Thursday, May 31, 2018

Pakistan Elections 2018: Significance of Social Media, Minorities

Pakistan's 46 million young voters of ages 18-36 years, up from 41 million in 2013, will likely have the biggest impact on the outcome of the elections this year.  Among other notable changes in the electorate is the number of non-Muslim voters that has jumped 30%, significantly faster than the 23% growth in overall voter registration in Pakistan since the last elections in 2013, according to data from the Election Commission of Pakistan.

Pakistan's young demographics and soaring use of social media platforms will almost certainly have a major impact on how political party candidates reach out to voters in general elections scheduled for July 25, 2018. The use of Facebook, Twitter, WhatsApp and other social media apps may even make the Pakistani election campaigns and outcomes vulnerable to manipulation by both domestic and foreign players. It is a fact that was recently acknowledged by Facebook CEO Mark Zuckerberg in his testimony to the United States Congress earlier this year.  Pakistani authorities will have to be on high alert to stop any attempts to manipulate the voters.

Young Electorate: 

There are 17.44 million voters between 18 and 25 years  and 28.99 million between 26 and 35 years. These 46 million young voters, up from 41 million in 2013, will likely have the biggest impact on the outcome of the elections this year.

Pakistan's online population of over 55 million is predominantly from 18 to 35 years age group. Social media platforms will play a very important role in reaching this demographic group to bring them out to vote.

Social Media Campaigns: 

Major political parties, particularly Pakistan Muslim League (Nawaz) and Pakistan Tehreek-e-Insaf (PTI) are keenly aware of the importance of social media in the upcoming elections. Both parties have very active social media teams on Facebook, Twitter, WhatsApp and other platforms.

Foreign actors may also try to influence Pakistani elections in the same way that the Russians are alleged to have influenced recent elections in the West.

Social media news feeds are driven by users' profiles to reinforce their preferences and prejudices.  Newsfeeds are customized for each user. Any posts that don't fit these profiles don't get displayed. The result is increasing tribalism in the world. American and British intelligence agencies claim that Russian intelligence has used social media to promote divisions and manipulate public opinion in the West.  Like the US and the UK, Pakistan also has ethnic, sectarian and regional fault-lines that make it vulnerable to similar social media manipulation.  It is very likely that intelligence agencies of countries hostile to Pakistan will exploit these divisions for their own ends. Various pronouncements by India's current and former intelligence and security officials reinforce this suspicion.

Electoral Map:

There are nearly 106 million registered voters eligible to vote in general elections scheduled for July 25, 2018, says the Election Commission of Pakistan.  This figure includes 59 million male and 47 million female voters.

Punjab tops the list with the largest number of registered voters with a total of 60.67 million,  23% increase from 2013. It is followed by Sindh with 22.39 million registered voters, 18% increase over 2013.

Khyber Pakhtunkhwa is the third largest province with 15.32 million registered voters, 25pc higher than 2013.  Balochistan has just 4.3 million registered voters but it's a increase of 29% over 2013. Federally Administered Tribal Areas (FATA) have 2.51m voters.

Among other notable changes in the electorate is the number of non-Muslim voters that has jumped 30%, significantly faster than the 23% growth in overall voter registration in Pakistan since the last elections in 2013, according to data from the Election Commission of Pakistan.

Hindus make up the bulk of the non-Muslim population in Pakistan. Their numbers increased from 1.6% to 1.73% or 3.593 million individuals, according to 2017 Pakistan Population Census.

The population of Dalits (Kohli, Bheel and Meghwar communities in Sindh) has also increased from 0.25% to 0.41% of the total national population. Together, the Hindu and Dalit population adds up to 2.14% of the total population.

Krishna Kumari Kohli recently made history by becoming the first-ever Hindu Dalit woman Senator in the upper house of Pakistan, according to media reports.  Her election represents a major milestone for women and minority rights in the Islamic Republic of Pakistan.

Hindu population of the areas that now constitute Pakistan was 15% in 1931 India Census. It declined to 14% in 1941 India Census. Then first Pakistan Census in 1951 showed it was 1.3% after the massive cross-border migration of both Hindus and Muslims in 1947. During the partition, 4.7 million Hindus and Sikhs migrated to India from what became Pakistan, while 6.5 million Muslims migrated from India to Pakistan. Since 1951, the Hindu population of what is now Pakistan has grown from 1.3% to 2.14% now.

Summary:

Pakistan's young electorate and soaring use of social media platforms will shape the election campaigns of major political parties in this year's elections scheduled for July 25, 2018. The use of Facebook, Twitter, WhatsApp and other social media apps may even make the Pakistani election outcomes vulnerable to manipulation by domestic and foreign players. It's fact that was recently acknowledged by Facebook CEO Mark Zuckerberg in his testimony to the United States Congress earlier this year.  Pakistani authorities will have to be on high alert to stop any attempts to manipulate the voters.

Related Links:

Haq's Musings

South Asia Investor Review

Social Media: Blessing or Curse For Pakistan?

Planted Stories in Media

Indian BJP Troll Farm

Kulbhushan Jadhav Caught in Balochistan

Lowdown on PTM and Manzoor Pashteen

Use of Social Media in Pakistan Political Protests

Riaz Haq's Youtube Channel

Saturday, May 26, 2018

India-Pakistan Spy Chronicles; Trump-Sharif Troubles

What are Asad Durrani and AS Dulat, ex spooks of India and Pakistan, trying to accomplish with their joint appearances and book collaboration? What is “Spy Chronicles: RAW, ISI and the Illusion of Peace" all about? What have the two revealed about the work of ISI and RAW spy agencies with Kashmiri insurgents? Has the Modi government lost control of the situation in Kashmir? Why does Durrani say that all Pakistan has to do now in Kashmir is "sit back and watch"? Why have both spy agencies been bribing the militants to buy influence? Is "corrupting someone with money more ethical than killing them" as AS Dulat has put it? Is Dulat's optimism about solution to Kashmir issue justified?

Why are both Nawaz Sharif and Donald Trump attacking the "deep state" or "establishment" in their respective countries? Why are they both spinning conspiracy theories? Is it to deflect public attention from the serious allegations against them? How serious are the problems of Russia collusion in the US case and money laundering in Pakistan's case? Are they succeeding in their efforts? Are their defense strategies causing major harm to the national cohesion in Pakistan and US? How will it all end?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with panelists Misbah Azam and Riaz Haq (www.riazhaq.com)

https://youtu.be/5qfDYZgEX8U




Related Links:

Haq's Musings

South Asia Investor Review

Ex Indian Spy Documents RAW's Successes Against Pakistan

Mohanalal Bhaskar: An Indian Spy in Pakistan

Sharif's and Trump's Strikingly Similar Narratives

Who's at Fault for Failure to Resolve Disputes: India or Pakistan?

700,000 Indian Soldiers vs 10 Million Kashmiris

UK Says Pakistan Among Top 3 Money Laundering Sources

Riaz Haq's Youtube Channel


Friday, May 25, 2018

Sharif's and Trump's Strikingly Similar Narratives

President of the United States Donald John Trump and Pakistan's former prime minister Mian Mohammad Nawaz Sharif are both under investigation by law enforcement agencies in their respective countries. Both men allege that they are victims of conspiracies against them by the "Criminal Deep State", better known as "the establishment" in Pakistan. The two men have accused the investigators, prosecutors and the judges of being biased against them. Their narratives are strikingly similar. Sharif and Trump have polarized and divided their nations by asking the voters to stand by them and to reject what they describe as a political "witch hunt". Both have succeeded in maintaining the support of the vast majority of their party legislators so far.

Donald Trump and Nawaz Sharif
Attacking Investigators:

Donald Trump has denounced the FBI teams working for Special Counsel Robert Mueller on Russia Collusion as "partisan Democrats". He has demanded that the FBI be investigated for "spying" on his 2016 presidential campaign. He has called the entire investigation a "witch hunt" by "criminal deep state" actors in the law enforcement and intelligence communities. He has described the FBI raid of his lawyer Michael Cohen's office as a "break-in".

Trump's Republican supporters in the House of Representatives of US Congress have made an unprecedented demand to see documents related to the FBI investigation of the President.

Like Trump, former Prime Minister Nawaz Sharif too has attacked the JIT (Joint Investigative Team) set up the Pakistan Supreme Court as being biased against him. Like Trump, Sharif has denounced the entire process of money laundering investigation against him as a "conspiracy" by the "establishment" (Deep State).

Nawaz Sharif's PMLN supporters have so far stood with their leader.

Distrust in Judiciary:

President Trump has repeatedly and viciously attacked judges who have issued orders unfavorable to him. Even before he was elected, candidate Trump accused a US-born judge with a Mexican last name of being biased him because  "he is Mexican and I'm building a wall".

Like Trump, Nawaz Sharif has accused his country's Supreme Court judges of acting against him on behalf of the "establishment" (the Deep State).

Politicizing Legal Processes: 

Both Trump and Sharif have used the legal accountability they face to rally political support for themselves. By arguing that they both face political witch hunt for their policies and not their alleged conduct, they have fired up their supporters and polarized their nations.  Both have delegitimized the institutions of law and justice in their attempts to beat the law enforcement agencies and the justice system in their respective countries.

Attempts by Trump's and Sharif to politicize legal proceedings against them are causing deep divisions in both the United States and Pakistan. These divisions don't augur well for the countries and the future of their institutions. They pose a threat to law and order and national security.

Lying to Law Enforcement:

While the right to remain silent is guaranteed under the 5th amendment of the US constitution, lying to law enforcement officials is a felony that triggers charges of obstruction of justice. These charges can potentially result in serious jail time. While state laws may vary across jurisdictions, obstructing a federal investigation is a felony with a potential five year prison sentence. Some of Trump's aides, including his former national security advisor General Michael Flynn, have already pleaded guilty to lying to the FBI and obstruction of justice charges.  Trump's  team is trying to avoid the obstruction of justice charges against the President.

Similarly, there are Articles 62 and 63 of the Pakistan constitution that require that the public office holders be honest. While one may question the specific meanings of the words "sadiq" and "ameen" written in the constitution,  it is ridiculous to argue that deliberate lying by the highest officials of the country go unpunished.  In answers to questions by law enforcement regarding the sources of funds for buying London properties owned by the Sharif family, Mr. Sharif's multiple different conflicting explanations to the parliament, law enforcement and the people constitute a  big white lie.

Foreign Residency (Iqama):

Mr. Nawaz Sharif says he has been disqualified by the Supreme Court for Iqama (foreign residency), not Panama (money laundering). What he doesn't acknowledge is that Iqma facilitates Panama. Nor does he fully explain the source of funds used by his children to buy properties in London at the time they were too young to have their own legitimate incomes to afford to buy the properties.

Assets held by people in offshore tax havens are tracked by their country of residence, not by their citizenship, under OECD sponsored Agreement On Exchange of Information on Tax Matters. Pakistan is a signatory of this international agreement.  When Pakistan seeks information from another country under this agreement,  the nation's FBR gets only the information on asset holders who have declared Pakistan as their country of residence. Information on those Pakistanis who claim residency (iqama) in another country is not shared with Pakistani government. This loophole allows many Pakistani asset holders with iqamas in other countries to hide their assets. Many of Pakistan's top politicians, bureaucrats and businessmen hold residency visas in the Middle East, Europe and North America.

Money Laundering:

Money laundering is a very serious problem resulting in the illicit outflow of trillions of dollars from the poor to the rich countries, according to data compiled by Washington-based Global Financial Integrity.   Bloomberg has reported that Pakistanis alone own as much as $150 billion worth of undeclared assets offshore.

There's a direct relationship between investment and GDP. Flight of capital reduces domestic investment and depresses economic growth in poor countries. Lower tax revenues also impact spending on education, health care and infrastructure, resulting in poor socioeconomic indicators.

A recent report by the British National Crime Agency (NCA) has identified Pakistan as one of the top three source countries for money laundering to the United Kingdom where Nawaz Sharif's family owns expensive real estate. Both the UK NCA report and Panama papers show that the politicians and their family members are the biggest culprits in money laundering.

President vs Prime Minister:

Presidents as heads of state in most countries avoid prosecution while in office. Prime Ministers as heads of government do not enjoy the same immunity.

The US president is both the head of state and the head of government. There is no precedent of any US president being indicted while in office. The closest that a prosecutor ever came to indicting a president was in 1974 when President Richard Nixon was named an "un-indicted co-conspirator" in Watergate.  President Nixon resigned when he saw that the US Congress was ready to impeach him. Later, President Gerald Ford pardoned President Nixon, sparing him the humiliation of indictment and-or conviction.

In Pakistan, the President does enjoy immunity from prosecution while in office. The Prime Minister does not.

Summary:

Faced with serious charges against them, US President Donald Trump and Pakistan's ex premier Nawaz Sharif are attacking investigators, prosectors and judges in their respective countries. Both are politicizing the legal processes and delegitimizing institutions of democracy in the United States and Pakistan. Their narratives are strikingly similar. They are  polarizing their people and dividing their societies.  These divisions don't augur well for the countries and their institutions.

Here's a discussion on the subject:

https://youtu.be/5qfDYZgEX8U




Related Links:

Haq's Musings

South Asia Investor Review

UK Names Pakistan Among Top Sources of Money Laundering

Did Musharraf Steal Pakistani People's Money?

Pakistan Economy Hobbled By Underinvestment

Raymond Baker on Corruption in Pakistan

Nawaz Sharif Disqualified

Culture of Corruption in Pakistan

US Investigating Microsoft Bribery in Pakistan

Zardari's Corruption Probe in Switzerland

Politics of Patronage in Pakistan


Wednesday, May 23, 2018

Proliferation of Cyber Hacking Tools in Pakistan

Many intelligence agencies are turning to the use of smartphone malware and spyware for the purpose of hacking and surveillance. The list of such agencies includes but not limited to US CIA, NSA, Mossad, RAW, MI6, ISI and others. Global proliferation of cyber hacking tools appears to have been accelerated with the US CIA's loss of control of its hacking tools including spyware, malware, viruses and trojans.

Stealth Mango and Tangelo:

Lookout, an American mobile security firm based in San Francisco, has recently published a report claiming that a "group or individuals that are believed to belong to the Pakistani military "has developed and released a "set of custom Android and iOS surveillanceware tools we’re respectively calling Stealth Mango and Tangelo".  The report says: "These tools have been part of a highly targeted intelligence gathering campaign we believe is operated by members of the Pakistani military". The countries affected by it include Afghanistan, India, Iraq, Pakistan and the United Arab Emirates, according to Lookout report.

Mango and Tangelo Spyware Targets. Source: Lookout


The targets in Pakistan include members of the foreign diplomatic corps who have visited conflict zones, particularly parts of Balochistan, and Pakistani officials involved in internal corruption investigations.

The goal of the Lookout report is to sell their security software as obvious from their concluding summary below:

"Stealth Mango and Tangelo is yet another example among the numerous campaigns we have uncovered (Dark Caracal, ViperRAT, FrozenCell, etc.) where threat actors are developing in-house custom surveillanceware. The actor behind Stealth Mango has stolen a significant amount of sensitive data from compromised devices without the need to resort to exploits of any kind. The actors that are developing this surveillanceware are also setting up their own command and control infrastructure and in some cases encountering some operational security missteps, enabling researchers to discover who the targets are and details about the actors operating it that otherwise are not as easily obtained. Relevant data has already been shared with the appropriate authorities. Lookout customers are protected against Stealth Mango and Tangelo and have been for several months since the beginning of the investigation."

Amnesty International Allegations:

Amnesty International has alleged that attackers are using fake online identities and social media profiles to "ensnare Pakistani human rights defenders online and mark them out for surveillance and cybercrime".  The report titled "Human Rights Under Surveillance: Digital Threats against Human Rights Defenders in Pakistan" claims that Diep Saeeda, a Lahore-based human rights activist, has been targeted by a "network of individuals and companies based in Pakistan that are behind the creation of some of the tools seen in surveillance operations used to target individuals in Pakistan".

Amnesty says that "over the course of several months, Amnesty International used digital forensic techniques and malware analysis to identify the infrastructure and web pages connected to online attacks on human rights activists in Pakistan".  "Amnesty International’s Technology and Human Rights team has been able to trace these attacks to a group of individuals based in Pakistan".

Proliferation of Hacking Tools:

In 2017, Wikileaks revealed that the American intelligence agency CIA has "lost control of the majority of its hacking arsenal including malware, viruses, trojans, weaponized "zero day" exploits, malware remote control systems and associated documentation." The Wikileaks noted that that "the CIA made these systems unclassified".

Wikileaks said: "In what is surely one of the most astounding intelligence own goals in living memory, the CIA structured its classification regime such that for the most market valuable part of "Vault 7" — the CIA's weaponized malware (implants + zero days), Listening Posts (LP), and Command and Control (C2) systems — the agency has little legal recourse".

FBI agents have since arrested 29-year-old former CIA software engineer Joshua A. Schulte as a prime suspect in the release of the CIA documents via Wikileaks, according to New York Times.

It appears that the CIA's "hacking arsenal" is now being modified and used by many state and non-state actors to carry out hacking and surveillance of their targets around the world. The proliferation of cyber hacking tools appears to be a lot easier than the proliferation of the nuclear weapons technology.

Summary:

A report by American mobile security software vendor Lookout claims that individuals and groups  connected to the Pakistani military are using spyware and malware tools on targets in Afghanistan, Pakistan, India and UAE. Amnesty International alleges that Pakistan intelligence agencies are "network of individuals and companies based in Pakistan that are behind the creation of some of the tools seen in surveillance operations used to target individuals in Pakistan".

Many intelligence agencies are turning to the use of smartphone malware and spyware for the purpose of hacking and surveillance. The list of such agencies includes but not limited to US CIA, NSA, Mossad, RAW, MI6, ISI and others. Global proliferation of cyber hacking tools appears to have been accelerated when the US CIA  lost control of its hacking tools including malware, viruses and trojans.

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan Operation Arachnophobia

Social Media Tribalism

Revolution in Military Affairs: Cyberweapons and Robots

Cyber Warfare

Pakistani-American Founder of Fireeye Cyber Firm

Pakistan Boosts Surveillance to Fight Terror

Pakistan's Biometric Registration Database

Operation Zarb e Azb Launch

Ex Indian Spy Documents RAW's Successes in Pakistan

Intelligence Failures in Preventing Daily Carnage in Pakistan

What If Musharraf Had Said NO to US After 911?

Pakistani Computer Scientist Fights Terror

Pakistani Killer Drones to Support Anti-Terror Campaign

3G 4G Rollout Spurs Data Services Boom in Pakistan

Monday, May 21, 2018

History of Pakistan's Business and Industry

Pakistan's $1.1 trillion GDP ranks the country as the world's 24th largest economy in terms of purchasing power parity (PPP).  Pakistan has come a long way since independence in 1947 when it was a poor agrarian country struggling to survive. Business and industry sectors now account for more than half of Pakistan's economy while agriculture's contribution is down to 20% of GDP.

The story of the country's business and industry parallels the ups and downs in its national history. It is the story of business individuals and families dealing with uncertainties. It is also the story of how the captains of business and industry were impacted by major events in the nation's history, particularly the breakup of Pakistan and the creation of Bangladesh in 1971. It is the story of survival in the midst of political instability, policy discontinuities and the fight against terror in recent years. It is the story of how the businesses and industries thrived under pro-business rulers and suffered under anti-business governments. It is the story of how the country's economy has performed under pro and anti-business policies.

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


Captains of Industry:

The United States had Rockefellers, JP Morgans, Carnegies, Fords and others who built American business and industry. Japan has Hitachi, Honda, Mitsubishi and other big names credited with building its business and industry. South Korea is home to recognized global giants like Samsung, Hyundai and others. A handful of individuals and families, aided by their governments, have played outsized roles in industrialization and economic growth in most major economies.

The captains of business and industry neighboring India are also a few known large families including Ambanis, Birlas, Hindujas, Jindals, Mittals, Tatas, and a few others. They have contributed to economic growth in their country.

Pakistan had the so-called 22 families which began the process of industrialization in 1960s but they were devastated by the 1971 war.  What was left of their business and industry was nationalized by the PPP government led by Zulfikar Ali Bhutto  in 1970s. Many of these families have since recovered and rebuilt and several new ones have now emerged.  Their continued growth and Pakistan's economic progress depend largely on the continuity of business-friendly government policies in future.

Source: KASB Securities. Courtesy: Faseeh Mangi of Bloomberg News

Business and Industry in Pakistan:

Here are the top 11 publicly traded groups of companies listed on Karachi Stock Exchange. These groups make up a little over one-third of the total market capitalization of all the companies listed on the Karachi Stock Exchange.  The market caps here represent a snapshot and vary daily with stock trading:

 1. The IGI Group tops the KSE listed groups. Headed by Syed Babar Ali, it is a diversified conglomerate that includes IGI insurance, IGI Life, Packages Ltd and other businesses with a combined market cap of Rs. 677 billion making up 7.4% of KSE.

2. Dawood Group includes companies such as Engro Corp,  Engro Fertilizers, Engro Polymer, Engro PowerGen, Dawood Hercules, and Dawood Lawrencepur with a total combined market cap at Rs. 442 billion adding up to 4.8% of KSE.

3. Pakistani military's Fauji Foundation owns Fauji Fertilizer, Fauji Foods, Fauji Cement, Askari Bank, and Mari Petroleum. The Fauji Foundation Group has a total market cap of Rs432 billion, and a a total KSE share of 4.6%.

4. Mian Mansha’s Mansha Group includes MCB Bank, DG Khan Cement, Nishat Mills Adamjee Insurance, Nishat Chunian, Lalpir Power, and Nishat Power. It has total market cap of Rs. 408 billion, or 4.4% of KSE.

5. Habib Group includes Indus Motor Company, Thal Limited, Habib Insurance, Habib Sugar Mills, Bank Al-Habib, Habib Metro, and Shabbir Tiles. Total market cap for the group is Rs326 billion making up 3.6% of KSE.

 6. Bestway Group includes United Bank Limited (UBL) and Bestway Cement with total market cap of Rs. 310 billion, or 3.4% of KSE market cap.

7. Tabba Group has total market cap of Rs. 298 billion or 3.3% of KSE. The group includes Lucky Cement, ICI Pakistan and Gadoon Textiles.

8. The Atlas Group which includes companies such as Honda Atlas Cars, Atlas Honda, Atlas Battery, and Atlas Insurance has total market cap of Rs. 143 billion  or 1.6% of KSE.

9. Chinoy Group includes Pakistan Cables, International Industries, and International Steel. It has market cap of Rs. 90 billion or 1% of KSE.

10. The Saigol Group includes companies such as Pak-Elektron, Maple Leaf Cement, and Kohinoor Textile Mills.  It is worth Rs. 79 billion accounting for 0.9% of KSE.

11. JS Group includes Jahangir Siddiqui Company, JS Bank, Bank Islami, JS Investments, and JS Global. It is worth Rs. 43 billion or 0.5% of KSE.

In addition to publicly traded companies, there are several large highly valued privately held business and industry groups like Jang Group, Hashoo Group,  Bahria Town and others.

Dawood Group:

Dawood Group is the second largest among the top 11 publicly traded business groups which make up a third of the total market capitalization of the Karachi Stock Exchange.

In a keynote address at OPEN Forum 2018, the annual conference of Pakistani entrepreneurs in Silicon Valley, Husain Dawood of Dawood Group in Pakistan told the story of his family's business starting in 1947. This story is probably representative of most of the rest of business and industry groups in the country.

Seth Ahmad Dawood, the patriarch of the Dawood family, started his textile business in India before 1947. He lost everything when he fled to what became Pakistan after the partition of India. He rebuilt his business in both East and West Pakistan. The family lost half its business in what became Bangladesh in 1971. What was left of the business was confiscated by Zulfikar Ali Bhutto government in West Pakistan.

The Dawood family was able to rebuild its business under General Zia ul Haq's pro-business military government that followed after Zulfikar Ali Bhutto was deposed in a military coup.

The best days for Dawood Group came during General Musharraf's pro-business government in years 2000-2007 under Husain Dawood who took charge after his father Ahmad Dawood's death. He led the diversification drive from textiles into chemicals, foods, fertilizers, power and communications businesses.

Dawood Group invested $1 billion in world's largest fertilizer plant and took on a lot of debt. Musharraf government committed gas supply as incentive for the group to invest.  The PPP government led by Asif Zardari demanded payoff to deliver on the commitment to supply gas for the fertilizer plant. Dawood's refusal to pay off the PPP officials meant that the group's investment sat idle until 2013 when Nawaz Sharif's pro-business PMLN government came to their rescue.  Dawood group and other business and industry groups have thrived since 2013 with a pro-business government in charge.

Summary:

Growth of business and industry in major American, European and East Asian economies has been led by a few large families aided by pro-business government policies.  Ford, Hitachi, Honda and Samsung are now household names but they all started small and built up in stable environments favorable to business. Pakistan had the so-called 22 families which began the process of industrialization in 1960s but they were devastated by the 1971 war.  What was left of their business and industry was nationalized by the PPP government led by Zulfikar Ali Bhutto  in 1970s. Many of these families have since recovered and rebuilt and several new ones have now emerged. Their continued growth and Pakistan's economic progress depend largely on the continuity of business-friendly government policies in future.

Related Links:

Haq's Musings

South Asia Investor Review

Who Owns Pakistan?

Pakistan Military Industrial Complex

Brief History of Pakistan Economy

OPEN Forum Silicon Valley 2018

Asian Tiger Dictators Brought Prosperity

Democracy vs Dictatorship Debate in Pakistan

Musharraf's Legacy

Is This a 1971 Moment in Pakistan's History?

Pakistan's Lost Decade of 1990s

Saturday, May 19, 2018

British Government Lists Pakistan Among Top 3 Money Laundering Sources

British National Crime Agency (NCA) has identified Pakistan, Nigeria and Russia as the top source countries for money laundering in the United Kingdom, according to British media reports. The NCA report says the UK is a prime destination for foreign corrupt and politically exposed people (politicians and their families) to launder money.

NCA Report Highlights:

In its annual assessment of serious and organized crime, the NCA says: “Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds....As the UK moves towards exiting the EU in March 2019, UK-based businesses may look to increase the amount of trade they have with non-EU countries....We judge this will increase the likelihood that UK businesses will come into contact with corrupt markets, particularly in the developing world, raising the risk they will be drawn into corrupt practices.”

Here are some of the key excerpts of the UK NCA report titled "National Strategic Assessment of Serious and Organized Crime 2018":

1. "The UK is a prime destination for foreign corrupt PEPs (politically exposed persons, a euphemism for politicians and their family member) to launder the proceeds of corruption. Investment in UK property, particularly in London, continues to be an attractive mechanism to launder funds. The true scale of PEPs investment in the UK is not known, however the source countries that are most commonly seen are Russia, Nigeria and Pakistan".

2. "The overseas jurisdictions that have the most enduring impact on the UK across the majority of the different money laundering threats are: Russia, China, Hong Kong, Pakistan, and the United Arab Emirates (UAE). Some of these jurisdictions have large financial sectors which also make them attractive as destinations or transit points for the proceeds of crime."

Politicians Dominate Panama Papers


Panama Papers Leak:

The NCA report says there are "professional enablers from the banking, accounting and legal world" who  facilitate the legitimization of criminal finances and are perpetuate the problem by refinancing further criminality.

In fact, there is an entire industry made up of lawyers and accountants that offers its services to help hide illicit wealth. Mossack Fonseca, the law firm that made headlines with "Panama Leaks", is just one example of companies in this industry.

Mossack Fonseca's 11.5 million leaked internal files contained information on more than 214,000 offshore entities tied to 12 current or former heads of state, 140 politicians, including Pakistan's now ex Prime Minister Nawaz Sharif's family.  Icelandic Prime Minister resigned voluntarily and Pakistani Prime Minister was forced out by the country's Supreme Court.

The Panama list included showbiz and sports celebrities, lawyers, entrepreneurs,  businessmen, journalists and other occupations but it was heavily dominated by politicians.

Trade Based Money Laundering (TBML):

The report singles out trade as one of the key mechanisms used in money laundering.  It says: "Trade based money laundering (TBML) is a complex global issue and a key method of money laundering impacting on the UK".

It is not just greedy politicians, unscrupulous businessmen and corrupt officials in developing countries who rely on fraudulent manipulation of trade invoices; all kinds of drug traders, terrorists and criminals also use TBML (trade-based money laundering).

John A. Cassara, former US intelligence official with expertise in money laundering, submitted written testimony for a US Congressional hearing on “Trading with the Enemy: Trade-Based Money Laundering is the Growth Industry in Terror Finance” to the Task Force to Investigate Terrorism Financing Of the House Financial Services Committee February 3, 2016. Here's an except from it:

"Not long after the September 11 attacks, I had a conversation with a Pakistani entrepreneur. This businessman could charitably be described as being involved in international grey markets and illicit finance. We discussed many of the subjects addressed in this hearing including trade-based money laundering, terror finance, value transfer, hawala, fictitious invoicing, and counter-valuation. At the end of the discussion, he looked at me and said, “Mr. John, don’t you know that your adversaries are transferring money and value right under your noses? But the West doesn’t see it. Your enemies are laughing at you.”"

Trade Misinvoicing:

Washington-based Global Financial Integrity (GFI) defines trade misinvoicing as "fraudulently manipulating the price, quantity, or quality of a good or service on an invoice submitted to customs" to quickly move substantial sums of money across international borders.



How does trade miscinvoicing work? Here's an example:

Let's say an exporter in Pakistan exports goods worth $1 million to a foreign country and invoices it at $500,000 through an offshore middleman.  The middleman invoices and collects $1 million from the end customer, sends $500,000 to Pakistan and deposits $500,000 in an offshore account. The result: Pakistan is deprived of the $500,000 in foreign exchange.

Similarly, imports of goods worth $1 million to Pakistan are overinvoiced at $1.5 million through an offshore middleman and the difference is kept in an overseas account. The result: Pakistan loses another $500,000 in foreign exchange. Meanwhile, the Pakistani traders and the officials facilitating misinvoicing together pocket $1 million or 50% on the two trades.  Pakistan's trade and current account deficits grow and the foreign exchange reserves are depleted, forcing Pakistan to go back to the International Monetary Fund (IMF) for yet another bailout with tough conditions.

Foreign Residency (Iqama):

Assets held by people in offshore tax havens are tracked by their country of residence, not by their citizenship, under OECD sponsored Agreement On Exchange of Information on Tax Matters. Pakistan is a signatory of this international agreement.  When Pakistan seeks information from another country under this agreement,  the nation's FBR gets only the information on asset holders who have declared Pakistan as their country of residence. Information on those Pakistanis who claim residency (iqama) in another country is not shared with Pakistani government. This loophole allows many Pakistani asset holders with iqamas in other countries to hide their assets. Many of Pakistan's top politicians, bureaucrats and businessmen hold residency visas in the Middle East, Europe and North America.

Loss of Tax Revenue:

Customs duties in developing countries often make up a huge part of the tax revenue collected by the governments. Trade Misinvoicing not only increases current account deficits but also worsen budget deficits by cutting tax receipts. Raymond Baker, author of Capitalism's Achilles Heel, has written about it as follows:

"The Pakistan government's largest source of revenues is customs duties, and therefore evasion of duties is a national pastime. Isn't there a way to tap into this major income stream, pretending to fight customs corruption and getting rich at he same time? Of course; we can hire a reputable (or disreputable, as the case maybe) inspection company, have the government pay the company about one percent fee to do price checking on imports, and get multi-million dollar bribes paid to us upon award of the contracts. Societe de Generale de Surveillance (SGS), headquartered in Switzerland, and its then subsidiary Cotecna, the biggest group in the inspection business, readily agree to this subterfuge. Letters in 1994 promised "consultancy fees", meaning kickbacks, of 6 percent and 3 percent to British Virgin Island (BVI) companies, Bomer Finance Inc. and Nassam Overseas Inc., controlled by (Benazir) Bhutto and (Asif) Zardari. Payments of $12 million were made to Swiss bank accounts of the BVI companies."

Aid in Reverse:

Some have called London the "Money Laundering Capital of the World" where corrupt leaders from developing nations use wealth looted from their people to buy expensive real estate and other assets. Private individuals and businesses from poor nations also park money in the west and other off-shore tax havens to hide their incomes and assets from the tax authorities in their countries of residence.

The multi-trillion dollar massive net outflow of money from the poor to the rich countries has been documented by the US-based Global Financial Integrity (GFI). This flow of capital has been described as "aid in reverse". It has made big headlines in Pakistan and elsewhere since the release of the Panama Papers and the Paradise Leaks which revealed true owners of offshore assets held by anonymous shell companies. Bloomberg has reported that Pakistanis alone own as much as $150 billion worth of undeclared assets offshore.

Impact on Economic Growth:

There's a direct relationship between investment and GDP. Flight of capital reduces domestic investment and depresses economic growth in poor countries. Lower tax revenues also impact spending on education, health care and infrastructure, resulting in poor socioeconomic indicators.

In Pakistan, for example, it takes investment of about 4% of GDP to grow the economy by 1%. Lower levels of investments in the country has kept its GDP growth below par relative to the rest of South Asia.  Any reduction in the outflow of capital to offshore tax havens will help boost economic growth in Pakistan to close the gap with its neighbors, particularly Bangladesh and India whose economies are both growing 1-2% faster than Pakistan's.

Summary:

UK's National Crime Agency (NCA) has listed Pakistan among the top three sources of money laundering in the United Kingdom. The report has identified trade misinvoicing as a key mechanism for money laundering. It singles out politicians as the main culprits. Pakistan's exports have declined significantly since former Prime Minister Nawaz Sharif's PMLN party assumed power in 2013. They are down from about $25 billion in 2013-14 to about $20 billion in 2016-17. Overvaluation of the Pakistani currency is often cited as a reason for it. The other, probably more important reason, may be increasing underinvoicing of exports facilitated by the people in power. Trade misinvoicing is the largest component of illicit financial outflows from developing countries as measured by New York- based Global Financial Integrity (GFI) which tracks such flows.

Related Links:

Haq's Musings

South Asia Investor Review

Did Musharraf Steal Pakistani People's Money?

Pakistan Economy Hobbled By Underinvestment

Raymond Baker on Corruption in Pakistan

Nawaz Sharif Disqualified

Culture of Corruption in Pakistan

US Investigating Microsoft Bribery in Pakistan

Zardari's Corruption Probe in Switzerland

Politics of Patronage in Pakistan

Why is PIA Losing Money Amid Pakistan Aviation Boom?

Wednesday, May 16, 2018

Free Speech: Myth vs Reality

The British Broadcasting Corporation (BBC) recently acknowledged the practice of hiring journalists vetted by MI5, the UK intelligence agency, to keep out the "subversives".

The CIA is believed to have driven American investigative reporter Gary Webb to suicide after he exposed the agency's use of drug deals to fund Contra rebels in Nicaragua.

American researcher Joseph Overton has described a spectrum from "more free" to "less free", known as the Overton Window, with regard to the US government intervention in the media.

Here's how American philosopher Noam Chomsky has explained the US establishment's media management strategy:  “The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum."

It seems that "free speech" in the West is really not so free.


Courtesy David Icke
MI5 Vetting of BBC Staff:

The BBC recently acknowledged its long relationship with the British security establishment that started in 1933. When questions were asked about it, the BBC policy was to "keep head down and stonewall all questions".

Vetting by the MI5 applied to  all new BBC staff except "personnel such as charwomen". Since the start of the policy, journalists were always subject to vetting, but a "review in 1983 resulted in about 2,000 posts being removed from the list - including some junior editorial jobs - bringing the total number down to 3,705".

When asked whether any staff are vetted these days, a BBC spokesperson responded:"We do not comment on security issue".

CIA and Media:

In the course of investigating US CIA's support of Contra rebels in Nicaragua,  American journalist Gary Webb discovered a drug connection. He found that the CIA was trafficking drugs sold in poor African American neighborhoods to fund Contra rebels war against Nicaragua's Sandinista government in 1980s. Webb published his findings in a 3-part report "The Dark Alliance" carried by his employer San Jose Mercury News.

Webb's report provoked outrage among African Americans for the harm it did by promoting drug addiction in their poor neighborhoods. It became a public relations nightmare for the CIA.

The CIA responded to the crisis by using what Nicholas Dujmovic, a CIA Directorate of Intelligence staffer described as “a ground base of already productive relations with journalists.”  The CIA top brass was overjoyed to see the nation's largest newspapers destroy the reputation of Gary Webb that eventually led to his suicide.

Veteran journalist Carl Bernstein, famous for his reporting on Watergate along with Bob Woodward, investigated CIA's use of the American media and wrote a piece describing "How Americas Most Powerful News Media Worked Hand in Glove with the Central Intelligence Agency and Why the Church Committee Covered It Up". Here's what he said:

"Among the executives who lent their cooperation to the Agency were William Paley of the Columbia Broadcasting System (CBS), Henry Luce of Time Inc., Arthur Hays Sulzberger of the New York Times, Barry Bingham Sr. of the Louisville Courier‑Journal, and James Copley of the Copley News Service. Other organizations which cooperated with the CIA include the American Broadcasting Company (ABC), the National Broadcasting Company (NBC), the Associated Press (AP),  United Press International (UPI), Reuters, Hearst Newspapers, Scripps‑Howard, Newsweek magazine, the Mutual Broadcasting System, the Miami Herald and the old Saturday Evening Post and New York Herald‑Tribune".

Overton Window:

American researcher Joseph P. Overton said that ideas may range a spectrum from "more free" to "less free" with regard to government intervention.  The mainstream media, particularly commercial media, tend to limit the public discourse within the range they define as permissible at any given time. This is done by designing editorial policies.

The Overton window is not static. It is guided by what is seen as vital national interest by the US national security establishment as we saw during the Cold War and subsequently in the "war on terror".

Social Media:

Social media have created new media management challenges for the western security establishment as we saw with Brexit and Trump victory in 2016. It's created an outrage that is likely to result in new social media regulations unless the likes of Facebook and Twitter agree to self-censorship.

There's so much pressure on major social media platforms that Facebook founder Mark Zuckerberg was forced to acknowledge regulation as "inevitable".

"The internet is growing in importance around the world in people's lives and I think that it is inevitable that there will need to be some regulation," said Zuckerberg to a US Congress committee at a recent hearing.

The western security establishment will now make sure that the new social media platforms are tamed to stay within the "Overton Window" just like the legacy electronic and print media.

Summary:

Recent BBC acknowledgement of its staff vetting by British secret service and revelations of CIA's role in American media management have confirmed what American academic Noam Chomsky has been saying for a while:  “The smart way to keep people passive and obedient is to strictly limit the spectrum of acceptable opinion, but allow very lively debate within that spectrum."  There are now moves afoot to tame the new social media platform to stay within the "spectrum of acceptable opinion".

Related Links:

Haq's Musings

South Asia Investor Review

Is Money Free Speech?

Social Media Promote Tribalism

Social Media: Blessing or Curse For Pakistan?

Planted Stories in Media

Indian BJP Troll Farm

Kulbhushan Jadhav Caught in Balochistan

The Story of Pakistan's M8 Motorway

Pakistan-China-Russia vs India-Japan-US

Riaz Haq's Youtube Channel

Tuesday, May 15, 2018

PTM: The Lowdown on Manzur Pashteen

Pashtun Tahaffuz Movement (PTM) has held rallies across Pakistan in support of Pashtun rights. The movement was born in response to the murder of Naqeebullah Mehsud, a young Pashtun falsely accused of being a terrorist by a rogue senior police officer in Karachi.  PTM has received very little coverage in Pakistan's mainstream media but the extensive foreign media reporting on its leader Manzoor Pashteen has been effusive.  Inside Pakistan, the PTM movement has been mainly a social media phenomenon. Foreign media appear to have relied on PTM's social media posts for their coverage. Pashteen's tweets have come under criticism for disseminating misleading images and disinformation about the actions of Pakistani military in FATA.

PTM Leader Manzoor Pashteen
Who is Manzoor Pashteen?

Manzoor Pashteen is from South Waziristan in Pakistan's federally administered tribal areas (FATA). Born in 1992, he saw a lot of violence and suffering in his home as the battle raged between the Taliban, particularly the TTP,  and the Pakistan's security forces in the last decade.

Pashteen has been variously hailed as "Pashtun Che" and "Messiah" by his supporters while those opposing him have been denigrated as "pygmies". Among others, Pahteen's movement has received support from Afghan President Ashraf Ghani who is not on good terms with Pakistan. Pakistan Army Chief General Qamar Javed Bajwa has described the PTM movement as "engineered" without explicitly naming it.

Social Media Disinformation Campaign: 

While pressing for redress of their genuine grievances, the PTM leaders their and supporters have attacked Pakistani soldiers as "terrorists in uniforms".  Manzoor Pashteen has sent out misleading tweets and disinformation about Pakistan Army.

One of Pashteen's tweets had an image of destroyed homes that he falsely claimed was the result of Pakistan Army action in FATA. It was in fact an image from a 2011 Radio Free Europe story titled "Taliban Burn Villages in Northwestern Pakistan".

Pashteen tweeted out an old 1960s picture from Woodstock , New York.  It showed American hippies sleeping in tents. He wrongly labeled them as internally displaced Pashtuns (IDPs) from FATA, Pakistan.

Another Pashteen tweet included the picture of an Afghan child who was killed by the Taliban in Helmand province. Pashteen incorrectly labeled him a Pakistani Pashtun child in FATA and falsely claimed the child was killed by the Pakistan Army.

Pashteen's account was suspended by Twitter for engaging in disinformation. It was only restored after he and his supporters made promises to correct their behavior and pleaded for restoration.

Violence in FATA:

 Pashteen has seen hundreds of fellow Pashtuns in FATA killed and injured. Tens of thousands have been displaced amid multiple military operations to clear out the Taliban militants from the region.

Terror Death Toll in Pakistan. Source: South Asia Terrorism Portal


There has been a marked decrease in violence as a result of Pakistan Army Operations Zarb e Azb and Radd ul Fasad to drive out militants from North and South Waziristan. Death toll from terrorism across Pakistan has declined from the peak of 11,704 in 2011 to 1,260 in 2017, according to South Asia Terrorism Portal.  Over 22,000 civilians have lost their lives in terrorist attacks since the year 2001. In the same period,  nearly 7,000 Pakistani security personnel have been killed in fighting the terrorists to bring peace to the country.

Pashtun Perpetrators and Victims:

It is true that many victims of terrorist violence in Pakistan have been Pashtuns. But data from South Asia Terrorism Portal (SATP) shows that Pashtuns alone have not suffered from terrorism.

All of Pakistan's ethnic groups and regions have paid a price. And most of the perpetrators of such violence have been Pashtuns. Pakistan Army has also used violence to stop this violence but it was inevitable to bring an end to an armed conflict that could not be peacefully resolved in spite of Pakistan's best efforts. Nearly 7000 Pakistani soldiers and policemen have died fighting the terrorists.

PTM Under Suspicion:

PTM"s detractors say the movement has been hijacked by those wishing to harm Pakistan. They point to the fact it went from pressing for redress of genuine Pashtun grievances to accusing the Pakistani soldiers of being "terrorists in uniform". In an interview with CNN, Pashteen asked "Who they are harboring in their cantonment zones, if not the Taliban?"

Pashteen's critics offer Pashteen's misleading tweets as evidence that he is being manipulated. This is not a surprise when seen in the context of the ongoing debate in the West about the use by hostile nations of the social media to promote divisions along ethnic, racial, sectarian lines.

American and British intelligence agencies claim that Russian intelligence has used social media to promote divisions and manipulate public opinion in the West.  Like the US and the UK, Pakistan also has ethnic, sectarian and regional fault-lines that make it vulnerable to similar social media manipulation.  It is very likely that intelligence agencies of countries hostile to Pakistan are exploiting these divisions for their own ends. Various pronouncements by India's current and former intelligence and security officials reinforce this suspicion.

Solution:

It is important that the Pakistani politicians and the military as well as the Pashtun Tahaffuz Movement (PTM) leaders focus on finding a way forward rather than dissipate their energies in the ongoing blame game.

One of PTM's demands is the removal of Pakistan Army check posts in FATA. Such a move will create a power vacuum that will almost certainly be filled  by the militants, resulting in the loss of hard-fought gains. What is needed is that the Pakistan military be replaced by an effective civilian administration and a police force in a well-planned transition. This requires that FATA be mainstreamed by either creating a new province or by merging it with Khyber Pakhtunkhwa (KP) province.  It means ending the colonial-era Frontier Crime Regulation (FCR) that relies on collective punishment. It means extending Pakistan's constitution and laws to FATA region. There has been a lot of talk about it but little action so far.  Progress on it seems unlikely until after the coming general elections in the country.

Summary:

Pakistan Tahaffuz Movement (PTM) led by Manzoor Pashteen started with demands seeking redress of their genuine grievances. But it has come under scrutiny because of its use of misleading tweets and their rebroadcast by foreign media to spread disinformation. It is especially relevant given the current debate in the West about the use of social media by foreign hostile nations to promote divisions in societies. What is needed is for FATA to be mainstreamed with a civilian administration replacing the Pakistan Army in the region.

Here's a debate on PTM and Manzoor Pashteen:

https://youtu.be/TSePPq_4ILE




Related Links:

Haq's Musings

South Asia Investor Review

Social Media: Blessing or Curse For Pakistan?

Planted Stories in Media

Indian BJP Troll Farm

Kulbhushan Jadhav Caught in Balochistan

The Story of Pakistan's M8 Motorway

What Can Pakistan Learn From Sri Lanka?

Riaz Haq's Youtube Channel


Monday, May 14, 2018

Impact of Trump's Iran Nuke Deal Pull-Out on Afghanistan, Pakistan and Mid-East

What motivated President Donald Trump's unilateral decision to withdraw the United States from JCPoA (Joint Comprehensive Plan of Action) on Iran nuclear weapons program? Why did the European signatories to the deal fail to persuade Trump to abide by the deal? What role did Israeli Prime Minister Benjamin Netanyahu, Saudi Arabia's Crown Prince Mohammad Bin Salman and the Bush era neocons play in this decision?

How will the Trump decision impact Iran's stability? Will the hardliners on all sides be emboldened? Will the US, Israel and Arabs succeed in bringing about a "regime change" in Iran? Will Iran's economic stress turn the Iranian people against the powerful clerics led by Ayatollah Khamenei?

 How will Iran respond to the threat from US, Saudi Arabia and Israel? Will Iran step up proxy wars against US in Afghanistan and the Middle East? How will these events affect Pakistan? Will there be a renewed intensified sectarian war in Pakistan? Will India's efforts to bypass Pakistan to reach Central Asia via Chabahar suffer a setback?

Viewpoint From Overseas host Faraz Darvesh discusses these questions with Misbah Azam and Riaz Haq (www.riazhaq.com)


https://youtu.be/1gme1sO28kM




Related Links:

Haq's Musings

South Asia Investor Review

Iran Nuclear Deal

Iran-Pakistan Ties

Are Iran and Russia Supporting Taliban in Afghanistan?

Iran's Chabahar Port

Viewpoint From Overseas Youtube Channel

Riaz Haq Youtube Channel

Sunday, May 13, 2018

Open Forum 2018: Pakistani-American Entrepreneurs Summit in Silicon Valley

Hundreds of Pakistanis and Pakistani-Americans converged on Santa Clara Convention Center in Silicon Valley on Saturday May 12, 2018 for Open Forum 2018.  The attendees included entrepreneurs, technologists, business executives, investors, lawyers, accountants and others.What was different this year was the presence of an unusually large number of attendees from Pakistan, including dozens of Fulbright scholars studying in the United States,  entrepreneurs from Pakistan, and Husain Dawood of Dawood Group of Companies, the second largest business group in terms of market cap of the companies listed on the Karachi Stock Exchange. Driverless vehicle tech and leading-edge brain research were among the new research and technology topics discussed at the Forum.

L to R: Imran Qureshi, Nazim Kareemi, Husain Dawood, Riaz Haq, Faruk Ahmad at Open Forum 2018

Husain Dawood Keynote:

The morning keynote by Husain Dawood of Dawood Group was in the form of an on-stage interview of the visitor by Imran Sayeed. Sayeed is part of the Entrepreneurship and Innovation faculty at the MIT Sloan School of Management in Cambridge, Massachusetts.

L to R: OPEN President Mobashar Yazdani, Imran Sayeed, Husain Dawood. Photo: Zain Jeewanji

Talking about ups and down of his business that reflect Pakistan's history, Husain Dawood said his father Seth Ahmad Dawood started in the textile business in undivided India and lost everything when he moved to Pakistan in 1947. He rebuilt the business from the scratch starting in 1947 but then suffered a major setback again in 1971 when the eastern wing of the county broke away. The family lost half its business in what became Bangladesh and the other half of its business was nationalized in what was left of Pakistan led by Zulfikar Ali Bhutto. They were forced to start all over again.


Husain Dawood took over the leadership of the group in 2002 when Ahmad Dawood passed away. Helped by President Musharraf's pro-business policies, Dawood diversified from textile into other businesses such as fertilizer, food, energy and communications.  The group took on a lot of debt to expand. Dawood invested nearly a billion dollars and built one of the world's largest fertilizer plants on government's commitment to supply gas to the plant. Then came the PPP government that went back on the commitment and plant ground to halt. The group was able to get it working again when Nawaz Sharif government took power in 2013 and restored gas supply to the plant. Dawood group also invested in the power sector upon Nawaz Sharif's urging to help deal with the energy crisis.

Karachi School of Business Leadership (KSBL):

After the keynote, I asked Husain Dawood why do the family owned business conglomerates and seth culture have such a strangle-hold in Pakistan. He said he's been working to change it to put professional managers in charge of the companies owned by his group. He cited his support for the setting up of Karachi School of Business Leadership (KSBL) a top private business school in Karachi.  KSBL was launched in collaboration with the UK's Cambridge University's Judge School of Business. KSBL faculty includes former professors at top US business schools like Wharton and Sloane.  Dawood said he is now working on creating a Business Leadership Institute at KSBL in collaboration with leading business schools and management consultancies.  McKinsey and Company is among the consultancies he's working with.


Dr. Maheen Adamson's Keynote. Photo Courtesy Ali Hasan Cemendtaur

Dr. Maheen Adamson Keynote:

The afternoon keynote speakers was Dr. Maheen Mausoof Adamson, a Pakistani-American professor at Stanford School of Medicine. She is engaged in leading-edge research and development for treating a variety of brain impairments such as Alzheimer's and brain injuries in sports and on the battlefields.

She spoke directly to the young women in the audience to inspire them to set and achieve ambitious goals as women, particular Muslim women of color with immigrant parents.

Dr. Adamson is working on translational neuroscience methodologies for diagnostic and therapeutic treatments (mainly repetitive Transcranial Magnetic Stimulation (rTMS) in mild and moderate Traumatic Brain Injury (TBI), including structural and functional changes in the brain in both Veteran, active military and civilian population.

One particular kind of brain injury she described is "blast wave injury" that results from just being near a blast that generates fast moving high energy waves. These waves cause serious physical and structural damage to the brain.

She said her research is in early stages and a lot more work is required to fully understand and treat brain impairments and injuries.

Self-Driving Cars:

I was not able to attend the driverless car panel discussion at Open Forum but I spoke with its moderator Shoeib Yunus. Shoeib said there are many Pakistanis working on driverless car technology in the global auto industry.

In particular, Shoeib mentioned two names: Sajjad Khan and Zaki Fasihuddin.

Sajjad Khan is the head of Mercedes Digital Car Division.  As Vice President - Digital Vehicle and Mobility at Mercedes Benz Cars, he is based in Stuttgart, Baden-W├╝rttemberg, Germany. Sajjad has about 300 engineers working for him at Mercedes Research and Development Center in Silicon Valley, CA.  Prior to coming to Mercedes, Sajjad worked for BMW in Munich, Germany.

Zaki Fasihuddin is Vice President of Strategic Partnerships in the Volvo Cars Silicon Valley Technology Center, and CEO of the Volvo Cars Tech Fund focused on funding research in driverless cars.

Social Entrepreneurship Panel: 

It was an all-women panel with two of the three panelists coming from Pakistan to participate in the conference. It was moderated by Shahab Riazi. The companies represented at this company were: Komal Ahmad of Copia, Shameela Ismael of Ghar Par and Maryam Arshad of Impact. They head for-profit startups with the motto: Do good and do well.

Komal Ahmad of Copia described how her company is helping solve hunger by reducing waste of millions of tons of perfectly good, healthy and edible surplus food. Her company's smartphone app matches those with excess food with those in need of food. The idea was born when  Komal saw University of California at Berkeley's cafeteria regularly throwing away un-eaten food. It took her a couple of hours to persuade the cafeteria director to donate the food instead of throwing it away. His main concern was liability if someone ate the food and got sick and sued the university. Komal explained to him that a good samaritan law protects donors from liability in such cases. That was the key to getting him to agree to begin donating surplus food to charity.

Komal's business helps donors, recipients and Copia as the match-maker. Donors get tax deduction for the in-kind donation, the hungry get fed and Copia receives a commission for their work.  Cpoia is a Y Combinator company. It received its seed funding from Pakistani-American Amar Hanafi, a charter member of OPEN, Organization of Pakistani-American Entrepreneurs.

Lahore-based Ghar Par has a similar business model for matching beauticians with customers. It provides employment for women looking for work and generates fees for Ghar Par as a match-maker.

Summary:

Organization of Pakistani-American Entrepreneurs (OPEN) held its annual forum in Silicon Valley on Saturday, May 12, 2018 at Santa Clara Convention Center. It drew hundreds of attendees including entrepreneurs, technologists, business executives, investors, lawyers, accountants and others. There were a large number of attendees from Pakistan, including dozens of Fulbright scholars studying in the United States, entrepreneurs from Pakistan and Husain Dawood of Dawood Group of Companies, the second largest business group in terms of market cap of the companies listed on the Karachi Stock Exchange. Driverless vehicle tech and leading-edge brain research were among the new research and technologies discussed at the Forum.

Related Links:

Haq's Musings

South Asia Investor Review

Pakistani-American Sells Tech Company For $7.5 Billion

Pakistani-American NED Alum Raises $50 Million Round

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 

Friday, May 11, 2018

Nawaz Sharif's Report Card 2013-18

The last five years of Pakistan's outgoing government of the Pakistan Muslim League (Nawaz) have seen the revival of Pakistan's economy and completion of many long delayed infrastructure and energy projects. Mr. Nawaz Sharif deserves full credit for it.  At the same time, the PML government is responsible for slow progress on human development indicators, major decline in exports, growing twin deficits of budget and external accounts, mounting public debt and lack of transparency in financial matters.  It is the lack of transparency that has been brought in sharp focus with the removal of Prime Minister Nawaz Sharif by the nation's Supreme Court in the aftermath of Panama Papers. The leak of these papers revealed his family's ownership of undeclared and unexplained substantial assets abroad.

Terrorism Toll in Pakistan. Source: SATP.org

Highlights:

Pakistan achieved 5.8% growth in gross domestic product (GDP) in fiscal 2017-18, the highest in the last 13 years.  Many long delayed projects ranging from roads, ports, dams and irrigation projects to power plants were finally completed.  Examples of such long delayed projects include M8 and M9 motorways, Lyari Expressway, New Islamabad Airport, Neelum-Jhelum Hydroelectric Project and Kachhi Canal. The PMLN government's performance was boosted by a number of factors including the following:

1. Pakistan Army's anti-terror operations Zarb e Azb and Radd ul Fasad dramatically reduced the level of violence and significantly improved security in the country. It resulted in increased confidence of businesses, investors and consumers in the economy. 

2.  Growth of Chinese investment in China Pakistan Economic Corridor (CPEC) related infrastructure and energy projects. Ongoing execution of CPEC projects is transforming some of the least developed areas of Pakistan and creating hundreds of thousands of new jobs.

3. Major decline in energy prices, particularly prices of liquified natural gas (LNG), helped boost the energy and the power sector which in turn helped increase industrial production and transport sectors.  Pakistan is now among the world's fastest growing LNG markets

Lowlights:

Structural problems in Pakistan's economy remained unaddressed. Current account deficits widened as exports declined and imports jumped, putting pressure on the nation's foreign exchange reserves. Increased deficit spending resulted in bigger budget deficit and heavy borrowing. Public debt and debt service costs climbed. School enrollment and literacy rates remained essentially flat in the last 5 years and Pakistan continued to rank low on human development indices. Here are some of the details:

1.  Pakistan's exports have plummeted from about $25 billion in 2013-14 to about $20 billion in 2016-17 under PMLN government.  Exports in first 9 months of current fiscal year 2017-18 have been recorded at $17 billion.  The trade deficit for the first nine months of fiscal 2017-18 reached $27.3 billion.  This situation has forced the government to borrow more in international debt markets at commercial rates. The country now faces the prospect of going back to the International Monetary Fund (IMF) for yet another bailout.

2.  Pakistan's net primary enrollment is stuck at about 57% while the literacy rate is flat at about 60%. This is in spite of fact that the country now spends almost as much on education as on defense.  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.

Mujhe Kyun Nikala (Why was I ousted?): 

When former Prime Minister Nawaz Sharif repeatedly asks "Mujhe Kyun Nikala" (Why was I ousted),  he appears to be arguing that, because of his government's unquestionably better performance than his predecessor PPP government's,  he deserves to be forgiven without explicitly asking for forgiveness.  What are his sins? His biggest sin is that he and his family have accumulated large amount of unexplained wealth in offshore shell companies during his three terms as Pakistan's prime minister. He and his family did not disclose this wealth until they were forced to acknowledge it after Panama Papers leaks.  They were given ample opportunity by the Pakistan Supreme Court to prove that it was acquired by legitimate means. But they failed to do so.

Mr. Sharif and his family are not unique as owners of unexplained offshore wealth. Washington-based Global Financial Integrity (GFI) estimates that developing countries have lost as much as $13.4 trillion through unrecorded capital flight since 1980. Bloomberg reports that Pakistanis own $150 billion worth of undeclared offshore assets, attributing this estimate to Syed Muhammad Shabbar Zaidi, a partner at Karachi-based A.F. Ferguson and Co. -- an affiliate of PricewaterhouseCoopers LLP.

Iqama (Foreign Residency) vs Panama:

Mr. Sharif says that he was removed for "iqama", not "Panama". What he doesn't acknowledge is that having "iqama" (foreign residency) facilitates "Panama", the hiding of assets in offshore locations.

Assets held by people in offshore tax havens are tracked by their country of residence, not by their citizenship, under OECD sponsored Agreement On Exchange of Information on Tax Matters. Pakistan is a signatory of this international agreement.  When Pakistan seeks information from another country under this agreement,  the nation's FBR gets only the information on asset holders who have declared Pakistan as their country of residence. Information on those Pakistanis who claim residency (iqama) in another country is not shared with Pakistani government. This loophole allows many Pakistani asset holders with iqamas in other countries to hide their assets. Many of Pakistan's top politicians, bureaucrats and businessmen hold residency visas in the Middle East, Europe and North America.

Summary:

The last five years of Pakistan's outgoing government of the Pakistan Muslim League (Nawaz) have seen the revival of Pakistan's economy and completion of many long delayed infrastructure and energy projects. Mr. Nawaz Sharif deserves full credit for it.  At the same time, the PML government is responsible for slow progress on human development indicators, major decline in exports, growing twin deficits of budget and external accounts, mounting public debt and lack of transparency in financial matters.  It is the lack of transparency that has been brought in sharp focus with the removal of Prime Minister Nawaz Sharif by the nation's Supreme Court in the aftermath of Panama Papers. The leak of these papers revealed his family's ownership of undeclared and unexplained substantial assets abroad.

Related Links:

Haq's Musings

South Asia Investor Review

CPEC Transforming Pakistan's Least Developed Regions

Pakistan: The Other 99% of the Pakistan Story

How Pakistan's Corrupt Elite Siphon Off Public Funds

Bumper Crops and Soaring Credit Drive Tractor Sales

Panama Leaks

How West Enables Corruption in Developing Countries

Declining Terror Toll in Pakistan

Riaz Haq's YouTube Channel