Comments on Haq's Musings: Pakistan's Year 2011 in Review

Pakistani stocks hit 6.5 months high, reports
2012-02-08T08:33:33.508-08:00
Pakistani stocks hit 6.5 months high, reports Reuters:

A rally in Pakistani banking shares helped lift the bourse to end on a six-and-a-half month high on Tuesday as foreign investors snapped up local stocks on the back of expected strong corporate results, dealers said.

The Karachi Stock Exchange (KSE) benchmark 100-share index gained more than one percent for a second straight day, closing up 1.22 percent or 147.70 points, at 12,284.62 points, its highest close since July 26, 2011.

Volume fell to 162.11 million shares, compared with 196.3 million traded on Monday.

"The bullish trend continued on renewed foreign investment led by banking stocks in the earnings announcement session at KSE," said Ahsan Mehanti, director at Arif Habib Corp Ltd.

Foreign investors bought shares worth a net $3.47 million on Monday. Data for Tuesday will be released later in the day.

Winners on the KSE included Bank Alfalah, which closed 2 percent higher at 12.75 rupees, and National Bank of Pakistan, which rose 2.85 percent to 46.58 rupees.

In the currency market, the rupee ended weaker at 90.62/67 to the dollar, compared with Monday's close of 90.50/56 due to increased import payments, particularly oil.

Dealers said they were also cautious after the International Monetary Fund advised Pakistan to take immediate steps to tackle growing budget pressures and raise interest rates to contain inflation.

The IMF projected a widening of Pakistan's fiscal deficit in the 2011/12 fiscal year to 7 percent of gross domestic product, compared with the government's revised budget target of 4.7 percent.

The rupee touched a record low of 91.28 to the dollar on Jan. 9, pressured by worries about higher payments for oil imports and the country's overall economic health, especially a weakening current account.

The current account recorded a provisional deficit of $2.154 billion in the first six months of the 2011/12 fiscal year, compared with a surplus of $8 million in the same period last year, according to data from the State Bank of Pakistan.

The deficit is likely to widen further in coming months because of debt repayments and a lack of external aid.

In the money market, overnight rates ended lower at between 11.25 percent and 11.75 percent, compared with Monday's close of 11.90 percent after the central bank bought back government paper worth 37 billion rupees ($408.70 million).

http://www.reuters.com/article/2012/02/07/financial-pakistan-idUSL4E8D75GW20120207

Here are some excerpts of a BBC report on Pakistani PM Gilani's pitch at Davos 2012:

Pakistan's Prime Minister, Yousuf Raza Gilani, has told business leaders attending the World Economic Forum in Davos that his government is stable and Pakistan is open for business.

Mr Gilani tried to convince corporate bosses that despite all the worrying news coming out of Pakistan, his country remains one of the best destinations for foreign investment.

It's a tough sell on his part, not least because of the recent political tensions and a fragile security situation at home. But also because of the country's faltering economy, with its public finances in disarray and growth hampered by the steady erosion of investor confidence.
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According to the International Monetary Fund (IMF), Pakistan's economy grew by only 2.4% last year, one of the lowest in the region and way behind India, Sri Lanka and Bangladesh.

At the heart of Pakistan's fiscal problem are some chronic structural imbalances. In a country of 180 million, less than 1% of people pay income tax. Billions of rupees of government revenue never make it into the treasury because of leakages, waste and corruption.

The country's public sector enterprises - such as, Pakistan International Airlines and Pakistan Railways - are ailing due to mismanagement and blatant inefficiencies. Industrial production and exports are hampered by crippling energy shortages, often leading to violent protests.

Absence of private sector investment means fewer jobs and a growing number of unemployed youths. Particularly unbearable for the majority of low-income Pakistani families was the unprecedented continuous double-digit inflation during most of Mr Gilani's four years in office.
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Critics of Mr Gilani say that in the face of his government's dismal economic performance, his upbeat statements show the government is either in denial or ignorant of realities.

"During the last four years, we have seen four governors change hands at the State Bank of Pakistan, four finance ministers, four finance secretaries, and five heads of the Central Board of Revenue," points out Dr Ashfaq Hasan Khan, a former adviser to Pakistan's Ministry of Finance.
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Economist S Akbar Zaidi believes there is a silver lining and rejects predictions of Pakistan's imminent economic collapse.

"Yes, Pakistan's economy is struggling, but it is not in a freefall or even on the verge of it," he says.
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"In fact, in my view, the economy is doing surprisingly better than expected under the circumstances. The economy has shown itself to be much more resilient than many people would like to admit. With necessary structural reforms, Pakistan has all the potential to rise above its current low growth trap."

To be fair, Mr Gilani got off to a bumpy start when he came into office in 2008. It proved to be a disastrous year for Pakistan's economy, mainly due to external shocks it suffered from the sudden rise in world oil prices and the global financial turmoil. .....

http://www.bbc.co.uk/news/business-16713968

Pakistan car sales up 20.5% July-Dec 2011, reports...

2012-01-26T10:47:59.028-08:00

Pakistan car sales up 20.5% July-Dec 2011, reports Dawn:

Car sales in the first half of current fiscal year went up by 20.5 per cent amid negative developments including the government’s decision to impose a ban on CNG kits and cylinders, suspension in production of Honda Civic and City and increase in prices of all vehicles.

According to figures shared by the Pakistan Automotive Manufacturers (PAMA), consumers purchased 12,240 more cars in July-December 2011 to 71,886 units as compared to 59,646 units in the same period of 2010.

Increase in production of Suzuki Mehran and Suzuki Bolan for onward supply to Punjab government’s Yellow Cab Scheme was the main reason that averted the negative impact of ban on CNG kits and cylinders and production halt of Honda cars on the overall production figures.

However, local assemblers are still perturbed over the government’s decision of imposing ban on CNG kits and cylinders. In this regard, Pak Suzuki Motor Company Limited (PSMCL), which holds over 50 per cent market share, may suffer more as it used to roll out 80 per cent CNG fitted vehicles out of its total production. Assemblers added that six months sales had risen due to previous orders and the impact of government’s decision would be visible in coming months. It must be noted that Toyota Corolla, which also launched CNG fitted vehicles few months ago, might also be affected by this decision.

Sarfaraz Abbasi, an analyst at Summit Capital, linked the growth in auto sales to removal of 2.5 per cent special excise duty and cut in the rate of General Sales Tax (GST) from 17 to 16 per cent.

Car sales in December 2011 plunged due to 92 per cent decline in sales of Honda Cars and flat sales of Indus Motor Company.

Honda Atlas Cars has suspended Civic and City production for December 2011 to January 2012 owing to non supply of parts from Thailand. Civic and City sales in December 2011 were recorded only 49 and 22 units as compared to 369 and 528 units in November 2011 respectively.

Nauman Khan of Top Line Securities said December 2011 sales declined as buyers preferred to defer orders due to year end phenomenon.

“Despite launch of new variants by the company in 1600cc segment and CNG vehicles (Eco), Toyota Corolla sales showed a decline on account of reduced farm income amid falling cotton prices,” he added.

Mehran leads: According to PAMA figures, production and sales of Mehran stood at 15,343 and 17,014 units as compared to 11,995 and 11,591 units in July-December 2010. Production and sales of Bolan rose to 8,052 and 8,848 units as compared to 6,978 and 6,483 units.

While other manufacturers suffered production and sales in December 2011 as compared to November 2011, production and sales of Mehran in December 2011 surged to 2,697 and 2,880 units as compared to 2,262 and 2,720 units in November 2011.

The production and sale of Bolan in December 2011 recorded at 1,603 and 1,968 units as compared to 1,380 and 1,369 units in November 2011.

Daihatsu Cuore continued to suffer as its production and sales plunged to 2,060 and 1,884 units in July-December 2011 as compared to 3,051 and 2,959 units in the corresponding period of 2010 due to reports of closure of its production in Pakistan from March this year.

Sale of Suzuki Cultus and Alto rose to 7,034 units in the last six months as compared to 5,599 while sale of Alto increased to 6,779 as compared to 5,762 units.

In 1,300cc and above, a total of 2,664 units of Honda Civic and 4,197 units of Honda City were sold in the last six months as compared to 2,918 and 3,957 units in the same period of 2010.

Suzuki Liana sales slightly stood at 199 units as compared to 188 units while Swift sales improved to 3,247 from 1,472 units.

Toyota Corolla sales grew to 20,020 units from 18,717 units.

http://www.dawn.com/2012/01/12/car-sales-surge-by-205-per-cent.html

Pakistani film-maker nominated for Oscar, accordin...

2012-01-24T09:36:33.609-08:00

Pakistani film-maker nominated for Oscar, according to Dawn:

Sharmeen Obaid-Chinoy became the first Pakistani filmmaker to earn an Oscar nomination with her film Saving face, which was nominated in the “Documentary, short film” category as the Oscar nominations were released on Tuesday.

Obaid, who has directed several documentary films, won an Emmy award in 2010 for her documentary Pakistan: Children of the Taliban.

Saving face, which the Karachi-based filmmaker has co-directed with Daniel Junge, depicts the life of a British Pakistani plastic surgeon who donates his time to heal acid victims in Pakistan.

The film is set to be released in March this year, while the Oscars will be held on February 26.

http://www.dawn.com/2012/01/24/sharmeen-obaid-chinoy-is-pakistan%E2%80%99s-first-oscar-nominee.html

Karachi stocks jump almost 7% on tax policy news, ...

2012-01-21T13:57:22.013-08:00

Karachi stocks jump almost 7% on tax policy news, reports Daily Times:

The Karachi stock market was dominated by bullish sentiment during the week as news regarding the proposals sent by Securities and Exchange Commission of Pakistan (SECP) to the Ministry of Finance pertaining to capital gains tax (CGT), withholding tax (WHT) and disclosure of the source of income created positive investor sentiment.

Furthermore, the announcement in the KSE regarding the visit of Finance Minister Hafeez Shaikh on the last trading day also provided impetus to the market as he is expected to announce some major changes to the CGT regime.

The Karachi Stock Exchange (KSE) 100-share index gained 760.22 points or 6.9 percent to close at 11, 774.68 points as compared to 11,014.46 points of the previous week.

“The 100-share index rallied 6.9 percent during the week, highest since April 03, 2009 (146 week high),” said JS Sec analyst Naveed Tehsin. “However, foreigners remained net sellers, offloading shares worth $3.7 million.”

Positive expectations related to the CGT issue ruled the market sentiment, while continuing global economic crisis and uncertain domestic political environment failed to dampen investor confidence, he said and added that moreover, the circular debt adjustment worth Rs 150 billion through issuance of Term Finance Certificates (TFCs) and the raid by Competition Commission of Pakistan (CCP) at All Pakistan Cement Manufacturers Association (APCMA) office were the major highlights of the week.

News regarding the proposals sent by SECP to the Ministry of Finance pertaining to CGT, WHT and disclosure of the source of income created positive investor sentiment.

The government of Pakistan has decided to adjust circular debt worth Rs 150 billion through issuance of TFCs. Reportedly the banks have agreed to subscribe to these issues that is likely to provide relief to the energy and banking sectors by converting loans of the energy companies into TFCs. Despite this news, banks and electricity sectors underperformed the market by 2.8 percent and 3.6 percent, respectively.

The daily turnover increased 456.69 percent to close at 178.42 million shares as against 32.05 million shares of the previous week.

“Stocks closed bullish during the week with record high trades on the last trading day of the week,” said Arif Habib Investments Ltd Director Ahsan Mehanti. “Hopes of good news regarding CGT issues supported the market while positive revision in Pakistan economic growth estimate to 4 percent, recovery in global stocks, foreign interest in blue chips and statement issued by White House on US, Pakistan to work together to reset ties played a catalyst role in the bullish sentiment at KSE.

http://www.dailytimes.com.pk/default.asp?page=2012\01\22\story_22-1-2012_pg5_16

Here's a Dawn report on ADB's assessment of Pakistan economy:

...After devastating summer floods caused economic growth to slow to 2.4 per cent in the 2010/11 fiscal year, ADB country director for Pakistan Werner Liepach forecast growth to pick up to just 3.6 per cent in 2011/12. The government targets an expansion of 4.2 per cent.

“Short-term there are huge challenges… (the) next few months will continue to be protracted as there are repayments and not enough inflows, reserves will go down,” Liepach said.

“But I don’t see a crash coming, and I don’t see the economy taking off either and that’s not good enough.”

There is grave concern amongst analysts about a possible balance of payments crisis as Pakistan’s current account deficit has widened to $2.154 billion in the first six months of the 2011/12 fiscal year.

Pakistan had a surplus of $8 million in the same period last year.

The deficit is likely to widen further in the coming months because of debt repayments and a lack of external aid.

The country’s foreign exchange reserves stood at $16.90 billion in week ending Jan. 13, compared with its record of $18.31 billion in July last year.

The pressure on reserves is likely to continue especially as IMF repayments start from next month.
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Pakistan has to repay IMF about $1.1 billion by the end of 2011/12 fiscal year.

“Pakistan has huge potential and not all is negative or gloom and doom,” said Liepach. “I am positive in the long term if right decisions are taken today.”

Pakistan has been criticised over its slow implementation of fiscal reforms which include elimination of energy subsidies and restructuring of the state owned utilities.

The government also received criticism for not being committed towards implementing the necessary reforms to bring the economy back on track.

“The people who we are talking to in the government, technocrats, they are committed and want to see the benefits and improvements in Pakistan, they are very sincere in bringing a change in Pakistan,” said Liepach.

“But when you move away from the technocrat level, that’s when it becomes more complicated. It is a complex decision making system.”

Focus on projects and delivery of results

ADB’s focus and therefore assistance largely now revolves around projects with four core areas, energy, urban services, water infrastructure and irrigation, and transport.

“We want to fight poverty through growth and right now our business is focused on implementation of projects and to get results on ground,” said Liepach.

ADB does not require a letter of comfort from the IMF for approval or disbursement of project-based assistance.

ADB has an envelope of $2.9 billion for energy for Pakistan until 2016, out of which $1.4 billion has been utilised and $1.5 billion remains to be drawn down by the government.

Pakistan’s power sector faces a shortfall that often peaks at 5,000 megawatts per day.

For urban services, the board has approved $300 million, out of which $260 million remains, water infrastructure and irrigation $900 million has been approved with about $400 million left to be drawn down and $1.1 billion has been approved for transport, and $700 million is left.

Government can draw down the assistance when a project is approved and made effective.

“It’s a success when power reaches families and industries or when water becomes available to the families etc,” said Liepach.

http://www.dawn.com/2012/01/20/pakistan-growth-challenging-dependant-on-reform-pace-adb.html

Here's Newsweek's Ron Moreau on the current crises in Pakistan:

...Gilani’s argument (about president's immunity) is likely to be contested when the judges convene again, on Feb. 1. “On the next date, let’s hear you convince us the issue is of the president’s immunity,” one of the judges told the prime minister. “Let’s grab the bull by the horns.” In fact, however, there seems to be some doubt as to whether the prime minister will be required to appear in person for the hearing. Meanwhile the prime minister’s lawyer, Aitzan Ahsan, hastened to assure the court that his client intends to comply with the order—eventually. “The letter shall be written when Asif Ali Zardari is no longer president,” Ahsan told the judges.
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Not that Zardari is in such good shape politically. His approval rating at best is just above 20 percent. Ordinary Pakistanis are struggling to hold themselves together, buffeted by inflation, energy shortages, and worry. Steel mills, railways, the national airline and other state-run enterprises are in pitiful shape as they drain the country’s already depleted treasury. Corruption and cronyism rage unchecked.

To make matters worse, Zardari still has not lived down his reputation for corruption. Back in the late 1980s, when his wife, Benazir Bhutto, was serving her first term as prime minister, Pakistanis contemptuously nicknamed him “Mr. 10 Percent,” and in 2003 a Swiss court convicted the couple in absentia of skimming and laundering tens of millions of dollars from a Swiss contract. In 2008, after Zardari was elected president in the wake of his wife’s assassination, the Swiss closed the case at his government’s request.
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As if Zardari didn’t have enough problems, his generals hate him. “The military sees him as a man with no principles, who is prepared to be pro-American and pro-Indian without any ideology of his own,” says retired Lt. Gen. Talat Masood. “They consider him to be a parasite. They really look down on him.” The dislike has only worsened as the military’s relations with Washington have deteriorated. “The Army is unhappy with the Americans, and they are taking it out on Zardari,” says opposition parliamentarian and political columnist Ayaz Amir. “It’s the Army, the judiciary, it’s everyone who wants his scalp.”
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“The military sees him as a man with no principles,” says retired Lt. Gen. Talat Masood. “They consider him to be a parasite. They really look down on him.”

At present, though, time appears to be on his side. His term of office (and those of the Parliament his party controls) won’t expire until 2013. His party and its allies are expected to prevail in the upcoming Senate elections this March, and Zardari could even call for early elections this year to ensure his hold on power. Despite the government’s incompetence, his Pakistan People’s Party remains strong and well-organized and the only party with roots in all four provinces...

http://www.thedailybeast.com/articles/2012/01/20/zardari-s-woes-pakistan-s-dismal-economy-an-angry-army-corruption-charges-memogate.html

Here are excerpts from a Dawn report on World Bank's assessment of Pakistan's economy:

...Pakistan is South Asia’s second largest economy, representing about 15 per cent of regional GDP.
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The portion on Pakistan points out that the country’s economy firmed in the second half of 2011. Industrial production surged to grow at a robust 32.1pc annualised pace during the three months ending in October, after falling at 9.1 and 10.1pc rates during the first and second quarters, respectively.

Part of the strengthening in growth reflects base effects due to the widespread flooding that had hampered activity in the second half of 2010. Since the floods occurred in July and August 2010, GDP growth on a fiscal year basis (ending June-2011) slowed to 2.4pc.

The report notes that Pakistan’s weak growth outturns are also tied to “worsening security conditions, accompanied by greater political uncertainty and a breakdown in policy implementation”.

The report also notes that “infrastructure bottlenecks, including disruptions in power delivery,” remain widespread.

A notable bright spot has been a strengthening of exports, evident particularly in the first half of 2011, led by textiles that surged 39pc in the first half of the year.However, like India, Pakistan’s export volume growth saw a sharp fall-off in October.

Indeed, Pakistan’s export volumes fell to a minus 46pc rate in the three-months ending October.

Along with an upswing in worker remittances inflows, robust exports have supported Pakistan’s external positions and contributed to an improvement in the current account from a deficit of 0.9pc of GDP in 2010 to a surplus of close to 0.5pc of GDP in the 2011 calendar year.

The World Bank notes that monetary tightening in Pakistan brought about positive real lending rates in early 2011 as well, the first time since late 2009.
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The bank points out that for South Asian nations, including India and Pakistan, domestic crop conditions and price controls are more important determinants of domestic food price inflation.
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Regional monetary policy authorities face several challenges in reducing inflation.

More recently, currency devaluation has contributed to inflation as well. In Pakistan, monetary authorities have also been monetising the deficit, complicating the efficacy of other monetary policy efforts to reduce inflation.

A key factor working against monetary policy efforts is the overall stance of fiscal policy, which despite some consolidation, remains very loose.

Monetary authorities in Pakistan have responded to persistent price pressures by raising policy interest rates and/or introducing higher reserve requirements.

Lower revenue growth has contributed to larger fiscal deficits in Pakistan. Terms of trade losses are estimated at about 1.9pc of GDP for the region in aggregate. India and Pakistan saw negative impacts of close to 1.8pc of GDP – estimated January through September 2011 terms of trade impacts relative to 2010.

Remittance inflow to Pakistan rose by an estimated 25pc in 2011, partly in response to the widespread flooding in the second half of 2010.

International reserve positions in South Asia have generally improved since mid-2008. Latest readings of foreign currency holdings were equivalent to at least three-months of merchandise imports in Pakistan.
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A good crop year (2011-12) in much of South Asia and sustained high regional stocks are providing a buffer for grain prices and import demand in 2012....

http://www.dawn.com/2012/01/19/pakistans-economy-recovering-wb.html

http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1322593305595/8287139-1326374900917/GEP_January_2012a_FullReport_FINAL.pdf

Here are excerpts from The Nation newspaper story on World Bank's Global Economic Prospects report for 2012:

The World Bank has observed that Pakistan’s weak economic growth is due to worsening security condition accompanied by greater political uncertainty and a breakdown in policy implementation. It predicted country’s economic growth at 3.9 per cent during the year 2012.
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According to the report, GDP growth rate in Pakistan would be 3.9 per cent during the year 2012 that was 2.4 per cent in 2011. Pakistan’s weak growth outturns are also tied to the worsening security situation, accompanied by greater political uncertainty and a breakdown in policy implementation. Infrastructure bottlenecks, including disruptions in power delivery, remain widespread. However, a notable bright spot has been the increased exports, evident particularly in the first half of 2011, led by textiles that surged 39 per cent in the first half of the year.
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Industrial production surged to grow at a robust 32.1 per cent annualised pace during the three months ending in October (3m/3m, at seasonally adjusted annualised rates), after falling at 9.1 and 10.1 per cent rates during the first and second quarters, respectively. Part of the strengthening in growth reflects base effects due to the widespread flooding that had hampered activity in the second half of 2010. Indeed, because the floods occurred in July and August 2010, GDP growth on a fiscal year basis (ending June-2011) slowed to 2.4 per cent from 4.1 per cent of the fiscal year 2009-2010.

Worker remittances remain a critical source of foreign exchange in South Asia. Remittance inflows to Pakistan rose by an estimated 25 per cent in 2011, partly in response to the widespread flooding in the second half of 2010. When measured in local currency terms, given the appreciation of the dollar, remittances inflows to the region grew by a more vibrant 13 per cent in 2011 (median rate). Adjusting for inflation, worker remittances inflows to the region grew by a less robust 5.8 per cent (median rate) in local currency terms.

http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/national/19-Jan-2012/pakistan-s-economy-to-grow-at-3-9pc-wb

http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1322593305595/8287139-1326374900917/GEP_January_2012a_FullReport_FINAL.pdf

Here are excerpts of an AP report taking about how much Pakistan has changed:

Pakistan appears on the brink of chaos again, with the judiciary and army bearing down on its elected leaders. But already the crisis has underlined how Pakistan has changed in recent years: The military can no longer simply march in and seize power as it has done three times over the last six decades.

As a result, opportunities remain for both sides to back down. The civilian government may be able to ride it out until elections now seen likely in late summer.

"If this were the '90s, there would have been a coup a year ago," said Moeed Yusuf of the Washington-based United States Institute of Peace.

A watchful media poised to hound the generals — and a populace under few illusions that the top brass can be saviors after failing so many times before — seem to have acted as a brake on any designs by the army. The judiciary itself, although regarded by some as out to get President Asif Ali Zardari, would not sanction a coup.

It's also unclear how much of an appetite the judges have for dismissing a government that heads a coalition with a solid majority in parliament and with just one year left before it has to call elections.

Opposition parties are happy to see the government weakened. But the country's largest party, that of former Prime Minister Nawaz Sharif, is no fan of the army and might not want to come to power on the shoulders of a military intervention.

"The status quo remains, despite all the institutions coming to a head. Every scenario you paint, there will be chaos and no one benefits," Yusuf said.

To be sure, tensions are higher now than they have ever been since Zardari took office in 2008, and the crisis could yet turn in unpredictable and dangerous directions. The political turmoil has all but paralyzed governance in the nuclear-armed country, hampering American hopes of rebuilding strained ties with Islamabad and securing its help with negotiating peace in neighboring Afghanistan.

Last week, coup jitters spread after the army issued an unusual warning of "grievous consequences" for the country over a scandal involving an unsigned memo sent last year to Washington asking for U.S. help in preventing a coup in the aftermath of the American raid that killed Osama bin Laden.

But pundits and government critics alike have been predicting the imminent fall of either Zardari, Prime Minister Yousuf Raza Gilani or the government they head for much of the past four years. Each time, they have been proven wrong.
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Many observers suspect Zardari's party is happy to play up conflict with the army and the judges because it diverts attention from its paltry list of achievements in office. The party may even embrace the prospect of being kicked out because it would fire up its base ahead of elections.

The Pakistan People's Party has a long history of battles with the army. Benazir Bhutto's father, Former Prime Minister Zulfikar Ali Bhutto, was executed by a military dictator in 1979. Zardari himself was elected on a massive sympathy vote after Benazir Bhutto's Dec. 27, 2007 assassination, which the party was happy to hint could have been orchestrated by elements of the army establishment.

http://www.cbsnews.com/8301-215_162-57360340/analysis-pakistani-crisis-shows-armys-limits/

Here's an Op Ed by HEC Chair Javaid Laghari pu...

2012-01-16T22:10:32.428-08:00

Here's an Op Ed by HEC Chair Javaid Laghari published in The Express Tribune:

There has been a quiet revolution in the last two years, particularly in improved quality, access and relevance, which are the cornerstones of the Higher Education Commission (HEC).

Quality is a ‘process’ and cannot be improved overnight by dialling ‘Q’. Quality enhancement cells have been established in 81 universities which will monitor and ‘own’ quality and report to the HEC’s QA (Quality Assurance) division. Six accreditation councils, including in business and computing, have been established, and these will accredit professional programmes. An institutional performance evaluation (IPE) process has begun, and by next year, the universities will be given a scorecard on good governance. For the first time ever, universities and programmes are being ranked as per international standards, and the results will be published by the end of the year. A two-day orientation of newly-appointed vice-chancellors (VCs), facilitated by two British VCs and one American university president, was organised — also for the first time — to inculcate leadership and to improve quality in governing higher educational institutes.

Accessibility to university education among the population is now 7.8 per cent, and not 5.1 per cent as implied by Dr Tahir, and we are well on our way to reaching 10 per cent by 2015 as per the education policy, despite a 10 per cent cut in higher education funding. Pakistan spends 1.7 per cent of its GDP on education, and only six other countries in the world spend less. Of this, 0.22 per cent is spent on higher education and not 0.3 per cent as the article incorrectly states. Under these circumstances, the HEC has done wonders!

What the writer fails to mention is the new emphasis on ‘knowledge exchange’. Ten offices of research, innovation and commercialisation (ORIC) have been established this year, and 20 more are in the pipeline to bridge the gap between university research and industry. With a 30 per cent increase in research publications and PhD dissertations in the last two years, a focus on relevant research and a new programme to establish incubators and technology parks, the Pakistani higher education sector is on its way to become an economic powerhouse in the next two years.

This is the soft and quiet revolution taking place at our universities which is already becoming visible and changing the lives of millions of youth who are the beneficiaries of higher education in Pakistan.

http://tribune.com.pk/story/290255/a-quiet-revolution-in-higher-education/

Here's an interesting excerpt of a World Bank blog on cell phone use in education in Pakistan:

In Pakistan, some innovative folks are exploring how basic text messaging (SMS) can be used in the education sector to the benefit of people with even very low end mobile phones, leveraging the increasing high teledensities found in communities across the country.

What's happening in Pakistan in this regard? A lot, it turns out, although admittedly only in pockets and at a rather modest scale to date. The country is perhaps not unique in what is being explored (most everything being tried there is being tried in various other places as well), but that doesn't mean it isn't quite interesting. For example:

In February, almost 150 third year students at Asghar Mall College in Rawalapindi (note: 'third year' in this context would be the rough equivalent of the first year at university in, for example, the United States) for whom authorities had mobile phone numbers on file began participating on a voluntary basis in a daily vocabulary quiz exercise delivered by SMS. These young men -- from middle to lower middle class backgrounds -- are sent a simple multiple choice question. Texts are addressed to each student individually, using the equivalent of a 'mail merge' function that will be familiar to anyone who has had to send out 'blast' emails or faxes). They reply via SMS, and then receive an automated response, based on their answer. In this response, their answer is repeated, a notation is made about whether the answer given was correct or not, and the correct answer is incorporated into a sample sentence.
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One thing perhaps that is worth mentioning here is that, for some of these students, who have been educated in a system where very large, lecture-based classes are the norm, this may be the first time they have received 'personalized' feedback of any sort from their instructors.

The team in Pakistan is asking all sorts of interesting questions as part of their work. How can the potential impact of each message be maximized, especially given that these messages constitute just one small part of a large stream of messages -- cricket scores, notes from friends and family, jokes, news items, scripture passages and horoscope advice -- that students receive every day? What is best learned or reinforced through such interactions? What are the most effective ways to sequence and scaffold such messages over time?

In the process, much user-related information is being collected, helping to answer some basic questions for which there are not yet good, reliable data:

How many young students have phones?

How many can afford to participate in education-related activities via mobile phone -- and are willing to do so?
(Related to this: Are there ways to subsidize SMS traffic for various populations? And what if people actual respond to the SMS quizzes -- can this sort of thing at scale?)

Vocabulary-building and grammar quizzes are just two potential applications possible as part of this sort of SMS-based interaction; opportunities for quizzes in various academic areas are easily imagined. This could be great for test preparation, for example -- a potentially fertile market for private firms in Pakistan. Indeed, project proponents hope to use this as a way to help to stimulate private sector activity and innovation in this area, especially for young entrepreneurs, given what have turned out to be very low piloting costs.

http://blogs.worldbank.org/edutech/sms-education-pakistan

http://blogs.worldbank.org/edutech/sms-pakistan-2

China has become Pakistan's largest trading pa...

2012-01-16T09:56:47.666-08:00

China has become Pakistan's largest trading partner, replacing the US which slipped to third place, according to Dawn News:

China has emerged as Pakistan’s largest trading partner replacing the US and is being closely followed by the UAE. The US has slipped to third position on the list of the top ten trading partners.

Germany and the UK occupy eighth and 10th slots respectively and Japan is no more on the ten top list. The latest rankings based on the FY11 statistics indicate that Pakistan is doing much more trade within Asia and its reliance on American and European markets is on the decline.
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Emergence of the new rich in China and expansion in middle-income consumers in the Middle Eastearn countries opened up new opportunities for Pakistan to boost trade with all these nations. Moreover, the trade gravity played its part in redirecting our external trade towards South and East Asia including Malaysia and Indonesia.

Small wonder then, that in the last fiscal year seven out of the top ten largest trading partners of Pakistan were all Asians—China, the UAE, Saudi Arabia, Kuwait, Malaysia, Afghanistan and India. And all of them except Saudi Arabia and India showed an improvement in their respective rankings, in a small span of three years.

“Interestingly whereas recession in the US and troubled political relationship between Islamabad and Washington affected growth of bilateral trade, the surge in the US troops in Kabul aimed at winding up the military operation there increased our exports to Afghanistan,” according to a senior official of Trade Development Authority of Pakistan (TDAP). That explains, at least in part, why Afghanistan’s seventh slot among our largest trading partners in FY11.

Our exports to Kabul totaled $2.3 billion in FY11. This growth trend is continuing and in the first five months of this fiscal year, exports to Afghanistan have touched a billion dollars mark------------
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Business leaders say Pakistan’s top bilateral trade partners are changing not just because of economic miracle of China and overall better average economic growth in Asia than in America and in Europe. “Increase in imports from China, for example, is also related to the Chinese investment projects in Pakistan part of which are scaling down American influence,” said a former president of the Federation of Pakistan Chambers of Commerce and Industry.
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India and China are two of the six countries on the list of the top ten trading partners with whom Pakistan runs trade deficits.
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The other four are the UAE, Saudi Arabia, Kuwait and Malaysia. Whereas Pakistan imports large amounts of costly fuel oil from the first three countries, it runs trade deficit with Malaysia primarily due to huge import bills of palm oil.
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With four countries out of the ten largest trading partners, Pakistan boasts of a trade surplus. These are the US, Afghanistan, Germany and the UK. “Whereas it is easier to retain Afghanistan as a major export market and it is encouraging that Bangladesh has emerged as a billion-dollar market for our products, the US, Germany, the UK and other European countries are equally important for sustained growth in overall exports,” remarked chairman of Pakistan Bedwear Exporters Association Mr. Shabbir Ahmad. He and many other exporters believe that normalisation of political relationship with the US and continuing of efforts to win trade concessions in European Union are required for keeping exports on a high growth trajectory.

http://www.dawn.com/2012/01/16/top-ten-trading-partners.html

Here are some excerpts from an interesting
2012-01-14T09:38:03.166-08:00
Here are some excerpts from an interesting Friday Times Op Ed on Pakistan's undocumented (informal & illegal) economy:

The economy is in the doldrums, but that is not news any more. What is more interesting, and more difficult to investigate, is what is happening in the world beyond the survey operator and tax collector's ambit. Papers published by the Social Policy Development Center (SPDC) in Karachi and the State Bank place the informal economy in a range of 20 to 30 percent of GDP. But most of this undocumented economy does not include strictly illegal, or shall we say criminal, practice.
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that militant groups are running their own businesses (during the TNSM's movement in Swat, emerald mines were reputed to be in the hands of Maulana Fazlullah's men); that militants and terrorists are even coming up with new ways to generate funds (kidnapping for ransom being a case in point).
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According to data from the UN, Afghanistan produced about 90% of the global output of opium in 2007. This fell to just over 62% by 2010 (with Myanmar accounting for most of the rest). Three quarters of the poppy production was in the provinces of Helmand and Kandahar, which border Pakistan. Domestic consumption of opium in Afghanistan is next to nil. Also, the country does not legally import the chemicals needed to process opium into heroin, although these are imported in Pakistan for legitimate uses. Almost 7,000 metric tons of opium, both raw and processed, in the form of morphine and heroin, leaves Afghanistan and finds its way to the lucrative markets of Western Europe.
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Given that the global trade in opiates is estimated to have a value of some $70 billion, even a small proportion of the proceeds can make life comfortable for a lot of people in Pakistan.
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With close to 80 suicide attacks in 2010, about 400 rocket attacks, and about 350 bomb blasts in addition to target killings, use of improvised explosive devices etc, its not hard to deduce that there is a significant trade in arms and ammunition in Pakistan. The ISAF container scam case led to some interesting findings. There were the obvious conclusions - including that the abuse of the Afghan Transit Trade facility is massive. More tellingly, the Supreme Court's suo moto case found that 7,922 ISAF containers simply went missing. In addition to the packed meals, the alcohol and the camp supplies stamped with ISAF logos that appear in border markets, the possibility of pilferage of more dangerous items cannot be ruled out.

The smuggling masked by the Afghan Transit Trade is another story altogether, and according to some stakeholders extends to the illegal trade in timber, antiquities and gemstones stemming from that unfortunate nation. Being a neighbor to a land-locked, war-ravaged country with no semblance of law and order was never going to be easy. But Pakistan's governance failures have made a bad situation worse.

There's much more to Pakistan's economy than meets the eye, and many of the more interesting activities are practically impossible to investigate unless someone is prepared to take considerable personal risks. The few pieces of the jigsaw puzzle that are available from public data and information paint a tantalizing picture. If the downslide of the formal economy continues, things could get even more interesting.

http://www.thefridaytimes.com/beta2/tft/article.php?issue=20120113&page=7

Here's a Daily Times report on Finance Minister Hafeez Shaikh's assessment of Pak economy:

Federal Minister for Finance and Economic Affairs Dr Abdul Hafeez Shaikh while briefing the parliamentarians about the national economy informed that the government would receive $2.5 billion in foreign exchange in the coming months from Etisalat’s pending dues, CSF from US, and Auction of 3-G Spectrum Licence.

He highlighted the achievements so far made by this present government, hurdles and subsequent solutions in the way of Pakistan’s economy. He apprised of the three factors, which are for causing the burden on our national economy. First, great flood in 2010, which caused damage of $10 billion as estimated by the World Bank, increase in oil prices at the international level and security situation.

While highlighting the tax revenue position he said that 17 percent increase has been achieved during the last six months, export touched historical way by up to 28 percent with respect to previous year, and remittances showed a star performance. In addition to that, foreign exchange reserves touched the highest figure in the history of Pakistan, he said.

He also said that we are facing certain issues in power and gas sector, Pakistan International Airlines, Pakistan Railways (PR), and Pakistan Steel Mills (PSM) but he said that the Cabinet Committee on Restructuring of the Public Sector Enterprises has been relentlessly working on revamping these enterprises and we have made certain very good advances in this regard, and hopefully these corporations shall start functioning under the economic vision of the present government. He said these issues are overshadowing our tremendous performance in the economy and said that like PSM are always source of criticism on our government and this must be seen in the political context only. While pondering on the PR, he said that the government has managed to create a consortium of banks to provide the requested Rs 6 billion to PR and said that government of Pakistan is paying the salaries and pension of PR’s service and retired workers. Although the PR is a public sector corporation, which should by itself arrange their salaries and pensions, moreover the government is going to pay to the electricity bill of PR also.

The meeting was told that the government has reached single digit inflation and in addition to that, export witnessed an increase by 4 percent in last six months, import increased by 18 percent, which is also an indicator of increasing activity in our economic and commercial field.

The minister hoped that the government would receive $2.5 billion in foreign exchange in the coming months, from Etisalat’s pending dues, CSF form US, and Auction of 3-G Spectrum Licence. The minister has also said that the government must be credited for some of the outstanding measures taken for the improvement of the country’s poor, that is the provision of Balochistan package, funding to the Gilgit Baltistan province and AJK, plus the alleviation of poor through the Benazir Income Support Programme through which almost 6 million poor families are getting financial help. As the gas is not been provided to the fertilizer plants, the government has decided to import 1.2 million tonnes of fertilizers so that the poor farmers may not be affected. And in this regard, the government is providing subsidy of Rs 40-50 billion on the prices of fertilizer to the farmers, the minister said.

http://www.dailytimes.com.pk/default.asp?page=2012\01\14\story_14-1-2012_pg5_1

Here's a market research report on Pakistan's agriculture sector:

Pakistan Agribusiness service provides proprietary medium term price forecasts for key commodities, including corn, wheat, rice, sugar, cocoa, coffee, soy and milk; in addition to newly-researched competitive intelligence on leading agribusiness producers, traders and suppliers; in-depth analysis of latest industry developments; and essential industry context on Pakistan's agribusiness service.

Pakistan's agricultural output has steadily declined in its contribution to GDP in the past decade, down from 24.0% in 2000/01 to 20.9% in 2010/11. That said, the sector still employs the largest number of workers in the population and we expect the industry to remain a government priority as the country deals with issues of food security and the vulnerability to natural disasters. Over the long term, we foresee the dairy, poultry and wheat industries as benefiting the most from increased investment.

However, despite the existing network of irrigation systems across the country, we believe that significant improvements in infrastructure and better supply chains will have to be implemented in order for the country to reap the full benefits of its fertile soil.

Key Trends

- Rice production out to 2015/16: 7.5% to 7.3mn tonnes. We expect the country to increase its share in the basmati rice trade as production expands over our forecast period.
- Wheat consumption out to 2016: 14.2% to 25.3mn tonnes. Consumption growth will be driven by rising incomes and population growth, as well as increased access to good-quality milk.
- Sugar production out to 2015/16: 35.1% to 4.8mn tonnes. Large-scale consumers such as confectioners, candy makers and soft drink manufacturers account for about 60% of the total sugar demand and will be the main drivers of growth.
- 2012 Real GDP Growth: 3.8% (up from 2.4% y-o-y in 2011; forecast to average 3.7% from 2011 to 2016).
- Consumer Price Inflation: 11.2% average in 2012 (down from 13.7% in 2011).
- Central Bank Policy Rate: 12.0% (lower than 14.0% in 2011)
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South Asia rice exporters should benefit the most from the recent rice trade disruptions out of Thailand. So far, traders report that more than 100,000 tonnes of rice for export have been stalled as a result of the country's worst flooding in decades. Some sources estimate that this could rise to more than 300,000 tonnes. Given these developments, the spotlight has now turned to South Asia to meet demand for the grain in the near term.

Despite the recent floods, which destroyed approximately 20-30% of the sugarcane crop in the Sindh region, we forecast 2011/12 sugar output from Pakistan at 4.1mn tonnes, 2.5% up from our previous estimates. This is largely due to an overall 5-8% increase in sugarcane yields, area harvested and favourable monsoon rains during the growing season. Sugar crushing is estimated at 82% and sugar recovery at 8.8%. According to provincial reports, higher sugar prices farmers received last year, coupled with strong demand from the industrial sector, have boosted planting in the provinces of Punjab, Sindh and Khyber Pakhtunkhawah.

http://www.researchandmarkets.com/research/b503cb/pakistan_agribusin

Hillary Clinton welcomes Pak Amb Sherry Rehman, sa...

2012-01-13T17:55:09.380-08:00

Hillary Clinton welcomes Pak Amb Sherry Rehman, says "US committed to crucial Pakistan relationship", according to The News:

WASHINGTON: Secretary of State Hillary Clinton has underscored the crucial importance of Pak-US relationship, saying that Washington remains steadfastly committed to the bilateral ties. “I was delighted to welcome the new ambassador (Sherry Rehman) here on Wednesday. She is someone that was known for some time,” Clinton said on Thursday in a press interaction. “My message to her (the Pakistani ambassador) was very straightforward: The Pak-US relationship is crucial to both of our countries, to the future of our people, to the safety and security of South Asia and the world. “We recognize there have been significant challenges in recent months, but we are steadfastly committed to this relationship and working together to make it productive,” Clinton said, replying to a question. Earlier on Wednesday, Pakistan’s new ambassador to the US, Sherry Rehman had a meeting with Secretary of State, Hillary Clinton.

http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=11757&Cat=13

Sunni Ittehad Council, the group supporting Taseer...

2012-01-11T09:42:38.718-08:00

Sunni Ittehad Council, the group supporting Taseer's killer, received funds from the US embassy in Islamabad, according to AP:

ISLAMABAD (AP) — The U.S. gave money to a Pakistani Muslim group that organized anti-Taliban rallies, but which later demonstrated in support of an extremist who killed a leading liberal politician, the U.S. Embassy in Pakistan said Wednesday.

The grant highlights the difficulties facing Washington as it seeks partners to support religious moderation in Pakistan. Last month, The Associated Press reported that the U.S. Embassy had created a counter-extremism unit to perform that mission.

U.S. government website Usaspending.gov shows that the group, the Sunni Ittehad Council, received $36,607 from Washington in 2009.

A U.S. diplomat said that the embassy had given money to the group to organize the rallies, but that it had since changed direction and leadership. He said it was a one-off grant, and wouldn't be repeated. He didn't give his name because he wasn't authorized to speak about the issue on the record.

The grant was first reported by the Council of Foreign Relations on its website.

The Ittehad council was formed in 2009 to counter extremism. It groups politicians and clerics from Pakistan's traditionalist Barelvi Muslim movement, often referred to as theological moderates in the Pakistani context.

The American money was used to organize nationwide rallies against militants and suicide bombings, the embassy official said. The demonstrations received widespread media coverage, and were some of the first against extremism in the country.

The rhetoric at the rallies was mostly focused on opposing militant attacks on shrines, which Barelvis frequent but are opposed by Deobandi Muslims, Pakistan's other main Muslim sect. Deobandis dominate the ranks of the Taliban and other extremists. Some view Barelvis as heretics.

In 2011 and also this month, however, the council led demonstrations in support of the killer of Salman Taseer, a governor who was killed a year ago for his criticism of anti-blasphemy laws used to persecute religious minorities. The displays have appalled Pakistani liberals and stoked international fears that the country is buckling under the weight of extremism.

Taseer's assassin, Mumtaz Qadri, is a Barelvi. He claimed he acted to defend the honor of the prophet Mohammed, a cause that is especially dear to Barelvis.

At its rallies, the group maintains its criticism of the Taliban even as it supports Qadri — a seemingly contradictory stance that suggests its leaders may be more interested in harnessing the political support and street power of Barelvis than in genuinely countering militancy.

Two leading members of the council who have been with the group from the beginning of its existence denied receiving any American funds. The apparent discrepancy could be explained by lack of transparency within the organization. However, given the current anti-American climate, owning up to receiving funds from the United States would invite criticism.

"This propaganda is being unleashed against us because we are strongly opposed to Western democracy and American policies in the region and in the world," said Sahibzada Fazal Karim, the head of the council, before reiterating the group's support for Qadri.

"We are against extremism, but we support Qadri because he did a right thing," he said.

Muslim groups and clerics in Pakistan have a long history of receiving money from foreign countries. Deobandi clerics have received millions of dollars over the last 20 years from Gulf nations to promote their austere brand of Islam and an anti-Shiite agenda. Iran has in turn funded Shiite groups.

Read more: http://www.seattlepi.com/news/article/US-aided-Pakistan-group-which-supported-extremists-2464420.php#ixzz1jAjbBmVp

Here's a report on Fortune magazine's interview with Pakistan's former leader Shaukat Aziz Part III:

Investing after the Arab Spring: Unfinished business

When India was drawn into the Nuclear Suppliers Group (a multilateral anti-proliferation organization) Pakistan should have been included too. The United States has to decide: are we in the tent or outside? That was a major missed opportunity. Inclusion in the NSG comes with a lot of responsibility and obligations. Engagement becomes more formalized, providing a forum for all key players to be around the table to discuss and solve issues. We are a nuclear power – there is no such thing as a halfway house here - and to deny it doesn't help anybody. It's not too late to rectify this. It would help the whole atmosphere in South Asia. If you keep people out of the tent, things can suddenly move the other way.

You've said that Pakistan would be better off with a free trade agreement with the U.S., instead of aid, but given the state of US-Pakistan relations that seems very unlikely.

I'm not optimistic about a free trade agreement because even when Congress was very friendly, they couldn't get things through, even things which were promised like the Reconstruction Opportunity Zones in the border area of Afghanistan and Pakistan, which was important for all three countries. The idea was to give duty-free access to the U.S. market for any goods produced in the tribal areas. Obviously when you put up a factory there the cost of production will be high, initially at least, because there is no infrastructure. This was a well-conceived and well-designed way of creating jobs. Otherwise they will have no incentive to put down their guns. Congress has approved other special market access programs like this for Haiti and Jordan, and maybe others. It was promised by the U.S. five or six years ago but nothing happened.

We really need to re-focus on these things so that when peace returns in the area, especially in the border areas, people will have alternatives for making a living. Security is not a big issue. It can be done by local people. You don't need expatriates; there are already plenty of entrepreneurs in that area. You're talking about very small numbers for the textile market, but symbolically it's very important because it will give people hope. This would be a good way for the U.S. government and Congress to send a message to people in the border areas: we want you to have a better, peaceful future.....

http://finance.fortune.cnn.com/2012/01/09/pakistan-shaukat-aziz/?section=magazines_fortune

Here's a report on Fortune magazine's interview with Pakistan's former leader Shaukat Aziz Part II:

You mentioned the need for good management. How would you assess the current management of the economy? I ask that in light of the lapsing of the stabilization plan with the IMF.

Being out of the IMF -- obviously this reflects the desire of the government to have more flexibility to pursue its reforms. The IMF program does bring with it certain macroeconomic discipline and that's beneficial, but I also believe in economic sovereignty. You need good governance and good management, but abdicating the economy to the IMF is not the way to succeed. What we need is growth and job creation, like every other country in the world.

The disagreement with the IMF is at least in part related to tax collection, which has been notoriously weak in Pakistan. There is a lot of concern whether Pakistan can muster the political will to make tough reforms, partly because of self-serving elites among the political class that have brought the country to the point of being nearly a failed state.

No, I think that's not true. The country is large -- roughly 180 million people -- and it's functioning. It has many challenges -- governance issues, transparency and management issues -- on top of the security issues that have cost us dearly. But the country is functioning. Obviously it could function better, but it's not come to a grinding halt. Life is going on.

Don't expect an Iranian oil crisis

Clearly, the country is facing a challenging situation financially, and tax reform has been an issue. It's true there is low tax compliance, but you have to look at the political impact -- not just the economic impact -- of taxes. The tax system has been around for a long time. Trade-offs have to be made; indirect taxes -- sales tax and customs duties -- have grown because of that, quite handsomely. Income tax is also up, but that is mostly out of big corporations' profits.

The key question is: How do we get growth? The pie has to get bigger for you to collect more taxes. You can't squeeze the lemon if there's no juice in it.

Moving on to Afghanistan, the U.S. is being more realistic about its transformative agenda and the Obama administration seems to be determined to wind things down. How do you see this playing out?

I think this is the right way to go. The presence of foreign troops generates ill effects and the sooner they are gone, the better. But the exit strategy has to be very carefully choreographed.

We need a Marshall Plan-like approach, a massive program for reconstruction. The World Bank, the Asian Development Bank, the sovereign banks, and many individual countries, have to be involved. There was a very successful meeting recently of Turkey, Pakistan, Afghanistan and others in Istanbul. People need to see a future, that tomorrow will be better than yesterday. The people of Afghanistan will have to work hard themselves to leverage this opportunity. It's a good thing that the U.S. and the Taliban are talking -- all stakeholders have to be included. I'm cautiously optimistic that adversity can be changed into an opportunity if it is funded well.

U.S.-Pakistan relations are generally refracted through the prism of Afghanistan but also through the fact that Pakistan is a nuclear power.

I think certainly the relationship is opportunistic on both sides. But I think the U.S. is pursuing a policy of both engagement and containment of Pakistan at the same time. We are both a friend and an adversary. Therein lies the conflict in the relationship. There is a trust deficit and when it comes to the nuclear issue there is a fundamental problem.....

http://finance.fortune.cnn.com/2012/01/09/pakistan-shaukat-aziz/?section=magazines_fortune

Here's a report on Fortune magazine's interview with Pakistan's former leader Shaukat Aziz:

Despite the regular eruptions of bad news from Pakistan, Shaukat Aziz, a former finance and prime minister there, remains cautiously bullish about his country's prospects, including the peace dividend that could come with the orderly exit of U.S. troops from Afghanistan. But that depends, he says, on a Marshall Plan-like reconstruction of Afghanistan -- and the U.S. delivering on tribal economic development plans.

That might seem overly ambitious for distracted Western capitals with tapped out coffers. But the 'mostly-sunny' technocratic vision is not unusual for Aziz, a former Citibank (C) executive who presided over strong growth as finance minister after General Pervez Musharraf staged a coup in 1999. (Musharraf just announced he would shortly be returning to Pakistan -- and risking arrest -- from Dubai where he has been since leaving office.)

Aziz, 64, was elected prime minister in 2004 (surviving an assassination attempt while campaigning) and was the first of 23 predecessors to serve out a full term, until 2007. He took up residence in London soon after and now serves on the board of the British hotel chain Millennium and Copthorne Hotels, and as an advisor to the Blackstone Group (BX).

Aziz recently spoke with Fortune about the state of Pakistan's economy, how to rebuild Afghanistan, and why Pakistan deserves a free trade agreement with the U.S. Below is an edited transcript of that discussion.

It's been more than six years since Goldman Sachs (GS) recognized Pakistan among the Next Eleven newly industrialized countries -- inflation is up, investment is at a 40-year low, and infrastructure is deteriorating, particularly in the power sector. By just about any measure things are not particularly good, so what is the source of your optimism about the Pakistani economy?

The problems of the world economy have obviously leaked to Pakistan. Yes, investment is down, trade also, but in Pakistan's case a lot of this is due to the security situation, the war on terror. We have to pay a huge price in terms of damaging our investor confidence -- both domestic and foreign.

On the other hand, we should bear in mind that more than two-thirds of the population lives in rural areas and agriculture has done well, especially in cotton -- prices and exports are up and the farmer is relatively more comfortable.

The country's human capital is a strong suit, the Pakistani people are very talented, their skills levels are impressive and they are hard-working. There's a huge number of Pakistanis working overseas and we can export a few more million and there won't be an iota of difference because there is a whole pipeline of trained – and untrained - people coming.
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http://finance.fortune.cnn.com/2012/01/09/pakistan-shaukat-aziz/?section=magazines_fortune

Business confidence is improving for operations to...

2012-01-08T23:24:00.523-08:00

Business confidence is improving for operations to expand during the current fiscal 2012, reports Khaleej Times:

Foreign Direct Investment (FDI) in fy-2011 was $ 1.6 billion down from $ 2.2 billion in fiscal year-2010, State Bank of Pakistan (SBP), the central bank, reported this week. The downtrend is attributed to three international factors including the slowdown in the global economy including low business in Western-US region, EU currency crisis and the trouble in Middle

East North Africa (Mena) region. The domestic problems that afflicted investment were bad governance, the energy crunch, reduction in the public sector development spending due to large defence and administrative expenses, expensive credit, high rate of inflation, poor Law and order and the effects of the war on terror. The decline in investment has been fairly of a broad range, encompassing a number of sectors. The country’s biggest industrial producer job provider, and exporter — textile industry — recorded a steep decline in manufacturing, spinning, ready-to-wear garments and other finished products, primarily owing to acute electricity and natural gas short -age.

Oil and gas sector was hit by limited profits and weak motivation to expand capacity and production at a time when the demand for all of its products is huge. Import of finished and refined products also hit it hard. Investment in construction declined by Rs2 billion n in fiscal year-2011— a reduction for the fourth year running. A continued decline in the real estate market , along with rising bank default by construction sector borrowers has over shadowed the positive impact of post-flood construction activities” of fiscal year-2011, SBP points out.

Except for the financial services and power sectors, a number of other sectors saw a drop in investment. In energy sector oil and natural gas received the largest amount of FDI amounting to $512 million in 2011. Financial services got $ 247 million. Telecoms saw the biggest decline. Its profit repatriation abroad was higher than investment by Rs34 million, down from positive investment of Rs 291 million in 2010.

SBP notes that US was the biggest investor with $239 million. United Arab Emirates was the runner up with $284.2 million, and Britain was the third with $208 million.But, at the same time, a just-conducted survey by Overseas Investors Chamber of Commerce & Industry (OICC&I) cites inflation as “the biggest single reason for decline in business confidence in the last six months, eclipsing all other negative factors including law and order.”
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There is a genuine feel good and confidence-plus sentiment according to BCI. “As many as 69 per cent of all the respondents plan to make capital investment, 64 per cent expect sales to increase, 54 per cent expect profits to rise and 47 per cent are of the opinion that return on investment will go up,” it confirms. The hope is pinned on a growth in the output of the Large Scale Manufacturing (LSM), farming, and oil and gas which are looking up, coupled with a likely reduction in the severity of the energy outages, will help push GDP growth to 3.9 per cent in fiscal year-2012, from 2.4 per cent in fiscal year-2011.

What are the bourses indicating? Karachi Stock Market, the country’s biggest bourse, will move up “once things become clear on the political front. Market is trading at a price to earning ratio of six much attractive than the regional average of 11. It is yielding around 8.5 per cent which stands as one of the highest in the region,” says Ashraf Bava, CFA and CEO of Noel Capital. ...

Here's a private-public partnership initiative...

2012-01-07T19:56:32.254-08:00

Here's a private-public partnership initiative for education in Sindh, as reported in The Express Tribune:

The Sindh Education Foundation has handed over the management of 1,200 schools across Sindh to entrepreneurs under its private-public partnership programme, Integrated Education Learning Programme (IELP).

The SEF asked entrepreneurs to apply for school adoption by submitting proposals and they received a staggering 9,600 applications. Each proposal was strictly assessed. There should be no other primary school within a one-kilometre radius of the new one or already established school as this would affect enrolment. No other secondary school should exist within a two-kilometre radius. At least 40 children should be enrolled in primary schools and 30 in elementary and secondary classes. The programme requires the student-teacher ratio to be at least 1:4. Teachers should be paid a minimum of Rs5,000 while at least Rs2,500 should be paid to the support staff. Drinking water and clean toilets are other prerequisites for the IELP selection.

Out of the total applications received, 4,500 were initially shortlisted and 1,500 were finally randomly selected, informed Sadaf Junaid Zuberi, the SEF senior manager.

The final contract signing ceremony was held at the SEF headquarters on Monday where the remaining 300 of the 1,500 selected entrepreneurs sealed their school adoption deal in the presence of Senior Minister for Education and Literacy Pir Mazharul Haq.

Prof Anita Ghulam Ali, the SEF managing director, welcomed the guests and school entrepreneurs and called for operators to take up this opportunity with full honesty and commitment. “You can change the future of thousands of children,” she said.

Lauding the efforts of the SEF, the education minister said that it has been promoting lasting public-private partnerships in the education sector. The government plans to open more schools under this agreement and people who adopt them will be strictly monitored.

The programme was launched in 2009 and was designed to give financial and technical support to new and existing private, community and trust-owned schools throughout the province. Three hundred schools were already working successfully. The project directly reaches 450,000 children.

Each entrepreneur will get a 350-rupee subsidy per child from the Sindh government via the SEF. They will be responsible for the school’s management, monitoring, enrolment, building capacity, community and parent mobilisation and student assessment.

As the project is fully funded IELP students do not pay any fees. SEF will provide textbooks and classroom aides and will also work on teacher training.

IELP follows the SEF’s Promoting Private Schooling in Rural Sindh (PPRS) programme. It is different from the PPRS as it involves both primary and secondary schools.

SEF director of programmes, operations and research, Aziz Kabani, said the aim was to “establish public-private partnership to increase access to and improve the quality of educational services to children in marginalised areas of the province”.

http://tribune.com.pk/story/156552/entrepreneurs-adopt-1200-more-schools-in-sindh/

Here's a story published in Fast Company about an "Education Revolution" in Pakistan:

TED Fellow, social entrepreneur and filmmaker Sharmeen Obaid-Chinoy is on a mission to foment Pakistan's education revolution.

The province of Sindh, where Obaid-Chinoy is based, decided less than two months ago to completely revamp public school textbooks, and the government enlisted Obaid-Chinoy to help. "There needs to be an overhaul," Obaid-Chinoy tells Fast Company. "Textbooks are outdated and I've been working with the government on how to encourage critical thinking and move away from rote memorization....It's tough, because the mindset is not there. The teachers are essentially products of the same system. We have to break the culture, which takes a long time."

Sindh's teachers now spend extensive time in professional training with education experts to try and reform the instruction of English, math, and social studies. "We're really making this a movement for education for social change," Obaid-Chinoy says.

"People are excited by it. Everyone's getting into it, rolling up their sleeves. We're trying to bridge the divide between the public and private school systems," which, she says, is at the heart of Pakistan's education challenges. The poorer schools are under-resourced and are often recruiting grounds for young terrorists. By improving the public education system, the less-fortunate children have a better shot at a solid future, away from terrorist groups, and local leaders hope to accomplish improvements by focusing on textbooks and teacher trainings.

"Pakistan also feels it needs to catch up with the rest of the world in terms of education and that was the genesis for the education overhaul," says Obaid-Chinoy. "Terrorism defines us today," but, she says, there was a time when the country was known for its vibrancy and sense of hope.

Obaid-Chinoy is doing her part in other ways to revamp Pakistan's education system. In 2007 she started CitizensArchive.org, the country's first digital archive documenting its oral history with interviews, rare photos, and other online collections. The initiative allows students in schools throughout Pakistan, Bangladesh, and India to better understand Pakistan and its history and Obaid-Chinoy was able to interview several notable figures who have since passed away, such as Deena Mistri, one of the country's first female educators. And students around South Asia are now engaged in learning exchanges with students in Pakistan, to help the countries build bridges.

And throughout her education work, Obaid-Chinoy's medium is often filmmaking. She makes about one film per year and has covered a range of topics from jihadi schools to female victims of acid attacks. Her next film will look at 9/11 through the eyes of different figures, in commemoration of the 10th anniversary this year.

"My mother gave up her dream of becoming a journalist when she got married and I think she always wanted to make sure that her six children pursued their dreams. I have four sisters and all of us work in male-dominated professions in Pakistan." And Obaid-Chinoy now brings that same sense of passion and justice to her work and thanks to her, her country may soon become a bright spot for global-minded education.

http://www.fastcompany.com/1731268/pakistan-education-revolution

Here's a Brookings Inst paper on mobile phones are helping increase female literacy in Pakistan:

In the small village of Hafizibad in Pakistan’s Punjab province, a young girl is using her mobile phone to send an SMS message in Urdu to her teacher. After sending, she receives messages from her teacher in response, which she diligently copies by hand in her notebook to practice her writing skills. She does this from the safety of her home, and with her parents’ permission, during the school break, which is significant due to the insecurity of the rural region in which she lives. The girl is part of a Mobilink-UNESCO program to increase literacy skills among girls in Pakistan. Initial outcomes look positive; after four months, the percentage of girls who achieved an A level on literacy examinations increased from 27 percent to 54 percent. Likewise, the percentage of girls who achieved a C level on examinations decreased from 52 percent to 15 percent. The power of mobile phone technology, which is fairly widespread in Pakistan, appears in this case to help hurdle several education barriers by finding new ways to support learning for rural girls in insecure areas—girls who usually have limited opportunities to attend school and who frequently do not receive individual attention when they do. Often they live in households with very few books or other materials to help them retain over summer vacation what they learned during the school year.

http://www.brookings.edu/papers/2012/01_education_technology_winthrop.aspx