Sunday, June 28, 2009

Pakistan Military Business and Industrial Revolution

There has been a great deal of criticism of Pakistani military's role in the industry and the economy of Pakistan since the release of Dr. Ayesha Siddiqa Agha's book "The Military Inc: Inside Pakistan's Military Economy" last year. The book describes in some detail the size and the activities of what Dr. Agha calls "MILBUS", the military business in Pakistan. MILBUS, according to the author, includes banks, insurance, cereals, fertilizer, cement, hospitals and clinics, radio and TV, schools, universities and institutes, etc.

In her strongest criticism of Pakistan's military, the author argues that Pakistani military is a giant which has strong political control, economic control, and a very dominant social presence; a military that has over 7% share of the GDP, which controls one-third of heavy manufacturing in the country, which controls 6-7% private sector assets. It has a huge economic presence. It is a constant story of uneven development, between different organizations and institutions.

While some commentators have challenged Dr. Agha's data and her allegations about the dominance of Pakistan's military in the country's business and economy, this post is designed to question why is it bad for Pakistan's military to play an important role in the nation's business.

Defense Expenditures as % of GDP Source: World Indicators

To explore the possibility of the Pakistani military playing a much bigger positive role in rapid industrialization and globalization of Pakistani economy, let us take a look the role the Chinese People's Liberation Army (PLA) has played in China's phenomenal economic progress and its emergence as a new superpower in the last few decades.

China's PLA began its manufacturing role for the defense sector that picked up steam after the Sino-Soviet tensions during Mao's time. Manufacturing purely military products, such as arms, ammunition, as well as electronics, plastics and metals for military applications, these so-called "third-line" factories were built in remote mountain regions, far away from transportation routes and power sources. The factories bought supplies at subsidized costs from other factories, manufactured the weaponry and related products -- generally low-tech and low-quality -- and then sold them to the military at subsidized prices.

With the change of leadership after Mao's death in 1976, the new government encouraged the military plants to begin exploring civilian uses for their products and to engage in the broader liberalization of the economy. The most nimble managers were free to exploit new markets for their goods. During the early 1980s, the PLA's share of the national budget declined, spurring it to look to other sources for cash, especially hard currency. The higher organizational levels of the PLA created trading companies like China Xinxing, China Poly and China Songhai to take advantage of the opening of China's economy to the international market, according to British analyst Gary Busch.

They formed banks, holding companies and international trading companies like Everbright to market these goods worldwide. Now the PLA runs farms, factories, mines, hotels, paging and telephone companies and airlines, as well as major trading companies.

Busch says the number of military-run businesses exploded during the boom of the late 1980s. The "third line" factories opened branches in the coastal areas, earning increasingly higher profits from the manufacture and export of civilian goods. Even the lowest levels of the PLA set up production units. In fact the PLA had a largely captive audience of Chinese who had never really had the chance to acquire personal goods produced in China before. In addition to their international arms sales, their production of consumer goods for the domestic market soared.

Since the 1980s, many of the PLA companies have now become part of the global economy. According research done by David Welker for Multinational Monitor, in pursuit of hard currency, many of the companies have listed themselves on capital markets in Hong Kong and elsewhere, opened representative offices in overseas markets, solicited foreign companies for joint ventures and partnerships in China and emphasized exports. The so-called red chips, companies listed on the Hong Kong exchange but which are in fact mainland Chinese firms, are the hottest stocks on the market. Hong Kong is the PLA's favored stock exchange because of its loose disclosure guidelines. China Poly Group has two listed companies: Continental Mariner Company Ltd. and Poly Investments Holdings Ltd. Both Continental Mariner and Poly Investments have a large number of subsidiary companies in mainland China, Hong Kong and tax havens like Liberia, the British Virgin Islands and Panama. China Carrie's listed company in Hong Kong is Hongkong Macau Holdings Ltd. China Carrie also owns HMH China Investments Ltd. on the Toronto Stock Exchange and HMH Gold Mining on the Australian Stock Exchange. 999 Enterprise Group, another company controlled by the PLA General Logistics Department, operates Sanjiu Pharmaceuticals Group, the largest pharmaceuticals manufacturer in China. 999 recently listed on the Hong Kong exchange.

Smaller military enterprises, like the Songliao Automobile Company owned by the PLA Shenyang Military Region, have also listed in the domestic Chinese markets.

China Poly Group is a commercial arm of the Chinese People's Liberation Army (PLA) General Staff Department. The PLA General Logistics Department operates China Xinxing. The PLA General Political Department owns and operates China Carrie. The Northern Army Group runs NORINCO and the PLA Navy runs China Songhai.

Some of these international Chinese companies with PLA connections are very rich and powerful. Some have entered into very controversial projects. A good example is the Hutchison-Whampoa, Hutchison Port Holding (HPH), according to Busch. HPH is a huge, multibillion-dollar company which has set up operations in ports all around the world. From Panama to the Philippines, an arm of Hutchison-Whampoa, Hutchison Port Holding (HPH), has become the world's largest seaport operator, embedding itself in strategic seaports all across the globe. In fact now Hutchison holds the exclusive contract to operate the Panama Canal.

Hutchison-Whampoa has spread everywhere. It has a base in Tanzania where it runs Tanzania International Terminal Services Ltd. In the Western Hemisphere it has seaport services in Buenos Aires, Argentina; Freeport, the Bahamas; Veracruz, Mexico; and at both ends of the Panama Canal. HPH's latest acquisition involved taking over eight Philippine ports. New ports in Mexico, Argentina, Saudi Arabia, Pakistan, Tanzania and Thailand make Hutchision-Whampoa the world's largest private port operator with 23 cargo berths, bringing its worldwide total of ports to a staggering 136.

Other ports include Jakarta, Indonesia; Karachi, Pakistan; India (where the company runs the cellular phone services); Burma; China; and Malaysia. There are port operations in Britain at Harwich, Felixstowe (Britain's largest port), and Thames port, and in the Netherlands at Rotterdam. The company is bidding to set up in South Korea's largest port, Pusan, and is already in Kwangyang, another South Korean port.

Retired PLA officers also continue to support China's transformation to a powerful first world economy by founding such companies as Huawei, the Chinese router giant challenging Cisco's dominance.

Since the early 1990s, there has been an ongoing effort to spin off the PLA's commercial enterprises into private companies managed by former PLA officers, and to reform military procurement from a system in which the PLA directly controls its sources of supply to a contracting system more akin to those of Western countries. The separation of the PLA from its commercial interests is now believed to be largely complete. But the stamp of the PLA influence continues on most large enterprises in the form of retired PLA personnel managing these businesses.

The Chinese have pursued liberalizing their economy without political liberalization, in the same way other East Asians did. Such a strategy has allowed them to pursue rapid economic growth while forcefully controlling chaos on the streets, as the PLA did at Tienanmen square in 1989. At the same time, the Chinese PLA businesses have sparked a great industrial revolution that has transformed the nation's economy, accelerated its human development, greatly enriched China and lifted hundreds of millions of people out of poverty. Just as it has in other East Asian nations, it can be expected that political liberalization and democracy will follow the rapid wave of industrialization and human development in China.

Even in the richest democracy like the United States, the military has played a significant role in funding research, development and manufacturing industries to support America's military-industrial complex and its space program. In spite of some of the well-deserved criticisms of the the world's biggest military-industrial and space complex in America, no one can deny that a lot of innovation and job creation and economic expansion has flowed from it for the American society at large.

India, another member of the emerging powers now called "BRIC", has failed to use a period of high economic growth to lift tens of millions of people out of poverty, falling far short of China’s record in protecting its population from the ravages of chronic hunger, United Nations officials said recently. Last year, British Development Minister Alexander contrasted the rapid growth in China with India's economic success - highlighting government figures that showed the number of poor people had dropped in the one-party communist state by 70% since 1990 but had risen in the world's biggest democracy by 5%.

Pakistan's record in alleviating poverty and increasing human development is not much better than India's. But Pakistani military has shown that it is capable of building and operating a wide variety of businesses profitably, ranging from heavy weapons manufacturing to industrial and consumer goods, construction and finance. The country now boasts a powerful industrial, technological and research base developing and manufacturing for its armed forces and exporting a wide variety of small and large weapons ranging from modern fighter jets, battle tanks, armored vehicles, frigates and submarines to unmanned aerial vehicles and high tech firearms and personal grenade launchers for urban combat. Comparing with the Chinese PLA, it is also clear that Pakistan's military currently has a very small footprint in industrial and economic development and globalization of the nation's economy. It is now recognized that without PLA's crucial role, it would have been very difficult for the Chinese to build the modern industrial base and attract massive foreign direct investments to become the factory of the world. It is also clear that, as a powerful and stable institution, Pakistani military can and should take inspiration from the PLA to play a much bigger role in Pakistan's economic development and rapid industrialization to help increase the nation's prosperity and lift millions out of poverty, as China's PLA has done.

Pakistan's military should take a leaf from the Chinese PLA playbook. It should do what is necessary to strengthen the nation's industry, economy and national security, regardless of any critics, including Ayesha Siddiqa Agha and her myriad fans. This is the best way forward to a well-educated, industrialized, prosperous and democratic Pakistan in the future.

Here's a video report about Pakistan's weapons development:

Related Links:

Foreign Origin of India's Agni Missiles
Chinese Military-Industrial Complex Goes Global

Video: Who Says Pakistan Is a Failed State?
Chinese Military-Commercial Complex
Pakistan Industrialization Strategy 2007

Pakistan's Defense Production Goes High Tech
Dr. Ayesha Siddiqa Agha on Pakistan Military Inc.

Military Inc: A Deflective and Derogatory Book

Chuck Yeager on Pakistan Air Force


Anonymous said...

Riazbhai why you show the writings of this lady-writer. She is RAW agent from long time. Pakistan army is worlds best and defend us forever against evil designs inshallah.

Moin said...

Dear Riaz:

Kudos. Very nice. Pl send this to Dawn for publication.

It would be very difficult for India to do the same thing as PLA because it is a 100% Democratic country. Same thing for USA. However, US MIL contracts everything out to Corporations who make a ton of money from its MIL orders. In turn the Corporations do the dirty work for the Government and MIL outside the Country. Not much different from PLA. So I think, in developed countries, PLA becomes replaced by Corporations.

Indian Corporations are still in infancy when it comes to International scene. A few have just recently ( Arcelor Mital) been bold to step into the International waters in a big way. Yes, India has been late in taking the path of the PLA but I think they have been observing China for a long time and will be forced to take the same path( thru its Corporations, just like USA) sooner or later. If they don't, they will miss this golden opportunity for ever. And the void created by India's absence will be filled in by Pakistan.

My humble 2 cents.

Riaz Haq said...

US industrialized in the 19th century, well before the emergence of military-industrial complex.

India is trying to industrialize by fits and starts now.

China has had a massive industrial revolution after Mao's death, mainly because Deng allowed the PLA to get into civilian industrial development in a big way to produce the funds it needed.

Pakistani military is already in civilian businesses and it's easier for it to emulate PLA, if it's given a free rein.

Moin said...

You mean the US industrialized in the 20th Century, don't you.

In the 19th Century ( 1800-1899) US was not an Industrial Power. The invention of the Automobile ( First Model T Ford did not roll out until 1909) and the WW ll ( Started in 1939) really pushed US to Industrialization. In the 19th Century US was not an Industrial Power at all. Gernmany and GB were generally considered as Industrialized nations in the 19th century. The advent of the automobile era gave boost to US in the Aircraft, Automobile and Farming Equipment ( also due to IC Engine) which eventually lead to huge scale prosperity and development of all kinds of other industries.

Riaz Haq said...

US industrialization began its rapid progress in mid-nineteenth century with Carnegie, Rockefeller and JP Morgan as the captains of industry. There would have been no Ford and no automobile without the infrastructure put in place in the 19th century.

You should read John Steele Gordon's "Business in America" to get into the history of US industrial development.

ashrafs said...

Really? You think that that the military hijacking everything that is of any worth in the whole economy is a good thing?

Riaz Haq said...

Driven by your pre-conceived bias, I don't think you even read my post. Take a look at how the Chinese army transformed China to an industrial power house. Then comment on it.

ashrafs said...

Thinking that turning my country over to the military-industrial complex is a bias? Then consider me guilty. I am as bigotted as Dwight D. Eisenhower was at the end of his term as POTUS.

Riaz Haq said...

When Eisenhower spoke of military-industrial complex, the US was not a feudal society. It was already highly industrialized. So it makes no sense to apply it to where Pakistan is today.

In fact, you have turned your country to the corrupt feudal elite already in the name of democracy. The ruling feudals have no interest in human development because they see it as a threat to their absolute power over the rural poor in Pakistan. These feudals are in fact slave-holders from whom the slaves need to be emancipated, more like the 1860s in America.

On the other hand, industrialist , like America's abolitionist north, be it military or civilian, do have an interest in human development to get the skilled labor they need to make their own profits.

Vikram said...

Moin, Arcelor Mittal is not an Indian company, it is simply owned by an Indian 'citizen' who has lived abroad for most of his life. Enough for our hyper-nationalistic 'national' media go all ga-ga over him.

I think it will be difficult for India to be a globally significant manufacturing base anytime soon. The main bottleneck I think is the lack of a skilled workforce. Infrastructure is of course also a big problem, although the government seems keen to rectify that.

I really dont see how a more economically active military will rectify the labor skills problem. Also, there are many more important reasons why the military should not involve itself in such activities.

Anonymous said...

I think neither india nor pakistan can have army based ventures.

That could happen in china because of the power equation.

in India and now in Pakistan it is a civilian government. So it will be politician turn business man or business man turned politician which will be a success.

Jadev,India said...

Military should be doing what it does best-preparing for war or fighting one. I dont see how giving "corporate power" to an organization that has a fighting force,best armed in the country,with signal and human intelligence capability(industrial espionage?anyone?) can function in "fair" free competitive market(Bombing of French Engineers for not paying bribe in Agosta-B sub deal..Ok I know RAW/Mossad did it right?..but for argument sake ;-)).China is huge and ethnically homogeneous(and non-argumentative &obedient people among others) to a large it will remain stable what ever political setup(dictatorship, democracy, kleptocracy..) as long as they "continuously" give material prosperity to the country.But, that military setup didnt work for North Korea(coz its small and its leaders are relatively stupid,hallucinating etc) and for Pakistan(with a similar military setup like PLA).There is huge corruption in Indian Army circles as case..(Tehelka scam,Arjun Tank sabotage,etc)..So we must adopt systems suitable for our culture,temperament and mental make-up..I think India is doing reasonably well with its fcuked up system except in military bureaucracy(which returns $10 billion to finance ministry coz of red tape annually).

Jaydev,India said...

The important point is giving so much power to a single entity is absolutely dangerous(eg:Pak army/ISI ;-)). Even a highly righteous idealist like Indira Gandhi was felled by greed for power.You need strong character and impeccable integrity to withstand with dispassion from raw "power". That's what Royalty did in the past.Raise children and train them with character to be a just King/Queen who works untiringly and justly for its people. But, like all things, that system decayed as well..Now what..Democracy?..hopefully this system gets better..or it will die like Royalty..

model town blog said...

my cousin (engineer/management) in NDC just told me today that they produce Honey and grafted Olive trees.
(Missiles are developed under the technical department)

when i asked him, is that morally right?
his reply was, "we have billions and have nothing to do all year long, so why not do some business!!!"

if military do business with billions and create a monopolistic and uncompetitive situation how can a public sector can work? pak-military should sell all businesses to public sector and focus on their trainings.

Riaz Haq said...

model town blog:
I hope your cousin's attitude is an aberration rather than the norm. Of all the institutions in Pakistan, the military is the most stable, capable and powerful institution whose civilian businesses have been run profitably and they pay substantial taxes to Pakistani treasury, while the feudals have run their farms badly and pay njo taxes on their income.

The military has also created a industrial base essential for nation's rapid industrialization.

In the absence of any real, organized effort to industrialize Pakistan, military should fill the gap just as the Chinese PLA Army did in China. And they should become globally competitive in mass producing civilian goods cheaply for exports, as the Chinese PLA did. In addition to creating millions of civilian jobs, this will also help them generate funds for themselves and lessen their dependence on taxpayers.

If Pakistan's military can learn from the Chinese PLA and turn Pak rapidly into an industrialized nation over the next decade, it will be great contribution that can increase human development, jobs and economic growth, thus paving the way for a real democracy, not the feudal one we have now.

Anonymous said...


The difference is that the chinese army is not run with the american money where as the pakistan army is run with american money and they have to loyal to their masters. See how loyal that they have created 3.5 million refugess for 4.5 billin usd of aid.

Great Income generation business for pakistan from pak military.

Riaz Haq said...


Pakistan Army is run by Pakistani taxpayers money. The size of American aid dwarfs when compared with the size of Pakistan's economy...$1.l5b is less than 1% of Pak GDP.

The PLA's budget was cut by Deng who then allowed the PLA to pursue profitable ventures and export opportunities to fund itself. Later, when PLA achieved signicant industrial growth targets generating lots of foreign exchange and tax revenues, Deng forced spin-off to private sector.
So the PLA contributed far more than it sucked in from taxpayers.

Like PLA, Pak Army also operates a range of civilian businesses professionally and profitably that results in significant taxes to the treasury.

The next step for Pak Army is to use their cooperation and friendship with PAL's retired officer corp who brought in the capital to run PLA-connected private businesses to contribute more to the nation than they take from the people, as PLA did.

This is not as big a leap as you imagine, if Pak govt cuts their military funding and lets them loose to bring in capital and do civilian business with the world.

NaveenKS said...

Its really a sorry state of affair if the Pak military-business complex has to bail out Pakistan's economy.

The army should only be in the business of fighting internal and external armed aggression.

Pakistan army can consider selling off its various businesses to first generation business men/women who are not from feudal backgrounds and thus develop/encourage genuine business ventures among the next generation Pakistani entrepreneurs.

Riaz Haq said...

Here's the transcript of an NPR report on feudal power in Pakistan and how it enslaves people on the large feudal estates in Punjab:

LAURA LYNCH: The midday sun throws a harsh spotlight on weathered faces. Women crouch low, searching for, then plucking out barely ripe tomatoes. Every crease and crevice in their feet, their hands, even on their faces is dusted with dirt from the fields they farm. They work from dawn to dusk - and the landowner gets most of the income. Nearly two thirds of Pakistan's rural population are sharecroppers. One of the male workers, Abdul Aziz, says they all owe their livelihood to their boss - so they support the political party he supports. He has always voted for the Pakistan People's Party he says; the party of the late Benazir Bhutto. Bhutto and other wealthy landowners like her had always been able to count on the loyalty of those who toil for them in the fields. At her gracious home in Islamabad, Syma Khar traces her lineage - both familial and political - through the photographs she keeps in the cupboard.

LYNCH: Khar is a member of the provincial assembly of the Punjab - the largest province in Pakistan. She is also a member of one of Pakistan's most powerful families. The pictures are from the Khar family estate just outside the city of Multan. The sprawling property includes fisheries, mango orchards and sugarcane fields. Thousands of people work there - most are loyal to their masters. Syma's husband, his father, brothers, nieces and nephews have all turned that to their political advantage to gain office. The workers are by and large, poor, landless and uneducated. Pervez Iqbal Cheema of Pakistan's National Defence University says that's the way most feudals want to keep it.

PERVEZ IQBAL CHEEMA: A feudal, in order to maintain his influence, will be probably not very happy for extension of education or health facilities because as long as they have a minimum interaction with the outsiders then the chances of new ideas germinating or causing some trouble are relatively less.

LYNCH: That star power was evident when Benazir Bhutto staged her return from exile in Karachi in October of 2007. Though it was later marred by a suicide bomb attack, the Bhutto power base in rural Pakistan bussed thousands of loyal followers in to cheer her arrival and dance in the streets. Even after she died, Bhutto's political machine ensured her husband eventually became President. And her son, Bilawal, inherited the party leadership even though he's only 20 with no political experience. In a back alley off a busy road in Rawalpindi, boys are just starting a late afternoon game of cricket. Aasim Sajjad Akhtar, rights activist and professor of colonial history at Lahore University of Management Sciences, keeps an office a few floors up. Akhtar sees the staying power of the feudals - and gives credit to the military. It is Pakistan's other power centre - staging four coups in the country's 62 year history. Akhtar says the military, interested in holding onto its own sphere of influence, finds a willing partner in the feudal class.
KHAR: If they don't' keep that attitude then people will be doing daytime robberies because they are illiterate people. They will, you know, kidnap the daughters they will take away the children they will take away the properties, they will kill each other. So a boss has to be a boss. He has to have that sort of attitude.
LYNCH: As a farm worker empties her bucket of tomatoes into a crate there is no smile of satisfaction - the day's work is still far from over. There's little chance her life will change soon. Several land reform programs have failed to change rural life in Pakistan. And failed to loosen the grip of Pakistan's large landowners on the country's politics.

Unknown said...

I am very concerned with the thought of the military entering the fabric of industrial and commercial sector of Pakistan and indeed getting into a dominant position. As a student of Economics and Finance, I see a lot of inefficiencies and lack of foresight in the military run businesses based on my academic research into the field and experience with military run businesses. They are categorized by a management structure that serves to emulate the rigors of PMA, quell innovation, are marred by a lack of strategic planning and show remarkable rigidity. More so, many of the earlier ones were acquired as a result of government takeovers of Hindu owned manufacturing businesses during the Ayub era, much less "developed" into what they are today by the military. Fauji Fertilizer is touted as a mega venture in full force of competition with the private sector but a little peek at the fundamentals of the company and its management history reveals a shaky business with deteriorating fortunes ahead, being overtaken by Engro and Fatima Group among others. In majority of the other businesses, the military business has systematically attempted to create a monopoly and deter market forces leading to what I would call "lop-sided" development or none at all. Yes I want Pakistan to develop and yes I was the fortunes of this country to improve, but if it has to involve the military attaining a dominant role in commerce and industry, I fear we are treading the wrong path, one wrought with significant problems, not only in terms of inefficient and autocratic businesses but imbalanced power structure. I honestly would bear with the feudals a bit longer in hope for change otherwise, rather than see the military take over. I respect it to the utmost, it stands on the borders of my country and makes sure I and everyone I know here sleeps peacefully without fear, in a free country. But I want it to stay on those borders and let economics dictate commercial activity, not the monopolistic culture the military always fosters.

Riaz Haq said...


Ideally, the private civilian sector should lead the effort to turn Pakistan into an industrialized nation. But it hasn't happened to any significant degree in the last 60+ years for various reasons, but mainly due to incompetence, inefficiency and corruption of Pak's civilian governments.

The China model presents the other alternative...the one led by the Chinese Army that has produced the most rapid industrialization of a nation in the history of the world. And still, even after the spin-off from military, most major industrial infrastructure is still state managed in the world's fastest growing economy.

Instead of being ideological about, let's be practical. Let's give those a chance who can produce rapid results for us to help make us the envy of the world. In my humble opinion, Pak military can do that if given a chance.

Eventually, after the basic mass manufacturing capabilities and capacity are in place in Pak, I think the private investors would be far more interested in buying and running it than they are now. That's what's happening in China. It;s benefiting the Chinese people and the PLA with the massive FDI coming in to the country.

Unknown said...

Mr. Riaz,

That is my point of contention as well. The Governments (both military and civilian) have done a poor job of creating an industrial and business friendly environment and that is the area that needs to be addressed rather than allow one institution in the country drive forward the country's economy, which I have to say, would be in the same environment of the same corrupt governments you refer to. So if that corruption is the problem, what kind of a solution can military led business offer when the core issue is still there? Wont they perform the same under the government policies as the civilian sector?

Yes, China has seen the most massive growth in the history of the planet, but that is all I agree to in your argument. Their growth has been through a myriad of factors including ideological cohesiveness, a revolutionary thought, policy making, sheer size and breadth of resources and many many other factors that may be unique to China. I just can not ascribe that nation's growth simply to its military. That's too simplistic and tunnel visioned an argument for me, I have to say respectfully.

We are not taking into account the motives behind the military taking up business ventures. They result in monopolies, rigidity, lack of innovation and change and survive through their own model of restrictive growth which is not at all good for industry and commerce in today's fast growing environment. If the military model takes hold, we will not have growth but a form of passive stagnation that borders on the inefficient and indeed I'm even concerned about the thought of the military ever wanting to hand things over to the civilian sector at any later stage. History has too many precedents for me to believe that sir.

Yes, Pakistan's industrial sector needs development. Yes, we have not managed it to the extent we need to. Yes China's military may have had an impact on its development. But I simply can not ascribe it simply to that. While most industries there are nationalized, it is the privatization that has led to development. Before that, China possessed industry and manufacturing as well but once Mao visited the Japanese, he marveled at their technology which was decades ahead of them and that is why Deng Xiaopeng opened up the economy, allowing economically liberalist policies to take partial hold. That is what we need. A hit at better policy making and environment, not military led business. Its too dangerous in too many forms and too potentially stagnating to be the cure for Pakistan's ills.

Again I say all that with complete respect for my military and the irreplaceable function it serves.


Riaz Haq said...

Here's an excerpt from William Dalrymple's book "Nine Lives" about Bhuttos:

Benazir was a notably inept administrator. During her first 20-month-long premiership, she failed to pass a single piece of major legislation, and during her two periods in power she did almost nothing to help the liberal causes she espoused so enthusiastically to the Western media.

Instead, it was under her watch that Pakistan’s secret service, the Inter-Services Intelligence (ISI), helped install the Taliban in Pakistan, and she did nothing to rein in the agency’s disastrous policy of training up Islamist jihadis from the country’s madrasas to do the ISI’s dirty work in Kashmir and Afghanistan. As a young correspondent covering the conflict in Kashmir in the late 1980s and early 1990s, I saw how during her premiership, Pakistan sidelined the Kashmiris’ own secular resistance movement, the Jammu and Kashmir Liberation Front, and instead gave aid and training to the brutal Islamist outfits it created and controlled, such as Lashkar-e-Toiba and Harkat ul-Mujahedin. Benazir’s administration, in other words, helped train the very assassins who are most likely to have shot her.

Benazir was, above all, a feudal landowner, whose family owned great tracts of Sindh, and with the sense of entitlement this produced. Democracy has never thrived in Pakistan in part because landowning remains the base from which politicians emerge. In this sense, Pakistani democracy in Pakistan is really a form of “elective feudalism”: the Bhuttos’ feudal friends and allies were nominated for seats by Benazir, and these landowners made sure their peasants voted them in.

Behind Pakistan’s swings between military government and democracy lies a surprising continuity of elitist interests: to some extent, Pakistan’s industrial, military and landowning classes are all interrelated, and they look after each other. They do not, however, do much to look after the poor. The government education system barely functions in Pakistan, and for the poor, justice is almost impossible to come by. According to the political scientist Ayesha Siddiqa, “Both the military and the political parties have all failed to create an environment where the poor can get what they need from the state. So the poor have begun to look for alternatives. In the long term, these flaws in the system will create more room for the fundamentalists.”

Many right-wing commentators on the Islamic world tend to see political Islam as an anti-liberal and irrational form of “Islamo-fascism”. Yet much of the success of the Islamists in countries such as Pakistan comes from the Islamists’ ability to portray themselves as champions of social justice, fighting people like Benazir Bhutto from the corrupt Westernised elite that rules most of the Muslim world from Karachi to Riyadh, Ramallah and Algiers.

Benazir’s reputation for massive corruption was gold dust to these Islamic revolutionaries, just as the excesses of the Shah were to their counterparts in Iran 30 years earlier: during her government, Pakistan was declared one of the three most corrupt countries in the world, and Bhutto and her husband, Asif Zardari — widely known as “Mr 10%” — faced allegations of plundering the country; charges were filed in Pakistan, Spain, Switzerland, the United Kingdom and the United States to investigate their various bank accounts, and they stood accused of jointly looting no less than $1.4 billion from the state.

Riaz Haq said...

Military businesses in Pakistan - are the result of honest intentions and visionary policies - to raise independent resources, to self-finance the on-going national technological development, to modernize strategic assets, and most importantly, the determination to rely less on Foreign Aid. While at the same time, build facilities for retired military personnel and their families; and slowly withdrawing from National Defense budget allocation as a percentage of GDP.

MILBUS also exists in well developed countries like the USA, UK, France, China, Israel or even Turkey. The Milbus or the PMEs (Private Military Enterprises) are generally known as the Private Military Industry. Famous US PMEs include Halliburton, Black-water worldwide, Defensecurity, Titan Corporations, Kellogg Brown & Root, Air Scan, DynCorp’s, CACI International, etc. Famous UK PMEs include Black-Op’s and Aegis Defense Services. Most of these are active beneficiaries of the Iraq War. The worldwide PME industry is now worth over $100 billion a year. Thus, this is not just a Pakistan specific industry.

Here is a list Pak military businesses in Pakistan:

Fauji Foundation

The National Logistics Cell (NLC) – the largest transportation company in Pakistan and in Asia with a fleet of 16,89 vehicles (in 2005); 7,279 people worked out of which 2,549 were uniformed.
The net worth of NLC in 2000-2001 was (US$ 68.356 million) it’s estimated to be around US$200+ million in 2009.

Frontieir Works Organization (FWO)

Foundation Gas (fully-owned by Fauji Foundation)
Fauji Corn Complex
Fauji Security Services
Fauji Sugar Mills
Overseas Employment Services
Fauji Foundation Experimental & Seed Multiplication Farm
Mari Gas Company Ltd. (Associated Company)
Fauji Cement Company Ltd.
Fauji Fertilizers Bin Qasim Ltd.
Securities (PVT) Ltd.
Fauji Kabirwala Power Company Ltd.
Fauji Oil Terminal & Distribution Company Ltd.
Foundation University
Pakistan Maroc Phosphere, S.A
Shaheen Foundation (SF)
The Pakistan Air Force opened it’s own welfare foundation in 1977 under the Charitable Endowment Act 1890 with the money of Rs.5 million (US $86,000).
Following are the AWT Projects controlled by the Deputy Chief of Air Staff,
Askari Stud Farms (two farms)
Askari Farms (two farms)
Askari Welfare Rice Mill
Askari Welfare Sugar Mill
Askari Fish Mill
Askari Cement (two plants)
Askari Welfare Pharmaceutical Project
Army Welfare Shoe Project
Army Welfare Woollen Mill
Army Welfare Hosiery Unit
Travel agencies (three different agencies)
AWT Commercial Plazas (three buildings)
Askari Aviation
Askari Housing Schemes (six spots)
Askari Commercial Enterprises
Askari Power Ltd.
Askari Guards Ltd.
Askari Information Services
Askari Associate Ltd
Askari Welfare Saving Scheme
Askari General Insurance Company
Askari Leasing Ltd
Askari Commercial Bank
Askari Welfare Commercial Project
Army Welfare Shops (four)
Bahria Foundation
Started operations in 1982 with Rs.3 million and controlled by armed forces.
Shaheen Air International
Shaheen Air Cargo
Shaheen Airport Services
Shaheen Aerotraders
Shaheen Insurance
Shaheen Travel ( three projects)
Shaheen Complex (two projects)
Shaheen Pay TV
FM-100 (radio channel)
Shaheen Systems (Information Tech.)
Shaheen Knitwear

Falah Trading Agency
Bahria Construction
Bahria Travel & Recurring Agency
Bahria Paints
Bahria Deep Sea Fishing
Bahria Complexes
Bahria Town & Housing Schemes (three projects)
Bahria Dredging
Bahria Bakery
Bahria University
Bahria Shipping
Bahria Coastal Services
Bahria Security & System Services
Bahria Catering & Decoration Services
Bahria Farming
Bahria Holding
Bahria Harbor Services
Bahria Ship Breaking
Bahria Diving & Salvage International

Riaz Haq said...

Here's a billion dollar LNG contract scandal uncovered by a complaint of the Fauji Foundation CEO, as reported by The News:

The NA members were told that the petroleum ministry bosses had never recommended to the Economic Coordination Committee (ECC) to give the multi-billion dollar contract to French firm (GDF-SUEZ), whom surprisingly they all were religiously defending now.

It was disclosed that the petroleum ministry had actually recommended the award of the contract to Shell-Qatar, whose bid was higher than the French bid by $1.5 billion. But Shaukat Tarin had thrown this recommendation of the ministry in a dustbin after he learnt that he was being asked to award the contract to a party (Shell), whose bid was higher by $1.5 billion compared to the lowest bidder.

At the end of the hour-long presentation followed by a question-answer session, Chairman MNA Sheikh Waqas Akram, praised the journalist for his comprehensive presentation. Later, MD Fauji Foundation Lt Gen Rab Nawaz was said to have reiterated his old stance that his firm’s bid was the lowest if compared with the GDF-Suez, which was awarded the deal.

The committee met with Chairman Sheikh Waqas in the chair and was attended by MNAs Barjees Tahir, Nawab Yousuf Talpur, Wasan, Khurum Wattoo and others. Petroleum Minister Naveed Qamar, Secretary Kamran Lashari, Special Secretary G A Sabri and MD FF General Rab Nawaz attended the meeting.

Klasra told the committee that his story was based on the minutes of the ECC presided over by then Finance Minister Shaukat Tarin. The minutes had revealed that Tarin had got a telephone call from MD Fauji Foundation that the lowest bid given jointly by FF/Vitol had been rejected and the highest bidder GDF-Suez was given the lucrative contract. Tarin had informed MD FF that he was not aware of any such bidding because the petroleum ministry never shared such information in its official summary tabled before the ECC on Feb 9.

Consequently, Tarin had alarm bells ringing and had ordered a serious probe into the whole issue as to why the bid offered by FF/Vitol was not mentioned in the summary. But the petroleum ministry never replied to the queries of Tarin till he departed from his office at the end of February, much to the satisfaction of the petroleum ministry officials who thought that the issue had been buried but the publication of the scandal by The News shook them.

Petroleum ministry officials had even written a letter to Tarin, informing him that Minister Naveed Qamar had desired that they should not respond to him as he would “personally deal” with this issue. According to Klasra, he had contacted Shaukat Tarin to get his version about these startling developments and the ex-FM had confirmed on record that he was kept in the dark about the joint bid of FF/Vitol, which was claimed to be the lowest.

Tarin confirmed that he got no reply from the Ministry of Petroleum till he left the office. He also claimed that according to his calculation and information, there was a difference of one billion dollars in the bid price of the French company and FF/Vitol, so the country had suffered a loss of a billion dollar.

Minister Naveed Qamar is a close friend and ally of Zardari.

Unknown said...

Dear Mr.Riaz,

I respectfully have to challenge your claims with regards to the intentions of the military businesses. Private military enterprises are not established for the betterment of the country, they are established purely for self interest, and more appropriately profit. This is idealistic talk that finds no ground in practical reality when one sees the practices of these military businesses. To quote one of your sentences, military businesses help in "slowly withdrawing from National Defense budget allocation as a percentage of GDP." This will never happen. Whatever money is made is purely for profit generation, to be provided to the shareholders, catering specifically to army personnel interests, as opposed to a civilian business sector which caters to all, regardless of status. I am attaching below the link for the financial statements of the previous years of the most profitable of these military businesses, the so called shining star of a conglomerate. Please help me identify one iota of contribution made to "modernize strategic assets" and more importantly, "to withdraw from National Defense budget allocation as a percentage of GDP." If anything Mr.Riaz, these businesses may TAKE OUT from the military budget that taxpayers provide to establish their own self interested businesses rather than contribute to it.

Unknown said...

...That aside, lets come to MILBUS in other countries. Some of the businesses you name are the most loathed names with regards to their connection with the Iraq War. KBR is a contractor that was outsourced services for soldiers such as laundry and food services and it was able to used its military linkages to win the contract by blocking some other bids via shady means and engaged in rampant over pricing and profiteering well above rationality. For example, charging over 5 times the amount it took to wash a bag of clothes other services offered, charging for a can of coke "manufactured in Iraq" with "arab labels" at the rate it would have taken to import it from the US!!! Please take time out to view the documentary Fahrenheit 9/11.

I dont even need to venture into the topic of Blackwater. If you look at the history and the operations of each of the companies you mentioned, you will see they have been the focus of rampant corruption and profiteering, have been inefficient compared to private civilian businesses, have massively distorted market forces to form temporary or permanent monopolies and have engaged in high handed exploitation.

The story is no different in Pakistan. Most of the military businesses here exploit market forces, try to create monopolies, fail to bring in innovation for the most part that makes good use of resources and purely seeks to bring economic rents to specific group which is discriminatory and not the job of the military. Many of the ownerships of Askari and Fauji Foundation are not profit making, the gulf being filled by those that are due to artificially created monopolistic conditions, keeping civilian sector at bay, hardly the harbinger for the country's growth and advancement of strategic assets. Fauji Corn failed to compete with Rafhan, Askari Bank's financials have always bordered on the sketchy and many of the areas you witness their presence in cater to niches and gaps where limited number of entities can operate, thereby providing the military businesses shelter from the full brunt of market forces.

It should stick to what its good at, defending the country's borders. The world over, there are examples of the private businesses leading the change in their countries, including in China. Privatization and unhampered civilian business under Deng Xiaopeng led to China's advancement, not military enterprises. Yes, they may have limited scope when it comes to augmenting some specific military functionalities but that is as far as I am willing to take it. The solution lies in reform and policy making that supports businesses, simultaneously taking a top down developmental approach, not handing the country's resources to ex-military allowing them to run amok with them.


Riaz Haq said...

Jibran: "Private military enterprises are not established for the betterment of the country, they are established purely for self interest, and more appropriately profit."

Self-interest of the military is not necessarily a bad thing, if it also helps others in society as well. The money invested by military in industrial sector is much better than the billions our political elite send overseas to secret Western bank accounts that create no jobs, no income and no revenue in Pakistani economy.

If the Pak Army can do for Pakistan what Chinese People's Liberation Army did for China, I say more power to them.

Industrial and economic growth that mil bus brings to Pakistan can benefit a lot more Pakistanis than the money repatriate abroad by the non-military sectors.

Unknown said...

I completely agree with your point that self interest is not a bad thing. I mentioned that only to illustrate that milbus is not "the result of honest intentions and visionary policies - to raise independent resources, to self-finance the on-going national technological development, to modernize strategic assets, and most importantly, the determination to rely less on Foreign Aid. While at the same time, build facilities for retired military personnel and their families; and slowly withdrawing from National Defense budget allocation as a percentage of GDP."

Believing that is creating a smoke screen for one's self.

I disagree that the development of China took place due to its army Mr.Riaz. Tonnes of literature exists pointing to economic liberalization mixed with directed policy making leading to China's development. The army rode the wave if anything, it wasn't the harbinger for their success.

Sir giving power to the military has its advantages of course, business is created and all but so is the same effect brought about by the civilian sector...and might I add much more efficiently and with a longer term impact. Not all entrepreneurs send their money abroad and those that do (I am not talking about feudal landlords) follow because of threats to their assets from government and policy impacts that do not favor investment. There are many more who actually invest. If they can earn a greater return with less threat investing in Pakistan, will they not do it? Bank holdings earn less interest than actual ventures. These entrepreneurs are rational when it comes to money if nothing else, their decision to send money abroad is not emotional but rational. That is why the solution is policy making that favors investment and provides protection to threatened assets, not espousing one sector that works to the benefit of one clique, completely decimating and policy making infrastructure and society. In a world that is moving towards representation for people, we will be moving to autocracy!

Riaz Haq said...

Jibran: "I disagree that the development of China took place due to its army Mr.Riaz. Tonnes of literature exists pointing to economic liberalization mixed with directed policy making leading to China's development. The army rode the wave if anything, it wasn't the harbinger for their success."

There is no question that economic liberalzation spurred unprecedented growth China. But this was FDI and export led growth that relied on the industrial base that the military put in place well before Deng's liberalization came along.

Here's how I explained it in my post:

"With the change of leadership after Mao's death in 1976, the new government encouraged the military plants to begin exploring civilian uses for their products and to engage in the broader liberalization of the economy. The most nimble managers were free to exploit new markets for their goods. During the early 1980s, the PLA's share of the national budget declined, spurring it to look to other sources for cash, especially hard currency. The higher organizational levels of the PLA created trading companies like China Xinxing, China Poly and China Songhai to take advantage of the opening of China's economy to the international market, according to British analyst Gary Busch.

They formed banks, holding companies and international trading companies like Everbright to market these goods worldwide. Now the PLA runs farms, factories, mines, hotels, paging and telephone companies and airlines, as well as major trading companies.

Busch says the number of military-run businesses exploded during the boom of the late 1980s. The "third line" factories opened branches in the coastal areas, earning increasingly higher profits from the manufacture and export of civilian goods. Even the lowest levels of the PLA set up production units. In fact the PLA had a largely captive audience of Chinese who had never really had the chance to acquire personal goods produced in China before. In addition to their international arms sales, their production of consumer goods for the domestic market soared."

Unknown said...

'India, another member of the emerging powers now called "BRIC", has failed to use a period of high economic growth to lift tens of millions of people out of poverty, falling far short of China’s record in protecting its population from the ravages of chronic hunger, United Nations officials said recently. Last year, British Development Minister Alexander contrasted the rapid growth in China with India's economic success - highlighting government figures that showed the number of poor people had dropped in the one-party communist state by 70% since 1990 but had risen in the world's biggest democracy by 5%. '

Riaz: That's a rather dishonest remark. First of all how about posting a link to Danny Alexander's actual quote. I haven't found anything from a google search.

And secondly with regard to - 'failed to use a period of high economic growth to lift tens of millions of people out of poverty' - pray what period of high growth are you referring to? India hit the 8% growth path only in 2003. That's five years of rapid growth(plus one predicted year 09-10). Can one reasonably expect a replication of living standards created by growth in the Chinese economy? China has been growing at 8% since the 80s. And as far as absolute figures are concerned poverty has reduced substantially in the last decade. The 'increase' has been due to a redefinition of poverty standards. Any 'increase' needs to take a similar standard for the 'starting point' as is taken for the 'ending point' of the surveyed period.

Riaz Haq said...

Vivek: "That's a rather dishonest remark. First of all how about posting a link to Danny Alexander's actual quote. I haven't found anything from a google search."

You are mixing up Alexander's remarks with UNICEF report.

Here are the links of the two:

Riaz Haq said...

Here's an AFP report about Indian military owning land and running golf courses:

NEW DELHI — The Indian army has developed a sideline in running golf courses using government land but returning no revenue to the state, the nation's auditor claims in a damning new report.

The Comptroller and Auditor General (CAG) found that at least 32 square kilometres (12 square miles) of rent-free land had been handed to a privately-run company, Army Zone Golf, which operates 97 luxury golf courses.

The defence ministry is the largest state landowner, holding 80 percent of the 7,000 square kilometres of government land, much of it now prime real estate, according to the CAG report released Friday.

Golf memberships are being sold to present and past service personnel as well as civilians and foreign nationals, the report said, with revenue credited to a private regimental fund which could not be accessed by the auditors.

Army authorities "earn large amounts of revenue by allowing persons other than service personnel to use these facilities," the report said.

"Heavy amounts of revenues were being earned without paying any lease rent and allied charges for use of government assets," it added.

The CAG's account of the misuse of public land will add to growing worries about the military's slide into corruption following a string of recent scandals.

In January, the government ordered a 31-storey apartment block in Mumbai to be demolished after it emerged army officers and local politicians had usurped apartments originally meant for war widows.

Army Zone Golf claims to promote the sport in the armed services and runs "some of the most spectacular golf courses of India," according to its website. No one at the company responded to calls for comment from AFP.

The company's organising council includes several retired army officers, and was once headed by Joginder Jaswant Singh, former army chief of staff and now the governor of the northeastern state of Arunachal Pradesh.

The CAG has been instrumental in exposing mismanagement and possible fraud in the sale of telecom licences in 2008 which it said had led to a loss to the state of up to 39 billion dollars.

The telecom minister at the time, A. Raja, has since been arrested and awaits trial.

Riaz Haq said...

As Pakistani Army comes under unprecedented sharp criticism by the politicians, the public and the media, here's an excerpts from an interesting piece by Vir Sanghvi on how the Indians treat Indian Army:

Equally, we will never blame the Army for anything. In 1962, we were thrashed by the Chinese but the consensus was that politicians had lost the war while our brave soldiers had done their best. The 1965 war was at best a stalemate (the Pakistanis also claimed they had won) but we treated it as a glorious victory for the Indian Army. Operation Blue Star was a fiasco. But even today, it is Blue Star we remember favourably rather than Black Thunder (conducted by the paramilitary forces to clean up the mess left behind by Blue Star), a bona fide success.

By and large, the social contract has worked. The Army has nearly always got us out of jams when we need its services. Whether it was Delhi in 1984, Bombay in 1993, or Gujarat in 2002, we needed the Army to restore order. And during the Kargil War, young officers led from the front, sacrificed their lives and displayed astonishing bravery in the service of their country.

Consequently, the army sometimes appears to live in a state within a state. Visit a cantonment and you will be struck by the contrast with the civilian part of the town or city where it is located. The roads will be broad and well-maintained, the buildings will be freshly painted, the surroundings will be clean, and an air of good manners and civility will prevail. Visit an army town (Wellington, for instance) and the contrast will be even more striking. The order and cleanliness of the cantonments serves as a contrast to the chaos and filth of modern India.

There is, however, one important aspect of the social contract that now seems to be failing. As corruption has spread in modern India, we have reluctantly accepted that most parts of our society are tainted – civil servants, the schools and even the lower judiciary. But somehow, we have always believed that the army is different.

Oh yes, we hear the stories. We hear about Generals who take kickbacks on arms deals and about officers involved in canteen purchase scandals. But because this corruption appears to be restricted to the Army itself and because we believe that it is not widespread, we are happy to look the other way.

The problem with the Adarsh scandal and the controversies over other land deals that have erupted recently is that they encroach into the civilian space. Senior army officers are seen to be conniving with politicians, bureaucrats and contractors to make millions.

Worse still, at least in the case of the Adarsh scandal, there is a cynical abuse of the social contract. When we say that we will respect and pamper the army, we do not expect senior officers to grab flats for themselves in the name of Kargil martyrs.

Earlier this week, the Army chief spoke about his resolve to cleanse his force. I am not sure he fully grasps how serious the situation is. The problem is not just that there are ‘a few bad apples’ in the army. It is that Army corruption has now spilled out into the civilian space and that Generals are making big bucks by exploiting the regard we have for the heroism of the Army and the sacrifices made by its soldiers.

If more such instances come to light, then the press will begin looking critically at the Army. The politicians will have an excuse to delve deep into the workings of the officer corps. This will give them the opportunity they need to play favourites. And the public, regretfully recognising that the Army has breached the social contract itself, will reluctantly acquiesce in the muck-raking by the press and the interference by politicians.

Once this happens, the social contract will not survive. The image of the Army will not recover. And the perfect balance we have built between the Army and the Indian people will topple over..

Mayraj said...
The Road to Tahrir
The roots of Egyptians' rage can be traced back to bad economic advice from the IMF -- and the crony capitalism it left behind.
We've yet to kill off the Washington consensus
The Washington consensus is alive and well and will continue to be so unless we lobby our governments to stop pushing the failed policies of the World Bank and the IMF, argues Rick Rowden

Riaz Haq said...

Excerpts from The News on Pakistan auto makers' contribution to economy:

The local auto industry manufacturers and vendors had paid total revenue of Rs64 billion last year while the industry saved foreign exchange of $500 million during the same period, said a presentation of the Indus Motor Company (IMC) to visiting journalists on Saturday.

With total investments of Rs92 billion and 0.4 million job opportunities, the local auto manufacturing industry has contributed substantially in the growth of national economy.

Despite some challenges and regulatory issues, the local auto industry has been flourishing and it is one of the important contributors in the country’s gross domestic product (GDP) growth, it added.

However, the local auto industry is a victim of government’s anti-industry policies like the import of used cars which are not only hurting the industry but also depriving the government of huge revenues in terms of duties.

Besides, the local auto manufacturers are fighting with the misperception that they charge exorbitant prices for vehicles while the quality is also not good. Yet, most of the facts once known would easily make the public to change perception about the industry.

The prices of cars have been increased by only 14 percent in last 2 years whereas the price of steel has increased by 16.5 percent, aluminum by 50.5 percent and polypropylene by 127 percent, minimum wage has increased by 75 percent, electricity and gas increased by 51 percent and 43.6 percent respectively during the same period.

Besides this, the depreciation of Pakistani rupee also played its role in increasing pressure on the industry, like the US dollar increased by 20 percent, Japanese Yen by 66 percent and Thai Bhatt by 22 percent.

Moreover, the duties on completely knocked down units (CKD) in Pakistan are much higher than other regional countries which contribute to high car prices. CKD duty in the country ranges between 32 to 50 percent, while in Thailand it is 30 percent and in India it ranges between 10 to 30 percent.

One of the major players of local auto manufacturing industry, IMC, while nullifying the stereotype image of the industry, has contribution of 1.5 percent/year to the national economy growth and maintained its image of quality production with plausible prices.

In addition, it has increased its production capacity from 20 units per day in 1993 to 210 units per day in 2011.

The company also created huge job opportunities as its number of direct employees increased from 496 in 1993 to 2,180 in 2011.

While commenting on IMC’s performance, CEO IMC, Parvez Ghias said that the buyer’s trust on the quality of the company’s products can be gauged by the fact that the company’s unit sales increased from 11,000 in 1993 to 51,000 in 2011.

Similarly, its units’ production increased from 2,930 in 1993 to 50,759 in 2011.

He said that IMC has been contributing heavily to the localization.

It is pertinent to note here that a total of 582 Corolla parts and assemblies are produced locally, while the company’s vendor-base has increased from 21 in 1993 to 60 in 2011 and these vendors are employing over 0.2 million people.

He said that on the part of dealership, the company’s 3S dealership increased from 21 in 1993 to 24 in 2002 and 34 in 2011 and of the total 34 3S dealership, 8 are in north region, 16 in central region and 10 in south region.

The company’s 3S dealership will increase to 66 till 2016.

Riaz Haq said...

Here's an Express Tribune story about Pakistan's first tablet computer offered by Pakistan Aeronautical Complex (PAC):

The newest entrant in the market for tablets and eBook readers – dominated by the likes of Apple, Amazon and Samsung – is none other than the Pakistani military.

The Pakistan Aeronautical Complex (PAC) Kamra, whose self-described mission is “to produce and support weapon systems for a high state of operational readiness of the Pakistan Air Force (PAF)”, has started up a new commercial venture with a Chinese company, which an official told The Express Tribune was to “strengthen the national economy”.

The first three products produced by PAC are a computing tablet, a notebook and an eBook reader.

A press release issued at the launch of the project on December 29 notes that “for the joint production of JF-17, PAF had established sufficient facilities which are appropriate for the production of both defence and commercial products.”

The PAC official, who asked not to be named, told The Express Tribune that the joint venture with the Chinese company Innavtek had taken off with the initial offering of three products. “We plan to expand this in the future.”

The venture website,, states that “Innavtek jointly developed two products with Avionics Production Factory which are successfully flying on fleet of our JF-17 aircraft and three more products are under co development phase.”

The official said that while PAC would manufacture the products, marketing was Innavtek’s responsibility.

He said the products were initially being marketed in Rawalpindi, but modalities needed to be finalised so it could expand to other cities including Lahore and Karachi. “We will get in touch with courier companies to see if we can reach a deal to transport them,” he said.

The competitively priced products, he said, have several benefits because they are being manufactured in Kamra. “It comes with a joint one-year warranty of PAC and Innavtek. Because PAC is producing it, it will ensure quality. We will also provide backup support,” the official said. In the first stage of this venture, PAC will manufacture the products locally but there are plans for an exchange of personnel to be trained in China and Pakistan respectively.

PAC’s plan to “strengthen the national economy” via its new commercial venture means it has to capitalise on “current trends”.

Jehan Ara, the president of the Pakistan Software Houses Association (PASHA), said she was unaware of the venture. She was skeptical that customers would buy PAC’s products just because they were manufactured by the Pakistani military. “People with a fixed budget will test products, read reviews and get recommendations from friends and then buy something. They don’t buy just because of a name. They will test it out of curiosity and put up reviews etc.” She also said governments around the world and in Pakistan buy computers from vendors based on pricing and reliability, and should not be forced to buy from a specific vendor.

Riaz Haq said...

Here are excerpts of an AP report on PAC PAD1:

Inside a high-security air force complex that builds jet fighters and weapons systems, Pakistan's military is working on the latest addition to its sprawling commercial empire: a homegrown version of the iPad.

It's a venture that bundles together Pakistani engineering and Chinese hardware, and shines a light on the military's controversial foothold in the consumer market. Supporters say it will boost the economy as well as a troubled nation's self-esteem.

It all comes together at an air force base in Kamra in northern Pakistan, where avionics engineers — when they're not working on defense projects — assemble the PACPAD 1.

"The original is the iPad, the copy is the PACPAD," said Mohammad Imran, who stocks the product at his small computer and cell phone shop in a mall in Rawalpindi, a city not far from Kamra and the home of the Pakistani army.

The device runs on Android 2.3, an operating system made by Google and given away for free. At around $200, it's less than half the price of Apple or Samsung devices and cheaper than other low-end Chinese tablets on the market, with the bonus of a local, one-year guarantee.

The PAC in the name stands for the Pakistan Aeronautical Complex, where it is made. The PAC also makes an e-reader and small laptop.

Such endeavors are still at the pilot stage and represent just a sliver of the military's business portfolio, which encompasses massive land holdings, flour and sugar mills, hotels, travel agents, even a brand of breakfast cereal.

PAC officials suggested the program that produces the PACPAD was modeled in part on the Chinese military's entry into commercial industry, which lasted two decades until it was ordered to cut back lest it become corrupted and lose sight of its core mission.

The tablet and other devices are made in a low-slung facility, daubed in camouflage paint, near, a factory that produces J-17 Thunder fighter jets with Chinese help.

"It's about using spare capacity. There are 24 hours in a day, do we waste them or use them to make something?" said Sohail Kalim, PAC's sales director. "The profits go to the welfare of the people here. There are lots of auditors. They don't let us do any hanky-panky here."

PAC builds the PACPAD with a company called Innavtek in a Hong Kong-registered partnership that also builds high-tech parts for the warplanes.

Maqsood Arshad, a retired air force officer who is one of the directors, couldn't say how much money had been invested, how many units the venture hoped to sell and what the profit from each sale was likely to be.

The market for low-cost Android tablets is expanding quickly around the world, with factories in China filling most of the demand. Last year, an Indian company produced the "Aakash" tablet, priced at $50, and sold largely to schoolchildren and students.

Arshad said a second-generation PACPAD would be launched in the next three months, able to connect to the Internet via cellphone networks and other improved features.

He said the Kamra facility could produce up to 1,000 devices a day.

During a brief test, The tablet with its 7-inch screen appeared to run well and the screen responsiveness was sharp.

"It seems good, but operationwise I have to look into it," said Mohammad Akmal, who had come to the store in Rawalpindi to check the product out. "Within a month or so, we will know."

Riaz Haq said...

Here's Russian analyst Anatol Karlin on India's prospects and its comparison with China:

It is not a secret to longtime readers of this blog that I rate India’s prospects far more pessimistically than I do China’s. My main reason is I do not share the delusion that democracy is a panacea and that whatever advantage in this sphere India has is more than outweighed by China’s lead in any number of other areas ranging from infrastructure and fiscal sustainability to child malnutrition and corruption. However, one of the biggest and certainly most critical gaps is in educational attainment, which is the most important component of human capital – the key factor underlying all productivity increases and longterm economic growth. China’s literacy rate is 96%, whereas Indian literacy is still far from universal at just 74%.
The big problem, until recently, was that there was no internationalized student testing data for either China or India. (There was data for cities like Hong Kong and Shanghai, but it was not very useful because they are hardly representative of China). An alternative approach was to compare national IQ’s, in which China usually scored 100-105 and India scored in the low 80′s. But this method has methodological flaws because the IQ tests aren’t consistent across countries. (This, incidentally, also makes this approach a punching bag for PC enforcers who can’t bear to entertain the possibility of differing IQ’s across national and ethnic groups).
Many Indians like to see themselves as equal competitors to China, and are encouraged in their endeavour by gushing Western editorials and Tom Friedman drones who praise their few islands of programming prowess – in reality, much of which is actually pretty low-level stuff – and widespread knowledge of the English language (which makes India a good destination for call centers but not much else), while ignoring the various aspects of Indian life – the caste system, malnutrition, stupendously bad schools – that are holding them back. The low quality of Indians human capital reveals the “demographic dividend” that India is supposed to enjoy in the coming decades as the wild fantasies of what Sailer rightly calls ”Davos Man craziness at its craziest.” A large cohort of young people is worse than useless when most of them are functionally illiterate and innumerate; instead of fostering well-compensated jobs that drive productivity forwards, they will form reservoirs of poverty and potential instability.

Instead of buying into their own rhetoric of a “India shining”, Indians would be better served by focusing on the nitty gritty of bringing childhood malnutrition DOWN to Sub-Saharan African levels, achieving the life expectancy of late Maoist China, and moving up at least to the level of a Mexico or Moldova in numeracy and science skills. Because as long as India’s human capital remains at the bottom of the global league tables so will the prosperity of its citizens....

Riaz Haq said...

Here's a Khaleej Times report on Pakistan's shipbuilding ambitions:

Pakistan is actively considering to fabricate and sell ships to the interested countries, which would add value to the business of defence production of Pakistan, Pakistan Ambassador to the UAE, Jamil Ahmed Khan has said.

Khan was addressing the naval officers of Pakistan Navy during a visit to Pakistan Naval Task Group ships Madadgar and Shujaat which are currently on a good will visit to the UAE. The ships are Pakistan’s indigenous construction and can perform all operational tasks assigned to them.

Khan said that certain countries have shown their interest in these indigenously built ships.

The Ambassador extended his gratitude to UAE government for its support in conducting joint naval exercise. “Pakistan and the UAE enjoy deep rooted, cordial relations which are further strengthened by cooperation between the Naval forces of Pakistan and the UAE,” he said.

The joint naval exercise between Pakistan and the UAE during their current voyage is yet another manifestation of military cooperation between the two countries, Khan added.

PNS Madadgar was built in Pakistan and was launched in 2009 while PNS Shujaat also indigenously built ship was inducted in Pakistan Navy in 1999. The two ships have been utilised in various military, constabulary and benign roles and are highly suitable to perform counter terrorism task in coastal areas.

The Ambassador was briefed about the visits of various operational and training institutes of UAE by PNTG Commander and conduct of joint naval exercise between the Naval ships of Pakistan and the UAE. The ships are part of PNTG presently visiting friendly countries in the Gulf.

Riaz Haq said...

Here's a report in The Register on Huawei's and other Chinese companies' close ties with PLA:

The People’s Liberation Army is actively arming and developing its soldiers with advanced information warfare capabilities which would represent a “genuine risk” to US military operations in the event of a conflict, a new report has alleged.

Contractor Northrop Grumman’s detailed 136-page report (PDF) for the US government on the cyber threat posed by China was released on Thursday.

The contractor asserts that the People’s Republic has come to believe that information warfare (IW) and computer network operations (CNO) are a vital part of any military operation and are integrating them with traditional components under a framework known as “information confrontation”.

It argues that the Chinese military is constantly evaluating US command and control infrastructure and will therefore likely “target these system with both electronic countermeasures weapons and network attack and exploitation tools” in the event of a conflict.

As Chinese capabilities in joint operations and IW strengthen, the ability to employ them effectively as either deterrence tools or true offensive weapons capable of degrading the military capabilities of technologically advanced nations or hold these nations’ critical infrastructure at risk in ways heretofore not possible for China will present US leaders and the leaders of allied nations with a more complex risk calculus when evaluating decisions to intervene in Chinese initiated conflicts such as aggression against Taiwan or other nations in the Western Pacific region.

The report also reveals the extent to which China’s military relies on academia and the commercial IT sector to boost R&D efforts; according to the contractor, 50 state universities are receiving grants to help them carry out information security and warfare research.

Huawei, ZTE and Datang are also all named in the report as having close collaborative ties with the PLA, with the former named as an “advanced source of technology” for the military.

Rather than isolate certain state owned IT firms as exclusively “defense” in orientation, the PLA, often operating through its extensive base of R&D institutes, alternately collaborates with China's civilian IT companies and universities and benefits as a customer of nominally civilian products and R&D. The military benefits because it receives the access to cutting edge research. This work is often carried out by Chinese commercial firms with legitimate foreign partners supplying critical technology and often sharing the cost of the R&D.

A secondary benefit to the PLA of this strategy is the ready access to the latest commercial off-the-shelf (COTS) telecommunications technology brought in by China's access to the foreign joint ventures and international commercial markets.

The report goes on to warn that joint ventures of the Symantec Huawei type could lead to a risk of intellectual property theft and long-term erosion of competitiveness for Western firms.
------------This is, of course, all territory we’ve visited before, with the US House of Representatives already investigating (PDF) the national security risk posed by the likes of Huawei and ZTE, although the report should get more than a cursory read in Washington, given its author and the amount of detail it goes into.

Huawei in particular has come in for a huge amount of scrutiny, given president and CEO Ren Zhengfei served in the People’s Liberation Army while a US intelligence report last year tied chairwoman Yun Safang to the mysterious Ministry of State Security....

Riaz Haq said...

I think those who advocate using aid as leverage should remember what US Ambassador Anne Patterson wrote back on Sept 23, 2009 in a cable leaked by Wikileaks. She said, "The Pakistani establishment, as we saw in 1998 with nuclear test, does not view assistance-even sizable assistance to their entities-as trade-off for national security".

Hopewins said...

^^RH: "But this was FDI and export led growth that relied on the industrial base that the military put in place well before Deng's liberalization came along"

Let us assume that our Army (competent, meritocractic, educated middle-class institution) decides to follow the PLA and DEVELOP our INDUSTRIAL BASE (as you say).

HOW will they do it when our SAVINGS rate is so abysmally LOW?
Note that China has always had high savings (30%+ of GDP), even before the Deng reforms. Our savings, even 65 years after independence, is at the same 8-9% of GDP that it was when the British left in 1947.

Clearly, we don't have the CAPITAL needed for anyone (army or private or GOP)to build anything remotely close to an "industrial base".

Our army may be competent, but even they cannot do the impossible.

What is your view?

Riaz Haq said...

HWJ: "Clearly, we don't have the CAPITAL needed for anyone (army or private or GOP)to build anything remotely close to an "industrial base"."

Much of the capital needed by Chinese PLA companies was raised through "red chips" listed on Hong Kong stock exchange.

Since the 1980s, many of the PLA companies have now become part of the global economy. According research done by David Welker for Multinational Monitor, in pursuit of hard currency, many of the companies have listed themselves on capital markets in Hong Kong and elsewhere, opened representative offices in overseas markets, solicited foreign companies for joint ventures and partnerships in China and emphasized exports. The so-called red chips, companies listed on the Hong Kong exchange but which are in fact mainland Chinese firms, are the hottest stocks on the market. Hong Kong is the PLA's favored stock exchange because of its loose disclosure guidelines. China Poly Group has two listed companies: Continental Mariner Company Ltd. and Poly Investments Holdings Ltd. Both Continental Mariner and Poly Investments have a large number of subsidiary companies in mainland China, Hong Kong and tax havens like Liberia, the British Virgin Islands and Panama. China Carrie's listed company in Hong Kong is Hongkong Macau Holdings Ltd. China Carrie also owns HMH China Investments Ltd. on the Toronto Stock Exchange and HMH Gold Mining on the Australian Stock Exchange. 999 Enterprise Group, another company controlled by the PLA General Logistics Department, operates Sanjiu Pharmaceuticals Group, the largest pharmaceuticals manufacturer in China. 999 recently listed on the Hong Kong exchange.

Hopewins said...

Comparing our country to China is silly. China is a totalitarian State, with one-party rule. The PLA, the civil bureaucracy, the legislature and the judiciary are all staffed only by Communist Party members. There is no distinction between Party, State & Government. This is not the case in our country. Even allowing for military rule for the majority of our existence, our system is still more similar to India's than it is to China's.

What works in India should work in our country as well. What works in China may not easily work in our country.

Looking at India then:

What about India's giant industrial groups associated with Tata, Premji, Ambani, Mittal, Agarwal, Jindal, Adani, Mahindra, Reddys, Rao etc?

Were these launched from some industrial base developed by India's Military?

If not, who developed their industrial base that has allowed these group companies to grow so large?

Is India's Army even allowed to own corporations?

If not, how is India managing without Army involvement?

Can you explain?

Riaz Haq said...

HWJ: "If not, who developed their (India's) industrial base that has allowed these group companies to grow so large?"

India is not really an industrialized country, especially when compared with China.

Ad the credit for the fastest industrialization of any nation in the history of the world goes to the Chinese Army.

It's an excellent example for Pakistan to follow.

Riaz Haq said...

Here's Gulf Today o Pak participation in IDEX 2013 in Abu Dhabi:

ABU DHABI: As many as 10 high profile and 14 auxiliary defence production companies of Pakistan will participate in the largest defence exhibition in the Mena region, International Defence Exhibition and Conference (Idex), starting from Feb.17 to 21 in Abu Dhabi.

This was stated by the Jamil Ahmad Khan, Pakistan ambassador, while briefing the media on Pakistan’s participation in this exhibition in Abu Dhabi on Thursday.

He said that it was a matter of great pride for us that for the first time in the history of Idex Pakistan has added a new dimension to this exhibition by displaying its indigenously modified and upgraded submarine ‘Khalid.’

“Besides the submarine, a Multi-Purpose Auxiliary Craft (MPAC), ‘Jurrat’ fabricated in Pakistan with full integration of weaponry and the destroyer ‘ShahJahan’ modified as per our own requirement and integration of warfare will be on display,” he added.

He said that Pakistan is indigenously meeting the defence production requirements of its armed forces besides exporting to 40 countries across the globe.

“We are offering affordable solutions for the defence needs of all countries, especially the countries which are looking for low cost affordable solutions. This is what the 52 participating countries and more than 6,000 attendees of this exhibition can benefit from,” he added.

He emphasised that Pakistan is a peace-loving country and desires to live in peace and harmony with the world but the regional security situation has become complex and uncertain.

He said that Pakistan’s defence industry is compelled to develop a response that is proportionate to challenges that confront the country.

“Events like Idex-2013 provide a unique opportunity for Pakistan’s defence related industries both in public and private sectors to display their products and interact directly with the defence industry of the developed world. This also creates a good opportunity to reinforce the diplomatic efforts in the domain of defence diplomacy,” he added.

Riaz Haq said...

Here's DefenseNews on Pak plans for new heavy armored vehicles:

Faced with mounting casualties among security forces from roadside bomb attacks in its Tribal Areas, Pakistan is set to reveal an indigenous mine-resistant vehicle.

A spokesperson for Pakistan’s state-owned vehicle manufacturer, Heavy Industries Taxila (HIT), has confirmed that its Burraq mine-resistant, ambush-protected (MRAP) vehicle is nearing the end of its prototype phase and will be unveiled in “three to four months.” The announcement comes after years of development and failed efforts to acquire such a vehicle from other sources.

The need for an MRAP is great, and the military has acknowledged the considerable menace improvised explosive devices (IEDs) pose to security forces, particularly in the Tribal Areas along the Afghan-Pakistan border in fighting with the Taliban.

In what was perhaps the largest loss of life from an IED attack to date, 14 soldiers were killed and 25 wounded during a Jan. 13 attack on a Pakistani Army convoy in Waziristan.

Pakistan has reportedly sought better protected vehicles from as far away as Germany, Turkey and the U.S. However, a lack of financial resources seems to have hampered those efforts.

Failure to acquire an off-the-shelf solution ultimately led to the development of an indigenous answer.

However, as of November, with no news of the Burraq entering production and its non-appearance at Pakistan’s biannual exhibition, IDEAS2012, many analysts began to believe it had been quietly shelved. An order for an undetermined number of Poly Group Corporation Type CS/VP3 MRAP vehicles from China at IDEAS2012 reinforced that notion.

Hitherto, HIT has produced mostly tracked armored fighting vehicles, with some lightly armored four-wheel-drive and Toyota Corolla sedans its sole wheeled products.

According to HIT, the wheeled Burraq will carry 12 passengers and a crew of two. It has standard protection features similar to other MRAPs and will be open for export.

The 8-to-10-ton vehicle can withstand IED blasts of up to 10 kilograms, can be armed with a .50-caliber heavy machine gun (protected against fire from a similar weapon), as well as being fitted with bulletproof windows and run-flat tires. The occupants sit on blast-mitigating seats.

A former Australian defense attaché to Islamabad, Brian Cloughley, was given a briefing on the Burraq during a visit to HIT last year. He said he was impressed with what he saw.

“It appears that the Burraq is a mid-tech and affordable protective vehicle that should serve the defense forces well,” he said.

He said he was also “impressed with the proposed manufacturing process and with what I was told about its technical parameters, which, while not as advanced as U.S. or European equivalents, which are vastly expensive, seem to be adequate to counter the current IED threat.”

Having garnered a considerable amount of data from IED blasts, it appears Pakistan is able to adapt its designs to meet requirements, which Cloughley said is reflected in the Burraq’s design.

“The high profile is caused by the ‘V’-shaped underside, which is so necessary to minimize the effects of mines and IEDs, and although details of the degree of protection afforded are understandably kept confidential, I was told that analysis of the effects of IED incidents showed that Burraq’s armor configuration could cope well,” he said....

Riaz Haq said...

Mary Kay Magistad of NPR's The World reported that China has reacted strongly to the Pentagon report on China's military growth and modernization with its first aircraft carrier, several nuclear submarines and stealth aircraft.

Magistead reported that Xinhua has for the first time talked about China as a global economic power with global interests and it needs a blue water navy to protect a tremendous number of sea-lanes.

Anonymous said...

the first automobile was built by Carl Benz and named it after his daughter Mercedes. The second car was built by Gottlieb Daeumler (later called Daimler), both from the Germany's south! They later became Daimler Benz company. Ford only built the first mass model.

Riaz Haq said...

Why #Turkey’s Buying Chinese Missile Systems?

Lower cost, technology transfer, diversification. #Turkey's rationale similar to #Pakistan's.#defensedeals

Riaz Haq said...

Here's a report describing diverse holdings of Pakistani Fauji Foundation ranging from finance and food to energy, transport and and fertilizer:

KARACHI: The Fauji Group on Monday announced that it will acquire Al-Hamd Foods – a venture of Al-Hamd Group which has interests in textile, confectionery and foods – in a bid to diversify its business already weighty of fertiliser, cement, food, power generation, gas exploration, LPG marketing and distribution, financial services, employment services and security services.

The acquisition price has not been disclosed yet.

In a notice sent to the Karachi Stock Exchange, the Fauji Group said that on June 15, the company’s board of directors approved acquisition of 100% stake in Al-Hamd Foods, of which 75% will be held by Fauji Fertilizer Company (FFCL) and the rest (25%) by Fauji Foundation, as part of FFCL diversification drive to ensure sustained and multiple revenue streams.

In May, the Fauji consortium took over the charge of Askari Bank from the Army Welfare Trust, the previous owner, at a sale-purchase price of Rs24.32 per share.

The Fauji Group has been diversifying for the past few years, expanding its interests in all of the potential good buys they can find. Looking at the acquisitions and expansion it was making, it seems that the company wants to become a household name just like Engro.

Published in The Express Tribune, June 18th, 2013.

Riaz Haq said...

The armed forces of Pakistan are the world’s largest recipient of $5 million funds the United States annually spends to impart technical education and training to foreign troops under its International Military Education and Training (IMET) programme.
Having reimbursed more than $11 billion as war expenditures to Pakistan over the past decade, Islamabad’s non-NATO allies in Washington have also extended over $ 4 billion in civilian aid under the Kerry-Lugar Bill (KLB) over last five years.
“The United States provides Pakistan’s military with training to promote regional stability, improve its counterterrorism and defense capabilities and enhance civilian-military relations,” said a fact sheet the US embassy shared on Monday with its local alumni on US Assistance to Pakistan.
The 10-page document details a range of areas in which the US has been cooperating with Pakistan to promote its partnership with the latter which, the embassy said, was vital to its shared interest in Pakistan’s economic growth and development, regional stability, and mutually determined measures to counterterrorism.
Since fiscal year 2009, the document said, the US had trained nearly 1,120 officials of the Pakistan Army, air force and navy.
“Pakistan is the largest recipient of… IMET funding in the world, with an annual budget of approximately $5 million for this program,” the fact sheet added.
The US also provides critical equipment, ranging from advanced communications gear to surveillance aircraft, to Pakistani troops conducting counterinsurgency and counterterrorism operations in the border region and to enhance Pakistan’s participation in international maritime security operations.
“In addition, the US has refurbished and upgraded military helicopters and maritime surveillance aircraft.”
Consequently, Pakistan has significantly increased the effectiveness of its operations against terrorist groups, the embassy said.
Unlike its past do-more attitude, the US embassy expressed satisfaction over the steps Pakistan had recently taken to check the production of improvised explosive devices (IEDs) that are said to be used against the ISAF troops in Afghanistan.
“Pakistan has taken positive steps over the past year to increase its controls and interdiction of the illicit supply of the materials used to produce IEDs,” the embassy viewed.

Riaz Haq said...

Here's Jane's Defense 360 on Pakistan arms exports to Bahrain and Nigeria:

Pakistan has highlighted further opportunities to export its military equipment to Bahrain and Nigeria.

Government statements said that Pakistan is pursuing opportunities for further defence trade and related industrial collaboration with both nations. The government also noted its ability to offer "good offset programmes" to its defence export customers, although did not elaborate.

Following meetings between Pakistan and Nigerian defence officials on 17 March, a statement outlined opportunities to increase defence trade and joint production programmes.

Nigeria is a known target customer for the Pakistan Aeronautical Complex JF-17 Thunder aircraft, jointly developed by Pakistan and China. It has also previously expressed interest in acquiring Al-Zarrar main battle tanks produced by Heavy Industries Taxila, Kaan 33 fast attack craft constructed by Karachi Shipyard & Engineering Works, and a range of firearms.

Anonymous said...

who cares bout all this pak vs india stuff, lets just agree to disagree

both our countries need to focus on a lot of things other than throwing mud at each other, same goes for all you guys in upping each other ....phew

Riaz Haq said...

FWO: National pride of Pakistan

Construction of an international standard highway was both challenging as well as enormous. Pakistan Army's Corps of Engineers, therefore, raised a special organisation named Frontier Works Organization (FWO) to undertake this virtually impossible task on 31st October 1966 to construct the Karakoram Highway (KKH). Resultantly, the founding of FWO owes its birth to one of the most significant and challenging project undertaken by Pakistan. The breathtaking task of chiseling across the mighty mountain ranges of Karakoram was accepted as a challenge with zeal and determination by the engineers of FWO. The project was unprecedented in the history of Pakistan and required tremendous technical skill in various fields like geology survey, concrete/masonry works and their designing, use of explosives, development of drilling and blasting techniques, besides administrative and logistic problems of a large work force of 15000 personnel spread over an inhospitable and harsh terrain for over 800km. The KKH being the highest road on earth has been acknowledged as 8th wonder of the World. Government of Pakistan, realizing the potential of FWO prior to the completion of KKH project, decided to retain FWO as a permanent organisation and expanded its sphere of activities throughout Pakistan.

FWO succeeded in its challenge and completed the exceptional task of KKH construction in 1978 after tremendous sacrifices. More than 1000 workers including 200 from our sincere friend China laid down their lives with over 1000 sustaining disabling injuries in their quest to achieve this national objective.

During the last half century, FWO has earned the reputation of Country's most prestigious, multidimensional and professional construction organisation which is committed to meeting the strategic needs of the Pakistan in versatile construction fields. FWO plays a pivotal role in socio-economic development and nation building through its unmatched contribution to infrastructure development. Over the years, FWO has been able to ensure performance par excellence despite time, budget and space constraints. The organisation is state of the art construction leader in civil as well as military spheres. Judicious utilisation of resources and adherence to modern construction practices is the hall mark of FWO. Taking a leap from its core competency of roads construction, FWO has excelled into large number of multifaceted infrastructure development projects.

This new paradigm shift has enabled FWO to serve the nation with utmost versatility and commitment. Today the domain of FWO projects range from blazing plateaus of Balochistan to lush green dales of Swat and Chitral; from the deserts of Sindh to snowcapped summits of Siachin.

FWO has a knack for accepting challenges and converting ideas into reality no matter how meagre are the resources. FWO has on its credit several initiatives which have contributed significantly in strengthening national communication infrastructure. FWO is also the pioneers and leader in Built-Operate-Transfer (BOT) regime in Pakistan. Lahore-Faisalabad road (LAFCO) is one such example. FWO has also been given the responsibility of constructing motorway between Karachi and Hyderabad (M-9) on similar BOT methodology.

Keeping up with its traditions of developing the far frontiers, FWO is active in building massive road network in Balochistan (around 900kms) which will bring prosperity in the region. Linkage of Gwadar further up North will provide Pakistan with tremendous potential for commercial activities through development of CPEC. ...

Riaz Haq said...

FWO: National pride of Pakistan

Keeping up with its traditions of developing the far frontiers, FWO is active in building massive road network in Balochistan (around 900kms) which will bring prosperity in the region. Linkage of Gwadar further up North will provide Pakistan with tremendous potential for commercial activities through development of CPEC. The Quick Impact Projects (QIPs) in Fata, Swat and other militancy hit areas by FWO have contributed significantly in changing landscape of militancy hit area. People of Fata have never been provided with such a sustained development which will facilitate durable peace and socio-economic development in the area. Fast development of energy and power generation projects such as Gomal Zam Dam and Dhana irrigation system, development of Central Trade Corridor (CTC) and nearly 700km roads network in Fata, are testimony of FWO’s contribution in eradicating militancy and terrorism from Fata. QIPs undertaken by FWO have changed the landscape of the area besides restoration of normalcy to the lives of affected population. With road infrastructure development, access of agriculture products and mining yields to bigger markets has unleashed a new era of prosperity in Fata.

Recently, National Highway Authority (NHA) has tasked FWO with conversion of existing 4 Lane Super Highway into a 6 Lane Karachi-Hyderabad Motorway (M9) on Build Operate and Transfer (BOT) basis. A consortium of banks headed by UBL provided the finances for the project.

FWO will maintain and operate the Motorway in line with international practices over the next twenty five years. This mega project was inaugurated by prime minister on 11th March 2015. All initiatives planned for M-2 shall also be extended to M-9.

On 25th Feb 2016, Governor Sindh Dr Ishrat-Ul-Ebad Khan while presiding a meeting to review the progress of ongoing mega development projects including the M-9 motorway overwhelmingly appreciated efforts of FWO in nation building. According to FWO, the work has already begun on the proposed M-9 project and negotiations are in progress to shift service stations to alternate locations. M-9 will be a state of the art project with modern CCTV cameras installed after every two kilometers, computerised signboards and automated toll tax collection system. Moreover, a total of 14 overhead bridges and underpasses will be constructed on the proposed route of M-9 for facilitating movement of population living on either side of the road.

Today, FWO with an envious track record, looks forward to greater challenges and stands better equipped to meet them. Our nation will remain highly indebted to the sacrifices of over 1000 lives of FWO workers while working in harsh climates and difficult terrain since its inception.

With growing list of national contributions each year, FWO will continue serving Pakistan with utmost humility. FWO is conscious of the responsibility given to it by the Pakistani nation and will maintain high standards of professionalism, sincerity and national commitment in times to come.

Riaz Haq said...

#China urges #Pakistan to let #Pak army, with its decades of infrastructure dev experience, lead #CPEC work

Frustrated with the slow progress on a sprawling, $46bn infrastructure project stretching from China to south Asia, Beijing is seeking to give Pakistan’s army a lead role.

Its desire to enlist Pakistan’s military is a sign of the challenges facing a crucial plank of President Xi Jinping’s signature One Road One Belt initiative. It was designed to increase China’s influence along the Silk Road and help the country export some of its excess industrial capacity.

Mr Xi made Pakistan an early stop on that road last year with the China-Pakistan Economic Corridor, a $46bn bundle of road, railway, electricity, oil and gas projects that marked the largest foreign investment in the nuclear-armed south Asian state.

But progress has stalled as the two sides work out how to turn the proposals into concrete projects, said Victor Gao, a former Chinese foreign ministry official, with some blaming Pakistan’s competing ministries.

“On the Pakistan side there is uncertainty about which entity wants to take leadership or ownership of the corridor projects,” he said. “There is a big debate internally [in Pakistan] over whether the government should take ownership or the military should take ownership. This is what is holding the whole thing up.”

The Pakistan military, which has detachments of civil, mechanical and electrical engineers, has had decades of experience with large infrastructure projects and analysts say the army is well placed to supervise the corridor.

But some politicians warn that military involvement will expand the army’s footprint on civilian matters and give the armed forces an even greater say in policymaking.

Security along the route, which traverses many volatile regions, is also a factor. “Because this project runs from Kashgar in Xinjiang to Gwadar, the CPEC’s route is very long and high-risk,” said Huang Rihan at the Center for China and Globalisation.

A 15,000-strong army-led security force has already been deployed to protect Chinese personnel assigned to the project.

Ultimately the new Silk Road will connect China’s western region, including the predominantly Muslim Xinjiang province, to the Chinese-funded Pakistani port city of Gwadar and significantly reduce the travel time between China and the Middle East.

“Pakistani politicians have squabbled over the route for the CPEC and this may have made people nervous in Beijing,” said a Pakistan government official. “Pakistan is a noisy place politically while the Chinese are not used to harsh disagreements, especially over such a vital project.”

Others attributed the hold-up to the long-term nature of the CPEC. “These projects will take many years to be completed, beyond the tenure of any one government,” said a foreign ministry official in Islamabad. “China wants to make certain that these projects will be completed as per plan”.

China is focused on securing a route to the Indian Ocean that would reduce dependence on the choke point of the Strait of Malacca between the Malay Peninsula and the Indonesian island of Sumatra.

Zaffar Hilaly, a former senior Pakistani diplomat and now commentator on national and security affairs, said: “The Chinese consider the Pakistan army a central player [for the country]. They see the army’s involvement with this project as a guarantee of its success.”

Pakistan’s armed forces have established close ties with Beijing as primary customers of China’s defence hardware, raising concerns in Delhi and Washington over a Sino-Pakistani military axis.

Riaz Haq said...

From The Economist Magazine:

The Egyptian army has more on its hands than running armoured cars over people in Tahrir Square. It also runs about 10% of the economy. Military-backed companies produce cement, olive oil and household appliances as well as arms. They also provide pest control, catering and even child care. The army owns large chunks of Egypt's most precious commodity, land, particularly on the Red Sea coast. It also leans on private companies to provide powerful retirees with jobs.

The Egyptians have plenty of brothers-in-arms-and-boardrooms. Pakistan's top brass are even more enterprising. Ayesha Siddiqa, the author of “Military Inc: Inside Pakistan's Military Economy”, calculates that the army controls a $15 billion empire, with hundreds of companies making everything from fertiliser to breakfast cereals. In China the People's Liberation Army took Deng Xiaoping's aphorism that “to get rich is glorious” as a direct order. At one point in the late 1980s it was running nearly 20,000 firms. Military men in Thailand and Indonesia have a long tradition of padding their pay with profitable enterprises. Zimbabwe's army has recently formed joint ventures with Chinese partners in farming and mining. Even in democratic India the army runs about a hundred commercial golf courses.

But the most enthusiastic practitioners of khaki capitalism are the Iranians. The Revolutionary Guard runs more than 300 companies in agriculture, industry, transport, foodstuffs and even tourism. (The slogans practically write themselves: “Visit Iran and we won't storm your embassy!”) The Guard has been snapping up companies “privatised” by the government, and exploits its control of border crossings to dominate Iran's black market.


There are also sound military reasons for getting armies out of business. They should get better value for money if they buy supplies on the open market instead of making them themselves. More important, as the Chinese recognise, they are more likely to become modern and professional defenders of the nation if they are not distracted by moneymaking.

That said, the armed forces can provide superb training for future business leaders: some 10% of the bosses of America's 500 biggest companies are former military officers. They are also a great incubator of entrepreneurs—and not just shady ones like Milo Minderbinder. A striking proportion of Israel's high-tech entrepreneurs went into business with friends they made in the Israeli Defence Forces. The founders of China's Huawei, one of the world's most successful makers of telecoms equipment, also met in the army. Many soldiers in Egypt and elsewhere clearly enjoy the challenge of running businesses. But they would do a better job of it if they took off their uniforms first.

Riaz Haq said...


Several Pakistani private sector vendors, most notably Metal Engineering Works, Shibli Electronics, and Blitzkrieg Defence Solutions, have entered Pakistan’s procurement mix as real factors.

Interestingly, the local private sector is not a new entrant in Pakistan’s defence industry, a few companies had been engaged with their public-sector counterparts and the armed forces for roughly 20 years. However, these vendors, such as Integrated Dynamics, accounted for minor portions of the armed forces’ procurement, especially since their applications (especially in the case of Integrated Dynamics) would be very specific and low in scale (in comparison to armoured vehicles and small arms).

In IDEAS 2016, it was apparent that Pakistan’s private sector had become eager to access a larger portion of the armed forces’ requirements. For example, Blitzkrieg Defence Solutions marketed its Hamza 8×8 multi-role armoured vehicle (MCV), which takes aim at multiple Pakistan Army requirements, namely the need for an 8×8 wheeled-armoured personnel carrier and mine-protected ambush-protected vehicle. In addition, Metal Engineering Works partnered with the Spanish automaker URO Vehículos Especiales, S.A. (UROVESA) to offer the VAMTAC ‘High Mobility Tactical Vehicle.’ The VAMTAC could be positioned as a general-purpose utility vehicle, one the armed forces could use for transport or even specialized missions (such as carrying low-level radars or very short-range air-defence systems).

Blitzkrieg and Metal Engineering Works are taking aim at the same requirements that Heavy Industries Taxila (HIT) – which is the armed forces’ main armoured solutions supplier today – caters for through its line-up. Orders from the Ministry of Defence and/or Ministry of Interior would provide these companies with high-volume and high-value business lines, and it would also incentivize other private players to enter the market, potentially with the backing and/or partnership with overseas manufacturers.

Vehicles are not the only area of interest to the private sector; Metal Engineering Works also has a partnership in place with the Spanish company Instalaza for supplying Pakistan with the Alcotán-100 recoilless anti-tank rocket launcher (produced locally if ordered). If Metal Engineering Works gains traction, it would not be implausible to see others (domestic or foreign) enter the munitions space.

Shibli Electronics began offering its catalogue of thermal imaging sensors earlier in the year – the TASIER and SKUA. The company, which maintains a development bureau in the United Arab Emirates, intends to become Pakistan’s leading optics and optronics supplier, which could drive its entry into other areas. For example, there may be an opportunity to link with the Pakistan Army’s next-generation standard-issue right program by offering reflexive sights and/or magnified scopes.

Integrated Dynamics, one of Pakistan’s earlier and successful private sector entrants, has continued fine-tuning its unmanned aerial vehicle (UAV) solutions. Granted, it is not in the exact space as the Army and Air Force’s Chinese suppliers are in terms of armed applications, but the company has sought to double-down on its intelligence, surveillance, and reconnaissance (ISR) roots. The Arrow optionally-piloted vehicle is an example of Integrated Dynamics’ effort to differentiate its offerings, and more importantly, try and offer a solution applicable to defence and civil services needs.

Riaz Haq said...

In July 2016, British newspaper Financial Times report headlined "China urges Pakistan to give army lead role in Silk Road project (CPEC): Squabbles in Islamabad highlight obstacles to Beijing’s plans for transport and energy corridor" said as follows:

"Frustrated with the slow progress on a sprawling, $46bn infrastructure project stretching from China to south Asia, Beijing is seeking to give Pakistan’s army a lead role.... progress has stalled as the two sides work out how to turn the proposals into concrete projects, said Victor Gao, a former Chinese foreign ministry official, with some blaming Pakistan’s competing ministries"..... “Pakistani politicians have squabbled over the route for the CPEC and this may have made people nervous in Beijing,” said a Pakistan government official. “Pakistan is a noisy place politically while the Chinese are not used to harsh disagreements, especially over such a vital project.”

The Pakistan military has thousands of civil, mechanical and electrical engineers with decades of experience in building large infrastructure projects and analysts say the army is well placed to supervise the corridor, according to the Financial Times.

In fact, Pakistan Army's Frontier Works Organization (FWO) is building significant parts of the China-Pakistan Economic Corridor (CPEC). A July 2015 announcement is an illustration of what Frontier Works Organization is doing to advance CPEC:

“The Frontier Works Organization (FWO) has built roads with 502 kilometers length on the western alignment of China Pakistan Economic Corridor (CPEC) to link Gwadar with other parts of the country. The FWO took up the challenge to extend the benefits of Gwadar port to rest of the country by building roads in rugged mountainous terrain and highly inaccessible areas. The gigantic task was undertaken on the directives of Chief of Army Staff General Raheel Sharif."

Riaz Haq said...

#Pakistan outlines 5th gen fighter #aircraft industrial aims. "Such large-scale (Project Azm) requires synergetic efforts from a number of #industrial (public and private) and #academic organizations to fulfill the enormous task." #jf17thunder |Jane's 360

The Pakistan Aeronautical Complex (PAC) has outlined ambitious plans to support its development of a fifth-generation fighter aircraft (FGFA) - otherwise known in Pakistan as Project AZM.

The PAC enterprise, which is owned and run by the Pakistan Air Force (PAF), has established a new office - the Aviation Research, Indigenization & Development (AvRID) unit - to lead the FGFA programme, it confirmed.

The development programme is supported through Pakistan's development of a new aerospace complex - named 'Aviation City' - that was launched in 2017 to support Project AZM and other national military aerospace requirements.

"The office of DG [Director General] AvRID has been established to transform into reality the [PAF's] air staff vision… with the long-term goal of developing our own fifth generation fighter aircraft (FGFA)," PAC said on its website.

"[The] development of [the] FGFA would be a major national programme that would entail a massive amount of work, not all of which may possibly be carried out within PAC or even within Pakistan.

"Such large-scale development requires synergetic efforts from a number of industrial (public and private) and academic organisations to fulfill the enormous task," it added.

In order to "manage an engineering development programme of this magnitude", effective technical, engineering, and project management processes need to be established, PAC said.

PAC also outlined several specialist project teams that it will establish in collaboration with other national agencies as part of the Aviation City initiative.

These include an engineering management and support office, an Aviation Design Institute, a Mission Electronics Design Institute, an Aero Structures Design Institute, an Advanced Technologies Centre, and a Flight Test Centre.

PAC states that AvRID will collaborate with and leverage the capabilities of these various Aviation City agencies in undertaking Project AZM. "This [will] put together components of industry and academia to build a high-end research centre to enhance indigenisation capability.

Riaz Haq said...

#Pakistan to corporatize State #Defense Enterprise Heavy Industries #Taxila. The move to corporatize HIT will enable the enterprise to more easily enter joint ventures (JVs) with national and foreign firms.| Jane's 360

Pakistan's Senate passed legislation in late August to support the transformation of state defence enterprise Heavy Industries Taxila (HIT) into a corporate entity. The move is in line with Pakistan's efforts to spur capability developments in its national defence industry.

The legislation - the Heavy Industries Taxila Board (Amendment) Bill 2019 - will result in HIT, a specialist in military land systems, becoming a limited company. The bill was approved earlier this year by Pakistan's National Assembly and was referred to the Senate for consideration in May.

In approving the bill, the Senate's Standing Committee on Defence Production said in a report that the move to corporatise HIT will enable the enterprise to more easily enter joint ventures (JVs) with national and foreign firms.

The committee said these JVs would be in commercial sectors - including the production of automobiles, trucks, and wagons - and that resulting revenues, investments, and technologies would benefit HIT's defence production activities. However, the committee also warned that such commercial activities should not be to the detriment of defence production.

According to the committee, other objectives of the move to corporatise HIT include enabling the enterprise to earn revenues to subsidise Pakistan's defence budget; support national efforts to "move incrementally towards self-sustenance" in the defence sector; support private-sector defence industrial expansion in Pakistan; and "help bring in the latest technologies" into the country to benefit defence.

HIT is one of Pakistan's most important defence enterprises. The organisation specialises in upgrades and manufacturing a range of military vehicles including main battle tanks (MBTs), armoured personnel carriers, and artillery, as well as military vehicle engines and related components and associated equipment.

Its most important programmes include the production of Al-Khalid-I MBTs and the development of Al-Khalid-II MBTs, both for the Pakistan Army.

Riaz Haq said...

UNDP: Elite privilege consumes $17.4bn of #Pakistan’s #economy. Top beneficiaries are corporate sector (tax breaks, cheap input prices, higher output prices, access to capital, land) – 2nd & 3rd biggest recipients of privilege are richest feudal landlords

The UNDP’s Wignaraja noted that this creates a paradox where those responsible for doling out the privileges were also those who were receiving them.

The biggest beneficiary of the privileges – which may take the form of tax breaks, cheap input prices, higher output prices or preferential access to capital, land and services – was found to be the country’s corporate sector, which accrued an estimated $4.7bn in privileges, the report says.

The second and third-highest recipients of privileges were found to be the country’s richest 1 percent, who collectively own 9 percent of the country’s overall income, and the feudal land-owning class, which constitutes 1.1 percent of the population but owns 22 percent of all arable farmland.

Both classes have strong representation in the Pakistani Parliament, with most major political parties’ candidates’ drawn from either the feudal landowning class or the country’s business-owning elite.

Economic privileges accorded to Pakistan’s elite groups, including the corporate sector, feudal landlords, the political class and the country’s powerful military, add up to an estimated $17.4bn, or roughly 6 percent of the country’s economy, a new United Nations report has found.

Released last week, the UN Development Programme’s (UNDP) National Human Development Report (NHDR) for Pakistan focuses on issues of inequality in the South Asian country of 220 million people.

The report uses the prism of “Power, People and Policy” to examine the stark income and economic opportunity disparities in the developing country.

“Powerful groups use their privilege to capture more than their fair share, people perpetuate structural discrimination through prejudice against others based on social characteristics, and policies are often unsuccessful at addressing the resulting inequity, or may even contribute to it,” says the report.

Kanni Wignaraja, assistant secretary-general and regional chief of the UNDP has been on a two-week “virtual tour” of Pakistan to discuss the report’s findings, holding talks with Prime Minister Imran Khan and other top members of his cabinet, including the ministers of foreign affairs and planning.

She says Pakistani leaders have taken the findings of the report “right on” and pledged to focus on prescriptive action.

“[In our remarks in meetings] we focused right in on where […] the shadows are, and what is it that actually diverts from a reform agenda in a country,” she told Al Jazeera in an exclusive interview.

“My hope is that there is strong intent to review things like the current tax and subsidy policies, to look at land and capital access.”


The country’s powerful military, which has directly ruled Pakistan for roughly half of its 74-year history, was found to receive $1.7bn in privileges, mainly in the form of preferential access to land, capital and infrastructure, as well as tax exemptions.
The report noted, however, that Pakistan’s military is also “the largest conglomerate of business entities in Pakistan, besides being the country’s biggest urban real estate developer and manager, with wide-ranging involvement in the construction of public projects”.

“These things are not neatly separate entities,” said Wignaraja. “You do see some of… these are overlapping so you almost get a double privilege by the military. The minute in a country the military is a part of big business, it obviously doubles the issue and the problem.”

In a country like Pakistan, where the military continues to hold power over many aspects of governance, she warned that it would take “almost a social movement” to displace structures of power that were so entrenched.

Riaz Haq said...

Pakistan's military-run enterprises need upgrade to revive economy
Corporate empire has potential to be globally competitive

By Uzair Younus

Pakistan's economy is facing another crisis as the country reaches a staff-level agreement with the International Monetary Fund to resume the support program that was suspended earlier this year. The finalization of the agreement will unlock inflows of almost $1.2 billion, critical to helping stabilize the country's economy.

This latest crisis is part of the decades-long economic decline of the country, which has been captured by a kleptocratic elite. This system is underpinned by Pakistan's powerful military, which operates a multibillion-dollar corporate empire across various sectors.

To many observers, the military's dominant role in the economy must be curtailed if Pakistan is to achieve sustainable growth. But well-meaning as they might be, these efforts have consistently failed to date, meaning that Military Inc. continues to be the dominant player in Pakistan's economy.

It is time to accept that rather than trying to cut this empire down to size, it may be more fruitful to develop Military Inc. 2.0: a corporate empire that is globally competitive.

Pakistan's military began playing a role in the economy soon after independence. The construction of the 805-km cross-border Karakoram Highway in the Himalayas was a major inflection point. The Frontier Works Organization was formed then with the mission to construct the highway on the Pakistani side.

Today, military-run organizations have their tentacles spread across the entire economy, with the military-owned Fauji Foundation being one of the largest conglomerates in the country. The government has exempted both the Army Welfare Trust and the Fauji Foundation from income taxes, giving them an edge over privately owned companies.

The military also operates housing developments across the country, with the Defence Housing Authority (DHA) a dominant force in the country's real estate sector. While the initial aim was to develop homes for serving and retired military personnel, DHA has since evolved into a multibillion-dollar entity with a presence in all major cities.

The military's economic footprint, however, is indicative of broader economic issues plaguing Pakistan. For decades, Pakistan's civilian and military elites have extracted wealth by engaging in highly protected, low-productivity sectors. As a result, Pakistani businesses are both globally uncompetitive and provide shoddy services to domestic consumers.

An example is the DHA project in Karachi, built on land reclaimed from the Arabian Sea. The predominant role enjoyed by the military meant that development of the DHA site occurred without proper access to proper stormwater drainage, resulting in multimillion-dollar homes, paid for in cash, routinely being flooded during monsoon rains.

Political volatility and instability have further compounded the problems, leading to an anemic rate of foreign direct investment, particularly in export-oriented sectors. The result: recurring balance of payments crises that require bailouts.

To emerge from this crisis, Pakistan's military must learn from its strategic ally China. While the Chinese regime also began with military-run organizations developing public infrastructure, over the decades, it has developed companies that have a more global outlook.

In addition, China focused on improving quality by leveraging technology while also investing in global best practices. This ensured that the country built globally competitive businesses that enhanced China's technological reach, such as telecommunications group Huawei Technologies.

Riaz Haq said...

Pakistan's military-run enterprises need upgrade to revive economy
Corporate empire has potential to be globally competitive

By Uzair Younus

Pakistan's military would do well to mimic China's strategy to become globally connected, competitive and innovative.

Such a reconfiguration may solve Pakistan's macroeconomic challenges and recurring external crises, as the military is finding it difficult to muster resources required to compete with an India that is growing at a faster pace and rapidly modernizing its military. This is tilting the balance of power in the region toward India, creating national security risks for Pakistan.

Critics will argue that reorienting the military's corporate empire will only worsen the challenges facing Pakistan's floundering democracy. This concern is valid, but Pakistan's growing economic challenges mean that it is time to prioritize sustainable growth and socioeconomic development.

Changing the military's corporate approach is likely to create the space for broader economic reforms that are urgently needed to end Pakistan's protracted economic decline.

The experience of the last few years shows that there is, at least in the near term, no political party capable of challenging and dislodging the military from its dominant role.

The next best alternative is to leverage the military's economic empire to transform the country's economy. But the question is: Do Pakistan's generals have it in them to reform in a way that generates wealth for their country?

With millions of younger Pakistanis joining the workforce and failing to find jobs, the time for a different approach is now.

Riaz Haq said...

Muneeb Sikander
1/2 Pak Flood hit rural economy

Work produces things of value and transforms physical world in ways to make life better and survival possible.

But without organised and purposeful productive action, i.e., work, not possible for most people asis at the base of economic order


2/2 Flood hit rural areas

Agrarian to agriculture/livestock based or limited workshop industry. Limited Agri TFP + 15.4 million at poverty risk

1. Need for agri TFP improvement
2., Need to diversify economic base by Proto-industrialization,

Riaz Haq said...

How to Jump-Start Industrialization in Sub-Saharan Africa
May 27, 2021
By Yi Wen , Iris Arbogast

Most sub-Saharan nations have such low per capita incomes that it would take decades of double-digit growth to attain U.S. living standards.
Nations that industrialize successfully often begin with small-scale efforts and progress to mass-producing heavy industrial goods.
African countries could follow this development pattern with government-provided infrastructure and other support.

When considering income disparities across nations, the differences often can be striking, particularly for nations in the sub-Saharan region of Africa. Per capita income in many poor countries like these is 30 to 50 times smaller than in the U.S. In sub-Saharan Africa, 38 of 48 countries had gross national income (GNI) per capita levels below $2,300 in 2019, while GNI per capita was $65,850 in the U.S., according to data from the World Bank’s World Development Indicators database.

Generations of economists have studied economic development and given policy suggestions to officials in poor countries in Africa and elsewhere, but the disparities remain. To catch up to U.S. living standards, they would need to grow at about 11% per year for 40 to 50 years—an almost impossible standard that only China has come close to achieving in recent history.

The New Stage Theory of Development
The commonality between successful Asian countries’ industrialization (such as China’s rapid rise in the past 40 years) and successful European nations’ industrialization (such as the British Industrial Revolution in the 18th* and 19th centuries) is that these economies all went through three key stages during their industrialization, according to the New Stage Theory of Development (NST):1

Proto-industrialization, which features massive numbers of workshops in rural areas with small-scale production of basic consumer goods for long-distance trade
A first industrial revolution, which features mass production of labor-intensive, light consumer goods for domestic and international markets
A second industrial revolution, which features mass production of capital-intensive, heavy industrial goods
The first stage is very important but has been largely ignored by development economists. During this initial stage, rural farmers or poor households in urban areas use their free time to manufacture simple products and engage in long-distance trade. This raises their income and nurtures the formation of an increasingly unified market and primitive production networks, while developing entrepreneurship and labor skills. 2

During the second stage, large-scale factory systems become prevalent for light industries such as textiles, processed food, toys and furniture. This mass-production stage is labor-intensive, export oriented and benefits from poor countries’ comparative advantage in cheap labor. Mass production in the second stage is profitable only because proto-industrialization has created a large enough market and distribution networks for consumer goods.

Finally, the expansion of light industry in the second stage facilitates the formation of a large enough market for heavy industrial goods—such as means of transportation, energy, steel and heavy equipment. This is not only because the income of workers needs to be high enough to purchase big-ticket items such as automobiles, but because mass production of heavy industrial goods is profitable only after the second stage creates a mass-production chain to support their demand. 3