Thursday, November 30, 2017

Why Do Majority of Indians Favor Military Rule?

A majority of Indians, 53%, favor military rule, according to a Pew Research Center survey released recently. India is one of only 4 countries where a majority is in favor of a military government, according to the survey. Vietnam, Indonesia, and South Africa are the other three.

Source: Pew Research Center

Pew Survey Question:

The Pew survey questionnaire asked respondents to vote on direct democracy, representative democracy,  technocrats rule, rule by a strong leader and rule by military. Here are the definitions of these in the survey:

Direct Democracy: A democratic system where citizens, not elected officials, vote directly on major national issues to decide what becomes law.

Representative Democracy: A democratic system where representatives elected by the people decide what becomes law. 

Rule by Experts: Experts, not elected officials, make decisions according to what they think is best for the country.

Rule by a Strong Leader: A system in which a strong leader can make decisions without interference from parliament or the courts.

Rule by Military: The military rules the country.

Indian Responses:

Majorities voted yes on all 5 choices with direct democracy leading with 76%, followed by representative democracy 75%, rule by experts 65%, rule by strong leader 55% and rule by the military 53%.

The results are a bit confusing but  it does seem that the majority of the people in India are open to all forms of government ranging from democratic to autocratic.

Why Autocracy?

The survey results raise the following question: Why are the majority of Indians so open to 3 non-democratic choices out of 5? I think the answer to this question can be found in the following post titled "Civilian "Democracy" vs Military "Dictatorship" Debate in Pakistan" that I wrote three years ago:

Civilian "Democracy" vs Military "Dictatorship":

Asian Tigers became Asian Tigers under dictators before they became democratic. There is not a single example of a developing country that became a developed country under democratic rule since WW II. Development gap between China, a one-party state, and India, a multi-party democracy, is huge and growing. Developed countries in Europe and North America took centuries to develop under democratic systems. Asian Tigers did it much faster under dictators. China is doing so now. Asia's experience has shown that democratic processes act as speed breakers to slow pace of development and stymie efforts to reduce poverty, ignorance and disease to deliver higher living standards. Let's examine these statements and see how they apply to Pakistan.

Asian Tigers:

Taiwan, Singapore and South Korea  experienced a dramatic rise under authoritarian regimes from 1960s through 1990s. The dictators who led these states also showed the way to fellow Asian dictators in Indonesia, Malaysia, Thailand and China who also industrialized and prospered using the same formula that rejected the Washington Consensus of democracy and free markets as the basis for development of all nations.



1960s Pakistan:

Pakistan was on a similar trajectory as the Asian Tigers during 1960s under Gen Ayub Khan's rule. GDP growth in this decade jumped to an average annual rate of 6 percent from 3 percent in the 1950s, according to Pakistani economist Dr. Ishrat Husain. Dr. Husain says: "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.7 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."



Bangladesh:

Some argue that it was Ayub Khan's rule in 1960s that resulted in the loss of Pakistan's eastern wing and the creation of Bangladesh. I strongly disagree with this view. I believe that ill-conceived general elections of 1970 gave the opportunity to Pakistani politicians to lie to mostly poor and illiterate electorate of the time to win their votes. Shaikh Mujib exploited normal regional economic disparities that can be found in any country, including India and US, to argue that Bengalis were unfairly treated. Just look at the income data for various states in US or in India and you'll see huge gaps in incomes and standards of living. Indian Punjab's per capita income of Rs. 88,783 is 1.4 times higher than West Bengal's Rs. 62,831. Bihar's per capita income of Rs. 28,317 is less than a quarter of Haryana's Rs. 122,660. New Jersey's per capita income of  $53,628 is much higher than Mississippi's $33,073. 

In the end, Zulfikar Ali Bhutto refused to sit down and talk with Shaikh Mujib and forced the split. Here's how one of Bhutto's friends late Gov Salman Taseer offered his view in his book "Bhutto: A Political Biography"

"Blame can never be satisfactorily or finally apportioned to the major players in this grisly drama, but that Bhutto, Mujibur Rahman and Yahya Khan share responsibility there can be no doubt. Many, indeed, are inclined to the view that Bhutto, as the most sure-footed politician of the three and thus the best equipped to assess the consequences of his actions, must accept the lion's share of the blame. Argument on this point will remain one of the central themes of Pakistani politics, perhaps for decades."

The fact is that economic gap between former East Pakistan and Pakistan has grown over the last 40 years, and the per capita income in Pakistan now stands at more than twice Bangladesh's in 2012 in nominal dollar terms,  higher than 1.6X in 1971.

The China Miracle: Fastest GDP Growth in World History



India: 


As China's share of the world's extreme poor (living below $1.25 per day per person level) has dramatically declined, India's share has significantly increased.  India now contributes 33% (up from 22 % in 1981). While the extreme poor in Sub-Saharan Africa represented only 11 percent of the world’s total in 1981, they now account for 34% of the world’s extreme poor, and China comes next contributing 13 percent (down from 43 percent in 1981), according to the World Bank report titled State of the Poor.

The share of poverty in  South Asia region excluding India has slightly increased from 7% in 1981 to 9% now, according to the report. India now has the world's largest share of the world's poor, hungry, illiterate and sick who still lack access to very basic sanitation.

Pakistan Growth By Decades. Source: National Trade and Transport Facility


In a recent book "Street Smarts", a hedge fund Manager Jim Rogers makes some important points to explain how East Asians have succeeded in rapidly developing while others have failed:

 "Many Asians say that the Asian Way is first to open your economy, to bring prosperity to your country, and then, only after that, to open up your political system. They say that the reason the Russians failed is that did it the other way around. Russia opened up its political system in the absence of a sound economy, everybody bitched and complained, and chaos inevitably ensued. As an example of the Asian path to political openness, they point to South Korea and Taiwan, both of which were once vicious dictatorships supported by the United States. Japan was at one time a one-party state supported by the US military. Singapore achieved its current status under one-party, authoritarian rule. All these countries have since become more prosperous and more open. 

Plato, in The Republic, says that the way societies evolve is by going from dictatorship to oligarchy to democracy to chaos and back to dictatorship. It has a certain logic, and Plato was a very smart guy. I do not know if the Asians ever read The Republic, but the Asian way seems to suggest that Plato knew whereof he spoke." Not only is the Asian model different from that of the Soviets, it stands China in marked contrast to those thirty-year dictatorships previously mentioned. Chinese leaders have put a high premium upon changing the country's economy, presumably to seek prosperity for the 1.3 billion people who live there." 

"And yet,in 1947, when it achieved independence, India was one of the more successful countries in the world, a democratic country. But despite democracy, or maybe because of it, India has never lived up to its potential. China was a shambles as recently as 1980. India was far ahead of it. Bt since then China has left India, literally in the dust....As China rises, India continues to decline relatively. Its debt-to-GDP ratio is now 90 percent, making a strong growth rate virtually impossible."




Pakistan's Economic History:

Since 1947, Pakistan has seen three periods of military rule: 1960s, 1980s and 2000s. In each of these decades, Pakistan's economy has performed significantly better than in decades under political governments.



In a 10/12/1988 interview with Professor Anatol Lieven of King's College and quoted in a book "Pakistan-A Hard Country", here is how eminent Pakistani economist Dr. Mabubul Haq explained lower economic growth under "democratic" governments:


"..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."
Human and Economic Development under Musharraf:

Pakistan saw yet another confirmation of accelerated economic and human development under military rule in years 2000-2007. 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”.

Source: Human Development Report 2013-Pakistan



 At 0.515, Pakistan's HDI is lower than the average HDI value of 0.558 for South Asia which is the second lowest among the various regions of the world tracked by UNDP. Between 2000 and 2012, the region registered annual growth of 1.43% in HDI value, which is the highest of the regions. Afghanistan achieved the fastest growth (3.9%), followed by Pakistan (1.7%) and India (1.5%), according to the United Nations Development Program.

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.

 Who's to blame for this dramatic slowdown in the nation's human development?  Who gave it a low priority? Zardari? Peoples' Party? Sharif brothers? PML (N)? PML (Q)? Awami National Party? Muttahida Qaumi Movement?  The answer is: All of them. They were all part of the government. In fact, the biggest share of the blame must be assigned to PML (N).



Sharif brothers weren't part of the ruling coalition at the center. So why should the PML (N) share the blame for falling growth in the nation's HDI? They must accept a large part of the blame because education and health, the biggest contributors to human development, are both provincial subjects and PML(N) was responsible for education and health care of more than half of Pakistan's population.

Pakistan R&D as Percentage of GDP Source: World Bank


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.

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

The issue of rulers' legitimacy often raised in Pakistan is not as black and white as it appears.  Polls showed that military rulers like Gen Pervez Musharraf of Pakistan made up with performance legitimacy for lack of political legitimacy. On the other hand, civilian leaders who ascended to power did demonstrate political legitimacy but they have consistently lacked performance legitimacy. Similarly, the terms "democracy" and "dictatorship" are often vague in Pakistan's context. Pakistani "dictators" were much more "democratic" than civilian politicians in deregulating mass media and allowing lots of political debate which was absent before Musharraf's coup in 1999.

Source: Pew Surveys in Pakistan

Benazir Bhutto Created Taliban:

Many Pakistanis hold the military responsible for creating the Taliban who are now responsible for daily carnage in Pakistan. Few Pakistanis know that the Taliban movement was midwifed by Benazir Bhutto and her right-hand man and interior minister Naseerullah Babar during her term in office in 1993-1996. Benazir is often referred to as the Mother of the Taliban because of her role in giving birth to the Taliban movement. Once born and nurtured by Benazir and Babar, the Taliban quickly became a force to be reckoned with. The Taliban under Mulla Omar's leadership defeated the Afghan Mujahedeen who had fought against the Soviets and quickly took control of much of Afghanistan in just a few years. The Taliban became so confident that they resisted Pakistan's pressure and refused to agree to the Durand Line as international Pak-Afghan border when they were in power in Kabul in 1990s.

Summary: 

Pakistan saw rapid social and economic development under military regimes in 1960s, 1980s and 2000s. Each time the torch passed to a civilian government, both the economy and social sectors suffered a significant slowdown.  If Pakistan had 30 years of continuous military rule with sustained  growth without several lost decades, it would have been an economy several times larger than it is today.



Had Pakistan's development continued on the 1960s trajectory, it is quite conceivable that Pakistan would be a prosperous democracy like the Asian Tigers today.

Here's a recent discussion on democracy in Pakistan:


Pakistan PM Invites Army Intervention; Can Army Chief Save Nawaz Sharif Govt? from WBT TV on Vimeo.

Related Links:

Haq's Musings

India Tops World Slavery Charts

Asian Tigers Brought Prosperity; Democracy Followed

Challenges of Indian Democracy

Pakistan's Economic History

Comparing Bangladesh with Pakistan

Economic and Human Development in Musharraf Years

India's Share of World;s Poor Up from 22% to 33%

Wealth Inequality in India and Pakistan

Musharraf Era Higher Education Reforms in Pakistan

Wednesday, November 29, 2017

Credit Suisse: Pakistan's Wealth Inequality is the Lowest in South Asia

Data released by Credit Suisse with its Global Wealth Report 2017 shows that Pakistan is the most egalitarian nation in South Asia. It also confirms that the median wealth of Pakistani households is three times higher than that of households in India.

Wealth Inequality:

Inequality is measured in terms of Gini index. It ranges from 0% for perfect equality (when everyone has the same wealth)  to 100% for total inequality (when all of the wealth is owned by one person).  On this scale, Pakistan’s Gini index is 52.6%, Bangladesh’s 57.9%, Sri Lanka’s 66.5%, Nepal’s 67.3%, China’s 78.9% and India's 83%.

Data Source: Credit Suisse Graph: Counterview


Household Wealth:

Here is per capita wealth data for India and Pakistan as of mid-2017, according to Credit Suisse Wealth Report 2017 released recently.

Pakistan average wealth per adult: $5,174 vs India $5,976
Pakistan median wealth per adult: $3,338 vs India $1,295

Average household wealth in Pakistan is $15,522 (3 adults) vs India $14,940 (2.5 adults)
Median household wealth in Pakistan is $10,014  (3 adults) vs India $3,237 (2.5 adults)

Pakistan Gini Index 52.6% vs India 83%

Ownership of Appliances and Vehicles: 

Growing household wealth in developing nations like India and Pakistan is reflected in  ownership of consumer durables like computers, home appliances and vehicles. This data is sourced from periodic household surveys like NSS (National Sampling Survey) in India and PSLM (Pakistan Social and Living Standards Measurement) in Pakistan.

Durables Ownership in India and Pakistan. Source: KSBL


India-Pakistan Comparison:

Dr. Jawaid Abdul Ghani, a professor at Karachi School of Business Leadership, has recently analyzed household surveys in India and Pakistan to discover the following:

1.  As of 2015, car ownership in both India and Pakistan is about the same at 6% of households owning a car. However, 41% of Pakistani household own motorcycles, several points higher than India's 32%.

2. 12% of Pakistani households own a computer, slightly higher than 11% in India.

3. Higher percentage of Pakistani households own appliances such as refrigerators (Pakistan 47%, India 33%), washing machines (Pakistan 48%, India 15%) and fans (Pakistan 91%, India 83%).

4. 71% of Indian households own televisions versus 62% in Pakistan.

Durables Ownership Growth in Pakistan. Source: KSBL
Growth over Time:

Dr. Abdul Ghani has also analyzed household data to show that the percentage of Pakistani households owning washing machines has doubled while car and refrigerator ownership has tripled and motorcycle ownership jumped 6-fold from 2001 to 2014.

Income/Consumption Growth in Pakistan. Source: KSBL

Rapid Income Growth:

Rising ownership of durables in Pakistan has been driven by significant reduction in poverty and growth of household incomes, according to Dr. Abdul Ghani's research. Percentage of households with per capita income of under $2 per day per person has plummeted from 57% in 2001 to 7% in 2014. At the same time, the percentage of households earning $2 to $10 per day per person has soared from 42% of households in 2001 to 87% of households in 2014.  The percentage of those earning over $10 per day per person has jumped 7-fold from 1% of households in 2001 to 7% of households in 2014.

Summary:

Credit Suisse wealth data for 2017 shows that Pakistan has the lowest wealth inequality in its region as measured by Gini index. Lower inequality can be seen in terms of rising percentage of households that can afford to buy durables like appliances and vehicles as reported by Dr. Abdul Ghani of Karachi School of Business and Leadership (KSBL).

Related Links:

Haq's Musings

Credit Suisse Wealth Report 2016

Pakistan: A Majority Middle Class Country

Karachi School of Business and Leadership

State Bank: Pakistan's Actual GDP Higher Than Officially Reported

College Enrollment in Pakistan

Musharraf Accelerated Development of Pakistan's Human and Financial Capital

China-Pakistan Economic Corridor

Monday, November 27, 2017

Did Maryam and Nawaz Sharif Orchestrate the TLY Dharna at Faizabad?

The 22-day long Faizabad Dharna anti-Ahmedi protest disrupted all aspects of life in the twin cities of Rawalpindi and Islamabad. It was too well planned and organized to be called "spontaneous". Protesters were provided with food and all other supplies they needed to sustain it for over three weeks. The question is: Who was behind this protest? Was it just the Tehrik Labbaik Ya Rasoollullah (TLY) activist mullahs seen on TV screens yelling out abuses at others? Was it the military or its intelligence agencies? Or was it politicians? Let's try and answer these questions.

Faizabad Interchange Near Islamabad
The Context:

It's important to understand the recent context to see who might have been behind these protests. Former Prime Minister Nawaz Sharif has been up in arms against the military and the judiciary since he was removed from office by the Pakistan Supreme Court in August this year. The point person leading this campaign on his behalf is his daughter Maryam Nawaz. The purpose of this effort is to bring about open confrontation with the military. In the end, Nawaz and Maryam hope to prove that they are victims of a conspiracy by the military and the judiciary against democracy.

Sequence of Events:

A few weeks ago, people linked to the PMLN social media wing, managed by Maryam Nawaz, tweeted a picture of General Javed Qamar Bajwa’s father’s grave allegedly located in an Ahmadi cemetery.

The ruling PMLN propaganda against General Bajwa's faith was followed by Maryam Nawaz's husband Captain Safdar's hateful anti-Ahmadi speech in parliament in which he demanded a “ban on recruitment of Qadianis [Ahmadis] in the armed forces." This drew a sharp response from Pakistan Army spokesman Major General Asif Ghafoor who said the following in a tweet:“When we put on the uniform we are a Pakistani soldier only, irrespective of our religion, irrespective of our province and irrespective of our clan,”

Controversial Amendment:

Law Minister Zahid Hamid introduced  Election Act, 2017 in which the words in Form-A “I solemnly swear” had been replaced with “I believe”. Sections 7B and 7C of the Conduct of General Elections Order, 2002, which relate to the status of Ahmadis, had also been omitted in the Election Act, 2017.

This caused a firestorm among the rightwing religious groups which, contrary to the advice of Punjab Chief Minister Shahbaz Sharif, was exploited by Maryam and Nawaz Sharif to ignite protests leading up to the Faizabad Dharna.

Maryam's Intransigence:

Faizabad dharna participants demanded the resignation of Law Minister Zahid Hamid as a condition for ending their protest. Maryam Nawaz, through her close confidant and minister Maryam Auranzeb, strongly opposed the resignation demand. At the same time, there are reports that traders and merchants close to Maryam and Nawaz Sharif continued to feed and sustain the protest at Faizabad.

Instead of reaching a deal with the dharna participants, the federal government resorted to the use of force that failed to disperse the protest.  In fact, the government action resulted in nationwide expansion of the protests.  Then the federal government called the Army to bring about a confrontation between the military and the protesters.

Pakistan Army's Role: 

To its credit, the Pakistan Army understood the game being plated by Nawaz Sharif and his daughter. Instead of using force against the protesters, the Army chief General Bajwa brokered a deal that forced the government to fire its Law Minister Zahid Hamid that brought an end to the protests.

Summary:

The Faizabad dharna was orchestrated by Maryam and Nawaz Sharif to create chaos and force military intervention. It started a few weeks ago when people linked to the PMLN social media wing tweeted a picture of General Bajwa’s father’s grave allegedly located in an Ahmadi cemetery. Then Nawaz Sharif's son-in-law Captain Safdar Awan made a hateful anti-Ahmadi speech in parliament to whip up anti-Army hysteria. Then came the 22-day long Faizabad dharna. Maryam and Nawaz Sharif were seeking to use the Army against this dharna and force a military takeover of the government to justify their claims of victimhood to gain public sympathy. Fortunately, the Army thwarted this conspiracy and brought the protest to a peaceful end.

Here's a discussion on this subject:

https://youtu.be/XJxDlalyfK0




 Related Links:

Haq's Musings

Nawaz Sharif Disqualification

Rising Tide of Intolerance Threatens Pakistan

Pakistan Opposition Indicts But Still Supports Nawaz Sharif

US Reported Alleges Nawaz Sharif Harassed Her

Civil-Military Ties in Pakistan

Pak Media Cheers as Right-Wing Judges Pursue Musharraf

Pakistan Army: Chief Backer and Guarantor of CPEC

Thursday, November 23, 2017

Marvell to Pay $7.5 Billion For Cavium Co-founded by Pakistani-American NEDUET Alum

Marvell Technology announced on November 20 that it would buy Cavium in a $6 billion stock deal, according to CNBC News. The value of the deal jumped to $7.5 billion enterprise value at the close of market on November 22, 2017.

Raghib Husain
Raghib Husain, Pakistani-American cofounder of Cavium and an alumnus of NED University of Engineering Technology, sent the following email today confirming the deal to his friends:

"Now that the news is public you must have figured out why I was so busy lately. It’s a day with mixed feelings for me. It’s like sending 17yrs old off to college. In any case I’m thankful to Allah to give us opportunity to experience this."

"To summarize: I started Cavium with Syed in late 2000, took public in 2007 with a Market cap of about $600M, ten years later in 2017, we are an established semiconductor company with revenue of $1B, 2000 employees and Market Cap of $5B and now consolidated for over $6.5B enterprise value. At the market close on Wednesday, the deal already valued at $7.5B (enterprise value). Alhamdolillah! I am thankful for everyone’s prayers and support."

Marvell said it will acquire all outstanding shares of Cavium common stock in exchange for consideration of $40.00 per share in cash and 2.1757 Marvell common shares for each Cavium share. Cavium shareholders are expected to own approximately 25% of the combined company on a pro forma basis. Marvell intends to fund the cash consideration with a combination of cash on hand from the combined companies and $1.75 billion in debt financing.

Cavium, Inc. designs and manufactures highly integrated semiconductor products that enable intelligent processing for networking, communication, and the digital home. Cavium offers a broad portfolio of integrated, software compatible processors ranging in performance from 10 Mbps to over 100 Gbps that enable secure, intelligent functionality in enterprise, data-center, broadband/consumer, wireless, access and service provider equipment.

Raghib, born to middle class parents in Karachi, Pakistan, received his bachelor's degree in computer science from NED University of Engineering in 1992. He has endowed the Muhammad Raghib Hussain Chair of Computer and Information System Engineering at his alma mater in Karachi

Related Links:

Haq's Musings

OPEN Silicon Valley Forum 2017: Pakistani Entrepreneurs Conference

Pakistani-American's Tech Unicorn Files For IPO at $1.6 Billion Valuation

Pakistani-American Cofounders Sell Startup to Cisco for $610 million

Pakistani Brothers Spawned $20 Billion Security Software Industry

Pakistani-American Ashar Aziz's Fireeye Goes Public

Pakistani-American Pioneered 3D Technology in Orthodontics

Pakistani-Americans Enabling 2nd Machine Revolution

Pakistani-American Shahid Khan Richest South Asian in America

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

Pakistani-American's Game-Changing Vision 



Wednesday, November 22, 2017

Information Technology Jobs Moving From India to Pakistan?

Outlook India recently ran a story headlined "Noida to Islamabad". It suggests at least anecdotal evidence of information technology jobs beginning to move from India to Pakistan. The number of jobs is only 125 but could it be the tip of a larger iceberg? Are western companies finding Pakistan becoming more competitive with India in terms of cost and skills on offer? Let's try and answer these questions.

Noida to Islamabad:

Outlook India report said 125 employees at a US-based information technology service provider were laid off in Noida in New Delhi, India, and the very next day an equal number of workers started working for the company in Islamabad, Pakistan. Here's an excerpt of Outlook India story:

"On the night of November 1, stretching into early next morning, close to half the workforce at the Noida office of a US-based IT service provider was informed that their services were no longer needed. A former employee says salaries for the staff at the Noida office were declared delayed by a day on October 31. The official explanation was that the servers were not working. “They weren’t clear about how many people were going to be laid off,” he says. The next night, they “axed 125 people in half-an-hour.” They all got a severance package—a cheque for October and another two months of salary—and a termination letter. Rumors of layoffs had started doing the rounds four to five months ago. The talk was that the company was opening offices in a neighboring country. Curiously, the day the workforce in Noida was sacked, almost the same number of employees for the same low-level IT-enabled jobs logged into their systems, 676 kilometers away, in Islamabad, Pakistan. Job cuts have plagued the Indian IT sector for about two years now and have begun to get pretty serious from the start of this year. “Bloodbath in Bangalore” has been the recurring headline. But the trend of these jobs going to techies in Pakistan is more recent. Away from all the noise of ceasefire violations and surgical strikes, where Pakistan could really hurt India is in taking away low-end IT jobs. The neighbor has a budding IT industry, growing in its own space, looking to emulate the Indian IT success story where right now data operators and BPO callers come much cheaper."

The story did not identify the company by name.

Pakistan: The Next Software Hub?

There are tens of thousands of Pakistani IT engineers working in the West, particularly in Silicon Valley, the high-tech capital of the world. The popular entertainment industry recognizes this fact by featuring a Pakistani-American software engineer in lead role played by a real-life Pakistani-American Kumail Nanjiani in HBO's "Silicon Valley" serial.  Articles like the New York Times Op Ed piece in 2015 titled "Pakistan, the Next Software Hub?" have helped raise the profile of Pakistan's information technology industry in the West.

Afiniti and Careem: Tech Unicorns Made in Pakistan:

Afiniti and Careem are two technology unicorns engineered in Pakistan by Pakistanis. AI (artificial intelligence) startup Afiniti software has largely been engineered in Lahore while taxi hailing service Careem's technology has mostly been developed in Karachi.

Careem is a taxi hailing app that is giving its American competitor Uber a run for its money in a region stretching from Pakistan to the Middle East and North Africa. The company cofounded by Mudassir Sheika, a Pakistani national, is headquartered in Dubai in the United Arab Emirates.

Careem's software has been developed by its technology partner VentureDive based in Karachi, Pakistan.  VentureDive was started by serial Pakistani entrepreneur Atif Azim who sold his earlier startup Perfigo to network equipment giant Cisco for $74 million in 2004, according to a report in Tech in Asia.

Washington D.C. based AI technology firm Afiniti, founded by serial Pakistani-American entrepreneur Zia Chishti, has filed for initial public offering (IPO) at $1.6 billion valuation, according to VentureBeat. The company has grown out of the technology used in the Pakistan-based call center business of The Resource Group (TRG) also founded by Zia Chishti.

Bulk of the Afiniti development team is located in Thokar Niaz Baig, Lahore. In addition, the company has development team members in Islamabad and Karachi.

Numbers,  Skills and Cost: 

Pakistani universities are producing over 10,000 IT engineers annually. Many of them have demonstrated their quality and skills by freelancing for American and European companies. Pakistani freelancers consistently rank among the top three year after year.

In terms of cost, Pakistani engineers cost significantly less than engineers in India and elsewhere. The average salary of a software engineer ($110,000) in Silicon Valley is about 20X more than the average salaries in India ($6,875) and Pakistan ($4,770), according to Glassdoor.

Source: Glassdoor

Summary:

Recent move of 125 IT jobs from Noida to Islamabad in an indication that  Pakistan is becoming an attractive destination for software and information technology companies looking for highly skilled talent at significant discounts. It is an emerging center of technology with at least two unicorns, Afiniti and Careem, engineered by Pakistanis in Pakistan.  With growing numbers of young homegrown Pakistani technologists, a highly skilled diaspora and an evolving startup ecosystem with incubators, accelerators and investors, the country is beginning to demonstrate its vast potential as a vibrant technology hub of the future. Provincial governments, particularly those in Punjab and KP, are showing leadership in encouraging this trend. The main ingredients are all coming together to make things happen in Pakistan.

Related Links:

Haq's Musings

OPEN Silicon Valley Forum 2017: Pakistani Entrepreneurs Conference

Pakistani-American's Tech Unicorn Files For IPO at $1.6 Billion Valuation

Pakistani-American Cofounders Sell Startup to Cisco for $610 million

Pakistani Brothers Spawned $20 Billion Security Software Industry

Pakistani-American Ashar Aziz's Fireeye Goes Public

Pakistani-American Pioneered 3D Technology in Orthodontics

Pakistani-Americans Enabling 2nd Machine Revolution

Pakistani-American Shahid Khan Richest South Asian in America

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

Pakistani-American's Game-Changing Vision 


Tuesday, November 21, 2017

Pakistan's Total Education Spending Surpasses its Defense Budget

Pakistan's public spending on education has more than doubled since 2010 to reach $8.6 billion a year in 2017, rivaling defense spending of $8.7 billion. Private spending on education by parents is even higher than the public spending with the total adding up to nearly 6% of GDP. Pakistan has 1.7 million teachers, nearly three times the number of soldiers currently serving in the country's armed forces. Unfortunately, the education outcomes do not yet reflect the big increases in spending. Why is it? Let's examine this in some detail.

Pakistan Education Budget:

The total money budgeted for education by the governments at the federal and provincial levels has increased from Rs. 304 billion in 2010-11 to Rs. 790 billion in 2016-17,  representing an average of 17.5% increase per year since 2010.

Source: Dawn Newspaper

Private Education Spending in Pakistan:

2012 Data from UNESCO and the World Bank shows that the private spending on education is about twice as much as the monies budgeted by federal and provincial governments in Pakistan.

Private/Public Spending on Education in Selected Countries. Source: Economist

Education Outcomes:

UNESCO and World Bank data from 2013 shows that only 52% of Pakistani kids and 48% of Indian kids reached expected standard of reading after 4 years of school, according to the Economist Magazine. It also shows that 46% of Pakistani children dropped out of school before completing 4 years of education.
Reading Performance in Selected Countries. Source: Economist

Education and Literacy Rates:

Pakistan's net primary enrollment rose from 42% in 2001-2002 to 57% in 2008-9 during Musharraf years. It has been essentially flat at 57% since 2009 under PPP and PML(N) governments.

Source: Economic Survey of Pakistan 2015-16

Similarly, the literacy rate for Pakistan 10 years or older rose from 45% in 2001-2002 to 56% in 2007-2008 during Musharraf years. It has increased just 4% to 60% since 2009-2010 under PPP and PML(N) governments.

Source: Economic Survey of Pakistan 2015-16

Pakistan's Human Development: 

Human development index reports on Pakistan released by UNDP confirm the ESP 2015 human development trends.Pakistan’s HDI value for 2013 is 0.537— which is in the low human development category—positioning the country at 146 out of 187 countries and territories. Between 1980 and 2013, Pakistan’s HDI value increased from 0.356 to 0.537, an increase of 50.7 percent or an average annual increase of about 1.25.

Pakistan HDI Components Trend 1980-2013 Source: Human Development Report 2014


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.

Bogus Teachers in Sindh:

In 2014, Sindh's provincial education minister Nisar Ahmed Khuhro said that "a large number of fake appointments were made in the education department during the previous tenure of the PPP government" when the ministry was headed by Khuhru's predecessor PPP's Peer Mazhar ul Haq. Khuhro was quoted by Dawn newspaper as saying that "a large number of bogus appointments of teaching and non-teaching staff had been made beyond the sanctioned strength" and without completing legal formalities as laid down in the recruitment rules by former directors of school education Karachi in connivance with district officers during 2012–13.

Ghost Schools in Balochistan:

In 2016, Balochistan province's education minister Abdur Rahim Ziaratwal was quoted by Express Tribune newspaper as telling his provincial legislature that  “about 900 ghost schools have been detected with 300,000 fake registrations of students, and out of 60,000, 15,000 teachers’ records are unknown.”

Absentee Teachers in Punjab:

A 2013 study conducted in public schools in Bhawalnagar district of Punjab found that 27.5% of the teachers are absent from classrooms from 1 to 5 days a month while 3.75% are absent more than 10 days a month. The absentee rate in the district's private schools was significantly lower. Another study by an NGO Alif Ailan conducted in Gujaranwala and Narowal reported that "teacher absenteeism has been one of the key impediments to an effective and working education apparatus."

Political Patronage:

Pakistani civilian rule has been characterized by a system of political patronage that doles out money and jobs to political party supporters at the expense of the rest of the population. Public sector jobs, including those in education and health care sectors, are part of this patronage system that was described by Pakistani economist Dr. Mahbub ul Haq, the man credited with the development of United Nation's Human Development Index (HDI) as follows:

"...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." 

Summary:

Education spending in Pakistan has increased at an annual average rate of 17.5% since 2010. It has more than doubled since 2010 to reach $8.6 billion a year in 2017, rivaling defense spending of $8.7 billion. Private spending by parents is even higher than the public spending with the total adding up to nearly 6% of GDP. Pakistan has 1.7 million teachers, nearly three times the number of soldiers currently serving in the country's armed forces. However, the school enrollment and literacy rates have remained flat and the human development indices are stuck in neutral.  This is in sharp contrast to the significant improvements in outcomes from increased education spending seen during Musharraf years in 2001-2008. An examination of the causes shows that the corrupt system of political patronage tops the list. This system jeopardizes the future of the country by producing ghost teacher, ghost schools and absentee staff to siphon off the money allocated for children's education. Pakistani leaders need to reflect on this fact and try and protect education from the corrosive system of political patronage networks.

Related Links:

Haq's Musings

History of Literacy in Pakistan

Reading and Math Performance in Pakistan vs India

Myths and Facts on Out-of-School Children

Who's Better For Pakistan's Human Development? Musharraf or Politicians? 

Corrosive Effects of Pakistan's System of Political Patronage

Development of Pakistan's Human Capital

Asian Tigers Brought Prosperity; Democracy Followed

Saturday, November 18, 2017

Pakistan Per Capita Cement Consumption Hit New High of 170 Kg in 2016

Pakistan's domestic cement consumption reached 35 million tons in 2016, up from 30 million tons in 2015, according to a report published by Global Cement.  Using the latest census population of 207 million, it works out to about 170 Kg per person consumption. The increase is driven by a combination of CPEC-related infrastructure projects as well as commercial and housing construction.


Pakistan Cement Sales. Source: Global Cement

While domestic demand for cement is continuing its upward trend, the exports have suffered a major decline. In 2009, the exports hit a high of over 11 million tons, constituting 34% of all cement dispatches at the time. Since then, they have fallen to below 6 million tons or 14% of all sales.

Pakistan cement industry is booming. There is some disagreement about where the biggest demand is coming from.  The CEO of Thatta Cement says it is 60% infrastructure and 40% housing but others say it is 70% housing and 30% infrastructure.

Pakistan's 11 cement manufacturers are investing a combined $2.25 billion to add new production capacity of 30 million tons a year by 2019, according to a media report attributed to the State Bank of Pakistan.

The year 2017 is also proving to be yet another boom year for cement industry. Cement sales have soared by 15% year-on-year to 10.3 million tons in the first quarter of fiscal year 2017-18 that ended in September 2017, up from 9 million tons in the same period in 2016.

Pakistan is among the world’s fastest-growing construction markets. A BMI report published earlier in 2017 forecasts an average 12 percent growth annually for the next five years.  Cement capacity utilization increased to 88 percent in the 10 months through April, the highest in 11 years, according to Bloomberg.

Beyond the construction industry boom, Pakistan's large scale manufacturing (LSM) sector is also soaring by double digits. Both of these sectors are important drivers for job growth in the country.

Although production was driven mostly by strong domestic demand, the exports in July-Sept 2018 also increased nearly 11% over the same period last year.

Among the notable sub-sectors driving strong LSM growth in July-August 2017 are: Tractors 115%,  motorcycles 28.3%, deep freezers 16.2%, air-conditioners 26.8%, electric-fans 22.4%, electric motors 17.3% and electric meters 18.3%, and switchgear 20.8%.

Significant improvement in the country's security situation is helping restore confidence of investors, businesses and consumers who are pushing economic growth in Pakistan to new highs. The fast pace of execution of China-Pakistan Economic Corridor (CPEC) related projects is at least partly responsible for it.

Related Links:








Tuesday, November 14, 2017

Pakistani Students Win Silver in International Genetic Engineering Competition

A team of undergraduate students representing Peshawar has won a silver medal in a genetic engineering competition organized recently by the International Genetically Engineered Machine (iGEM) Foundation in Boston, Massachusetts.

Source: iGEM Peshawar Facebook Page


iGEM Team:

The team was made up of students from several cities and towns across Pakistan including Lahore, Attock, Islamabad, Multan, Faisalabad, Khyber Agency, Nowshera, Charsadda, Peshawar, Swabi and Mardan.

The team was hosted by Institute of Integrative Biosciences of CECOS University of IT and Emerging Sciences Peshawar. It was sponsored by Khyber-Pakhtunkhwa (KP)’s Directorate of Science and Technology, according to media reports.

The team's silver-medal-winning 2017 entry is a genetically engineered fish called "Reporter Fish" that can detect five different heavy metals and change color to indicate the presence of metal contamination in the water. It used an Arduino electronic circuit board with bacterial-human interface device that enables bacteria to detect and report contamination.

The Peshawar team also participated in iGEM 2016 competition and won a Bronze medal. The 12-member team last year was made of 5 female and 7 male students.

Stanford Challenge:

Earlier this year, a 3-person team of Pakistani students, including a female student from Islamabad's National University of Science and Technology (NUST), won first place in a contest organized by Stanford Center of Longevity. The team's entry is a device they designed and prototyped that enables tremor patients to perform daily routine tasks.

Higher Education in Pakistan:

Wins such as the iGEM silver medal and the first place in Stanford Challenge are the result of improvements in higher education in Pakistan since the year 2000.

There are over 3 million students enrolled in grades 13 through 16 in Pakistan's 1,086 degree colleges and 161 universities, according to Pakistan Higher Education Commission report for 2013-14.  The 3 million enrollment is 15% of the 20 million Pakistanis in the eligible age group of 18-24 years.  In addition, there are over 255,000 Pakistanis enrolled in vocational training schools, according to Technical Education and Vocational Training Authority (TEVTA).

Graduation Day at NED Engineering University For 1300 Graduates in 2013
Pakistani universities have been producing over half a million graduates, including over 10,000 IT graduates, every year since 2010, according to HEC data. The number of university graduates in Pakistan increased from 380,773 in 2005-6 to 493,993 in 2008-09. This figure is growing with rising enrollment and contributing to Pakistan's growing human capital.

Source: UNESCO's Global Education Digest 2009






Higher education in Pakistan has come a long way since its independence in 1947 when there was only one university, the University of Punjab. By 1997, the number of universities had risen to 35, of which 3 were federally administered and 22 were under the provincial governments, with a combined enrollment of 71,819 students. A big spending boost by President Pervez Musharraf helped establish 51 new universities and awarding institutions during 2002-2008. This helped triple university enrollment from 135,000 in 2003 to about 400,000 in 2008, according to Dr. Ata ur Rehman who led the charge for expanding higher education during Musharraf years. There are 161 universities with 1.5 million students enrolled in Pakistan as of 2014.

R&D Investment: 

Rise of research and publications at Pakistani universities began during Musharraf years when 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 seven-fold as percentage of GDP from 0.1% of GDP in 1999 to 0.7% of GDP in 2007. It has since declined as percentage of GDP.

Summary:

Pakistani students, scientists and researchers are continuing to produce highly recognized and cited research in spite of serious economic and security challenges. Enrollment in higher education is rising and giving a boost to innovation. With better policy focus and more investment in higher education, Pakistan  can make an even greater impact with its young demographics.

Related Links:

Haq's Musings

Pakistan Beats BRICS in Highly Cited Research

Pakistan Becomes CERN Member

Pakistani Scientists at CERN

Rising College Enrollment in Pakistan

10 Pakistani Universities Among Asia's Top 300

Genomics and Biotech Research in Pakistan

Human Capital Growth in Pakistan

Educational Attainment in Pakistan

Pakistan Human Development in Musharraf Years

Robotics Growth in Pakistan 

Monday, November 13, 2017

Is US Playing the "India Card" Against China With "Indo-Pacific Quad"?

Has Asia-Pacific become Indo-Pacific? Is George W. Bush's Quad back again? Is this Trump's version of Obama's Pivot to Asia? Let's examine what happened during President Donald Trump's recent Asia Trip.

Obama's Pivot to Asia:

President Barack Obama's Pivot to Asia initiative and his efforts to create Trans-Pacific Partnership (TPP) seemed to have been all but abandoned by President Donald Trump after his inauguration in January 2017. This is part of a pattern of Mr. Trump's campaign to erase the Obama legacy and put his own stamp on all things American. However, it now appears that the Obama legacy is being repackaged by the Trump administration under new names such as "Quad" in "Indo-Pacific" region. Its aim remains the same: To check China's rise.

Trump's Quad in Indo-Pacific:

In a speech to business leaders during his visit to Vietnam, President Trump repeatedly called for a “free and open Indo-Pacific,” describing a region where independent nations could “thrive in freedom and peace” and all states “play by the rules.” Without naming China as the target, Trump also used the phrase repeatedly at the start of a meeting Monday in the Philippines with President Rodrigo Duterte, according to Bloomberg.    Trump also met Indian Prime Minister Narendra Modi in Manila and called him a friend and a “great gentleman.”

Trump's Asia trip also saw the revival of a decade-old but short-lived partnership of four maritime nations (Australia, India, Japan and the United States) worried about China’s rising influence in the region now being described as "Indo-Pacific" rather than its usual moniker of Asia-Pacific.  Senior officials from the four countries met in Manila for the first such meeting since the George W. Bush administration, focused on regional issues including North Korea but topped with China-related concerns.

US-India Anti-China Military Alliance?

To some observers, the "Quad" appears to be a throwback to the Cold War era in which the United States wants to use Narendra Modi as a willing ally to check China's rise. They cite lack of confidence in the current American leadership under Trump to follow through on any international or bilateral commitments.

While the US seeks to use India against China, the Indians remain obsessed with Pakistan. They talk about the lack of American concern for India's interests in South Asia and the Middle East. Writing for The Wire, Indian analyst Manoj Joshi complains that "there is no reciprocal US commitment to issues of Indian concern relating to Pakistan and the dangers arising out of the highly volatile environment in the Persian Gulf area which the US has helped create".

India's Pakistan Obsession:

It seems to me that the US policymakers don't fully appreciate the Kautilya doctrine that says "your neighbor is your enemy and your neighbor's neighbor is your friend".

The foreign policy doctrine enunciated by Kautilya, the ancient Indian Machiavelli, continues to guide India's foreign policy vis-a-vis its neighbors, particularly Pakistan. Kautilya's Rajamdala (Circle of States) theory can be seen in action today in India's use of Afghanistan against Pakistan. Unfortunately, the Pakistan phobia in India is so deeply ingrained that the Indian policy vis-a-vis Pakistan is not likely to change in the foreseeable future.

Summary:

President Donald Trump has repeatedly talked about the "Indo-Pacific" region in an obvious attempt to sign up Delhi to counter Beijing in Asia.  However, the Indians remain obsessed with enlisting the Americans to hurt Pakistan. The Trump administration is willing to engage in anti-Pakistan rhetoric but it is not going to act against Pakistan as long as Afghanistan remains important to the US interests. This is where their interest diverge now and likely to remain so at least in the foreseeable future.

Related Links:

Haq's Musings

Why is India Sponsoring Terrorism in Pakistan?

Ex-Indian Spy Documents RAW's Successes in Pakistan

Post Cold War Line-up: Pakistan-Russia-China vs India-Japan-US

Ex RAW Chief AS Dulat Blames Advani For Agra Summit Failure

Pakistan ISI: Afghanistan's Bogeyman

Trump's Anti-Pakistan Rhetoric

Counter-insurgencyOperation ZarbeAzb

India's Abiding Hostility Toward Pakistan 

India's Israel Envy: Will Modi Attack Pakistan?

India's Pakistan Phobia