Friday, January 31, 2014

Japan Multinationals Rank Pakistan Among Top Growth Markets

Japanese companies have "strong intentions to expand their business for the reasons of “sales increase” and “high growth potential.” in Pakistan.  JETRO 2013 Report

Japanese companies doing business in Pakistan have ranked the country second in the world in terms of business growth, according to a survey conducted by the Japan External Trade Organization (JETRO).

Japanese Companies Reporting Profits (Source: JETRO)



JETRO surveyed 9,371 Japanese multinational companies operating around the world and reported that Pakistan is ranked number 2 in terms of current profitability and expected sales growth. Taiwan leads with 81.8% reporting profits, followed by Pakistan with 74.1% being profitable in 2013.

Japanese Companies' Sales Growth Forecast (Source: JETRO)

Pakistan also ranks at number 2 with 81.5% forecasting future sales growth, just behind Myanmar where  84.6% see growth in the next one to two years. Other South Asian nations, including Bangladesh, India and Sri Lanka, rank much lower for both profits and sales growth.

Japan to Supply Karachi Circular Railway Trains

JETRO has been conducting such surveys for many years. Pakistan’s data is based on responses of 27 Japanese firms doing business in the country. The percentage of Japanese firms expecting improved operating profits remained the same level as last year, while varying by country and region. 64.6% of respondents expect an operating profit in 2013, remaining almost the same level as the previous year (63.9%). Looking at the results by country, the percentage for Taiwan is the highest (81.8%), followed by Pakistan (74.1%), South Korea (73.8%), Hong Kong and Macau (72.6%) and Thailand (72.4%), among others. On the other hand, the percentage is relatively low for Sri Lanka (38.7%), Cambodia (38.5%) and Laos (25.0%). Looking at the results by business scale, 69.4% of large-scale companies expect an operating profit, 13.2 points above the percentage for small and medium-sized enterprises (SMEs) (56.2%).

The percentage of respondents planning to expand business operations in the next one or two years was 59.8% overall, a 2.0 point rise from the 57.8% in the previous year. Firms in emerging countries such as Myanmar (84.6%), Pakistan (81.5%) and Cambodia (80.0%) have particularly strong intentions to expand their business for the reasons of “sales increase” and “high growth potential.” The percentage for China increased to 54.2%, a 1.9 point rise from 2012 when it had decreased by 14.5 points from 2011. On the other hand, the percentage for Indonesia decreased 10.9 points from the previous year, the largest decrease among the surveyed countries. While the percentages for the Philippines (58.1%) and Sri Lanka (51.5%) are below overall average, they showed significant increase (9.9 points and 14.0 points, respectively) compared to the previous year.

JETRO survey is the latest ray hope on the heels of  impressive share market performance in 2013. Karachi's KSE-100 Stock Market Index was up 49.4% (37% in US$ terms) in 2013, beating all but four stock indices in the world. It handily beat Morgan Stanley's MSCI emerging market index which remained essentially flat. By comparison, India's main stock index rose just 8.89% in the same period. The remaining three BRIC countries--Brazil, Russia and China-- all saw their key stock indices decline in 2013.

KSE-100 vs MSCI Emerging Markets Index Source: Wall Street Journal

This is a continuation of the bullish trend seen in 2012 when KSE-100 also rose nearly 50% to top all Asian market indices. As of December 31, 2013, KSE-100 is up 329% since the end of 2008. It is being driven mainly by rapid growth in revenue and profits of the listed companies. Even after the strong run-up, the market still remains cheapcurrently trading at over nine times trailing 12 month earnings—a common valuation measure used by stock analysts, according to Wall Street Journal.

World Stock Indices Performance 2013 Source: Seeking Alpha
Dubai finished up the most in 2013 with a gain of 107.69%. Japan was up the fourth most with a gain of 56.72%, making it the best performing G7 country. The US ended up in 9th place globally with a gain of 29.6%. Of the other G7 countries, Germany finished third with a YTD gain of 25.48%, followed by France (17.99%), Italy (16.56%), the UK (14.43%) and Canada (9.55%), according to Seeking Alpha.

The fresh investor optimism in 2013 was triggered by the election of Prime Minister Nawaz Sharif whose government is seen to be business-friendly by investors and businessmen. His finance minister Ishaq Dar claimed that Pakistan's gdp growth accelerated to 5% in July-Sept quarter in 2013. It was driven by large-scale manufacturing (LSM) which grew 12.76 per cent in September 2013 from a year ago.

"Pakistan has a fairly diverse economy with a large and young population that needs to be fed and supplied basic infrastructure such as electricity," Wall Street Journal quoted Caglar Somek, global portfolio manager at Caravel Management in New York, as saying. He manages around $650 million of investments. "If you find the companies that supply those basic needs, growing at double digit with high profitability, you can buy them at valuations that are on average 30% to 40% cheaper than their emerging market peers," said Mr. Somek.

Since the general elections of May, 2013, Pakistan has seen smooth power transfer from one civilian government to another. Other major transitions include the change of President, Army Chief and the nation's powerful Chief Justice of the Supreme Court.

Power cuts are now less frequent after payment of power generation companies overdue bills by the federal government. Financing has been closed on several power projects, including ADB financing of a major coal-fired plant in Jamshoro and Chinese loans for the nation's largest nuclear power plant planned for Karachi.

The good news for Pakistan in the JETRO report is that the Japanese companies have "strong intentions to expand their business for the reasons of “sales increase” and “high growth potential.”" Let's hope this results in a significant increase in foreign direct investment (FDI) in the country.

Progress on economic front, however, needs to be matched by similar progress on the security front which remains the biggest concern for the future of the country and its economy. What is needed is a comprehensive anti-terrorism strategy and plan of action soon.

Related Links:

Haq's Musings

Pakistan Stock Market Among World's Top 5 Performers in 2013

Foreign Investment Up, Load-shedding Down in Nawaz Sharif's First 100 Days

Pakistan to Beg and Borrow Billions More in 2013-14

Power Companies Profits Soar at Taxpayer's Expense

Does Nawaz Sharif Have a Counter-terrorism Strategy?

Pakistan's Tax Evasion Fosters Aid Dependence

Pakistan's Vast Shale Oil and Gas Reserves

Pak IPPs Make Record Profits Amid Worst Ever Load Shedding 

Global Power Shift Since Industrial Revolution

Massive Growth in Electrical Connections in Pakistan

Finance Minister Ishaq Dar's Budget 2013-14 Speech

Tuesday, January 28, 2014

ICC Big 3: Will Australia, England and India Doom Cricket?

Australia, England and India, the three biggest revenue producing nations in the world of cricket, are seeking to remodel International Cricket Council (ICC) along the lines of the UN Security Council. They are making a naked bid to get more money and power for themselves at the expense of the cricket boards of the rest of the ICC member nations including Bangladesh, New Zealand, Pakistan, South Africa, Sri Lanka, West Indies and Zimbabwe.

The "Big 3" Proposal:

The proposals, written by the ICC's Finance, Commercial Affairs (FCA) committee and leaked to the media last week, calls for the formation of a four-person executive committee, on which the representative of boards of Australia, England and India would be guaranteed a seat. Only one representative from the rest of the cricketing nations combined would be selected by the three boards annually.

Would this proposal, if adopted as is, strengthen the sport of cricket? Or would it spell doom for it? Its proponents argue that the new structure would improve governance of world cricket. Cricket Australia Chairman Wally Edwards said " its approach internationally is consistent with its approach at home where we have made significant strides improving the governance of Australian cricket".

The Debate on "Big 3":

Opponents such as former Indian Premier League boss Lali Modi call it "a nail in the coffin for world game". Here are some excepts of what Modi told Hindustan Times:

“It’s a cartel, an unholy trinity and it threatens the future of the game. I’m serious. How can it possibly be good for the other Test playing nations and the associate members that these three line their own pockets. It is a scandal and it must be stopped. “They are going to kill cricket with these proposals. Great, India and England and Australia can play themselves to their heart’s content but they have put every other nation on the bread line.”

“They are saying they should have the power because they can bring greater stability but they don’t explain how they are going to do it. This is cloak and dagger stuff. Where’s the transparency? And then they say that each member will be given revenue share in line with the growth of the ICC. They are just lining their pockets".

 “You can read it yourself. It is clear in black and white. Section one, page three, point E and I’ll quote it ‘Ensuring a fair distribution of revenues, recognizing the contribution of each member to the ICC both on and off the field’. The key word there is ‘contribution’. Well, of course Indian ‘contribute’ more in terms of money than Zimbabwe. But this is totalitarian. This is about the rich getting richer and screw the rest".

“Again, a little further down. Same section, same page but point f. ‘The need to streamline bilateral cricket arrangements and ensure the on-going relevance of all these matches to ICC events and the viability of cricket in all relevant markets’. Look, we all know what streamline means in this context. It’s reducing or getting rid all together.”

Successful NFL Model:

The world's most successful sports franchise today is the National Football League (NFL) in the United States. It treats all of its 32 member teams equally with equal vote in decision making. Over 70% of its revenue is shared equally among its member teams.

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

Economics of Sports:

Simon Rottenberg, an economist at University of Chicago, published what is considered as the first significant paper on the subject of the economics of sport, "The Baseball Players' Labor Market" in 1956. He stressed the importance to sporting competition of uncertainty of outcome and distribution of talent: "The nature of the industry is such that competitors must be of approximately equal ‘size’ if any are to be successful; this seems to be a unique attribute of professional competitive sports." This ‘invariance principle’ was because a league in which the strong simply soaked up all the talent would defeat itself.

Summary: 

The naked power grab by cricket boards of Australia, England and India is indeed an "Unholy Trinity". It defies the basic economics of sports as described by University of Chicago economist Simon Rottenberg. It results in unequal competition by weakening the majority of the national cricket teams by starving them of needed revenues to train, promote and reward the best and the brightest players.  It will badly hurt international cricket. PCB and other cricket boards should strongly oppose it.

Related Links:

Haq's Musings

Pakistan Cricket Needs World Class Batting Coach and Top Sports Psychologist

US NFL Team Owner Shahid Khan

Top Ten Sledges in Cricket

Pakistan Breaks Australia's 34-Match Winning Streak

Wikileaks on India's Hawkish Policy on Pakistan

Obama on Cricket

Case For Resuming India-Pakistan Peace Talks

Pakistan Punish Aussie 2-0 in T20 Series

Afridi's Leadership

Pakistan In, India Out of T20 Semis

Pakistan Beat India in South Africa

Kiwis Dash Pakistan's ICC Championship Hopes

Pakistan Crowned World T20 Champs

Pakistan's Aisamul Haq Beats Tennis Great Roger Federer




Friday, January 24, 2014

Is Pakistan Ready For Long Sustained Anti-Terror Campaign?

The year 2014 in Pakistan began with 27 deadly terrorist attacks in the first 20 days, claiming nearly 200 lives, according to South Asia Terrorism Portal. Tehrik-e-Taliban Pakistan (TTP) claimed responsibility for most of the attacks. In response, Pakistan ordered air-strikes against TTP targets in Tirah Valley (Khyber Agency) and Mir Ali (North Waziristan) in FATA. This was the first time in several years that the Pakistan Air Force jets pounded TTP hide-outs.

Source: South Asia Terrorism Portal 

While I believe the air-strikes were needed to send a message to the terrorists, there was no word from Prime Minister Mian Nawaz Sharif as to his strategy to deal with the TTP terror campaign that has so far claimed over 50,000 lives in the last few years. The strikes raise several questions: 

1.  Is Pakistan now ready to engage in a long and sustained campaign to eliminate terrorism as Sri Lanka did

2. If Pakistan is launching a war on TTP terrorists, why is it being done without first taking the people of Pakistan in confidence? 

3. When will the Prime Minister launch a communication offensive to build public support required for a war that could take many more years and lives? 

4. How will the Prime Minister deal with the pro-Taliban forces active in Pakistan's politics and media and other walks of life? 

5. If the Prime Minister has finally decided to end the menace of terrorism, is he prepared to stay the course when there are many more casualties on all sides? Is he preparing the nation to pay the price? 

6. What are the consequences of failure in this war? Will Pakistan fall to the Taliban? Will military directly intervene and take control of the government if the politicians fail to do what is necessary? What if both the politicians and the military fail? Will there be a massive multinational force intervention to keep Pakistan's nuclear weapons from falling into the hands of the Islamic militants? Will US and China join hands to prop up Pakistani state to protect themselves?  

For a discussion of the above and other current topics, please watch the following video:

https://vimeo.com/84989799

Wednesday, January 22, 2014

Can the Taliban Defeat and Destroy Pakistan?

While some Pakistanis, including major political leaders, are afraid of speaking out against the Taliban, other Pakistanis are taking the challenge posed by the insurgents lightly. They are underestimating the power and the capacity of a rag-tag band of barbarians to bring down the Pakistani state and take control in the nation's capital in Islamabad. It's important for Pakistanis to learn from history to end such complacency.

Ibn Khaldun
History Lessons:

Famous medieval Islamic historian Abd ur Rehman Ibn Khaldun (1332-1406) argued in his masterpiece "Muqaddima" that tribesmen and barbarians have often had more courage and social cohesion than settled and civilized folk.  He cited many instances in history when rag-tag bands of ill-educated and uncivilized insurgents have swept in and conquered lands whose rulers became corrupt and complacent.

Fall of Empires:

History is witness to the fact that great empires were brought down by relatively unsophisticated but highly committed armed groups of fighters. Roman empire was destroyed by blue-eyed barbarian tribes from Northern Europe. Persian and Byzantine empires were brought to their knees by desert-dwelling Muslim tribesmen from the Arabian Peninsula. Thriving Islamic Caliphate of Baghdad in what is known as the Golden Era of Islam was sacked by Mongols and completely destroyed. China, too, was conquered and ruled by Mongols. India was repeatedly attacked and conquered by invaders from Europe and Central Asia and ruled  by their dynasties for centuries.

The Taliban:

The Taliban attacking the Pakistani state are not fundamentally different from earlier generations of barbarians and tribesmen in history. They have shown that they, too, are highly committed and willing to die for whatever they believe in . They are clear in their aims and ready to use whatever means it takes to achieve their goals. They have been relentless in their attacks on the Pakistani state and civilian population.
Taliban vs Pakistan


Pakistan's Response:

The response of the Pakistani leadership has so far been highly confused in the face of concerted Taliban efforts to destroy the Pakistani state. There is a lot of talk about "peace talks" but it's not clear what they are going to talk about? The Taliban have made it clear that they do not accept Pakistan's constitution. They have rejected democracy as a system of governance. They have stepped up their attacks on state institutions and Pakistan's security apparatus. They have unleashed a reign of terror and killed tens of thousands of civilians in the last few years. And they are adamant about implementing their version of "Shariah" which top Islamic scholars do not accept as authentic.

Are Pakistani political leaders willing to compromise on the constitution of  Pakistan? Or the democratic process? Or Pakistan itself? Are they willing concede defeat to a band of barbarians without a fight?

Conclusion:

Pakistani leaders need to develop necessary consensus to fight the existential challenge posed to the nation by the Taliban and their allies in Pakistan. They need to declare war and show determination, not weakness, in the face of relentless Taliban attacks on innocent civilians. They must remember that it took Sri Lanka a long sustained effort spanning decades to win against the Tamil Tigers (LTTE). It will take a long and sustained effort for Pakistan to win the war on Taliban to preserve Pakistan. It's time for Pakistanis to learn the lessons of history to chart and stay the course.  Once there is a clear strategy and plan, I am confident that the Pakistani state and its military will eventually defeat and destroy the Taliban.

Related Links:

Haq's Musings

Nawaz Sharif's Silence on Taliban Terror in Inaugural Speech

Pakistan Can Learn From Sri Lanka's Defeat of LTTE

Taliban vs. Pakistan

Yet Another Peace Deal and Shia Blockade

Taliban Insurgency in Swat

Musharraf's Treason Trial

General Kayani's Speech on Terror War Ownership

Impact of Youth Vote and Taliban Violence on Elections 2013

Imran Khan's Social Media Campaign

Pakistan Elections 2013 Predictions 

Why is Democracy Failing in Pakistan?

Viewpoint From Overseas-Vimeo 

Viewpoint From Overseas-Youtube 

Sunday, January 19, 2014

Musharraf Accelerated Financial and Human Capital Growth in Pakistan

Pakistan experienced rapid economic and human capital growth in years 2000 to 2008 on President Pervez Musharraf's watch. Savings, investments and exports hit new records and the rate of increase in human development reached new highs not seen before or since this period.

Savings and Investments:

Domestic savings rate reached 18% of the GDP and foreign direct investment (FDI) hit a record level of $5.4 billion in 2007-8. This combination of domestic and foreign investments nearly tripled the size of the economy from $60 billion in 1999 to $170 billion in 2007, according to IMF. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs. Pakistan was lifted from a poor, low-income country with per capita income of just $500 in 1999 to a middle-income country with per capita income exceeding $1000 in 2007.

Pakistan Per Capita Income 1960-2012. Source: World Bank 


The PPP government summed up General Musharraf's accomplishments well when it signed a 2008 Memorandum of Understanding with the International Monetary Fund which said:

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

Human Capital Development: 

In addition to the economic revival, Musharraf focused on social sector as well. Pakistan's HDI grew 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”.



Primary Enrollment Source: Economic Survey of Pakistan

Youth Literacy Rate Source: Economic Survey of Pakistan

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.

R&D Spending Jumped 7-fold as % of GDP 1999-2007 Source: World Bank

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. The annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. Government R&D spending jumped from 0.1% of GDP in 1999 to 0.7% of GDP in 2007. 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.

Pakistan's High-Tech Exports Tripled as % of Manufactured Exports. Source: World Bank


To see a discussion of the above subject and the current situation, please watch the following video:

http://vimeo.com/84504051



Civil-military Stand-Off on Musharraf Trial; Musharraf Govt's Performance Record from WBT TV on Vimeo.

Related Links:

Haq's Musings

Musharraf Earned Legitimacy By Good Governance

Musharraf Wants to Face Trial; Military Opposed to it

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?

Human Development in Musharraf Years

Thursday, January 16, 2014

Meat Consumption: Carnivorous Pakistanis Sit Atop Food Chain

A recent study published in Proceedings of the National Academy of Sciences and Nature magazine reports that Pakistanis are among the most carnivorous people in the world.

The scientists conducting the study  used "trophic levels" to place people in the food chain. The trophic system puts algae which makes its own food at level 1. Rabbits that eat plants are level 2 and foxes that eat herbivores are 3. Cod, which eats other fish, is level four, and top predators, such as polar bears and orcas, are up at 5.5 - the highest on the scale.
Trophic Levels Map Source: Nature Magazine
After studying the eating habits of 176 countries, the authors found that average human being is at 2.21 trophic level. It put Pakistanis at 2.4, the same trophic level as Europeans and Americans. China and India are at 2.1 and 2.2 respectively.

Source: Proceedings of National Academy of Sciences


The countries with the highest trophic levels (most carnivorous people) include Mongolia, Sweden and Finland, which have levels of 2.5, and the whole of Western Europe, USA, Australia, Argentina, Sudan, Mauritania, Kazakhstan, Pakistan and Turkmenistan, which all have a level of 2.4.

United States Department of Agriculture (USDA) also published recent report on the subject of meat consumption. It found that meat consumption in developing countries is increasing with rising incomes. USDA projects an average 2.4 percent annual increase in developing countries compared with 0.9 percent in developed countries. Per capita poultry meat consumption in developing countries is projected to rise 2.8 percent per year during 2013-22, much faster than that of pork (2.2 percent) and beef (1.9 percent).

Per Capita Meat Consumption and Income Source: USDA


India and China with the rising incomes of their billion-plus populations are expected to be the main drivers of the worldwide demand for meat and poultry.



Pakistan's goat meat consumption of 779,000 tons in 2011-12 ranks it among the top 3 in the world. 1.7 million tons of beef consumption in Pakistan is ranked  9th among beef consuming nations. In addition, 834,000 tons of poultry meat consumption puts it among world's top 20.

Source: Economic Survey of Pakistan 2011-12
Along with rising meat consumption, there has also been a big surge in milk consumption with the ongoing livestock revolution in Pakistan. Pakistanis consumed nearly 39 million tons of milk in 2011-12, according to Economic Survey of Pakistan. This translates into 223 Kg of milk consumption per person which is about the same as the developed world's per capita milk consumption and more than twice that of neighboring India's 96 kg per capita.

Although meat consumption in Pakistan is rising, it still remains very low by world standards. At just 18 Kg per person, it's less than half of the world average of 42 Kg per capita meat consumption reported by the FAO.

Being mostly vegetarian, neighboring Indians consume only 3.2 Kg of meat per capita, less than one-fifth of Pakistan's 18 Kg. Daal (legumes or pulses) are popular in South Asia as a protein source.  Indians consume 11.68 Kg of daal per capita, about twice as much as Pakistan's 6.57 Kg.

Another ingredient popular in South Asian cuisine is vegetable oil.  It's an important source of fat and protein for a nutritious and tasty diet. Edible oil consumption soars during the holidays as hundreds of millions of people eat sweets and fried foods during the September-December festive season.   Pakistanis use about 20 Kg of oil, the per capita amount recommended by the World Health Organization, while Indians consume about 13 Kg per capita.

Celebratory occasions like Eid or Diwali push sugar consumption in South Asia. Pakistan's per capita sugar consumption is about 23 Kg while India's is about 20 Kg per person per year.

Although still below average relative to the world, per capita consumption of meat, milk and edible oil is rising with rising incomes and standards of living in both India and Pakistan. As the dietary habits change, it'll be important for policy makers and health and fitness professionals to watch the changes and help educate the people about healthy eating and its environmental impact.

Related Links:

Haq's Musings

Pakistan Among Top Meat and Dairy Consuming Nations

Pakistan Leads South Asia in Value Added Agriculture

Livestock and Agribusiness Revolution in Pakistan

Pakistan's Rural Economy Showing Strength

Solving Pakistan's Sugar Crisis

Food, Clothing and Shelter in India and Pakistan 

Is India a Nutritional Weakling?

India Tops World Hunger Charts

Tuesday, January 14, 2014

Musharraf Earned Legitimacy By Good Governance

Former President Musharraf's detractors argue that he lacked legitimacy because he came to power through a coup which removed a duly elected government in 1999.

Implicit in Musharraf's opponents' argument is the assumption that the electoral process is the only source of legitimacy for a ruler. It ignores the possibility that the will of the people can also be expressed in ways other than elections to confer legitimacy on a leader. It rejects the notion that a leader can earn legitimacy in the eyes of the people by delivering results to the people through good governance.

Public Opinion Surveys:

Such an expression of people's will can come in many forms, including results of frequent public opinion polls conducted by multiple professional pollsters in Pakistan and many other countries around the world. One such credible survey is done regularly by Pew Global Research.  It shows that the majority of the people believed the country was headed in the right direction in Musharraf years. It also shows that people's satisfaction with Pakistan's direction has been in rapid decline. It has sharply fallen to about 8% in 2013.
Source: Pew Research in Pakistan

Another survey conducted by Gallup Pakistan  in August 2013 shows that 59% of Pakistanis have a positive view of President Muaharraf (31%  say they hold a favorable opinion of him and another 28% say he was satisfactory). 34% have an unfavorable opinion of the former ruler.

Judiciary and Parliament Approval:

Musharraf's actions of 1999 were legitimized by Pakistan Supreme Court in Syed Zafar Ali Shah v. General Pervez Musharraf, Chief Executive of Pakistan (PLD 2000 SC 869). In addition to endorsing the coup, the Supreme Court granted extensive powers to the new Musharraf Government, empowering it to unilaterally amend the 1973 Constitution and enact new laws without the approval of Parliament.

Musharraf held parliamentary elections in 2002 and subsequently won a parliamentary vote to confirm him as President of Pakistan.

Good Governance Under Musharraf:

When Musharraf took over in 1999, Pakistan was essentially bankrupt with just a few hundred million dollars in reserves and a heavy debt load which it couldn't repay. 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% and 264.8% respectively in 1998) and India (44.0% and 358.4% respectively in 1998).





So what did Musharraf do to gain the trust of a very large number of Pakistanis who supported his rule after the 1999 coup? He undertook a number of economic and regulatory reforms to rejuvenate the country's economy. Deregulating telecommunications and liberalizing electronic media business, particularly television, immediately brought in significant first wave of domestic and foreign investment and created media and telecom boom in the country. Banking and financial services sector took off and rapidly grew and created lots of jobs. A construction boom followed which more than doubled per capita cement consumption and created millions of new jobs. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs.





Pakistan Savings Rate as Percent of GDP (Source: World Bank)

Source: Credit Suisse and Cement Industry

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

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


The PPP government summed up General Musharraf's accomplishments well when it signed a 2008 Memorandum of Understanding with the International Monetary Fund which said:

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

Contrary to what Musharraf bashers dismiss as "aid-fueled " or "consumption-driven" economy in 2002-2007, the economic growth was actually driven by private savings and investments. Private domestic savings rate was over 18% of GDP in Musharraf but has slumped to just 7% in recent years. Pakistan attracted record foreign direct investment (FDI) in telecom, banking, manufacturing and other sectors of the economy. Annual FDI flow into Pakistan reached $5.4 billion in Year 2007-08. As to US aid during and after Musharraf's years in office, it has actually tripled in size from $700 million in 2007-8 to $2.1 billion since 2010. If aid alone were responsible for economic growth, then the GDP growth rate should have accelerated, not plummeted, after Musharraf left office.

Pakistan FDI as Percent of GDP (Source: World Bank)



In addition to the economic revival, Musharraf focused on social sector as well. Pakistan's HDI grew 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. The annual budget for higher education increased from only Rs 500 million in 2000 to Rs 28 billion in 2008, to lay the foundations of the development of a strong knowledge economy, according to former education minister Dr. Ata ur Rehman. Student enrollment in universities increased from 270,000 to 900,000 and the number of universities and degree awarding institutions increased from 57 in 2000 to 137 by 2008. 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.

So Why Didn't the Musharraf Miracle Last?

It takes a long time to build and very little time to destroy a beautiful, well-manicured garden with flourishing plants and flowers. A new incompetent, lazy and corrupt gardener can turn it into a disaster by failing to fertilize, water and prune. That's what happened in Pakistan in 2008. A healthy, well-run and growing economy was quickly turned to shambles in a very short time because of policy inaction and neglect. Here's how Pakistani economist Dr. Ashfaque H. Khan explained it in 2010: "What went wrong? Why one of the fastest growing economies in the Asian region until two years ago has been totally forgotten in the region? Firstly, the speed and dimension of exogenous price shocks (oil and food) were of extraordinary proportions. Secondly, the present government found itself totally ill-prepared and clueless in addressing the challenges arising out of the shocks. While rest of the world was taking corrective measures and adjusting to higher food and fuel prices, Pakistan lurched from one crisis to another."

Constitution Not Suicide Pact: 

To those who say nothing should trump the constitution of Pakistan, let me remind them that there is legal precedent to suggest  that there are things more important than the constitution. "The Constitution is not a suicide pact" is an oft-repeated phrase in American political and legal discourse. It refers to the belief that constitutional restrictions on governmental power must be balanced against the need for survival of the state and its people. It is frequently attributed to Abraham Lincoln who is said to have used it in answering charge that he violated the United States Constitution by suspending habeas corpus during the American Civil War. Others who have used it include Justice Robert H. Jackson (Terminiello v. Chicago, 1949) and Justice Arthur Goldberg (Kennedy v. Mendoza-Martinez, 1963).

Here's a video discussion on the subject:


Civil-military Stand-Off on Musharraf Trial; Musharraf Govt's Performance Record from WBT TV on Vimeo.

Related Links:

Haq's Musings

Musharraf Wants to Face Trial; Military Opposed to it

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?

Human Development in Musharraf Years


Monday, January 13, 2014

Musharraf Wants to Face Trial But Pakistan Army Opposes it

President Musharraf strongly believes he is innocent of all of the charges leveled against him and he wants to go through his treason trial under Article 6 of the Pakistan Constitution. However, Pakistan Army does not want to see its former chief and a retired four-star general tried and convicted because it would set an unacceptable precedent for the entire military.

The theory is that if Musharraf's trial were to go through in a court made up of civilian judges, it would essentially nullify the Army Act which does not recognize the jurisdiction of civilian courts over Pakistani military officers. Under the Army Act, the military officer can only be tried in a military court even for charges relating to violation of civilian laws.

Prior to Nawaz Sharif government's attempts to drag Musharraf into civilian courts, there was a similar effort made the PPP government two years ago to try in a civilian court two retired senior Army officers with financial mismanagement in NLC (National Logistics Cell) scandal. General Kayani thwarted it by bringing them back in military service and insisting that they be tried in a military court.

The military has already made a soft intervention in General Musharraf's case when it took him to a hospital when he was on his way to a waiting court which, after summarily rejecting all of the defense attorneys' pretrial motions, appeared ready to charge Musharraf and convict him under Article 6 after a rushed trial.

The soft intervention appears to be a warning to Nawaz Sharif's government, the prosecutors and the judges that Musharraf's trial is unacceptable. If the government persists in its efforts to try the former general, a hard intervention in the form of a coup can not be ruled out. This is a critical moment in the long and rocky history of civil-military relations in Pakistan.

To learn more about it and other current topics, please watch the following video:

http://vimeo.com/83912166


SP Chaudhry Aslam Killed; Musharraf's Trial Hurts Civil-Military Ties; Civilians Worst Hit in Terrorist Violence from WBT TV on Vimeo.

Related Links:

Haq's Musings

Pak Media Cheers as Vindictive Politicians, Judges Pursue Musharraf

Lest We Forget by Dr. Ata ur Rehman

UN Malala Day

Treason Trial of Musharraf

Does Sharif Have an Anti-Terror Policy?

Blowback of US Drones in Pakistan

Why is Democracy Failing in Pakistan?

Viewpoint From Overseas-Vimeo 

Viewpoint From Overseas-Youtube

Thursday, January 9, 2014

Karachi's "Dirty Harry" Chaudhry Aslam Killed by Taliban

“As a Muslim, my faith tells everyone has to die one day. I’m not afraid of it.”

The above quote is from Police Superintendent Chaudhry Aslam Khan, the head of Karachi City's anti-terror operations, who was a brave cop indeed. He ran out of luck today after flirting with death every day for decades. He was killed in a suicide attack near Essa Nagri at the Lyari Expressway in Karachi on Thursday. May his soul rest in peace!

SP Chaudhry Aslam Khan RIP
Tehrik-e-Taliban Pakistan (TTP) has claimed responsibility for the "successful" attack, according to media reports. TTP central spokesman Shahidullah Shahid told Newsweek Pakistan: “Chaudhry was on our hit-list. He was directly involved in killing more than 50 mujahideen and anyone who dares to launch an operation against the mujahideen will be our target."

Earlier in the day, an anti-terror team led by Aslam conducted a raid along the Northern Bypass in the Manghopir area of Karachi and claimed to have killed three militants. A policeman also suffered injuries during the raid.

Chaudhry Aslam Khan had been shot at dozens of times in his career. He survived a massive bomb attack in September 2011 which left a huge crater where his home stood in Karachi's Defense Society neighborhood.

A 2011 Guardian newspaper story described Aslam in the following words: "Few know the dark streets as well as Aslam, a grizzled police veteran of 27 years' experience. Profane, chain-smoking and usually armed with a Glock pistol, he has earned a controversial reputation as Karachi's version of Dirty Harry – the cop who will do whatever it takes to keep the peace."

For those unfamiliar with "Dirty Harry" character, it is the name of a fictional San Francisco Police Department Homicide Division Inspector "Dirty" Harry Callahan which was immortalized by Clint Eastwood. Dirty Harry has come to symbolize a no holds barred cop who relentlessly pursues bad guys to remove them from the streets.

Chaudhry Aslam was a very courageous officer who put his life on the line to protect the citizens of Karachi. It will be extremely difficult, if not impossible, to replace such a dedicated and committed police officer.

Related Links:

Haq's Musings

Pak Terror Deaths Decline But TTP Threat Looms Large

Nawaz Sharif's Silence on Taliban Terror in Inaugural Speech

Taliban vs. Pakistan

Nawaz Sharif's First 100 Days

Yet Another Peace Deal and Shia Blockade

Taliban Insurgency in Swat

Musharraf's Treason Trial

General Kayani's Speech on Terror War Ownership

Impact of Youth Vote and Taliban Violence on Elections 2013

Imran Khan's Social Media Campaign

Pakistan Elections 2013 Predictions 

Why is Democracy Failing in Pakistan?

Viewpoint From Overseas-Vimeo 

Viewpoint From Overseas-Youtube