xinhua report has for the first time shed light on China's growing concerns with US pivot to Asia which could threaten China's international trade and its economic lifeline of energy and other natural resources it needs to sustain and grow its economy. This concern has been further reinforced by the following:

1. Frequent US statements to "check" China's rise.  For example, former US Defense Secretary Leon Panetta said in a 2011 address to the Naval Postgraduate School in California: "We try everything we can to cooperate with these rising powers and to work with them, but to make sure at the same time that they do not threaten stability in the world, to be able to project our power, to be able to say to the world that we continue to be a force to be reckoned with." He added that "we continue to confront rising powers in the world - China, India, Brazil, Russia, countries that we need to cooperate with. We need to hopefully work with. But in the end, we also need to make sure do not threaten the stability of the world."

Source: The Guardian


2. Chinese strategists see a long chain of islands from Japan in the north, all the way down to Australia, all United States allies, all potential controlling chokepoints that could  block Chinese sea lanes and cripple its economy, business and industry.



Karakoram Highway-World's Highest Paved International Road at 15000 ft.


Chinese Premier's emphasis on "connectivity and maritime sectors" and "China-Pakistan economic corridor project" is mainly driven by their paranoia about the US intentions to "check China's rise" It is intended to establish greater maritime presence at Gwadar, located close to the strategic Strait of Hormuz, and  to build land routes (motorways, rail links, pipelines)  from the Persian Gulf through Pakistan to Western China. This is China's insurance to continue trade with West Asia and the Middle East in case of hostilities with the United States and its allies in Asia.

Pakistan's Gawadar Port- located 400 Km from the Strait of Hormuz


As to the benefits for Pakistanis, the Chinese investment in "connectivity and maritime sectors" and "China-Pakistan economic corridor project" will help build infrastructure, stimulate Pakistan's economy and create millions of badly needed jobs.

Clearly, China-Pakistan ties have now become much more strategic than the US-Pakistan ties, particularly since 2011 because, as American Journalist Mark Mazzetti of New York Times put it, the  Obama administration's heavy handed policies "turned Pakistan against the United States". A similar view is offered by a former State Department official Vali Nasr in his book "The Dispensable Nation".

Related Links:

Haq's Musings 

US-Pakistan Ties and New Silk Route

Can Pakistan Say No to US Aid?

Obama's Pakistan Connections

Seeing Bin Laden's Death in Wider Perspective

China's Investment and Trade in South Asia

China Signs Power Plant Deals with Pakistan

Soaring Imports from China Worry India

China's Checkbook Diplomacy

Yuan to Replace Dollar in World Trade?

China Sees Opportunities Where Others See Risk

Chinese Do Good and Do Well in Developing World

Can Chimerica Rescue the World Economy?



Tuesday, May 21, 2013

Facts and Myths About Out of School Children in Pakistan

A recent Express Tribune newspaper headline screamed: "Over 27 million children out of school" It included the following graphic that looks even more scary:


The story had the intended effect. Various commentators and pundits responded in a knee-jerk fashion. Without scrutinizing the data and checking the facts, they declared the situation "hopeless". Many Indian readers also jumped in on the discussions at various Internet sites to reinforce the doom and gloom about Pakistan.



Instead of joining the mourning crowd, I decided to check the original sources and found as follows:

1. The actual number of out of school children of primary age in Pakistan is 5.1 million.

2. The figures of 50% in Punjab, 61% in Sindh, 65% in KP and 78% in Balochistan are for pre-primary children ages 3 to 5 years, not for ages 6-16 years.

3. In 6-16 years age group, 7% of urban and 23% of rural children are out of school.

Source: 2012 Global Monitoring Report
4. The number of primary-age out-of-school children has declined from in 8.4 million in 2001 to 5.1 million in 2010.

5. According to Pakistan Standards of Living Measurements PSLM 2011-12, the country's literacy rate is 58%, not 54% as claimed in the latest Express Tribune story.

Source: 2012 Global Monitoring Report


6. Data from Harvard researchers Rober Barro and Jhong-Wa Lee shows that Pakistan has been increasing enrollment of students in schools at a faster rate since 1990 than India. In 1990, there were 66.2% of Pakistanis vs 51.6% of Indians who had no schooling. In 2000, there were 60.2% Pakistanis vs 43% Indians with no schooling. In 2010, Pakistan reduced it to 38% vs India's 32.7%.



Source: Pakistan Education Stats


UNESCO data also shows that a significant percentage of out-of-school children in Pakistan are expected to enter school:

I do not see any justification for the usual expressions of extreme pessimism that follow every alarmist report in the media. I do, however, see an urgent need for higher spending and greater focus on education by the incoming government to make faster progress, particularly in closing the gender gap in school enrollment. A recent report about significant education successes in Punjab prepared by Sir Micheal Barber gives me hope that the PML (N) will perform better than the last government in responding to the challenge.

Related Links:

Haq's Musings

Educational Attainment in Pakistan

Upwardly Mobile Pakistan

Biotech and Genomics in Pakistan

India & Pakistan Comparison Update 2011

India and Pakistan Contrasted in 2010
 
Eating Grass-The Making of Pakistani Bomb
 
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
 

Monday, May 20, 2013

Looking Back at Military Rule in Indonesia and Pakistan

General Suharto stepped down 15 years ago tomorrow. Here's an excerpt of today's New York Times story on the Indonesian strongman's legacy:

"Mr. Suharto’s spirit continues to loom over modern-day Indonesia. He brought the country back from the brink of political, social and economic calamity in the mid-1960s, dramatically reduced poverty and by the early 1990s had turned Indonesia into one of the Asian tiger economies. But he also governed with an iron fist, sending his jackbooted military into separatist-minded regions, jailing and exiling political enemies, quashing democratic institutions and the news media, and presiding over what some claim is one of the most corrupt governments in modern history.....Tuesday is the 15th anniversary of Mr. Suharto’s resignation as president.  .... Since then, Indonesia has undergone a dramatic transformation toward democracy and now has open elections and the world’s 16th-largest economy. Yet corruption remains endemic, crime is higher than during Mr. Suharto’s “New Order” regime, and Jakarta and other large cities have chronic traffic problems".

Both Indonesia and Pakistan have each seen about 30 years of military rule.  So why has Indonesia become an Asian tiger economy and Pakistan has not?

One possible explanation is that while there was 32 years uninterrupted military rule with sustained development in Indonesia, Pakistan has seen three stints of high growth under military generals in 1960s, 1980s and 2000s separated by  three periods of slow or very slow growth under civilian rule in 1950s, 1970s and 1990s. Pakistani military rulers have also been less ruthless and more benevolent than Gen Suharto.

Pakistan has also experienced economic and social progress comparable to Indonesia's during periods of military rule. There has been much better governance and significantly faster rates of economic and social development during military rule than under civilian leaders. Many economists persuasively argue  that Pakistan would have developed as fast as South Korea had the Ayub era policies continued uninterrupted for another decade or two.

Pakistan's first  military dictator General Ayub Khan's period is labeled by Pakistani economist Dr. Ishrat Husain as "the Golden Sixties". General Ayub Khan pushed central planning with a state-driven national industrial policy.  Countries like Malaysia and South Korea saw Pakistan as a model for export-led growth, according to Prof Stephen Cohen. In fact, South Korea sought to emulate Pakistan's development strategy and copied Pakistan's second "Five-Year Plan".

Here's how Dr. Husain recalls Pakistan of 1960s:

"The manufacturing sector expanded by 9 percent annually and various new industries were set up. Agriculture grew at a respectable rate of 4 percent with the introduction of Green Revolution technology. Governance improved with a major expansion in the government’s capacity for policy analysis, design and implementation, as well as the far-reaching process of institution building. The Pakistani polity evolved from what political scientists called a “soft state” to a “developmental” one that had acquired the semblance of political legitimacy. By 1969, Pakistan’s manufactured exports were higher than the exports of Thailand, Malaysia and Indonesia combined. Though speculative, it is possible that, had the economic policies and programs of the Ayub regime continued over the next two decades, Pakistan would have emerged as another miracle economy."

Pakistanis have found that each time a military ruler has been forced out and replaced by a civilian government led by politicians, both the economic and the social indicators have suffered. For example, Pakistan's decade of 1990s under the PPP and the PML rule is remember by economists as the lost decade. It was followed by a rebound of robust social and economic development during the Musharraf period from year 2000 to 2007.

In the 1990s, economic growth plummeted to between 3% and 4%, poverty rose to 33%, inflation was in double digits and the foreign debt mounted to nearly the entire GDP of Pakistan as the governments of Benazir Bhutto (PPP) and Nawaz Sharif (PML) played musical chairs. Before Sharif was ousted in 1999, the two parties had presided over a decade of corruption and mismanagement. In 1999 Pakistan’s total public debt as percentage of GDP was the highest in South Asia – 99.3 percent of its GDP and 629 percent of its revenue receipts, compared to Sri Lanka (91.1% & 528.3% respectively in 1998) and India (47.2% & 384.9% respectively in 1998). Internal Debt of Pakistan in 1999 was 45.6 per cent of GDP and 289.1 per cent of its revenue receipts, as compared to Sri Lanka (45.7% & 264.8% respectively in 1998) and India (44.0% & 358.4% respectively in 1998).

The year 1999 brought a bloodless coup led by General Pervez Musharraf, ushering in an era of accelerated economic growth that led to more than doubling of the national GDP, and dramatic expansion in Pakistan's urban middle class. Pakistan became one of the four fastest growing economies in the Asian region during 2000-07 with its growth 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.

The above facts were acknowledged by the last PPP 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. The document clearly (but grudgingly) acknowledged that "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)

In addition to faster economic growth, Pakistan's human development index (HDI) also grew at an average rate of 2.7% per year under President Musharraf from 2000 to 2007, and then its pace slowed to 0.7% per year in 2008 to 2012 under elected politicians, according to the 2013 Human Development Report titled “The Rise of the South: Human Progress in a Diverse World”. Overall, Pakistan's human development score rose by 18.9% during Musharraf years and increased just 3.4% under elected leadership since 2008. The news on the human development front got even worse in the last three years, with HDI growth slowing down as low as 0.59% — a paltry average annual increase of under 0.20 per cent.

Going further back to the  decade of 1990s when the civilian leadership of the country alternated between PML (N) and PPP,  the increase in Pakistan's HDI was 9.3% from 1990 to 2000, less than half of the HDI gain of 18.9% on Musharraf's watch from 2000 to 2007.




Acceleration of HDI growth during Musharraf years was not an accident.  Not only did Musharraf's policies accelerate economic growth, 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, his government also ensured significant investment and focus on education and health care. In 2011, a Pakistani government commission on education found that public funding for education has been cut from 2.5% of GDP in 2007 to just 1.5% - less than the annual subsidy given to the various PSUs including Pakistan Steel and PIA, both of which  continue to sustain huge losses due to patronage-based hiring.


Why is it that the military rulers have consistently delivered better economic and social results while the politicians have not been able to mach them? To put it all in perspective, let's recall how late Dr. Mahbub ul-Haq, the renowned Pakistani economist who is credited with the idea of UNDP's human development index (HDI), explained the corrosive impact of political patronage on economic policy in Pakistan.

In a 10/12/1988 interview with Professor Anatol Lieven of King's College and quoted in a recent book "Pakistan-A Hard Country", here is what Dr. Haq said:
"Growth in Pakistan has never translated into budgetary security because of the way our political system works. We could be collecting twice as much in revenue - even India collects 50% more than we do - and spending the money on infrastructure and education. But agriculture in Pakistan pays no tax because the landed gentry controls politics and therefore has a grip on every government. Businessman are given state loans and then allowed to default on them in return for favors to politicians and parties. Politicians protect corrupt officials so they can both share the proceeds.

And every time a new political government comes in they have to distribute huge amounts of state money and jobs as rewards to politicians who have supported them, and short term populist measures to try to convince the people that their election promises meant something, which leaves nothing for long-term development. As far as development is concerned, our system has all the worst features of oligarchy and democracy put together.



That is why only technocratic, non-political governments in Pakistan have ever been able to increase revenues. But they can not stay in power for long because they have no political support...For the same reason we have not been able to deregulate the economy as much as I wanted, despite seven years of trying, because the politicians and officials both like the system Bhutto (Late Prime Minister Zulfikar Ali Bhutto) put in place. It suits them both very well, because it gave them lots of lucrative state-sponsored jobs in industry and banking to take for themselves or distribute to their relatives and supporters."
To summarize, there is insufficient revenue collected by the state of Pakistan, and the diversion of this very limited revenue to political patronage fosters dependence on foreign aid and impinges on the nation's sovereignty. It also seriously harms Pakistan's ability to invest in education, health care and infrastructure development in terms of school and hospital buildings, roads, rails, and water and energy projects for Pakistan's future.

Discussing the politics of patronage in Pakistan, Professor Lieven, the author of "Pakistan-A Hard Country", sees a silver lining to it by describing the difference between Nigeria and Pakistan in the following words:
"Rather than being eaten by a pride of lions, or even torn apart by a flock of vultures, the fate of Pakistan's national resources more closely resembles being nibbled away by a horde of mice (and the occasional large rat). The effect on the resources, and on the state's ability to do things, are just the same, but more of the results are plowed back into the society, rather than making their way straight to bank accounts in the West. This is an important difference between Pakistan and Nigeria, for example."
I personally see no better explanation for the boom under President Musharraf in 2000-2007, followed by current economic crisis since 2008, than the prevailing system of political patronage continuing to trump good public policy almost 23 years after late Dr. Mehboob ul Haq described it so well.

Having just voted and elected new leaders in general elections on May 11, it is important that the voters demand an explanation from the new leadership for their extremely poor performance in the social sector in the past. Without accountability, these politicians will continue to ignore the badly needed investments required to develop the nation's human resources for a better tomorrow. Forcing the political leaders to prioritize social sector development is the best way to launch Pakistan on a faster trajectory.

Here's a video discussion on the subject recorded on Pakistan's independence day:



Wide Angle Zoom: Formation and Future of Pakistan by wbt-tv

Related Links:

Haq's Musings

General Suharto Passes On

The Idea of Pakistan By Stephen Cohen

Saving Pakistan's Education

Political Patronage Trumps Public Policy in Pakistan

Dr. Ata-ur-Rehman Defends Pakistan's Higher Education Reforms

Twelve Years Since Musharraf's Coup

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?

Friday, May 17, 2013

Pakistan Elections 2013 Results; Rigging Charges; New Government's Challenges

Pakistanis defied threats of violence by the Taliban and turned out in large numbers to vote in general elections on May 11, 2013. It was massive exercise with 60% of 86 million registered voters casting their ballots all across the country to choose members of national and provincial legislatures.

Results Summary:

Pakistan Muslim League (Nawaz) emerged as the big winners with over 124 seats in a house of 272 directly-elected members at the national level. Pakistan Peoples' Party suffered heavy losses everywhere except in rural Sindh province. Imran Khan's forecast of PTI tsunami did not quite materialize but his party still emerged as a strong challenger with 27 seats, almost as many National Assembly seats as the much older and better established Pakistan Peoples' Party.


 There are some who argue that PTI and PPP are now irrelevant in the National Assembly. There could be nothing further from the truth! The fact is that PTI in particular is far more relevant now and poses the biggest challenge to Nawaz Sharif. I fully expect Imran Khan to pounce on Sharif if he falls short in solving the many serious crises of security, energy and economy that Pakistan faces today.

Rigging Charges:

There have been rigging charges by losing candidates and parties in a number of constituencies. However, international observers all agree that the elections were by and large free and fair. In its interim report, the European Union, which deployed the largest foreign election observer mission in Pakistan, said the voting at 90% of the polling stations remained ‘satisfactory’.

In my view, the fact that the Taliban violence selectively prevented ANP, MQM and PPP from campaigning freely raises more serious questions about the freeness and fairness of the elections than what happened at a few polling stations on polling day. But I believe that elections are never 100% fair anywhere-much less in Pakistan. There were serious questions about President John F. Kennedy's win in Chicago Illinois and George W. Bush's win in Florida but in each case the opponents chose to back down in the larger interest of the country. Unlike Pakistan's May 11 elections in disputed constituencies, the 1960 and the 2000 general elections were very close with the difference of  just a few thousand votes.

I hope the rigging claims are peacefully resolved by re-polling in affected polling stations where there is solid evidence of irregularity. It's not in Pakistan's or any of the political parties' best interest to plunge the country into yet another crisis. I hope sanity prevails here. Leaders like IK need to play a role here to calm the situation.

Expectations of Nawaz Sharif's Government:

In his prior stints in government, Mr. Nawaz Sharif managed the economy poorly. Pakistan was nearly bankrupt with about a billion dollars in reserves in 1999. He ran afoul of the powerful military as well as the media and the judges.

Pakistan has changed a lot since 1999 when Mr. Sharif was removed from power by General Pervez Musharraf and few tears were shed for him. Pakistan has since gone from a low-income to a middle-income country and its economy is now almost 4 times larger. The country has nearly $12 billion in reserves. New power centers have emerged in the form of powerful mass media and highly assertive judiciary.

Pakistan now faces huge challenges. The state must fight a fierce Taliban insurgency and address crippling energy shortages. It must also revive the economy and increase tax revenues to invest in education, health care and infrastructure.

Pakistan's Macro-economic Indicators (Source: State Bank of Pakistan)

Summary: 

I congratulate the incoming Prime Minister Mr. Nawaz Sharif and his PML (N) party on their victory and I welcome the emergence of PTI as a third powerful force in Pakistani politics. I hope PML leadership is now more experienced and mature and up to the challenge of leading Pakistan out of its current crises of security, energy and economy.

As to Imran Khan's PTI, it has come from nowhere to become almost the second largest party in the National Assembly and the new governing party in KP. It has the potential to transform the future of Pakistan if PTI does well in governing KP and forces change at the center to bring in much needed reforms. It's a big test of PTI and and a great hope for Pakistan.

Here's a video discussion related to this post:



Pakistan Elections 2013 results, Rigging charges, what to expect from the new government from WBT TV on Vimeo.

Related Links:

Haq's Musings

Who Will Win Pak Elections 2013 and Form Next Government

Musharraf's Coup Revived Pak Economy

Judicial Coup in Pakistan

Media and Telecom Revolution in Pakistan

Impact of Youth Vote and Taliban Violence on Elections 2013


Taliban vs. Pakistan in Elections 2013

Detailed Voter Maps for Pakistan Elections 2013

Imran Khan's Social Media Campaign

Pakistan Elections 2013 Predictions 

Why is Democracy Failing in Pakistan?

Imran Khan's Social Media Campaign

FMCG Companies Profiting From Pakistan's Rural Consumption Boom

Poll Finds Pakistanis Happier Than Neighbors

Politics of Patronage in Pakistan

Feudal Power Dominates Pakistani Elections

Viewpoint From Overseas-Vimeo 

Viewpoint From Overseas-Youtube 

Thursday, May 16, 2013

World Values Survey Finds Indians Most Racist

43.5% of Indians, the highest percentage in the world, say they do not want to have a neighbor of a different race, according to a Washington Post report based on World's Values Survey.

About Pakistan, the report says that  "although the country has a number of factors that coincide with racial intolerance – sectarian violence, its location in the least-tolerant region of the world, low economic and human development indices – only 6.5 percent of Pakistanis objected to a neighbor of a different race. This would appear to suggest Pakistanis are more racially tolerant than even the Germans or the Dutch".

Housing Discrimination: 

It appears that there is a small but militant minority in Pakistan that is highly intolerant, but the vast majority of people are tolerant. My own experience as a  former Karachi-ite  is that there is little or no race or religion based housing segregation, the kind that is rampant in India where Muslims are not welcome in most Hindu-dominated neighborhoods. There have been many reports of top Muslim Bollywood stars having difficulty finding housing in Mumbai's upscale neighborhoods. A common excuse used to exclude them is the ostensible requirement to be vegetarian to live there.

Source: World Values Survey and Washington Post

Hate Against Indian Muslims:

The idea of racial purity is central to Hindu nationalists in India who have a long history of admiration for Adolf Hitler, the Nazi leader, including his "Final Solution".

In his book "We" (1939), Madhav Sadashiv Golwalkar, the leader of the Hindu Nationalist RSS (Rashtriya Swayamsevak Sangh) wrote, "To keep up the purity of the Race and its culture, Germany shocked the world by her purging the country of the Semitic races -- the Jews. Race pride at its highest has been manifested here. Germany has also shown how well-nigh impossible it is for races and cultures, having differences going to the root, to be assimilated into one united whole, a good lesson for us in Hindusthan to learn and profit by."

Caste-based Apartheid:

While Golwalar's principal target in the above paragraph were Indian Muslims, the treatment of lower caste Hindus in India also falls in the category of racism. The International Convention on the Elimination of All Forms of Racial Discrimination (ICERD) now includes discrimination based on caste. Dating back to 1969, the ICERD convention has been ratified by 173 countries, including India. Despite this, and despite the United Nations Sub-Commission on the Promotion and Protection of Human Rights reiterating that discrimination based on work and descent is a form of racial discrimination, the Indian government's stand on this issue has remained the same: caste is not race.

Over 250 million people are victims of caste-based discrimination and segregation in India. They live miserable lives, shunned by much of society because of their ranks as untouchables or Dalits at the bottom of a rigid caste system in Hindu India. Dalits are discriminated against, denied access to land, forced to work in slave-like conditions, and routinely abused, even killed, at the hands of the police and of higher-caste groups that enjoy the state's protection, according to Human Rights Watch.

Gandhi's Disdain for Black Africans:

It's not just the Hindu Nationalists who are racists. Even Mohandas K. Gandhi, Mahatma or the Great Soul, was not immune to Indians' racist tendencies. In 1908, recording his first experience in a South African prison, Gandhi referred to black South Africans as "kaffirs". According Joseph Lelyveld, the author of "Great Soul: Mahatma Gandhi and His Struggle With India", Gandhi wrote: "We were then marched off to prison intended for kaffirs. ..we could understand not being classed with the whites, but to be placed with the Natives seemed too much to put up with. It is indubitably right that Indians should have separate cells."

Summary:

The findings of World's Values Survey on India are well-supported by other evidence such as the Hindutva ideology as spelled out by RSS leader Golwalkar, the existence of widespread caste-based discrimination classified as racism by the United Nations and lots of other anecdotal evidence. Just this month, Indian racism was on full display at a lavish Indian wedding in South Africa where guests flown in from India refused to be served by black waiters and drivers.

Let me conclude this post with a video interview of Professor Ahmad Hasan Dani who attended Banaras Hindu University (BHU) and studied archaeology, and said that he was ostracized and treated as a pariah by Hindu students and faculty at BHU. He was not allowed to sit and eat with his fellow students, he was asked to keep his plates and dishes separate in his room, and required to stand outside the dining hall to be served his meal and then wash the dishes himself. Later, when he graduated at the top of the archaeology class, he was offered a faculty position, but the University head and former president of India Radhakrishnan told him that he would be paid a salary but he would not be allowed to teach. Here is a video clip of late Prof Dani talking about it:


Related Links:

Haq's Musings

Indians Admire Israel and Hitler

Caste Apartheid in India

Mahatma Gandhi and His Struggle With India

Who Killed Karkare?

Procrastinating on Hindutva Terror

India's Guantanamos and Abu Ghraibs

Hindutva Government in Israeli Exile?

Growing US-India Military Ties Worry Pakistan

The 21st Century Challenges For Resurgent India

Friday, May 10, 2013

Who Will Win Pak Elections 2013 and Lead Next Government?

Time to update my last set of elections 2013 predictions which were made in August 2012, well before the Taliban started to selectively attack PPP, ANP, and MQM. 

Since then, ANP's chances have significantly diminished but PPP and MQM still remain strong in their respective strongholds.  In recent months, Nawaz Sharif's PML (N) has also recovered significant ground vis-a-vis Imran Khan's Tehrik-e-Insaf. 

The PPP-MQM-ANP bloc can still prevail and form the next govt because the right-wing (PML N, JI, JUI, and I include PTI in that as well) in Pakistan is deeply divided with each party fielding candidates against others and splitting the traditional conservative vote. 

Youth and women vote still remains a wild card which could tip the balance in favor of Imran Khan's Tehrik-e-Insaf if there is significantly higher voter turn-out this time relative to the 44% in 2008 elections. 

As Pakistanis begin to vote in General Elections 2013, here's my assessment of how the results will turn out:

PML (N) may end up with the largest number of seats but it probably will not be able to put together a coalition. 

This will likely open up an opportunity for the PPP to form the next govt. So there's very little chance of better governance in the next 5 years. 

Imran Khan (PTI) will most likely sit in the opposition with 30-40 seats....a substantial number to be able to influence laws and policies. 

If the result goes as I predict with PTI getting 30-40 seats (substantial in my view), then I fear that Imran Khan's folks will cry foul. But it'll be a test of IK's leadership to cool tempers and work to improve the system and hope that the next election could make PTI a big winner.

Who will win Pakistan Elections 2013? Who will lose? Who will form the next government at the center and the provinces? How will violence affect the outcome? Who is using the mass media for campaigning? Please watch Viewpoint From Overseas host Faraz Darvesh discuss these and other questions with Sabahat Ashraf, Ali Hasan Cemendtaur and Riaz Haq



Who Will Win Pakistan Elections 2013? Imran Khan's Fall and Ali Haider Gilani's abduction. from WBT TV on Vimeo.

Here's the seats summary as of May 15, 2013:

Source:  Pakistan Election Commission via GeoTV

Here's percentage of votes cast for each party:

Source: Pakistan Election Commission via Dawn



Related Links:


Haq's Musings

Impact of Youth Vote and Taliban Violence on Elections 2013


Detailed Voter Maps for Pakistan Elections 2013

Imran Khan's Social Media Campaign

Pakistan Elections 2013 Predictions 

Why is Democracy Failing in Pakistan?

Imran Khan's Social Media Campaign

FMCG Companies Profiting From Pakistan's Rural Consumption Boom

Poll Finds Pakistanis Happier Than Neighbors

Politics of Patronage in Pakistan

Feudal Power Dominates Pakistani Elections

Viewpoint From Overseas-Vimeo 

Viewpoint From Overseas-Youtube