Saturday, May 31, 2014

Jang Group's Geo TV Suffering Heavy Financial Losses

Geo TV has lost 80% of its viewers and billions of rupees in advertising revenue since it accused Pakistan's ISI of attempting to assassinate its anchor Hamid Mir last April, according to credible reports in the mainstream media.

Pakistan's once most-watched cable-satellite television channel Geo, with the country's largest newsgathering network, has lost more than 80% of its viewers in less than a month, according to the BBC. In addition to Geo News channel, major cable operators across the country have blocked transmission of all other channels of the group, including Geo Super, Geo Tez, Geo Kahani and Geo Entertainment.

Among the biggest advertisers, the mobile phone companies accounting for 20% of media spend on Geo group, have pulled their marketing campaigns from Geo Network, including Geo News, Geo Kahani, Geo Super and Geo Entertainment, according to ProPakistan.pk website which covers telecommunications news.

Pakistan's Top 20 TV Cable-Satellite Channels. Source: Gallup Pakistan
Geo News ranks number 2 and Geo Entertainment ranks 6th among cable-satellite channels in terms of viewers in Pakistan, according to Gallup Pakistan TV ratings data for 2013. Gallup report shows that India's Star Plus tops the list with an average daily viewership of around 12 million Cable and Satellite Viewers during the time period Jan-June (2013). It's followed by PTV Home and Geo News with approximately 8 million average daily Cable and Satellite Viewers.

Overall TV Ratings 2010. Source: Audiencescapes.org 
Terrestrial channels operated by PTV and ATV continue to dominate the overall television viewing in the country.  2010 data from Audiencescapes.org shows PTV Home garnering the highest market share at 46% of all viewers.

Jang Media Group which owns Geo TV channels has been the biggest beneficiary of the 2002 media deregulation ordered by former President Pervez Musharraf. The Jang group is also credited with bringing down the Musharraf government with its heavy coverage of the lawyers movement to restore the former Chief Justice Iftikhar Mohammad Chaudhry. Mr. Munir Malik, one of Mr. Chaudhry's key allies, said in an interview recently that the lawyers movement could not have succeeded without the backing of Geo TV and other media outlets and civil society which grew up during Musharraf years. Jang Group has been facing rising criticism for what the critics call "sensationalism" and "irresponsible" journalism.

Related Links:

Haq's Musings

Prof Noam Chomsky on Indian Media

Pakistan's Media and Telecom Revolution

Hamid Mir's Ties to Terrorists and Spies

Upwardly Mobile Pakistan

Geo TV Under Fire

Muslim Santa Claus Commercializes Ramadan

Wikileaks on Jang Group

Arsalan Iftikhar's Corruption Scandal

Chaudhry is No Angel


Thursday, May 29, 2014

Maulana Azad's Grandniece Says "Muslims Are Not Minorities" in India

"Muslims are not minorities. Parsis are. We have to see how we can help them so that their numbers don't diminish...This is not the ministry for Muslim Affairs. It's the ministry for Minorities Affairs." Indian Minorities Minister Najma Heptullah, Grandniece of Maulana Abul Kalam Azad

Najmullah Heptullah (left) on stage with BJP Leaders
It appears that Najma Heptullah, Narendra Modi's minister for minorities affairs, thinks the main focus of her job is to look after the welfare of India's 60,000 Parsis, three-fourths of them living in Mumbai's exclusive neighborhoods. Her statement implies that she does not consider her fellow Muslims as a minority that needs any of her attention.

Source: India's NCRB via Indian Express

Her statements raise the following questions:

1. Is she merely expressing her own personal opinion or articulating Hindu Nationalist Prime Minister Narendra Modi's well-thought-out view of her job?

2. Is there a real need for a federal ministry for a mere 60,000 Parsis most of whom are concentrated in just one Indian city?

3. Is she aware of the widespread discrimination against Muslims in education, employment and housing?

4. Is India's criminal justice system fair to Muslims and other minorities?

5. Does she know that Muslims make up 13% of India's population but 28% of Indian prisoners?  Similarly, Christians make up 2.8% of India's population but 6% of India's prison population? Meanwhile, the newly elected parliament has just 4% Muslim representation?

6. Has she seen the ghettoization of Muslims in Indian cities? Have any of her fellow Muslims told her that they are excluded from living in nice urban neighborhoods?

7. Does she know that her fellow Indian Muslims are now worse off than the lowest-caste Hindus, or Dalits, in terms of education and employment? Has she seen the 2013 update of the Sachar Commission report which shows little improvement for Muslims since the original report published 2006?

And the final question is: Is she willing to be just another Muslim token in Prime Minister Modi's cabinet? Or does she plan to set the agenda to shape Mr. Modi's government policies to help all of India's minorities, including the Indian Muslims?

Related Links:

Haq's Musings

Modi's Pakistan Policy

Indian Muslims Worse Off Than Dalits

Gujarat Muslims Ignored By Indian Politcians

Are Muslims Better Off in Jinnah's Pakistan?

India's Guantanamos and Abu Ghraibs 


Tuesday, May 27, 2014

Pakistan Has World's 4th Highest Number of Shadow Entrepreneurs

Pakistan has 109 informal entrepreneurs for every formally documented entrepreneur, ranking the country 4th in the world for the size of its shadow economy, according to a study published by Professor Erkko Autio and Dr. Kun Fu of the Business School of London's Imperial College.

Pakistan's 109 shadow entrepreneurs for every officially registered one rank it 4th behind Indonesia's 131, India's 127 and the Philippines' 126. Egypt ranks 5th with 103 shadow entrepreneurs.

The U.S. appears at number 32 on the list with 2.37 unregistered businesses for each registered one, while the UK exhibits the lowest rate of shadow entrepreneurship among the 68 countries surveyed, with a ratio of only one shadow economy entrepreneur to nearly 30 legally registered businesses.

Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and services but they do not register it. This means that they do not pay taxes, operating in a shadow economy where business activities are performed outside the reach of government authorities.

The shadow economy results in loss of tax revenue, unfair competition to registered businesses and also poor productivity - factors which hinder economic development. As these businesses are not registered it takes them beyond the reach of the law and makes shadow economy entrepreneurs vulnerable to corrupt government officials.

In a study of 68 countries, Professor Erkko Autio and Dr Kun Fu from Imperial College Business School estimated that business activities conducted by informal entrepreneurs can make up more than 80 per cent of the total economic activity in developing countries. Types of businesses include unlicensed taxicab services, roadside food stalls and small landscaping operations.

 A 2011 World Bank report titled "More and Better Jobs in South Asia" showed that 63% of Pakistan's workforce is self-employed, including 13% high-end self-employed. Salaried and daily wage earners make up only 37% of the workforce.

M. Ali Kemal and Ahmed Waqar Qasim, economists at Pakistan Institute of Development Economics (PIDE), have published their research on their estimates of the size of Pakistan's shadow economy.

They have explored several published different approaches for sizing Pakistan's underground economy and settled on a combination of  PSLM (Pakistan Social and Living Standards Measurement) consumption data  and mis-invoicing of exports and imports to conclude that the country's "informal economy was 91% of the formal economy in 2007-08".

While Pakistan's public finances remain shaky, it appears that the country's economy is in fact healthier than what the official figures show. It also seems that the national debt is less of a problem given the debt-to-GDP ratio of just 30% when informal economy is fully comprehended. Even a small but serious effort to collect more taxes can make a big dent in budget deficits. My hope is that increasing share of the informal economy will become documented with the rising use of technology. Bringing a small slice of it in the tax net will make a significant positive difference for public finances in the coming years.

Related Links:

Haq's Musings

Pakistan's Underground Economy

Job Creation in Pakistan

IBA Report on Entrepreneurship in Pakistan

Pakistan's Economy Ranks Among World's 25 Largest

Tax Evasion in Pakistan Fosters Foreign Aid Dependence

Wednesday, May 21, 2014

Will Modi's Pakistan Policy Focus on "Aatankwad" and "Vyapar"?

BJP leader Narendra Modi has made history as the first low-caste Hindu to be elected prime minister of India. Modi's spectacular rise from being a chai-walla to a major world leader is sure to inspire the world's largest population of poor who call India home.  Before discussing how Modi's rise will impact India-Pakistan ties, let's briefly examine the new man at the helm of affairs of the world's second most populous nation.

Who's Narendra Modi?

Narendra Modi will soon become the first low-caste Hindu prime minister of India. Modi was a young man when he joined Rashtriya Swayamsevak Sangh (RSS), the extremist Hindu nationalists organization in India, which has a long history of admiration for Adolf Hitler, the Nazi leader, and his "Final Solution".

In his book "We" (1939), Madhav Sadashiv Golwalkar, the leader of the Hindu Nationalist RSS 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."

2002 Gujarat Riots: 

Apparently taking a cue from his Guruji Golwalkar, Modi presided over the 2002 anti-Muslim riots in Gujarat state where he was first elected chief minister in 2001. During the riot, at least 2,000 Muslims were killed by Hindu mobs and several hundred girls and women were stripped naked, raped or gang-raped, had their wombs slashed and were thrown into fires, some while still alive.

In spite of the riots (or may be because of the riots), Modi continued to win elections and run Gujarat state as its chief minister since he was first elected 13 years ago. Gujarat saw significant investment and rapid economic growth during this period which is often attributed to Modi's pro-business policies.

Modi's Ties to Oligarchs: 

Modi has cultivated close ties with India's oligarchs who mostly come from his Gujarat state. Gautam Adani is one of these oligarchs to whom Modi has been particularly close. Adani has received cheap land for his land development projects and lucrative power purchase contracts for the electricity his power company generates. Adani has returned the favor by prividing both financial and logistics support for the Indian history's most expensive election campaign run by the BJP on Modi's behalf.

Modi and Sharif Comparison:

Far-fetched as it may seem, the fact is that Mr. Narendra Modi shares some commonalities with Mr. Nawaz Sharif. Examples:

1. Both men lead parties considered to be right-of-center.

2. Both leaders won fewer than a third of the popular votes in "landslides" to achieve absolute majorities in their respective national parliaments.

3. Both politicians are considered pro-business with close ties to oligarchs. There's Sharif-Mansha nexus in Pakistan similar to Modi-Adani nexus in India.

4. Both men support rapid expansion in trade which will benefit the oligarchs on both sides.

Modi's Balancing Act:

Narendra Modi's political support base consists of the extreme right-wing Hindu Nationalists.  His financial backers and investors are the big Gujarati oligarchs. The interests of these two groups diverge dramatically. While the Hindu Nationalists will demand hawkish policies toward Pakistan, Bangladesh and Indian Muslims, the oligarchs will push for expanded trade ties with Pakistan.  Adani is reportedly building a major power plant in Kutch region near Pakistan's border in the hope of exporting electricity to the country.

I expect Modi will try and balance the two interests groups by stepping up his anti-Pakistan rhetoric on "aatankwad" (terrorism) and at the same time pursue increased "vyapar" (trade) with Pakistan. This balancing act will severely test Modi's ability to quickly acquire political skills which he did not need as the chief minister of Gujarat. Failure to do so could scuttle all of his lofty promises of "development" he has made to the people India during his recent campaign to become prime minister of India.

Here's a video discussion on this and other subjects with Raza Rumi, Misabah Azam and Faraz Darvesh:


Implications of Modi's Rise in India; Pakistan's GeoTV Under Fire from WBT TV on Vimeo.

Here's celebrated Indian author Arundhati Roy talking about Narendra Modi:

http://www.dailymotion.com/video/x17mmrr_narinder-modi-by-arundati-roy_news


Narinder Modi by Arundati Roy by hastalgill

http://youtu.be/TCb15I5-ujs




Related Links:

Haq's Musings

India is World's Biggest Oligarchy

Should Pakistan Ignore Washington Consensus?

Gujarat Riot Victims 

Hindu Nationalists Admire Hitler

India Has World's Largest Population of Poor, Hungry and Illiterates

Pakistan Needs More Gujaratis? 

India's Israel Envy

Monday, May 19, 2014

Ex-AG Munir Malik vs Riaz Haq on Ex-CJ Iftikhar Chaudhry of Pakistan

Viewpoint From Overseas team invited former Chief Justice of Pakistan Mr. Iftikhar Mohammad Chaudhry and former Attorney General of Pakistan Mr. Munir A. Malik for a conversation at our Silicon Valley studio last week. 

The former chief justice did not respond to our invitation.

We were fortunate to have Mr. Munir Malik visit with us and respond to the questions often asked by people here in the valley. 


L to R: Misbah Azam, Saeed Malik, Riaz Haq, Munir Malik and Faraz Darvesh
The format chosen was essentially a debate format moderated by VPOS host Faraz Darvesh. 

Mr. Malik vigorously defended the lawyers' movement a movement to bring rule-of-law to Pakistan. The former attorney general supported the actions of Mr. Chaudhry before, during and after 
his restoration to the top bench, including Mr. Chaudhry's unprecedented use of suo moto and contempt of court actions. Mr. Malik rejected allegations that Mr. Chaudhry covered up his son Arsalsan Iftikhar's corruption

Riaz Haq responded by pointing out the lawless conduct of lawyers during and after the lawyers' movement. Mr. Haq pointed that Mr. Chaudhry took PCO oaths twice and remained a compliant judge until his support for his son Arsalan Iftikhar's illegal and rapid promotions and conduct were discovered in 2007 and a reference filed against Chief Justice Chaudhry.  The issues of corruption brought out in that reference have remained unresolved mainly due to obstruction of justice by the Chaudhry Court. 

Faraz focused on the following questions: 

How did Mr. Munir Malik start and lead Pakistan lawyers' movement? 

Did Ex-CJ Iftikhar Chaudhry meet lawyers' expectations of him?

Was the effort to restore him worth it? 

 ViewPoint from Overseas host Faraz Darvesh discussed these questions with Pakistan's former attorney general Munir Malik and Riaz Haq (www.riazhaq.com

Here's a video of the Malik-Haq debate:


Ex AG Munir Malik Defends Ex CJ Chaudhry, Lawyers Movement in Pakistan from WBT TV on Vimeo.



Related Links:

Haq's Musings

Chaudhry Court Scared Away Investors

Chaudhry is No Angel

Vindictive Judges Pursue Musharraf

Is Musharraf's Treason Trial Justified?

Arsalan Iftikhar's Corruption Scandal

Lawless Lawyers of Pakistan

Viewpoint From Overseas Video Collection

Saturday, May 17, 2014

Pakistani Ukrainian Oligarch's Newspaper Led Opposition to Yanukovich

Oligarchs have shaped politics in post-Soviet Russia and other former Soviet republics including The Ukraine since the breakup of the Soviet Union in 1991. One such oligarch is Karachi-born Pakistani Ukrainian Mohammad Zahoor, a member of growing Pakistani diaspora which is already the world's 7th largest. He owns Kyiv Post newspaper which is widely believed to have led the campaign to topple pro-Russian President Viktor Yanukovych.

Mohammad and Kamaliya Zahoor

In 1974, Zahoor left Karachi, Pakistan, for the Soviet Union to study metallurgy in Donetsk in the Ukraine. Though he moved back with his Russian wife to work at Pakistan Steel Mills plant in Karachi, Pakistan upon graduation but he didn’t stay there long.

“Having a Russian wife limited my career development there,” he told Newsweek. “The secret services were also very active during the ’80s, and I thought it better to leave.” He moved to Moscow to work for a Pakistani steel company in the late ’80s, and hasn’t looked back since

He learned Russian and metallurgy well. Then he eventually found a way to apply those skills in Ukraine, one of the world’s top 10 steel-exporting nations. Zahoor also displayed a talent for knowing when to get out of a business, as he did in 2008 by selling his Donetsk steel mill for a top-drawer price of $1 billion, according to Kyiv Post. He has since invested in media and real estate businesses.

Zahoor With Trophy Wife Kamaliya


Zahoor divorced his first wife to marry Kamaliya (born as Natalya Shmarenkova in 1977) in 2003. Kamaliya won Mrs. World title in 2008. She is involved in charitable work in both Ukraine and Pakistan. They live in a mansion designed to resemble Dubai’s hotel Burj al-Arab in the suburbs of Kyiv. The couple had twin daughters last year. Zahoor has two grown children, Arman and Tanya, from his previous marriage.

Zahoor and Kamaliya have starred in a Fox Entertainment reality show "Meet the Russians". Kamaliya has a singing career with hit singles like "Crazy In My Heart," "Rising Up," and "Butterflies," and she is also famous for singing duets with Russian pop star Philipp Kirkorov.

Here's a Kamaliya music and dance video:


Kamaliya - Butterflies (Fabinho DVJ & DJ Antoine vs. Mad Mark Remix) from Fabinho DVJ on Vimeo.


Related Links:

Haq's Musings

Ukraine's Muslim Billionaire Holds Balance of Power

Crimean Muslims Oppose Russian Take-over 

Pakistani Diaspora is World's 7th Largest

Putin Challenges US Exceptionalism

Syrian Crisis

Hui Muslims in China

Turkish Soaps in Pakistan

Muslims Demographics in West

Soviet Defeat in Afghanistan

US Dollar is Global Currency

Friday, May 16, 2014

Ukraine's Muslim Billionaire Akhmetov Holds Balance of Power

Powerful Muslim Crimean Tatar, Rinat Akhmetov, the richest man in Ukraine, is a self-made billionaire son of a coal miner. He may hold the balance of power in Eastern Ukraine's tensest standoff since the Cold War.

Rinat Akhmetov
Before the Russians moved in and took control of the Crimea earlier this year, thousands of Akhmetov's fellow Tatar Muslims had marched in opposition to the Russian take-over of the region.

In 1917 communist takeover of Russia, Tatar Muslims were one-third of  south eastern Ukrainian population. Then in 1944, Joseph Stalin accused them of collaborating with Nazi Germany and ordered their mass deportations. Nearly 200,000 Crimean Tatars were sent to Central Asia by freight trains. Nearly half of all Crimean Muslims died in 1944–1945 from hunger and disease. Their property and territory were given to mostly ethnic Russians who were resettled by the Soviet Union in Crimea.

Akhmetov's decision to support Ukraine's unity may turn the tide against the pro-Russia separatists in the Ukrainian conflict  He has ordered thousands of his steelworkers  on Thursday to restore order and establish control over the streets of Mariupol. They now appear to have routed the pro-Kremlin militants who had seized control of important government buildings several weeks ago.

By late Thursday, Akmetov's miners and steelworkers had deployed in at least five cities, including the regional capital, Donetsk, though they had not yet become the dominant force there that they are in Mariupol, the region’s second largest city and the site just last week of bloody confrontations between Ukrainian troops and pro-Russian militants, according to The Globe and Mail.

 Here are excerpts of a Washington Post report on Akhtemov's crucial role in the crisis:

 "Two days after Akhmetov deployed workers from his steel plant to restore order in a region torn by separatist violence, calm appeared to return Friday to the center of this eastern city. A few steps from a recent deadly clash, people lunched on sushi as a song by Katy Perry played. Near the scorched city council building that had been held by pro-Russian militants, a group of Akhmetov’s unarmed steelworkers lounged and smoked cigarettes as they kept watch." A few blocks away, at the ruins of the city police building where at least seven people died last week, retired steelworker Oleg Krivolapov welcomed Akhmetov’s intervention. “He has his factories, his industries, a lot of money — he could do a lot,” said Krivolapov, who trusts that his former colleagues at Akhmetov’s Ilych Factory can keep the peace. “Of course, he should have done something sooner.” 

Whatever Akhtemov's motivations may be, let's hope he can pull off what the US, Europe, NATO and the government in Kiev have failed to do so far. Let's hope peace returns to Ukraine soon.

Related Links:

Haq's Musings

Putin Challenges US Exceptionalism

Syrian Crisis

Hui Muslims in China

Turkish Soaps in Pakistan

Muslims Demographics in West

Soviet Defeat in Afghanistan

US Dollar is Global Currency

Wednesday, May 14, 2014

World Bank: Pakistan Ranks Among World's 25 Largest Economies

With an estimated $778 billion PPP GDP for 2011, Pakistan's economy is the 23rd largest in the world, according to the World Bank's International Comparison Program (ICP) 2011. Other surprises in the report include the follpowing:


1.  China may have already pulled ahead of the United States to become world's largest economy. 

2.  India's economy is now the world's third largest economy after passing Japan's. 

3. Pakistan is the second least expensive country in the world in terms of  how much a US dollar can buy there. Egypt is the least expensive. 

4. The six largest middle income economies – China, India, Russia, Brazil, Indonesia and Mexico – account for 32.3 percent of world GDP, whereas the 6 largest high income economies – United States, Japan, Germany, France, United Kingdom, and Italy – account for 32.9 percent.

4. Asia and the Pacific, including China and India, accounts for 30 percent of world GDP, Eurostat-OECD 54 percent, Latin America 5.5 percent (excluding Mexico, which participates in the OECD and Argentina, which did not participate in the ICP 2011), Africa and Western Asia about 4.5 percent each. 

5. China and India make up two-thirds of the Asia and the Pacific economy, excluding Japan and South Korea, which are part of the OECD comparison. 

6. Russia accounts for more than 70 percent of the CIS, and Brazil for 56 percent of Latin America. 

7. South Africa, Egypt, and Nigeria account for about half of the African economy.

Here's the list of the top 25 economies in terms of PPP GDP as calculated by International Comparison Program (ICP) 2011: 


1. United States $15,534 billion

2. China $13,495 billion

3. India $5,757 billion

4. Japan $4,380 billion

5. Germany $3,352 billion

6. Russia $3,216 billion

7. Brazil $2,816 billion

8. France $2,369 billion

9. United Kingdom $2,201 billion

10. Indonesia $2,058 billion

11. Italy $2,056 billion

12. Mexico $1,895 billion

13. Spain $1,483 billion

14. South Korea $1,445

15. Canada $1,416 billion

16. Saudi Arabia $1,367 billion

17. Iran  $1,315 billion

17. Turkey $1,315 billion 

18. Australia $956 billion

19. Taiwan $907 billion

20. Thailand $899 billion

21. Egypt $843 billion

22. Poland $838 billion

23. Pakistan $788 billion

24. Netherlands $720 billion

25. Malaysia $606 billion

Cost of Living Comparison in Asia



World Bank's International Comparison Program (ICP) does a detailed study of a list of around 800 household and nonhousehold products to compare real purchasing power for trans-national income comparison program (ICP). The latest ICP findings conclude that Pakistan's per capita income is US$4,450.00, just slightly below India's US$4,735.00

ICP Based GDP Per Capita. Source: World Bank


At US$4,450 per capita, Pakistan's PPP GDP works out to US$788 billion for 2011, and more than a trillion US dollars now.

The results of an earlier ICP program for 2005 and 2006 released by Asian Development Bank in 2009 concluded that Pakistan's per capita income was HK$ 13,528.  It reported India’s per capita as HK $12,090.

Price Level Index Rankings. Source: World Bank


The ICP program uses Price Level Index (PLI) as an indicator of cost of living in a country. It defines PLI as the ratio of a PPP (purchasing power parity) to a corresponding exchange rate. An index over 100 means prices are higher on average than in the world, and one less than 100 means prices are relatively lower. Pakistan's PLI of 28.2 ranks it at 176, just above the last-ranked Egypt's PLI of 27.2 at 177. India's PLI of 32.4 ranks it at 127.

23 economies are showing a PLI of 50 or below. The cheapest economies are Egypt, Pakistan, Myanmar, Ethiopia and Lao People's Democratic Republic, with indices ranging from 35 to 40.

The most expensive economies in GDP terms are Switzerland, Norway, Bermuda, Australia and Denmark, with indices ranging from 210 to 185. The United States ranked 25th in the world, lower than most other high-income economies, including France, Germany, Japan, and the United Kingdom.

Last month, another survey done by Cato Institute found that Pakistan fares better than its neighbors on world misery index. Back in 1960s, distinguished American economist Arthur Okun defined misery index as sum of inflation and unemployment rates. America's high misery index was cited by candidate Jimmy Carter as a reason to elect him president in his 1976 presidential race against President Gerald R. Ford. The Cato Institute has now revived it by adding interest rates to the sum of inflation and unemployment rates and subtracting per capita GDP growth rate from it.

Pakistan (score 21.9) at 28 ranks below Iran (score 61.6) at 2 and India (score 25.6) at 19 on world misery index rankings for 2013 compiled by Washington's Cato Institute. Other nations worse off than Pakistan on the list include Serbia, Argentina, Jamaica, Egypt, Spain, South Africa, Brazil, Greece, Macedonia, Palestine, Turkey, Cyprus, Croatia, Dominican Republic, Georgia, Nicaragua, Honduras, Costa Rica, Jordan, Ukraine, Peru, Uruguay, Portugal and Barbados. Indonesia (score 21.6) at 29 is only slightly better off than Pakistan.

Earlier this year, Economist Intelligence Unit's latest Worldwide Cost of Living survey revealed that Pakistan’s Karachi is the second cheapest city of the world in 2014 while India’s Mumbai is the cheapest. The top 10 cheapest cities include Mumbai, Karachi, New Delhi, Kathmandu, Damascus, Algiers, Bucharest, Panama City, Jeddah and Riyadh in that order, according to EIU.

Related Links:










Tuesday, May 13, 2014

Declining Investment Hurting Pakistan Economic Growth

Pakistan needs investment of 20% of GDP to achieve 5% economic growth, a capital-to-output ratio (COR) of four, according to Mohsin Mushtaq Chandna, economic minister at the Pakistan Embassy in Washington, DC.

Major Issues:

In a wide-ranging presentation to the Pakistan Club at the University of Chicago Booth School of Business, Mr. Chandna, an alumnus of the university, listed the following major issues facing Pakistani economy:

1. Pressure on capital account

2. Declining FDI

3. Declining tax to GDP ratio

4. Over reliance on monetary policy

5. Excessive domestic borrowing

6. Extremely volatile internal and external geo-political environment

7. Energy shortages

8. Increase in poverty and unemployment rates

Heavy Borrowing: 

To make up for the shortfall in investments and tax revenues, the Pakistani government is forced to borrow heavily from commercial banks and international financial institutions such as the World Bank, the Asian Development Bank and the IMF, in addition to recent floating of $2 billion worth of bonds on international debt market. These debts add to the debt-to-GDP ratio and put further pressure on the cost of debt service.

Many of the problems highlighted by Mr. Chandna did not exist during President Musharraf's rule when foreign and domestic investments climbed to new highs and debt-to-gdp rartio declined.

Pakistan Domestic Savings Rate Source: World Bank


Domestic savings rate was about 18% and foreign direct investment reached $5.2 billion, or 3.5% of Pakistan's GDP. These investments fueled economic growth from 2000-2008.  In my view, the activist judges led by former chief justice Iftikhar Mohammad Chaudhry have contributed significantly to the sharp decline in FDI and domestic investments in the country.

Gross Fixed Capital Formation in Pakistan. Source: ADB


Foreign Direct Investment (FDI):

World Bank's data shows that foreign direct investment (FDI) in Pakistan reached a peak of over $5 billion (3.6% of GDP) in 2007 and then fell sharply in the wake of Justice Chaudhry's reversal of the privatization of Pakistan Steel Mills. FDI has essentially dried up and the Pakistan Steel Mills Corporation has accumulated losses over Rs. 100 billion in spite of multiple bailouts at taxpayers expense. It is currently operating at just 3% of capacity and its monthly payroll adds up to Rs. 500 million, according to Dawn.

FDI as % of GDP in Pakistan Source: World Bank

Canceled Privatization Deals:

Huge subsidies are being given at taxpayers' expense to Pakistan Steel Mills and several other state-owned enterprises which take resources away from more pressing needs for spending on education, health care and infrastructure. In fact, Pakistan Education Task Force Report 2011 reported that "under 1.5% of GDP [is] going to public schools that are on the front line of Pakistan's education emergency, or less than the subsidy for PIA, Pakistan Steel, and Pepco."

Speaking at a recent international judicial conference in Islamabad, Dr. Ishrat Hussain, current dean of the Institute of Business Administration and former governor of The State Bank of Pakistan, said there has not been a single privatization deal in Pakistan since the Supreme Court's 2006 decision voiding the steel mill transaction.

Dr Hussain said that despite fulfilling the legal requirements, the fear that the country’s courts may take suo motu notice of the transaction, and subsequently issue a stay order, deters businesses from investing in Pakistan, according to a report in The Express Tribune. “A large number of frivolous petitions are filed every year that have dire economic consequences. While the cost of such filings is insignificant the economy suffers enormously,” he added.

Crucial Projects Delayed:

Among other projects, Dr. Hussain particularly cited Reko Diq and LNG projects which could not proceed because of judicial activism of Pakistan Supreme Court judges.

The lack of progress on liquefied natural gas (LNG) deal has exacerbated Pakistan's energy crisis. It would have brought in 400 million cubic feet of gas per day to bridge the growing supply-demand gap now crippling Pakistan's economy.

The invalidation of Reko Diq license to  Tethyan, joint venture of Canada's Barrick and Chile's Antofagasta, has turned away Pakistan's single largest foreign investment deal to date. The deposit in Balochistan was expected to produce about 200,000 tons of copper and 250,000 ounces of gold annually. Under the deal Baluchistan province would hold a 25 percent stake in the project, with Tethyan holding the remaining 75 percent.

Militants Released:

In addition to activist judges intervention in economic matters, there have also been many instance in which hundreds of known militants have been released by Pakistani courts. Those released have then committed acts of terror which have also scared away investors, both foreign and local.

Summary:

Mohsin Mushtaq Chandna's presentation of the data and facts is quite comprehensive. A combination of poor governance and activist judges have significantly contributed to the major issues highlighted in the presentation. I hope Prime Minister Nawaz Sharif's government is up to the tough challenges faced by Pakistan.  Failure to confront these challenges would produced yet another lost decade like the decade of 1990s when Pakistan's economic growth was just 3-4%.

You can find a pdf version of Mr. Chandna's presentation on PakAlumni.com website:

http://www.pakalumni.com/forum/topics/assessment-of-the-state-of-pakistan-economy-in-may-2014

Related Links:




Sunday, May 4, 2014

Silicon Valley Pakistani-Americans Enabling 2nd Machine Revolution

Silicon Valley is home to 12,000 to 15,000 Pakistani Americans. Thousands of them are working at Apple, Cisco, Google, Intel, Oracle and hundreds of other high-tech companies from small start-ups to large Fortune 500 corporations. Pakistani-Americans are contributing to what Erik Brynjolfsson and Andrew McAfee describe as "The Second Machine Age" in a recent book with the same title.

Pakistani-American Ecosystem:

Pakistani-American entrepreneurs, advisers, mentors, venture capitalists, investment bankers, accountants and lawyers make up a growing ecosystem in Silicon Valley. Dozens of Pakistani-American founded start-ups have been funded by top venture capital firms. Many such companies have either been acquired in M&A deals or gone public by offering shares for sale at major stock exchanges. Organization of Pakistani Entrepreneurs (OPEN) has become a de facto platform for networking among Pakistani-American entrepreneurs in Silicon Valley. It holds an annual event called OPEN Forum which attracts over 500 attendees. OPEN Forum 2014 is scheduled for Saturday, May 10, 2014, at the Santa Calra Marriott.


Pakistani-American Demographics Source: Migration Policy Institute 



Pakistani Diaspora World's 7th LargestPutting it in context of the global Pakistani diaspora, there are 5 million to 6 million people of Pakistani descent living outside Pakistan, making up the world's 7th largest diaspora. Of these, the US alone has 410,000 Pakistanis, according US Census 2010. California state has 47,000 Pakistanis, about a quarter of them in Silicon Valley. Silicon Valley Pakistanis are enabling the 2nd Machine Revolution which is expected to be similar in scope and transformational impact as the First Machine Revolution, also known as the Industrial Revolution of 18th century.

Second Machine Revolution:

Silicon Valley is driving the second machine revolution which is similar in global scope and transformational impact as the First Machine Revolution, also known as the Industrial Revolution of 18th century. Much of Asia and Africa, including what constitutes Pakistan today, were left behind and colonized after the last industrial revolution that was driven by inventions like the steam engine and printing press. This time, however, Pakistanis are the forefront of the current machine revolution, contributing to the exponential growth in high-tech enabled by semiconductor technology as predicted by Moore's Law, named after Intel founder Gordon Moore. Rapid increase in chip densities has allowed building of more and more functions and progressively greater intelligence in small form factors.

Moore's Law Source: Wikipedia


Here are a few examples of how doubling of computer chip densities every 2 years is changing the world:

1. Smartphones are now as powerful as huge mainframe computers of a decades ago. Pakistani-American chip technologists at Intel (Microprocessors) and other companies (SoC chips) have contributed to it. Intel (Riaz Haq), AMD and Raza Microelectronics (Atiq Raza), OpenSilicon (Naveed Sherwani), Muhammad Irfan (Whizz Systems).

 2. Ability to communicate 24X7X365 is now taken for granted around the globe. Pakistani-Americans at Intel (Ethernet), Cisco (routers, switches) and other companies have driven it. Intel (Sikanadar Naqvi), Cavium (Raghib Husain), Wichorus (Rehan Jalil), VPNet (Idris Kothari, Saeed Kazmi), Cisco and PLUMgrid (Owais Nemat) 

3. 3D vision is enabling computer games (XBox Kinect) and self-driving cars. Pakistani-American Nazim Kareemi's Canesta's 3D chips have made these possible.

4. Cloud Computing is supplanting WinTel era PC computing, enabling much more mobile work using small portable devices like smartphones and tablets. Many Pakistani-Americans are making it happen.

Fireeye (Ashar Aziz), vIPTela (Amir Khan), Elastica (Rehan Jalil) 


Riaz Haq's Person of the Year Plaque from PC Magazine 1988


Moore's Law on Exponential Growth Personal Computer Revolution Intel (Riaz Haq), VIA Technologies (Idris Kothari, Saeed Kazmi), SandForce (Sikandar Naqvi), AST Computers (Safi Qureshi in Irvine)

Communications Revolution Intel (Sikanadar Naqvi), Cavium (Raghib Husain), Wichorus (Rehan Jalil), VPNet (Idris Kothari, Saeed Kazmi), Cisco(Khali Raza, Owais Nemat, Raghib Husain),  PLUMgrid (Owais Nemat)

 Cloud Computing Fireeye (Ashar Aziz), vIPTela (Khalid Raza, Amir Khan), Elastica (Rehan Jalil)

 Big Data Oracle (Sohaib Abbasi), Obama Campaign (Rayid Ghani)

 Artificial Intelligence Canesta (Nazim Kareemi)

 Education: Khan Academy (Bilal Musharraf, Ali Hasan Cemendtaur), Chegg (Osman Rashid)

Consumer Apps Streetline (Zia Yusuf), Kiwi (Omar Siddiqui)

Business Apps Convo (Faizan Buzdar), Infonox (Safwan Shah), Vertical Systems Inc (Saeed Kazmi, Idris Kothari)

TV Entertainment HBO Comedy Silicon Valley (Kumail Nanjiani), Jadoo TV (Sajid Sohail), Triple-Oscar-Winning Computer-generated Imagery (CGI) for Hollywood hits Frozen, Life of Pi and The Golden Compass (Mir Zafar Ali).

 Venture Capital Sequoia Capita (Aaref Hilaly), CMEA Capital (Faysal Sohail, Saad Khan), Alloy Ventures (Ammar Hanafi), ePlanet Ventures (Asad Jamal).

Positive Media Coverage:

The mainstream media and the tech press have noticed the contribution of Pakistani-Americans in the Valley. I was recognized in 1980s by the PC magazine as a person of the year award given to the Intel 80386 microprocessor design team. More recently, there have been positive stories about Pakistani-American entrepreneurs in Forbes and other publications. A Forbes story recently acknowledged that Pakistan is among a dozen countries which are birthplaces of some of the most successful Silicon Valley companies funded by Sequoia Capital, a top venture capital firm credited with early investments in Cisco and Google. Another recent article called Silicon Valley Pakistanis a "model minority".

Brand Pakistan:

Unfortunately, Pakistan has a serious branding problem in the world. Its name conjures up images of Osama Bin Laden and the Taliban terrorists. This problem has to be addressed by Pakistanis in Pakistan. The Pakistani diaspora, however,  can try and balance the negative coverage by highlighting the good thigs happening in Pakistan. Stories such as a Karachi slum girl going to Harvard, a 12-year-old taking advanced MOOC courses in Lahore, the country's rising urban middle class, and Pakistani diaspora making important contributions in places like the Silicon Valley. I make an effort to do it through my blog Haq's Musings. I hope others will support this effort by sharing it with others.

Here's a video of a recent presentation I made at University of Chicago Booth School of Business on Pakistani-Americans in Silicon Valley:


Talk by Riaz Haq for Pakistan Club Chicago May... by urduonair

http://www.dailymotion.com/video/x1t1orh_talk-by-riaz-haq-for-pakistan-club-chicago-may-2014-event_tech


https://www.youtube.com/watch?v=1VZSUo4jH3w

A PDF version of my full presentation at University of Chicago Booth Business School is available on PakAlumni WorldWide

Related Links:

Haq's Musings

Pakistani Diaspora World's 7th Largest

Pakistani-American Population Second Fastest Growing Among Asian-Americans

Organization of Pakistani-American Entrepreneurs

Karachi-born Triple Oscar Winning Graphics Artist

Pakistani-American Ashar Aziz's Fire-eye Goes Public

Two Pakistani-American Silicon Valley Techs Among Top 5 VC Deals

Pakistani-American's Game-Changing Vision 

Minorities Are Majority in Silicon Valley 

US Promoting Venture Capital & Private Equity in Pakistan

Pakistani-American Population Growth Second Fastest Among Asian-Americans

Edible Arrangements: Pakistani-American's Success Story