Thursday, February 13, 2025

Pakistan Navy Plans Modernization, Indigenization

Admiral Naveed Ashraf, Pakistan Navy Chief, spoke of his vision for "indigenization and modernization" of his branch of the Pakistani military on the eve of multinational AMAN 2025 naval exercises. Biennial AMAN Exercise and Dialogue this year attracted 60 nations from Australia to Zimbabwe (A to Z). China, the United States, Turkey and Japan were among the countries which participated in it. 

Some of the AMAN 2025 Participants in Karachi, Pakistan


Pakistan has a 1,000 kilometers long coastline on the Arabian Sea with maritime sovereignty over 200 nautical miles deep Exclusive Economic Zone (EEZ) and 150 nautical miles of Continental Shelf. This adds 290,000 square kilometers of sea or about 36% of the country's land area open for tapping vast resources in it. Pakistan's "Blue Economy" in this extended economic zone includes seafood and energy resources as well as international trade connectivity with the rest of the world. It offers opportunities for water sports, recreation and tourism in the coastal areas of Pakistan. 

Over the next 10 years, Pakistan has plans to build a modern well-equipped naval force with 50 ships ranging from frigates and submarines to corvettes and offshore patrol vessels.  Recently, Pakistan Navy has inducted Type 054 A/P frigates from China, Offshore Patrol Vessels Batch-I and Batch-II from Romania and MILGEM-class corvette from Türkiye.  "These platforms with the latest weapons and sensors will be a significant addition to the Pakistan Navy’s existing capabilities to effectively deal with today’s complex multi-threat environment", Ashraf told John Hill of "Naval Technology" publication.  "The Jinnah-class frigate marks a significant advancement for my Navy as our first indigenously designed and produced large warship", he added. 

As part of its modernization and indigenization effort, Pakistan is building its domestic defense industry to reduce dependence on imports. The Pakistani Navy Chief explained: "Currently, our industrial base is developing and gearing up for this initiative and we anticipate that our technological capabilities will grow throughout the program. This growth will be facilitated through partnerships with experienced defense partners from friendly countries". China and Turkey are Pakistan's closest partners in this effort.  Pakistan’s defense acquisition budget is forecast to register a compound annual growth rate of 11.4% over the next four years: it is projected to reach $3.1 billion in 2029 from $2 billion in 2025, according to GlobalData intelligence.

In terms of military diplomacy, Pakistan is working with a much larger group of nations represented at the AMAN Exercises and Dialogue 2025. The list includes Australia, Azerbaijan, Bahrain, Bangladesh, Belarus, Brazil, Brunei, Burundi, Cambodia, Canada, China, Comoros, Czech, Djibouti, Egypt, Fiji, France, Germany, Indonesia, Iran, Iraq, Italy, Japan, Jordan, Kazakhstan, Kenya, Kingdom of Saudi Arabia (KSA), Kuwait, Libya, Malaysia, Maldives, Morocco, Myanmar, Netherland, Nigeria, Oman, Pakistan, Palestine, Philippines, Qatar, Romania, Russia, Seychelles, South Africa, South Korea, Spain, Sri Lanka, Switzerland, Tajikistan, Tanzania, Thailand, Timor-Leste, Tunisia, Türkiye, UAE, Uganda, UK, USA and Zimbabwe. 

Over two dozen ships from twelve navies participated in an international fleet review off the coast of Pakistan – the grand finale to multinational naval exercise AMAN 2025 that saw a record 60 nations participate, according to media reports

Here's an Aljazeera video of AMAN 2025:

https://youtu.be/ghuOerEfNFs?si=o3N_a4IUsQ52ez5R


 

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Thursday, February 6, 2025

US Deports Indian Illegal Immigrants in Handcuffs and Chains Aboard Military Aircraft

 A US Air Force transport plane landed in India today with 104 illegal Indian immigrants in handcuffs and shackles, according to media reports. Speaking with reporters, a deportee said: “For 40 hours, we were handcuffed, our feet tied with chains and were not allowed to move an inch from our seats. After repeated requests, we were allowed to drag ourselves to the washroom. The crew would open the door of the lavatory and shove us in.”

Illegal Indian Immigrants Deported in Handcuffs and Chains. Source: News18

The inhumane treatment meted out to citizens of India, a US ally, has sparked a lot of anger against Prime Minister Narendra Modi's government. The critics are citing the example of Colombia, a small South American nation, whose president protested similar treatment of its citizens by the Trump administration. Colombian President Gustavo Petro turned back the US military planes carrying deportees and then sent his own aircraft to transport them back home in Colombia. 

Illegal immigration from India to the US has dramatically increased on Prime Minister Modi's watch. A Pew Research Center report said that as of 2022, India ranked third, after Mexico and El Salvador, on the list of countries with the largest number of undocumented immigrants — 725,000 — living in the U.S.

India has a serious unemployment problem, particularly for the young people entering the job market by the millions each year. This problem is concealed by headline  economic growth figures highlighted by the Modi government. At the same time, India is losing its best and brightest in a massive brain drain. 

"Leave India! It's High Time!!" screams out a recent Reddit post that has gone viral! The poster who claims to be an Indian entrepreneur warns of impending "terrible economic collapse" with a "massive depreciation of the Indian rupee".  

The now-deleted post, written by a user named ‘u/anonymous_batm_an,’ urges high-earning professionals, especially innovators, to leave India for countries with better opportunities and governance, as reported by the Times of India.  It recommends the UAE or Thailand as alternative destinations . The sentiments expressed in the post are already resonating with a large number of Indians.  The non-resident Indians now constitute the world's largest overseas diaspora. Every year, 2.5 million Indians leave their country of birth, making India the nation with the highest annual number of emigrants in the world. 

New Company Registrations in Dubai. Source: Khaleej Times


Indian investors continued to top the list of new non-Emirati companies joining the Dubai Chamber of Commerce during the first nine months of 2024. A total of 12,142 new Indian companies joined the chamber during the period, data showed on Monday, according to the Khaleej TimesPakistan ranked second on the list with 6,061 new companies joining between Q1-Q3 2024, while Egypt followed with 3,611 new companies registering as members of the chamber. The number of new Syrian companies joining the chamber during the first nine months of the year reached 2,062, placing the country fourth among the top nationalities of new member companies.

India is losing its best and brightest to the West, particularly to the United States, at an increasingly rapid pace. A 2023 study of the 1,000 top scorers in the 2010 entrance exams to the Indian Institutes of Technology (IIT) — a network of prestigious institutions of higher learning based in 23 Indian cities — revealed the scale of the problem. Around 36% migrated abroad, and of the top 100 scorers, 62% left the country, according to a report in the science journal Nature.  Nearly two-thirds of those leaving India are highly educated, having received academic or vocational training. This is the highest for any country, according to the Organization for Economic Co-operation and Development.

Example of The Great Indian Brain Drain. Source: Boston Political Review

Brain drain is defined as the loss of precious human capital of a nation. It is a “consequence of an education system designed for ‘selecting’ the best and brightest in an economy that is still too controlled and cannot create opportunities for its best and brightest”, according to Indian economist Shruti Rajagopalan. High-profile examples of India's human capital loss include Satya Nadella (Microsoft), Sundar Pichai (Google), Shantanu Narayen (Adobe), Arvind Krishna (IBM) and Ajay Banga (World Bank). 

Foreign-Born STEM Workers in America. Source: American Immigration Council


Growing number of Indian students are going abroad for higher education each year and 90% of them never return home after completing their studies.  In 2022, the number of Indian students leaving the country for higher education reached a six-year high of 770,000. And a 2021 report estimated that around two million Indian students would be studying abroad by 2024. 

Many developing countries are experiencing brain drain. But India is losing its best brightest at a much faster rate than others. Some call it "The Great Indian Brain Drain". This is the reason why Indians in the United States are the best educated and the highest earning group.  In a recently published book titled "The Other One Percent", authors Sanjoy Chakravorty, Devesh Kapur and Nirvikar Singh explain this phenomenon. 

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Sunday, February 2, 2025

Researchers of Chinese Origin Dominate the World's Top AI Talent

Recent launch of DeepSeek AI model has brought to light the large and growing AI talent in China. The researchers working for the Chinese startup have shown that human creativity and problem-solving skills can overcome limitations such as access to high-performance hardware. It confirms that the most important resource needed for breakthroughs in AI is the human resource. 

The people of Chinese PRC origin account for 47% of the top 20% AI talent in the world based on undergraduate degree, according to a survey.  Americans make up 18%, Europeans 12% and Indians 5% of the global AI researchers. In terms of the countries they serve, 57% of them work in the United States, 12% in China, 8% in the UK, 4% each in France and Germany and 3% in Canada as of 2022. While the US still has the lion's share of the top talent, its share has declined from 65% in 2019 to 57% in 2022. Marco Polo talent tracker lists Pakistan among a dozen countries for top AI talent in Asia. 

Top Global AI Talent. Marco Polo AI Talent Tracker


More than half (15 out 25) of the institutions (companies and universities) where the top AI researchers work are located in the United States, while 6 are in China. The remaining four are in the UK, Switzerland, Singapore and Canada, according to Marco Polo Global AI Talent Tracker

Top AI Talent in Asia Pacific. Source: Marco Polo


The Chinese from PRC dominate the Asia Pacific region with 81.9% of the top AI talent. Indians account for 8.2%, South Korea 4% and "others" 5.8%.  "Others” include Taiwan, Australia, Vietnam, Singapore, Japan, Bangladesh, the Philippines, Malaysia, Pakistan, Mongolia, and Sri Lanka. 

The fact that a number of large language models, including Chinese DeepSeek and Meta's Llama 3, are open source will help develop more global AI talent and spur greater innovation around the world. In the end, it is much more likely that the open source offerings will see greater success than the closed source models like OpenAI's.  


Sunday, January 26, 2025

Chinese Lab's AI LLM Performance Shocks Silicon Valley

A Chinese Lab has sparked panic in Silicon Valley with the release of its first AI model that can outperform America's best despite being built more cheaply and with less-powerful chips, according to the US media reports. The lab called DeepSeek has recently unveiled a free, open-source large-language model (LLM) that it says took only two months and $5.5 million million to build, using reduced-capability chips from Nvidia called H800s. By comparison, the US-based OpenAI's closed LLM model cost $100 million to develop and train using the most advanced H100 chips from Nvidia. Open-source and free DeepSeek models can significantly help developing nations like Pakistan by providing affordable access to the latest AI technology, allowing them to develop solutions tailored to their specific needs without high costs. 



DeepSeek, a small startup lab in China, has accomplished this feat despite the US technology export controls to slow down China's AI efforts. Former Google CEO Eric Schmidt is now acknowledging that China has narrowed or closed the AI technology gap with the United States. 

In 2022 America banned the export of advanced chips to China, according to Economist magazine. Nvidia, a leading chipmaker, has had to design special downgrades to its products for the Chinese market. America has also sought to prevent China from developing the capacity to manufacture top-of-the-line chips at home, by banning exports of the necessary equipment and threatening penalties for non-American firms that might help, too. 

The slower H800 chip was created by Nvidia to comply with export regulations that prevent the chipmaker from selling its high-end GPUs to China. Apparently, the limits imposed by Washington on Chinese engineers' access to the most advanced Nvidia chips forced them to develop a much more efficient model to achieve the same performance as their US counterparts.  Other Chinese tech companies ranging from Alibaba and Huawei to TenCents are also working on their own multiple AI models, including LLMs. 

DeepSeek has emerged from High-Flyer, a Chinese hedge fund started by 40-year-old Liang Wengfeng in 2015 to use AI to gain an edge in stocks-trading. Conducting fundamental research helped High-Flyer become one of the biggest quant funds in the country, according to The Economist magazine. 


Monday, January 20, 2025

PFX to Advance Pakistan Air Force Modernization

Pakistan has unveiled its PFX (Pakistan Fighter Experimental) program as a significant upgrade to its JF-17 joint program with China. The new upgrade will have a number of stealth features ranging from the use of radar-absorbing composite materials and diverterless supersonic inlets (DSI) to internal weapons bay (IWB) which will significantly reduce the aircraft's radar signature. It is targeted for completion by the end of this decade. In addition, the PFX's twin-engine design will improve maneuverability and allow greater payload capacity. 

Pakistan PFX Concept Fighter. Source: Raksha Anirveda


The program is part of Pakistan's broader strategy to reduce reliance on foreign suppliers and strengthen the domestic defense industry. Currently, 58% of JF-17 components are manufactured locally by PAC, but Pakistan aims to increase this share to achieve full production autonomy for the PFX. It is not just about the PAF modernization but also about positioning Pakistan as an important player in the global military aviation market

The PFX is an evolution of a plan that Pakistan announced in 2017 to develop and produce 5th generation fighter planes. It is part of Pakistan Air Force's highly ambitious Project Azm that includes building Kamra Aviation City dedicated to education, research and development and manufacturing of advanced fighter jets, unmanned aerial vehicles (UAVs) and weapon systems.

The PAF has already started replacing its aging fleet with the induction of the Chinese J10C fighter jets which are considered 4.5 Gen. The J10-C has stealth features like diverterless supersonic inlets (DSI).  Its BVR capability is supported by PL-15 missiles, with an engagement range of up to 200 kilometers, facilitating long-range target engagements. 

The PAF has also begun the process of acquiring 5th generation Chinese J35 fighter jets. The delivery of 40 J35 fighters to Pakistan is expected within two years, potentially altering regional dynamics, particularly concerning India. 

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Wednesday, January 15, 2025

Pakistan to License Multiple LEO Satellite Internet Service Providers

The Pakistan government is preparing to license three low-earth-orbit (LEO) satellite operators for space communication services in the country, according to media reports. The companies whose applications are pending include London-based OneWeb, China's Shanghai Spacecom and US headquartered Starlink.  They operate tens of thousands of small mass-produced satellites in low orbits that communicate with designated (mobile and stationary) ground stations.  Each LEO satellite circles the earth in 128 minutes or less. The critical importance of the services they offer has recently become apparent in the Ukraine War being waged in Europe and the ongoing disaster response in the areas devastated by the California wildfires. Such services are essential for any area, remote or otherwise, where the land-based infrastructure either does not exist or it has been destroyed by war or natural disasters.

Representation of low, medium and geosynchronous orbits. Source: MIT


Pakistan has established a regulatory framework consisting of two bodies: the Pakistan Space Activities Regulatory Board (PSARB) and the Pakistan Telecommunications Authority (PTA). Each space telecom operator must first get a no-objection certificate (NOC) from the PSARB and then a license from the PTA to operate in Pakistan. The government has reiterated its commitment to fostering digital inclusion through the PSARB, which was established to regulate satellite-based services. Industry experts emphasize that accelerating the approval process is essential for leveraging LEO technologies to boost the country’s digital transformation, according to The News

The LEO satellite industry has become highly competitive, with several companies competing for market share. Some of the key players in the industry include SpaceX, OneWeb, Amazon and Shanghai Spacecom, all of which are working to develop and launch their constellations of LEO satellites for various applications such as broadband, internet, remote sensing, and satellite communication, according to the Washington-based Bipartisan Policy Center

Initial prices announced by Starlink for Pakistan range from the lowest Rs. 2,000 per month for 2 MPS to Rs. 8,700 per month for 10 MBPS. OneWeb is partnering with VEON to offer Internet access packages but no pricing has yet been announced. Shanghai Spacecom has registered in Pakistan but no pricing is available so far. Hopefully, the competition among the three players will benefit consumers in terms of lower pricing and higher bandwidth availability. It will also reduce the digital divide in the country. 

Friday, January 10, 2025

British Pakistani Grooming Gangs: Myths and Facts

American billionaire and President-Elect Donald Trump's confidante Elon Musk's recent tweets have revived the allegations by the far right that the British Pakistani gangs are mainly responsible for sex crimes against children in the United Kingdom.  Earlier, these claims were repeated by former British Home Secretary Suella Braverman when she said in a television interview that child grooming gangs in the UK were “almost all British-Pakistani”.  This claim elicited a strong response by British Press regulator  IPSO which said that Braverman’s decision to link “the identified ethnic group and a particular form of offending was significantly misleading” because the (British) Home Office’s own research had concluded offenders were mainly from white backgrounds. The British Home Office Report on Group-Based Child Sexual Exploitation (December 2021) said that while some high-profile cases involved men of Pakistani ethnicity (2%), the academic literature suggests that group-based child sexual exploitation offenders are most commonly white (88%), according to Professor Tahid Abbas's blog for the London School of Economics

Grooming Gang Sex Crimes Stats. Source: Financial Times


Let's examine what the official statistics reveal about sex crimes in England and Wales.  It shows that grooming gangs account for a small fraction (3.7%) of child sexual abuse, even when looking just at group offending. In 2023, there were 4,428 reported offline sexual offenses committed by groups, according to official data for England and Wales published in November, the first time a detailed breakdown has been made available. These accounted for 3.7% of all child sexual abuse crimes.  Of these crimes, grooming gangs — organized networks of criminals who target children — accounted for 17%, or 717 crimes, according to the Financial Times

Sex Crimes Against British Children. Source: UK Ministry of Justice Via LSE


In terms of ethnicity, Pakistani defendants account for 2% (same as their proportion in the general population) of all defendants charged with sex crimes against children. White defendants make up 88%, proportionally more than the 83% of their numbers in general population in England and Wales, according to the UK Ministry of Justice. 

Group-based child abuse represents less than 1% of sex crimes against children. Pakistanis account for 3.9% in this specific category, according to the UK Police Chiefs Council.  The figure rises for Pakistani offenders to 13.7% if you remove institutional groups, such as sports groups, schools and church-based group offenders, and group child abuse committed in a family setting.

Clearly, the British government data doesn't support the allegations made by former UK Home Secretary Suella Braverman and tweeted by Elon Musk. So what is their motivation for it? The only conclusion one can draw is that both Braverman and Musk are motivated by Islamophobia and anti-Muslim racism. The demonization of Muslim men has become a common theme in public discourse, with a “Muslim bashing” mentality, particularly among the far right groups in the West. 

It is important to mention that British Pakistanis who make up just 2% of the general population represent 3.7% of all British doctors

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Friday, January 3, 2025

Pakistan Stock Market Among World's Best Performers in 2024

Pakistan's KSE-100 index soared 86% in 2024, making it the second best among major indexes, according to Bloomberg News. The 2024 performance of KSE-100 represents its best year since 2002 when it shot up 112%. The top 3 performing stock markets in 2024 were Argentina (114%), Pakistan (88%) and Kenya (79%), according to Topline Securities. The US markets posted double digit gains with the AI-driven tech-heavy NASDAQ-100 up 27.6%. Small and medium US companies performed well with the Russell 2000 Index edging out India's Sensex with an 8.9% return.  

Pakistan Among Top Performing Stock Markets in 2024. Source: Bloomberg


Clearly, the $7 billion IMF program helped restore some investor confidence in Pakistan's economy in 2024. It was also boosted by remittances from overseas Pakistanis in  July-October 2024 which soared nearly 35% YoY to $11.8 billion as compared to $8.8 billion in July-Oct 2023. The fact that the KSE100 shares valuations relative to earnings still remain at historic lows (PE ratio of just 5.9) is an indication that investors have doubts about the sustainability of the economic improvements in the country. Among the top investor concerns appear to be worsening internal security situation and rising political instability. 


History of Pakistan's KSE-100 Returns Since 1995. Source: Bloomberg


Pakistan's macroeconomic indicators have significantly improved in 2024. Inflation has come down dramatically, from 29.7% in December 2023 to 4.1% in December 2024, resulting in aggressive monetary easing of 900 bps by the State Bank of Pakistan (SBP). The current account deficit has turned into a surplus of $729 million in November 2024 and the currency has remained stable.  In spite of the run-up, the KSE-100 2025 forward PE ratio of 5.9x is still substantially below the 10-year average P/E of 8.2x. 

Pakistan Shares Index PE Ratio. Source: Arif Habib

Pakistan's exports grew to $16.56 billion, an increase of 10.52% in July-Dec period in 2024 over the same period in 2023, while  imports grew 6.11% to $27.73 billion in this period. Pakistan's textile exports grew 9.7% in the first six months of the current fiscal year. The trade deficit in July-December FY25 increased 0.18% to $11.17 billion from $11.15 billion over the prior year. In December, the deficit jumped 34.80% to $2.44 billion from $1.82 billion in December 2023. The trade gap contracted to $24.08 billion in FY24 from $27.47 billion in the preceding year. The current account improvement was helped by remittances from overseas Pakistanis in  July-October 2024 which soared nearly 35% YoY to $11.8 billion as compared to $8.8 billion in July-Oct 2023.

Pakistan Textile Exports. Source: Arif Habib


In 2024, Pakistan began to make some progress to resolve the economic impact of high electricity rates and rising debt (PKR 2.1 trillion) owed to the independent power producers (IPPs). While the government terminated or renegotiated power purchase contracts (PPAs) with some IPPs, the consumers took matters into their own hands and started an unprecedented solar energy revolution

As a result of the latest round, PPAs with five IPPs were terminated as a first step. Two of the five IPPs took haircut deals, accepting a discount of up to PKR 20 billion. 18 other IPPs face possible conversion to take-and-pay contracts, whereby the state-owned off-taker will only be liable to pay for energy consumed by the grid, eliminating capacity charges, according to a report by the Institute for Energy Economics and Financial Analysis. 

Pakistan Solar Projects Seen From Satellites. Source: Atlas Via Bloomberg


High power prices are fueling a massive solar buildout across Pakistan, according to a Yale360 report. Solar imports from China so far this year have already outstripped imports across all of last year, Bloomberg reports. Panels purchased in 2024 amount to 17 gigawatts of capacity, enough to raise Pakistan's total power capacity by a third. A satellite data analysis done in April by Norwegian firm Atlas revealed around 400 solar plants across the country, clustered mostly in industrial hubs. But many more installations went undetected, the geospatial analysis firm said. Most panels have been deployed almost equally across homes, factories, and farms, solar distributors say. 

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