Saturday, March 6, 2021

Asif Zardari: A Corrupt Master Manipulator?

The recent shock defeat of  Dr. Hafeez Shaikh, Prime Minister Imran Khan's nominee for the Senate, has former President Asif Ali Zardari's fingerprints on it. The former president and current co-chairman of the Pakistan Peoples Party orchestrated the buying of votes and arranged the tens of millions of rupees used for the purpose to ensure former Prime Minister Yusuf Raza Gilani's surprise victory in the recent Senate Elections. Zardari has been widely known to be "in his elements" when it comes to "money transactions". 

L to R: Khurshid Shah, Asif Ali Zaradri, Yusuf Raza Gilani


What Mr. Zardari pulled off is a reminder of what he did for Prime Minister Benazir Bhutto, his late wife who faced almost certain defeat in a no-confidence motion against her in November, 1989. In his recent book entitled "The Bhutto Dynasty", veteran British journalist Owen Bennet Jones offers several specific instances of how the Bhuttos used money for political gain. One such instance was when Benazir Bhutto's husband Asif Ali Zardari helped her defeat a no-confidence motion in 1989 that appeared to be all but certain to remove her from power. Here are the relevant excerpts of the book:

"Having seen politics close up when her father was in power, Benazir had long been aware that money played a part in Pakistani politics. But now it could not have been clearer: if one of her National Assembly members was being offered a bribe to switch to the opposition, she needed to be able to match it............As another of her political advisers later recalled, ‘Asif’s role became more prominent when she beat back the motion of no confidence. There was some wheeler dealing in that. Some buying of votes. The moment money transactions came into play, Asif was in his element.’ Asif Zardari has consistently denied any financial malpractice. During her second government, Benazir told an aide that you needed to have $200–300 million to go into an election so that you could fund your candidates and secure their loyalty. While many of her advisers gave her plenty of interesting suggestions about what to do, Zardari actually did things, proving himself to be a man she could rely on" 

Owen Bennet Jones has described in some detail how Zulfikar Ali Bhutto and his daughter Benazir Bhutto saw the role of money in Pakistani politics. Here's an excerpt of Benazir's candid admission that "kickbacks must be taken":

"In a surprisingly unguarded interview with the American Academy of Achievement in 2000 she (Benazir Bhutto) said, while denying personal involvement, that she wished she had done more to tackle corruption: ‘We all knew kickbacks must be taken . . . these things happen.’Politicians everywhere, she argued, made money. The difference was that while Western politicians did so after they left office, their counterparts in the developing world did not have that option".

Owen Bennet Jones has reported another instance in which Zulfikar Ali Bhutto gave away bundles of cash to a religious leader who was the last hold-out against the adoption of the 1973 constitution. Here is the excerpt:

"It was, by any standards, extraordinary that Zulfikar managed to push it through with no one in the National Assembly voting against it. Mubashir Hassan described how the final hold-out – a cleric – was persuaded to vote in favour with a payoff: ‘The amount was settled and Bhutto described the scene to me how when the fellow came to President’s House to collect the money, Bhutto threw a packet of notes on the floor and ordered him to pick it up. There the man was, moving over the carpet on all fours, picking a bundle from here and a bundle from there. Bhutto was mightily amused. By using all his political skills – bribery included – Zulfikar had made a significant contribution to Pakistan’s national story." 

Related Links:

Haq's Musings

South Asia Investor Review

Political Patronage in Pakistan

Zardari Corruption

Panama Papers

US Aid to Pakistan

1971 Debacle in East Pakistan

Is it 1971 Moment in Pakistan's History?

Mission RAW by RK Yadav: India in East Pakistan

Benazir Bhutto Gave Birth to Taliban

What if Musharraf Had Said No to US After 911?

Riaz Haq Youtube Channel

VPOS Youtube Channel

Friday, March 5, 2021

Can Pakistan Follow Vietnam's Example to Become the Next Asian Tiger?

Vietnam has attracted major manufacturing and export-oriented industries that have relocated from China as the US-China trade war heated up. This process further accelerated during the COVID19 pandemic in the year 2020. As a result, Vietnam is now labeled by many analysts as "The Newest Asian Tiger". Bangladesh, too, has attracted export-oriented garment manufacturing industries.  Can Pakistan follow Vietnam's and Bangladesh's examples? Pakistan was the original Asian Tiger back in the 1960s when other developing Asian nations sought to emulate its development model.  

Vietnam's Rise:

With rising manufacturing costs in China and the US-China trade war,  many major manufacturers are relocating to other countries in Asia. This situation has helped Vietnam emerge as a hub of foreign direct investment (FDI). FDI flow into the country has averaged more than 6% of GDP, the highest of any emerging economy. The country’s recent economic data shows a rise of 18% in exports, with a 26% jump in computers/components exports and a 63% jump in machinery/accessories exports.  These figures have earned Vietnam the moniker of the newest "Asian Tiger". 


South Asian Countries' Export Growth. Source: Wall Street Journal


Bangladesh's Exports:

Bangladesh's garment exports have helped its economy outshine India's and Pakistan's in the last decade. Impressed by Bangladesh's progress, the United Nations’ Committee for Development Policy has recommended that the country be upgraded from least developed category that it has held the last 50 years. 

The next challenge for Bangladesh is to move toward higher-value add manufacturing and exports, as Vietnam has done. Its export industry is still overwhelmingly focused on garment manufacturing. The country’s economic complexity, ranked by Harvard University’s Growth Lab, is 108 out of the 133 countries measured. That is actually lower than it was in 1995, according to the Wall Street Journal


Pakistan's Potential: 

Pakistan was the original "Asian Tiger" back in the 1960s when  other developing Asian economies sought to emulate its development model. It became an export powerhouse in the 1960s when the country's manufactured exports exceeded those of Thailand, Malaysia and Indonesia combined.  The creation of major industrial estates in Karachi under President Ayub Khan's industrial policy incentivized industrial production and exports of value added manufactured products such as textiles. Now the country's industrial output lags its neighbors'. 

History of Pakistan's Manufactured Exports


With Chinese looking to relocate some of their industrial production to low-cost countries, Pakistan has a golden opportunity to grow its industrial output and exports again. Here's Karen Chen explaining why:

“Vietnam is too crowded already and moved into automobiles and electronics. There is no space for investment in Vietnam. Myanmar doesn’t have infrastructure. India is terrible. In Bangladesh you don’t have right conditions for setting up fabric units. So Pakistan is the ideal location for such garment manufacturing because of abundance of cheaper labour. The investment and tax policies for SEZs and new projects are also good. We’ve confidence to be at here.”

Seizing the opportunity to attract export-oriented investors will help Pakistan become the next Asian Asian Tiger economy. It will help the country avoid recurring balance-of-payments crises that have forced the nation to seek IMF bailouts with all their tough conditions. Focusing on "Plug and Play" Special Economic Zones (SEZs) is going to be essential to achieve this objective.

Thursday, March 4, 2021

Indian Engineering Students Perform Poorly on International Assessment Tests

The results of a test called "Supertest", developed by researchers from the US, China, Russia and India,, show that Indian engineering students perform very poorly relative to their  peers in other countries. Supertest is the first study to track the progress of students in computer science and electrical engineering over the course of their studies with regard to their abilities in physics, mathematics and critical thinking and compare the results among four countries.  

Supertest was initiated by Stanford University, HSE University Moscow, the Educational Testing Service (ETS), and partner universities in China and India, according to Phys.org.  Here's an excerpt of the article in journal that explains the test:

"More than 30,000 undergraduate students participated in the study. The researchers collected a sample of students from elite and large universities, roughly equal in number for each country. In Russia, the sample included students from six Project 5-100 universities and 28 other universities. Their skill development was measured three times: upon entering university, at the end of their second year, and at the end of their studies........Russian engineering students outperform Indian students while performing lower than Chinese students. In terms of developing these skills over the course of their studies, students of all three countries perform lower than students in the United States. "We found that, as the students progress in their studies, their critical thinking skills remain approximately the same in Russia and India, but significantly decrease in China. On the contrary, American students show improvement," said Igor Chirikov. This is a serious problem, the researchers note, because technologies change rapidly, and in order to be able to master new ones, you need not only a firm grasp of the subject area, but, above all, skills of the 21st century".


Earlier testing of Indian students on international assessment tests has also shown that they rank near the bottom on PISA, a global test of learning standards conducted in 74 nations in 2011.  TIMSS, another standardized international test, produced similar results earlier in 2003.


The year 2011 was the first time that Indian students participated in PISA. Students from Himachal Pradesh and Tamil Nadu took the Program for International Student Assessment (PISA) test, coordinated by the Paris-based Organization for Economic Co-operation and Development (OECD). Prior to this participation, students from Indian states of Orissa and Rajasthan took a similar test called Trends in International Mathematics and Science Study (TIMSS) in 2003.

Tamil Nadu and Himachal Pradesh rank high on human development indicators among Indian states. The India Human Development Report 2011, prepared by the Institute of Applied Manpower Research (IAMR), categorized them as “median” states, putting them significantly ahead of the national average. IAMR is an autonomous arm of India's Planning Commission.



Himachal Pradesh ranked 4 and Tamil Nadu 11 in literacy rates on India's National Family Health Survey released in 2007. However, in the PISA study, Tamil Nadu ranked 72 and Himachal Pradesh 73, just ahead of the bottom-ranked Kyrgyzstan in mathematics and overall reading skills. Shanghai, China's biggest city, topped the PISA rankings in all three categories—overall reading skills, mathematical and scientific literacy. The new entrants included Costa Rica, Georgia, India (Himachal Pradesh & Tamil Nadu), Malaysia, Malta, Mauritius, Venezuela (Miranda), Moldova, United Arab Emirates. PISA 2009+ involved testing just over 46 000 students across these ten economies, representing a total of about 1,377,000 15-year-olds.


In Tamil Nadu, only 17% of students were estimated to possess proficiency in reading that is at or above the baseline needed to be effective and productive in life. In Himachal Pradesh, this level is 11%. “This compares to 81% of students performing at or above the baseline level in reading in the OECD countries, on an average,” said the study.

The average Indian child taking part in PISA2009+ is 40 to 50 points behind the worst students in the economic superstars. Even the best performers in Tamil Nadu and Himachal Pradesh - the top 5 percent who India will need in science and technology to compete globally - were almost 100 points behind the average child in Singapore and 83 points behind the average Korean - and a staggering 250 points behind the best in the best.

The average child in HP & TN is right at the level of the worst OECD or American students (only 1.5 or 7.5 points ahead). Contrary to President Obama's oft-expressed concerns about American students ability to compete with their Indian counterparts, the average 15-year-old Indian placed in an American school would be among the weakest students in the classroom, says Lant Pritchett of Harvard University. Even the best TN/HP students are 24 points behind the average American 15 year old.

The 2003 TIMSS study ranked India at 46 among 51 countries. Indian students' score was 392 versus average of 467 for the group. These results were contained in a Harvard University report titled "India Shining and Bharat Drowning".

These results are not only a wake-up call for the Hindutva brigade, but also raise serious questions about the credibility of India's western cheerleaders like Indian-American journalist Fareed Zakaria and New York Times' columnist Tom Friedman.

A World Bank report on student learning in South Asia is also depressing. Sri Lanka is the sole exception to the overall low levels of achievement for primary and secondary school kids in the region.  The report documents with ample data from various assessments to conclude that "learning outcomes and the average level of skill acquisition in the region are low in both absolute and relative terms". The report covers education from primary through upper secondary schools.

Source: World Bank Report on Education in South Asia 2014

Buried inside the bad news is a glimmer of what could be considered hope for Pakistan's grade 5 and 8 students outperforming their counterparts in India. While 72% of Pakistan's 8th graders can do simple division, the comparable figure for Indian 8th graders is just 57%. Among 5th graders, 63% of Pakistanis and 73% of Indians CAN NOT divide a 3 digit number by a single digit number, according to the World Bank report titled "Student Learning in South Asia: Challenges, Opportunities, and Policy Priorities".  The performance edge of Pakistani kids  over their Indian counterparts is particularly noticeable in rural areas. The report also shows that Pakistani children do better than Indian children in reading ability.

Source: World Bank Report on Education in South Asia 2014


Here are some excepts from the World Bank report:

Unfortunately, although more children are in school, the region still has a major learning challenge in that the children are not acquiring basic skills. For example, only 50 percent of grade 3 students in Punjab, Pakistan, have a complete grasp of grade 1 mathematics (Andrabi et al. 2007). In India, on a test of reading comprehension administered to grade 5 students across the country, only 46 percent were able to correctly identify the cause of an event, and only a third of the students could compute the difference between two decimal numbers (NCERT 2011). Another recent study found that about 43 percent of grade 8 students could not solve a simple division problem. Even recognition of two-digit numbers, supposed to be taught in grade 2, is often not achieved until grade 4 or 5 (Pratham 2011). In Bangladesh, only 25 percent of fifth-grade students have mastered Bangla and 33 percent have mastered the mathematics competencies specified in the national curriculum (World Bank 2013). In the current environment, there is little evidence that learning outcomes will improve by simply increasing school inputs in a business-as-usual manner (Muralidharan and Zieleniak 2012).


Source: The Hindu

In rural Pakistan, the Annual State of Education Report (ASER) 2011 assessment suggests, arithmetic competency is very low in absolute terms. For instance, only 37 percent of grade 5 students can divide three-digit numbers by a single-digit number (and only 27 percent in India); and 28 percent of grade 8 students cannot perform simple division. Unlike in rural India, however, in rural Pakistan recognition of two-digit numbers is widespread by grade 3 (SAFED 2012). The Learning and Educational Achievement in Punjab Schools (LEAPS) survey—a 2003 assessment of 12,000 children in grade 3 in the province—also found that children were performing significantly below curricular standards (Andrabi et al. 2007). Most could not answer simple math questions, and many children finished grade 3 unable to perform mathematical operations covered in the grade 1 curriculum. A 2009 assessment of 40,000 grade 4 students in the province of Sindh similarly found that while 74 percent of students could add two numbers, only 49 percent could subtract two numbers (PEACE 2010).


Source: World Bank Report on Education in South Asia 2014




The report relies upon numerous sources of data, among them key government data (such as Bangladesh’s Directorate of Primary Education; India’s National Sample Survey, District Information System of Education, and National Council of Education Research and Training Assessment; and Pakistan’s National Education Assessment System); data from nongovernmental entities (such as Pakistan’s Annual Status of Education Report, India’s Student Learning Study, and its Annual Status of Education Report); international agencies (such as the Organisation for Economic Co-operation and Development [OECD] Programme for International Student Assessment [PISA] 2009+ for India; the World Bank Secondary Education Quality and Access Enhancement Project in Bangladesh); and qualitative studies undertaken for the report (such as examining decentralization reforms in Sri Lanka and Pakistan). The study also uses the World Bank Systems Approach for Better Education Results (SABER) framework to examine issues related to ECD, education finance, assessment systems, and teacher policies.

I hope that these reports serve as a wake-up call for political leaders and policymakers in South Asia to redouble their efforts with significant additional resource allocations of nutrition, education and healthcare.

Related Links:

Haq's Musings

South Asia Investor Review

Who's Better for Pakistan Human Development?

History of Literacy in Pakistan

Myths and Facts About Out-of-School Children in Pakistan

PISA, TIMSS Results Confirm Low Quality of Indian Education

India Shining, Bharat Drowning

Learning Levels and Gaps in Pakistan by Jishnu Das and Priyanka Pandey

Pasi Sahlberg on why Finland leads the world in education

CNN's Fixing Education in America-Fareed Zakaria

PISA's Scores 2011

Poor Quality of Education in South Asia

Infections Cause Low IQs in South Asia, Africa?

Peepli Live Destroys Western Myths About India

Learning Levels and Gaps in Pakistan by Jishnu Das and Priyanka Pandey

Pasi Sahlberg on why Finland leads the world in education

CNN's Fixing Education in America-Fareed Zakaria

PISA's Scores 2011

Poor Quality of Education in South Asia

Infections Cause Low IQs in South Asia, Africa?

Peepli Live Destroys Western Myths About India

PISA 2009Plus Results Report

Monday, March 1, 2021

Can Digital Yuan Challenge US Dollar's Dominance in International Finance?

China's central bank is testing its digital currency in several major Chinese cities. The chairman of US Federal Reserve has recently confirmed that the US Central Bank is working on digital dollar. The State Bank of Pakistan announced in 2019 that it was developing a digital currency. It seems that the popularity of Bitcoin has triggered serious worries of loss of control of the official financial systems among the central bankers around the world. China's substantial lead in digital currency could put it far ahead of the US in the future of global payments and financial settlement. It could eventually displace the US dollar and provide China with the immense global financial power that the US currently enjoys. 

Digital Yuan


Central Bank Digital Currency (CBDC):

What Is a Central Bank Digital Currency (CBDC)?  Investopedia defines it as a digital currency that "uses a blockchain-based token to represent the digital form of a fiat currency of a particular nation (or region)". A CBDC is centralized; it is issued and regulated by the  country's Central Bank. Unlike decentralized cryptocurrencies like Bitcoin, a CBDC would be centralized and regulated by a country's monetary authority.  

Motivations for such currencies are many, but the key one is to maintain control of the national and global finance. Another worry is that the use of unregulated digital currencies like Bitcoin could enable serious domestic and international crimes. It could also make tax evasion easier and hurt governments' ability to support public expenditure on education, healthcare, physical infrastructure, public safety, national defense and other priorities. 

Digital Yuan:

The People’s Bank of China, the Chinese Central Bank, is testing its e-yuan digital currency in Shanghai, Chengdu and other major cities. It has filed more than 100 patent applications for its digital currency. Reports indicate that the experiments are going smoothly, and soon people will have the option of downloading a government-issued digital wallet. Unlike commercial payment processors such as WeChat Pay and Alipay, the official Chinese version will be equivalent to an account at the central bank with the same guarantee as hard cash, according to The Economist magazine. 

China is far ahead of of the rest of the world, including the United States in the development of a central bank-backed digital currency (CBDC). This could put it far ahead in the future of global payments and financial settlement. It could eventually displace the dollar and provide China with the immense global financial power that the US currently enjoys. 

China has set up a partnership with SWIFT, the Society for Worldwide Interbank Financial System, that manages the global system for cross-border payments, through its digital currency research institute and clearing center.    SWIFT is a major vehicle for the United States to enforce its unilateral sanctions on countries like Iran, North Korea and Venezuela. 

Digital Dollar: 

US Treasury Secretary Janet Yellen and Federal Reserve Chairman Jerome Powell have confirmed last week that they are working on digital dollar as a high-priority project. 

US Treasury Secretary Janel Yellen has been quoted by the media as saying: “I gather that people at the Federal Reserve Bank of Boston are working with researchers at MIT to study the properties of it. We do have a problem with financial inclusion. Too many Americans really don’t have access to easy payment systems and bank accounts. This is something that a digital dollar, a central bank digital currency, could help with. I think it could result in faster, safer and cheaper payments.”  

Digital Rupee: 

A top official of the State Bank of Pakistan, the nation's central bank, announced in April 2019 that the institution aims to issue a digital currency (Central Bank Digital Currency or CBDC) by 2025, according to media reports.   Speaking at the launch of regulations of Electronic Money Institutions (EMIs), central bank officials said that EMIs will be non-bank entities to be licensed by the central bank to issue e-money for the purpose of digital payments. Pakistan's finance minister Asad Umar and the central bankers said they are targeting Pakistan's economy to go fully digital by 2030.

More recently, the State Bank of Pakistan launched Raast, a digital payment system.  It is essentially a pipe that is intended to connect government and financial institutions with consumers and merchants with each other to process payments instantly at very low cost. Raast will be boosted by Pakistan government's decision to use it to pay salaries, pensions and pay welfare recipients under Benazir Income Support and Ehsaas Emergency Cash programs. 

Raast digital payment infrastructure represents a great leap forward for the use of financial technology (FinTech) and financial inclusion in the  country.  It will also promote e-commerce in Pakistan. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion.  Raast is part of the government's effort to modernize payment systems and document the nation's cash-based informal economy. 

America's Global Financial Power: 

There's a common perception that the United State is abusing its extraordinary financial power to arbitrarily punish countries through its unilateral financial sanctions. This power stems mainly from the fact that the US dollar is the main international reserve and trade currency. It allows US to control multi-lateral financial institutions like SWIFT, World Bank, IMF and FATF. Many countries, including major US allies in Europe, are now looking to find alternatives to SWIFT. This has been specially true since former US President Donald Trump existed the JCPOA (Joint Comprehensive Plan of Action) agreed among the 5 permanent members of the UN Security Council (P5) plus Germany. Here's an excerpt of a recent New York op ed by Peter Beinart: 

"By deluding themselves about the extent of America’s might, they are depleting it. A key source of America’s power is the dollar, which serves as the reserve currency for much of the globe. It’s because so many foreign banks and businesses conduct their international transactions in dollars that America’s secondary sanctions scare them so much. But the more Washington wields the dollar to bully non-Americans into participating in our sieges, the greater their incentive to find an alternative to the dollar. The search for a substitute is already accelerating. And the fewer dollars non-Americans want, the harder Americans will find it to keep living beyond their means."

 
Summary:

Central Bank Digital Currencies (CDBDs) are gaining momentum with the talk of digital yuan and digital dollar. Motivations for such currencies are many, but the key one is to maintain control of the national and global trade and financial systems. If successful, these new currencies and associated payment systems could challenge the global financial power of the United States and fundamentally transform banking as we know it. 

Saturday, February 27, 2021

Construction and Manufacturing Driving Double-Digit Growth in Pakistan Cement and Steel Production

Pakistan steel production grew by 13.3% in 2020,  the second fastest among the top 40 steel producing countries, according to data published by the World Steel Association. At the same time, Pakistan Bureau of Statistics revealed that the nation's steel imports rose by 18% year-over-year. The demand for steel was driven by construction and manufacturing sectors which are leading Pakistan's economic recovery. 

World Steel Production. Source: World Steel Association

Pakistan steel-makers produced 3.7 million tons of steel in 2020, up 13.2% from 3.2 million tons in 2019. Neighboring India saw 10.6% decline in steel production in the same period. Global steel production declined 0.9% in 2020. Pakistan also imported $2.1 billion worth of iron, steel and scrap in the first 7 months (July 2020- January 2021) of the current fiscal year.  It's a jump of 18% from the same period in prior fiscal year.  Pakistan steel industry reached peak production of 5 million tons in 2017 before declining to 4.7 million tons in 2018 and 3.3 million tons in 2019. 

Construction boom helped Pakistan grow its domestic cement consumption by 17% in the first 7 months (July 2020-January 2021) of the current fiscal year. Domestic cement sales rose to 27.65 million tons in this period, while exports grew by 10.23% to 5.71million tons from 5.186 million tons in the same period last year.  The total cement sales (local and exports) were 33.36 million tons,  up 15.77% over the corresponding period of the last fiscal year.  

Related Links: 

Haq's Musings

South Asia Investor Review

Pakistan to Become World's 6th Largest Cement Producer By 2030

Naya Pakistan Housing Program

Pakistan's Response to COVID19 Pandemic

Pakistan Tech Exports

Pakistan Digital Economy Surged 69% Amid Covid19 Pandemic

Soaring Food Prices Hurting Pakistanis

Najam Sethi on Desperation in PDM Ranks

India's Firehose of Falsehoods Against Pakistan

Pakistan Launches Defense AI Program

Riaz Haq's Youtube Channel

PakAlumni Social Network

Tuesday, February 23, 2021

Can SEZ Industrial Parks Help Pakistan Become an Export Powerhouse?

Asian Tigers built their strong economies by becoming export powerhouses. China has done so in more recent decades.  How can Pakistan do the same? An answer to this question came this week from Karen Chen of China's Challenge Apparel. Here's what she said as reported by Dawn News:

“Chinese want to shift their business to a place where they can set up their operations in 3-6 months. You know when you go overseas to invest even in Africa they have industrial parks ready. You just go there and enjoy the ‘plug-and-play’ facility. No firm wants to waste two years in acquiring land and another couple of years in securing utilities to start operations. By the time you get utilities the opportunity is gone and you are already out of business. This is the biggest problem in Pakistan.”


Pakistan Industrial Development Corporation Building in Karachi



Pakistan was the original "Asian Tiger" back in the 1960s when other developing Asian economies sought to emulate Pakistan. It became an export powerhouse in the 1960s when the country's manufactured exports exceeded those of Thailand, Malaysia and Indonesia combined.  The creation of major industrial estates in Karachi under President Ayub Khan's industrial policy incentivized industrial production and exports of value added manufactured products such as textiles. Now the country's industrial output lags its neighbors'. 

History of Pakistan's Manufactured Exports


With Chinese looking to relocate some of their industrial production to low-cost countries, Pakistan has a golden opportunity to grow its industrial output and exports again. Here's Karen Chen explaining why:

“Vietnam is too crowded already and moved into automobiles and electronics. There is no space for investment in Vietnam. Myanmar doesn’t have infrastructure. India is terrible. In Bangladesh you don’t have right conditions for setting up fabric units. So Pakistan is the ideal location for such garment manufacturing because of abundance of cheaper labour. The investment and tax policies for SEZs and new projects are also good. We’ve confidence to be at here.”

Seizing the opportunity to attract export-oriented investors will help Pakistan avoid recurring balance-of-payments crises that have forced the nation to seek IMF bailouts with all their tough conditions. Focusing on "Plug and Play" Special Economic Zones (SEZs) is going to be essential to achieve this objective.

Sunday, February 21, 2021

Imran Khan Government's Midterm Review: Economy and Foreign Policy

Imran Khan's government has completed about half of its 5-year term it won in 2018. What are its accomplishments? Where has it failed in terms of economy and foreign policy. 

Economy:

Imran Khan inherited a serious balance of payments crisis cased by flat exports and record high imports in 2013-2018 period under Pakistan Muslim League (Nawaz) government. while the PTI government was still dealing with it, the country and the world were hit by COVID19 pandemic that devastated the global economy. 

Pakistan's Trade July2020-Jan2021. Source: Arif Habib


The 2019 International Monetary Fund's bailout required the PTI government to significantly devalue the Pakistani rupee to make exports competitive, and to raise interest rates to slow down imports. These actions triggered inflation, particularly food inflation, as energy and fertilizer prices rose. 

Export Growth in South Asia. Source: Wall Street Journal

The global COVID19 pandemic hit Pakistan and the world while the PTI government was still trying to stabilize the economy. The global economy slowed down as a result of lockdowns imposed around the world to slow the spread of the novel coronavirus. It impacted South Asian economies but Pakistan was thankfully spared the worst of it. 
Pakistan Vehicle Sales 1H FY20-21. Source: Arif Habib



Now Pakistani economy is finally stabilizing and a strong recovery is underway. The recovery is led particularly by the construction and manufacturing sector as evident from double digit increases in cement consumption and large scale manufacturing growth. 

Cement Sales in Pakistan. Source: Bloomberg


Foreign Policy:

One of Pakistan's key foreign policy successes is the US-Taliban Peace Deal. But now there is uncertainty surrounding it with the inauguration of President Joseph Biden. Biden's election and the growing rivalry between US and rising China have changed the calculus in South Asia and the Middle East regions, impacting Pakistan. Former President Trump's erratic behavior has also contributed to it. 

Based on Biden's record as Obama's vice president, it is expected that the new US president will continue to support a stable Pakistan. A suggestion that has been made by former State Department officials Shumaila Chaudhry and Vali Nasr is for the US to take advantage of Pakistan's free trade deal with China by setting up value-added re-export units in the country. 

Please watch this discussion with Faraz Darvesh as host and Dr. Owais Saleem, Sabahat Ashraf and Riaz Haq as panelists:

https://youtu.be/Cse9j72H1cU



Related Links:













How "Illiterate" Are Pakistan's "Illiterate" Cell Phone Users?



Friday, February 19, 2021

Development Boom in Thar Brings Hope For Pakistan's Least Developed Region

New roads, an airport and a water reservoir in Tharparkar are opening up Pakistan's least developed region. Jobs are being created, drought-resistant nutritious trees and crops being planted and fish farms being established for the benefit of the the people of Thar. New water pond is attracting migratory birds that feed on fish. 

Tharparkar Peacock


Underground Water: 

Fortunately for the people of Thar, Sindh Engro Coal Mining Company has discovered significant amount of underground water, the most precious commodity in drought-hit Tharparkar region of Pakistan.  Syed Abul Fazal Rizvi, Chief Executive Officer (CEO) of SECMC and Thar Foundation was quoted by Business Recorder as saying, “While carrying out hydrogeological studies for Thar coal project, we found out abundant water reserves of groundwater at the depth of 450 plus feet in the whole of the desert region." The available water in Thar has the potential to irrigate thousands of acres of land by applying modern watering methods such as drip and sprinkler systems, he added. 

Rizvi said in collaboration with Pakistan Agriculture Research Council (PARC) and Institute of Sustainable Halophyte Utilization of Karachi University, Thar Foundation has produced commercially viable amounts of Apple Ber, guava, dates, Rhodes Grass (for livestock feed), Castor (cooking) Oil, Cluster Bean (guar), and vegetables. Utilizing the underground saline water, the foundation has piloted a 40-acre plot of land to grow fruits, vegetables, and local grass species and established Sindh’s largest private sector nursery which nurtures 500,000 saplings at a time. It has also set up a 68-acre Green Park which has grown local species of trees that comprises Neem, Babur, Roheero, Kandi, Moringa, and other species.

Gorano Pond has begun to attract a lot of migratory birds that feed on fish. Some species, the report said, have even started nesting on the partly submerged tree tops, according to the Turkish Andolu News Agency

Moringa Trees Fight Malnutrition:

Aga Khan University and Sindh Agriculture University are jointly promoting Moringa tree planting in Pakistan's Thar desert to fight malnutrition, according to multiple media reports. Moringa has gained popularity as superfood in the West in recent years. People of drought-stricken Tharparkar have been suffering from malnutrition and disease in the middle of a long-running drought in the region. Sindh Agriculture University, Tando Jam, and the Aga Khan University will plant 40,000 moringa tree seedlings in Matiari, a rural district in central Sindh, in an effort to improve the health of malnourished mothers, children and adolescents in the area. The moringa tree plantation campaign has been funded by the Prince Sadruddin Aga Khan Fund for the Environment, a $10 million fund dedicated to practical solutions to environmental problems.  

Moringa tree packs 92 essential nutrients, 46 antioxidants, 36 anti-inflammatories and 18 amino acids which help your body heal and build muscle. Native to South Asia, the hardy and drought-resistant Moringa tree can contribute to everything from better vision and stronger immune system to healthier bones and skin. Moringa has 25 times more iron than spinach, 17 times more calcium than milk, 15 times more potassium than bananas and nine times more protein than yoghurt,  according to Dr. Shahzad Basra of the University of Agriculture in Faisalabad, Pakistan. “It also has seven times more vitamin C compared to oranges, over 10 times more vitamin A compared to carrots and three times more vitamin E compared to almonds", he added. No wonder the powder made from Moringa leaves is sold as superfood in the West. Global market for Moringa products is estimated at $5 billion and growing at 8% CAGR. 

Fish Production For Protein:

Dewatering operation of the deep aquifers underneath the coal deposits has discovered large amounts of water which has been removed and pumped into a lake called Gorano Pond. This has opened up  organic fish farming in the region. 


Gorano is 35 KMs south of the Islamkot Taulka where an artificial reservoir of 1500 Acres was established, according to Business Recorder.  Dewatering started in April 2017 from SECMC coal mine and so far, 600 Acres of the reservoir have been filled with water. More than 100,000 fish-seedlings (3-4inches in size) were initially released and within 8-9 months with full grown fish reaching more than 1Kg in weight only on natural feed (Zooplanktons, Phytoplanktons, Algae and other marine insects available in Pond) and were declared fit for consumption by an external laboratory.

Jobs For Locals:

Sindh Engro Coal Mining Company (SECMC), the largest contractor working in Thar desert coal project, has committed itself to hiring locals wherever possible.

When SECMC launched its Female Dump Truck Driver Program near the town of Islamkot in Thar,  Kiran Sadhwani, a female engineer, visited several villages to motivate women to apply for the job and empower themselves, according to Express Tribune newspaper. “Not all women who are working as dumper drivers are poor or in dire need of money. It is just that they want to work and earn a living for themselves and improve the lives of their families,” she told the paper. SEMC is hiring 30 women truck drivers for its Thar projects, according to Dawn newspaper.

Private Sector's Role in Thar:

Most of the social sector improvement effort in Tharparkar is part of what is known as "Corporate Social Responsibility" (CSR). It is led by Sindh Engro Coal Mining Co (SECMC), and the Thar Foundation, funded by SECMC. SECMC is joint venture of Engro Corporation (Dawood Group) and Sindh government.  The Thar Foundation is a special department under SECMC that serves as the CSR office of the Thar project, and handles all the CSR work in the entire Thar area on behalf of all the funding parties. Also helping out are Prince Sadruddin Aga Khan Fund & several universities in Sindh, including Karachi University, Aga Khan University and Tando Jam Agriculture University.

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Haq's Musings


Tuesday, February 16, 2021

Pakistani-American Doctor Fired For Giving Away Expiring COVID19 Vaccine

Dr. Hasan Gokal, Pakistani-American medical director of Harris County COVID Response Team, has been charged with stealing COVID19 Moderna vaccine and fired from his job, according to media reports.  Dr. Gokal's "crime" is to give away unused coronavirus vaccine doses that would have expired and lost if not used within hours. A Texas judge has dismissed charges against him. 

Dr. Hasan Gokal

Each vial of Moderna vaccine has 10 doses. Once it is punctured, the vaccine expires within 6 hours. After administering COVID19 vaccine to all the front-line healthcare workers who showed up for their appointment, Gokal gave the remaining expiring doses of the vaccine to acquaintances and strangers, including a bed-bound woman in her 90s, a woman in her 80s with dementia, several men and women in their 60s and 70s with health issues, and a mother with a child on a ventilator, according to New York Times. After midnight and just minutes before the vial would expire, the final person called and said he wouldn’t make it. Gokal turned to his wife, who has a pulmonary disease that causes shortness of breath, and gave her the last dose.

Even after dismissal of charges against him, Dr. Gokal still doesn’t have a job and instead volunteers at a nonprofit health clinic. Now his lawyer is pursuing a wrongful termination lawsuit, according to ABC Channel13. “An apology by Harris County Public Health and the Harris County District Attorney’s Office towards Dr. Gokal and his family will not be enough,” Paul Doyle, Gokal’s lawyer, told the news outlet.

Dr. Gokal is among thousands of Pakistani-American doctors who have been at the forefront of saving lives in the middle of the devastating COVID19 pandemic that has taken over 400,000 American lives so far. Among them is Dr. Syra MadadPakistani-American head of New York City’s Health and Hospitals System-wide Special Pathogens Program, who is featured in a 6-part Netflix documentary series "Pandemic: How to Prevent an Outbreak".

Pakistani-American doctors are the 3rd largest among foreign-educated doctors in America. Among the notable names of Pakistani-American doctors engaged in the fight against Covid-19 are: Dr. Saud Anwar in Connecticut, Dr. Gul Zaidi in New York and Dr. Umair Shah in Texas. Their work has received positive media coverage in recent weeks.

Dr. Saud Anwar, a Connecticut pulmonologist and state senator, came up with a ventilator splitter to deal with the shortages of life-saving equipment. Dr. Gul Zaidi, an acute-care pulmonologist in Long Island, was featured in a CBS 60 Minutes segment on how the doctors are dealing with unprecedented demands to save lives. Dr. Umair Shah was interviewed about his work by ABC TV affiliate in Houston, Texas.

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Sunday, February 14, 2021

The White Tiger: An Incisive Social Commentary on Religion, Caste, Class and Democracy in India

Few films about India offer the kind of incisive social commentary that the recently released "The White Tiger" does. Based on a novel of the same name by Aravind Adiga, it tells  the story of a poor but ambitious young man from a village in the Indian state of Uttar Pradesh. The film touches on religion, caste, class and democracy in India. It is directed by Iranian-American director Ramin Bahrani and now available on Netflix. 

The White Tiger: Adarsh Gourav, Priyanka Chopra and Rajkummar Rao


The movie opens with a scene showing Balram Halwai (Adarsh Gourav) looking back at his life. It follows up with a series of long flashbacks to tell his story. Along the way, Balram sarcastically compares India's democracy with China's sanitation system. “If I were in charge of India, I’d get the sewage pipes first, then the democracy.” Numerous scenes in the film illustrate poor sanitation in India by showing Balram and others squatting and defecating in the open

Raised in an Indian village, Balram is determined to rise above his "halwai" (confectioner) caste in India's rigidly defined caste system which makes any such escape extremely difficult. He persuades a corrupt landlord known as the Stork (Mahesh Manjrekar) and his son Ashok (Rajkummar Rao) to give him a job as a back-up driver.  Ashok is married to Pinky (Priyanka Chopra Jonas), a chiropractor who grew up in the United States.   

Balram soon replaces the primary driver (Girish Pal) by revealing his Muslim identity which he was hiding to work for the Islamophobic Stork. Balram spends most of his time working for Ashok.  Ashok’s older brother, referred to as Mukesh Sir or the Mongoose (Vijay Maurya), doesn't  particularly like Balram. Unlike Ashok who has studied abroad, the Mongoose character accepts India’s culture of corruption and participates in it willingly. The Mongoose visits Delhi regularly to help Ashok distribute bags full of cash to politicians and bureaucrats. He also helps Ashok deal with his sadness when Pinky suddenly leaves him to return to the United States.  

The White Tiger is a well-made film. I recommend it to anyone interested in understanding the real life in India

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