Wednesday, September 30, 2020

US Presidential Debate 2020: Trump Attacks India; Biden Says "Inshallah"

The first US presidential debate of Elections 2020 on September 29 was a very chaotic affair. It was characterized by constant interruptions by President Donald J. Trump and exchange of unprecedented insults with Democratic presidential nominee Joseph R. Biden. Chris Wallace, the Fox News anchor and moderator, found it impossible to bring order in spite of his best efforts. It resembled Pakistani Talk Shows with all the yelling, screaming, drama and insults. Trump attacked India twice during the debate. At one point, Biden said "Inshallah". 

Trump refused to denounce white supremacists and questioned the integrity of the elections.  Trump also attacked Biden’s intelligence at several points during the contentious debate. Biden called Trump a "clown" and told him to "shut up" at one point. 

Trump questioned India's coronavirus data while responding to Biden's accusation that his opponent has badly mishandled the pandemic. About 21 minutes into the debate, Trump said: "And, by the way, when you talk about numbers, you don’t know how many people died in China. You don’t know how many people died in Russia. You don’t know how many people died in India. They don’t exactly give you a straight count, just so you understand".  

Officially, North America (particularly US & Mexico) has suffered 303,600 coronavirus deaths, the highest COVID19 death toll in the world . It’s followed by SouthAmerica (248,700), Europe (220,600), Asia (189,900), Africa (35,200) as of Sept 28,2020, according to Axios.  US, with 200,000 deaths, accounts for two-thirds of all deaths in North America.  Asia accounts for about 60% of the global population.  India, with a death toll near 100,000, accounts for over half of all deaths in Asia. 


Global Coronavirus Deaths By Continents. Source: Axios

Talking about climate change, Trump accused India of being a leading polluter. About an hour into the debate, Trump said: "China sends up real dirt into the air. Russia does. India does. They all do". There are reports suggesting India has surpassed China as the world's top polluter. Images captured by the Dutch space instrument, Tropomi, show high concentrations pollutants like Nitrogen dioxide, Ozone and other pollutants produced by car traffic, industry and power stations in India, according to a Business Insider report.

India Top Polluter. Source: Business Inside

About 15 minutes into the debate, Biden used the word "Inshallah" while demanding Trump's tax returns.  Pressing Trump on when the American public would get to see his long-anticipated tax returns, Biden questioned: "When? Inshallah?" "Inshallah" is often considered as a non-committal response by some in the Muslim world. 

Related Links:



Is India a Paper Elephant?

COVID19 in Pakistan: Test Positivity Rate and Deaths Declining

Fareed Zakaria Never Misses Any Opportunity to Bash Pakistan

Retired Justice Markanday Katju on Modi's India

Lynchistan: India is the Lynching Capital of the World

73 Year After Independence, Caste-Ridden India Dominated By Brahmins

Pakistan's Pharma Industry Among World's Fastest Growing

Is Pakistan's Response to COVID19 Flawed?

Pakistan's Computer Services Exports Jump 26% Amid COVID19 Lockdown

Coronavirus, Lives and Livelihoods in Pakistan

Vast Majority of Pakistanis Support Imran Khan's Handling of Covid19 Crisis

Pakistani-American Woman Featured in Netflix Documentary "Pandemic"

Coronavirus Antibodies Testing in Pakistan

Can Pakistan Effectively Respond to Coronavirus Outbreak? 

How Grim is Pakistan's Social Sector Progress?

Pakistan Fares Marginally Better Than India On Disease Burdens

Trump Picks Muslim-American to Lead Vaccine Effort

Democracy vs Dictatorship in Pakistan

Pakistan Child Health Indicators

Pakistan's Balance of Payments Crisis

Panama Leaks in Pakistan

Conspiracy Theories About Pakistan Elections"

PTI Triumphs Over Corrupt Dynastic Political Parties

Strikingly Similar Narratives of Donald Trump and Nawaz Sharif

Nawaz Sharif's Report Card

Riaz Haq's Youtube Channel

Monday, September 28, 2020

Pakistan Digital Gig Economy Surged 69% Amid COVID19 Pandemic

Pakistan's digital gig economy has surged 69% during the COVID19 pandemic, putting the country among the world's top 4 hottest online freelancer markets, reports  Payoneer, a global payments platform company based in Silicon Valley, in its latest report. Payoneer attributes it to government programs such as Punjab government's e Rozgaar program that has been offering free online courses in digital freelancing. The sudden rush to learn skills online boosted the demand for instructors. The Pakistan government filled this demand by hiring alumni of programs like e Rozgaar who were successfully participating in the gig economy.

Punjab government's e-rozgaar program logo

After a brief dip in January 2020, the demand for freelancers took off in February and increased by double digits each month starting in March until June when it surged 47% at the time the data was compiled by Payoneer for its report.“ Likewise, this response is reflected in the revenue figures where freelancing continued to grow year-on-year but temporarily slowing from 21 per cent growth in March to 16 per cent growth in May,” the report noted. e-Rozgaar’s latest group of graduates earned the highest ever income for a new class of the program--earning over Rs. 25 million in three months during the Covid-19 lockdown. PITB Chairman Azfar Manzoor told Profit magazine that e-Rozgaar was playing a pivotal role in curbing youth unemployment. 

Online Freelance Revenue Surge in Pakistan. Source: Payoneer

“One factor that goes a long way to explain this is that in April, local government authorities took the initiative to rapidly shut down educational institutes as a way to contain the spread of the virus,” the report said, adding that this led to the development of a new online education system and as part of this initiative, government training programs, such as e-Rozgaar, expanded its services throughout the country, offering people a new way to enhance their professional capabilities. “The mission was to help expedite freelancing skills for thousands and enable them to earn a living in the most in-demand fields and ultimately lead to a higher employment rate,” the report highlighted.

A global survey conducted by Payoneer, shows that Pakistani women freelancers are earning $22 an hour, 10% more than the $20 an hour earned by men. While Pakistani male freelancers earnings are at par with global average, Pakistani female earnings are higher than the global average for freelancers. Digital gig economy is not only helping women earn more than men but it is also reducing barriers to women's labor force participation in the country. The survey also concludes that having a university degree does not help you earn more in the growing gig economy. The survey was conducted in 2015.

Freelancers Hourly Rate by Gender. Source: Payoneer


An average Pakistani freelancer working 34 hours a week at $20 an hour earns $34,000 a year, or Rs. 5.7 million a year, a small fortune for a young Pakistani. This is one of the upsides of the online global labor market for skilled young men and women in developing nations like Pakistan. Sometimes freelancing experience leads to tech startups in Pakistan.

Another interesting survey finding is that freelancers with a university degree earn about 10% less on average than those with just the high-school diploma. This indicates that the freelancers skills matter more than the level of formal education.

Average Hourly Rate by Education. Source: Payoneer


Payoneer surveyed 23,000 freelancers worldwide, including emerging markets such as Pakistan, the Philippines and the Ukraine. Survey respondents comprise a random sample of Payoneer’s cross-border payment platform users, providing unique insights into how these globally-enabled freelancers operate, what makes them successful and what rates they command.

Freelancers Average Work Week. Source: Payoneer 

Pakistani freelancers worked about 34 hours a week, a little less than the 36 hours global average. Indian freelancers log 37.4 hours a week and Bangladeshis 35.9 hours weekly. Freelancers from Kenya average the highest amount of hours per week (42.6) with Egypt coming in second (38.5). Professionals working in Morocco and Tunisia work the fewest hours per week, potentially as a high percentage of them are also working at companies as well

Pakistan's digital gig economy growth is the fastest in Asia and fourth fastest in the world, according to digital payments platform Payoneer.

Gig Economy Growth in Q2/2019. Source: Payoneer
United States led gig economy growth of 78% followed by the United Kingdom 59%, Brazil 48%, Pakistan 47% and Ukraine 36%. Asia growth was led by Pakistan followed by Philippines (35%) , India  (29%) and Bangladesh (27%).

The rapid gig economy expansion of 47% in Pakistan  was fueled by several factors including the country's very young population 70% of which is under 30 years of age coupled with improvements in science and technical education and expansion of high-speed broadband access.  Pakistani freelancers under the age of 35 generated 77% of the revenue in second quarter of 2019.

Growth in Freelance Work. Source: Payoneer

Mohsin Muzaffar, head of business development at Payoneer in Pakistan, has said as follows: "Government investment in enhancing digital skills has helped create a skilled freelancer workforce while blanket 4G coverage across Pakistan has given freelancers unprecedented access to
international jobs".

Global Freelance Revenue By Age. Source: Payoneer. 


In Q2/2019, Asia cemented its status as a freelancer hub.  Pakistan, Bangladesh and India, Philippines made it to the  top 10 list, collectively recording 238% increase from Q2/2018.


Online Labor Index. Source: Oxford Internet Institute

Silicon Valley based global payments platform Payoneer has reported that Pakistan's digital gig economy has surged 69% during the COVID19 pandemic, putting the country among the world's top 4 hottest online freelancer markets. A global survey results on freelancing show that Pakistani women freelancers are earning $22 an hour, 10% more than the $20 an hour earned by men. While Pakistani male freelancers earnings are at par with global average, Pakistani female earnings are higher than the global average for freelancers.   The survey also concludes that having a university degree does not help you earn more in growing gig economy. The survey was conducted in 2015. As of 2017, Pakistan freelancers ranked fourth in the world and accounted for 8.5% of the global online workforce, according to Online Labor Index compiled by Oxford Internet Institute. India led with 24% share followed by Bangladesh 16%, US 12%, Pakistan 8.5% and Philippines 6.5%.

Related Links:

Haq's Musings

South Asia Investor Review


Sunday, September 27, 2020

UNIDO 2020: Pakistan Industrial Output Lags Behind Peers in South Asia

Manufacturing in Pakistan lags behind Bangladesh, India and Sri Lanka in terms of manufacturing value added per capita as well as per capita exports of manufactured products, according to Competitive Industrial Performance Report 2020 released by United Nations Industrial Development Organization (UNIDO). 


Pakistan's Competitive Industrial Performance. Source: UNIDO



On the competitive Industrial Performance (CIP) Index, Pakistan ranks 82 among 152 countries, well behind India at 42, Bangladesh at 70 and Sri Lanka at 75. Only Maldives (144) and Nepal (135) rank lower than Pakistan. Bangladesh has built a very successful garments manufacturing and export business that rivals China's. The country is now focusing on building mobile phones and consumer electronics industry.  

India's Competitive Industrial Performance. Source: UNIDO


Only 1.3% of Pakistan's manufacturing is high-tech and 9% medium tech, better than Bangladesh's 0.4% high-tech and 1.5% medium tech, but considerably worse than India's 9.4% high tech and 25.4% medium tech. 

Bangladesh's Competitive Industrial Performance. Source: UNIDO

Nearly 40% of India's manufacturing output is based on locally extracted natural resources like iron ore and coal, much higher than Pakistan's 9.7% and Bangladesh's 1.9%. Pakistan's per capita manufactured exports add up to only $87 per capita, well behind Bangladesh $198 and India $208. Per capita manufactured output in Pakistan is $178 versus Bangladesh's $281 and India's $299. 

China's Competitive Industrial Performance. Source: UNIDO


The most successful example of a manufactured exports-driven economy in Asia is China, ranked number 2 in the world, just behind top-ranked Germany. China's per capita manufacturing value added is $2,726 and its per capita manufactured exports add up to $1,685. High-tech manufactured products account for 30.6% of Chinese manufacturing output while its resource-based manufacturing is just 9.3% of its output.

Pakistan's Manufacturing Output Trend Since 2000. Source: World Bank


Manufacturing industries are defined by the International Standard Industrial Classification (ISIC).  Value added is the net output of a sector after adding up all outputs and subtracting intermediate inputs. 

Here's Pakistan's manufacturing output in current U.S. dollars:

Pakistan manufacturing output for 2019 was $34.66B, a 9.57% decline from 2018. In 2018, it was $38.33B, a 4.88% increase from 2017. Pakistan manufacturing output for 2017 was $36.54B, a 8.56% increase from 2016. It was $33.66B in 2016, a 2.73% decline from 2015.

 
Pakistan Manufacturing Output Peer Ranking 2019. Source: World Bank

Pakistan’s overall exports have continued to lag behind those of its South Asian counterparts since the early 1990s. Bangladesh’s exports have increased by 6.2 times compared to Pakistan’s, measured in terms of exports per capita, and that of India by 6.8 times, according to Princeton's Pakistani-American economist Atif Mian. 


Pakistan's average economic growth of 5% a year has been faster than the global average since the 1960s, it has been slower than that that of its peers in East Asia. It has essentially been constrained by Pakistan recurring balance of payment (BOP) crises as explained by Thrilwal's Law. Pakistan has been forced to seek IMF bailouts 13 times in the last 70 years to deal with its BOP crises. This has happened in spite of the fact that remittances from overseas Pakistanis have grown 24X since year 2000. The best way for Pakistan to accelerate its growth beyond 5% is to boost its exports by investing in export-oriented manufacturing industries, and by incentivizing higher savings and investments.


Saturday, September 26, 2020

FinCEN Files: UK is Global Center For Money Laundering and Pakistan Among its Top 3 Sources

The latest leaks of US FinCEN (Financial Crime Enforcement Network) files show that the United Kingdom (UK) is the biggest global center for money laundering. An earlier report issued by the British Crime Agency put Pakistan among the world's top sources of money laundering in the United Kingdom. The latest FinCEN leaks represent just the tip of an iceberg. The leaked 2,100 FinCEN files covering $2 trillion worth of transactions that ICIJ (International Consortium of Investigative Journalists) and Buzzfeed reporters got their hands on represent just a small sliver of the roughly 12 million SARs FinCEN has received since 2011. Pakistan's Prime Minister Imran Khan has repeatedly raised the issue of the West's inaction in stopping the illicit flows of hard currencies from developing nations to the developed world. Money laundering and other financial crimes affect the economic roots of a nation like Pakistan and slow down its human and socioeconomic development.

FinCEN Leaks Represent Tip of Iceberg



FinCEN Leaks:

Financial Crimes Enforcement Network (FinCEN) is an arm of the U.S. Treasury Department responsible for keeping tabs on and combating money laundering. All banks are required by US Law to file SARS (Suspicious Activity Reports) of transactions involving unclear sources and beneficiaries, or those connected to jurisdictions with a history of financial crime. 

Banks file about 2.2 million such transactions each year. Very few of these are actually reviewed or investigated by the US government. Recently, journalists at Buzzfeed and the International Consortium of Investigative Journalists (ICIJ) have announced they have obtained 2,100 FinCEN files covering $2 trillion worth of transactions that  represent just a small sliver of the roughly 12 million SARs FinCEN has received since 2011. Some of the biggest western banks, including HSBC, JP Morgan, Barclays and Standard Charter Bank are named among the institutions reporting SARS. 

Pakistani Banks:

There are six Pakistani banks named among those filing suspicious activity reports with FinCEN. The banks named are Allied Bank, United Bank (UBL), Habib Metropolitan Bank, Bank Alfalah, Standard Chartered Bank Pakistan, and Habib Bank (HBL). According to the data revealed by ICIJ, 29 such suspicious transactions from and to Pakistan were flagged. Of those, the ‘received’ transactions amounted to $1,942,560, while the ‘sent’ transaction was $452,000. 

FinCEN leaks show suspicious activity of a Dubai-registered company linked to Altaf Khanani of Pakistan through accounts at Danske Bank. “There can only be one reason why money has been moved out of Danske Bank and into his trading companies - and that is money laundering. Because that was the only thing that happened in those companies,” says Richard Grant, the former head of the Australian intelligence service told DR, a Danish news platform. 

Pakistan Among Top 3 Sources:

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


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

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

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

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

Politicians Dominate Panama Papers


Panama Papers Leak:

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

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

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

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

Pakistani Names in Panama Leaks:

Pakistani politicians and their supporters use allegations of corruption in Pakistani military to distract attention from their own well-documented corruption. Just a quick look at the names in leaked Panama Papers shows that politicians, not generals, dominate these lists. Pakistani names included in Panama Papers are those of several politicians and business people, but no generals, according to media reports.

 Prime Minister Nawaz Sharif is linked to 9 companies connected to his family name. Those involved are:  Hassan Nawaz, Hussain Nawaz, Maryam Nawaz, Relatives of Punjab Chief Minister and brother of Prime Minister Shahbaz Sharif are linked to 7 companies. They are: Samina Durrani and Ilyas Meraj.

Former Prime Minister Benazir Bhutto was linked to one company. Her relatives and associates are linked to others: Nephew Hassan Ali Jaffery Javed Pasha, Close friend of Asif Ali Zardari (4 companies), PPP Senator Rehman Malik (1 company), PPP Senator Osman Saifullah’s family (34 companies), Anwar Saifullah, Salim Saifullah, Humayun Saifullah, Iqbal Saifullah, Javed Saifullah, Jehangir Saifullah. The Chaudharies of Gujrat have not been linked personally but other relatives have including: Waseem Gulzar Zain Sukhera (co-accused with former Prime Minister Yusuf Raza Gilani’s son in the Hajj scandal).

Pakistani Businessmen in Panama Leaks: Real Estate tycoon Malik Riaz Hussain’s son (Bahria Town) Ahmad Ali Riaz (1 company), Chairman ABM Group of Companies Azam Sultan (5 companies), Pizza Hut owner Aqeel Hussain and family (1 company), Brother Tanwir Hassan Chairman Soorty Enterprise Abdul Rashid Soorty and family, Sultan Ali Allana, Chairman of Habib Bank Limited (1 company), Khawaja Iqbal Hassan, former NIB bank President (1 company), Bashir Ahmed and Javed Shakoor of Buxly Paints (1 company), Mehmood Ahmed of Berger Paints (1 company), Hotel tycoon Sadruddin Hashwani and family (3 companies), Murtaza Haswani Owner of Hilton Pharma, Shehbaz Yasin Malik and family (1 company), The Hussain Dawood family (2 companies), Shahzada Dawood Abdul Samad Dawood Partner Saad Raja, The Abdullah family of Sapphire Textiles (5 companies), Yousuf Abdullah and his wife, Muhammad Abdullah and his wife, Shahid Abdullah and his family, Nadeem Abdullah and family, Amer Abdullah and family, Gul Muhammad Tabba of Lucky Textiles, Shahid Nazir, CEO of Masood Textile Mills (1 company), Partner Naziya Nazir Zulfiqar Ali Lakhani, from Lakson Group and owner of Colgate-Palmolive, Tetley Clover and Clover Pakistan (1 company) and Zulfiqar Paracha and family of Universal Corporation (1 company).

Pakistani Judges in Panama Leaks: Serving Lahore High Court Judge Justice Farrukh Irfan, Retired Judge Malik Qayyum, Pakistani Media personnel in Panama Leaks: Mir Shakil-ur-Rehman of GEO-Jang Media Group (1 company).

FinCEN vs Panama Leaks: 

FinCEN leaks differ from previous bank leaks such as the Panama Papers in a crucial way: They are a snapshot into financial crime that banks are openly reporting to the authorities. 

These files mean, on a basic level, the reporting system is functioning. But the same leaks also show that banks frequently filed a SAR months after the transaction had taken place, and sometimes multiple times on the same client without anyone seemingly taking any action. 

West's Inaction Hurts Poor Nations:

Speaking to the 75th plenary session pf the United Nations General Assembly (UNGS), Pakistan's Prime Minister Imran Khan raised the issue of the West's inaction is stopping the illicit flows of hard currencies from developing nations to the developed world. He said:"Every year billions of dollars leave poor countries & go to rich countries. Billions of dollars siphoned by corrupt politicians to tax havens ,expensive properties bought in western capitals. It is devastating to the developing world".  

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

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

Summary:

The latest FinCEM leaks and previous Panama Papers as well as British crime agency reports confirm that the UK has attracted vast sums of illicit wealth from Pakistan and other emerging economies. Speaking to the 75th plenary session of the United Nations General Assembly (UNGS), Pakistan's Prime Minister Imran Khan raised the issue of the West's inaction is stopping the illicit flows of hard currencies from developing nations to the developed world. He said:"Every year billions of dollars leave poor countries & go to rich countries. Billions of dollars siphoned by corrupt politicians to tax havens ,expensive properties bought in western capitals. It is devastating to the developing world".  Money laundering and other financial crimes affect the economic roots of a nation like Pakistan and slow down its human and socioeconomic development.

Related Links:


Haq's Musings

South Asia Investor Review

The West Enables Corruption in Developing Nations

Did Musharraf Steal Pakistani People's Money?

Pakistan Economy Hobbled By Underinvestment

Raymond Baker on Corruption in Pakistan

Nawaz Sharif Disqualified

Culture of Corruption in Pakistan

US Investigating Microsoft Bribery in Pakistan

Zardari's Corruption Probe in Switzerland

Politics of Patronage in Pakistan

Why is PIA Losing Money Amid Pakistan Aviation Boom?

Riaz Haq's Youtube Channel

PakAlumni Social Network

Monday, September 21, 2020

Ambassador Kishore Mahbubani: America Does Not Respect India

"One hard truth that Indians have to contend with is that America has also had difficulty treating India with respect", writes former Singaporean diplomat Kishore Mahbubani in his latest book "Has China Won?". "If America wants to develop a close long-term relationship with India over the long run, it needs to confront the deep roots of its relative lack of respect for India", adds Ambassador Mahbubani. It's not just Mahbubani who suspects the United States leadership does not respect India. Others, including former President Bill Clinton, current US President Donald Trump, former Secretary of State Hillary Clinton and CNN GPS host Fareed Zakaria have expressed similar sentiments. 


Kishore Mahbubani



Kishore Mahbubani:

Kishore Mahbubani is a former top diplomat who served as the head of Singaporean mission at the United Nations. He was born in Singapore in 1948 to Hindu Sindhi parents who migrated from Pakistan to India in 1947, and then to Singapore in 1948. He is currently a Distinguished Fellow at the Asia Research Institute of the National University of Singapore.  In 2019, Mahbubani was elected a member of the American Academy of Arts and Sciences. He is a frequent guest on CNN Global Public Square hosted by Fareed Zakaria. Here's an excerpt from Mahbubani's "Has China Won?": 

 "One hard truth that Indians have to contend with is that America has also had difficulty treating India with respect.....Many Americans, like many of their fellow Westerners, have a higher degree of respect for Chinese civilization than they do of Indian civilization. Many Americans will deny it because it is an uncomfortable truth. They will proclaim loudly that they respect India as much as they respect China. But you cannot feign respect: it is best demonstrated not through words but in deeds. Every country in the world demonstrates its respect for another country by the amount of time and attention it gives to that country, and America has devoted far more time and attention to China than it has to India". 

Trump and Clinton:

There is some evidence to support Ambassador Mahbubani's assertion about America's lack of respect for India. For example,  ex US President Bill Clinton said in 1990s that India has a Rodney Dangerfield problem: It can’t get no respect, according to his deputy secretary of state Strobe Talbott. In a diplomatic cable released by WikiLeaks in 2010, Hillary Clinton referred to India as "a self-appointed frontrunner for a permanent UN security council seat."

More recently, US President Donald Trump mocked Indian Prime Minister Narendra Modi about Indian contribution to Afghanistan.  Trump said he got along very well with Prime Minister Narendra Modi, but the Indian leader was "constantly telling me he built a library in Afghanistan". "That's like five hours of what we spend... And we are supposed to say, 'oh, thank you for the library'. I don't know who is using it in Afghanistan," Trump said.

Western Media:

Indians were justifiably very proud of their great scientific achievement when the India Space Agency ISRO successfully launched the nation's Mars Mission back in 2013. The New York Times, America's leading newspaper, mocked India with a cartoon depicting the country as a dhoti-wearing farmer with his cow knocking on the door of the Elite Space Club. 

New York Times Cartoon


In an article titled "Paper Elephant", the Economist magazine talked about how India has ramped up its military spending and emerged as the world's largest arms importer. "Its military doctrine envisages fighting simultaneous land wars against Pakistan and China while retaining dominance in the Indian Ocean", the article said. It summed up the situation as follows: "India spends a fortune on defense and gets poor value for money".

After the India-Pakistan aerial combat over Kashmir, New York Times published a story from its South Asia correspondent headlined: "After India Loses Dogfight to Pakistan, Questions Arise About Its Military".  Here are some excerpts of the report:

"Its (India's) loss of a plane last week to a country (Pakistan) whose military is about half the size and receives a quarter (a sixth according to SIPRI) of the funding is telling. ...India’s armed forces are in alarming shape....It was an inauspicious moment for a military the United States is banking on to help keep an expanding China in check".

Fareed Zakaria: 

CNN GPS host Fareed Zakaria is known to be among the loudest cheerleaders for India and a sharp critic of Pakistan. While he still refuses to say anything that could even remotely be considered positive about Pakistan, it seems that he is souring on his native India.

Speaking with Indian journalist Shekhar Gupta on The Print YouTube channel, Fareed Zakaria called the Indian state an “inefficient state”.“Indian government functions very poorly, even in comparison to other developing countries. Coronavirus has highlighted that reality, " he added. He did not clearly speak about the lynchings of Indian Muslims by people affiliated with the ruling BJP and the brutality of Indian military against Kashmiri Muslims, but he did ask: “What I wonder about (Prime Minister Narendra) Modi is, is he really bringing all of India along with him? He noted sadly:”India seems like roadkill for China".

Has New Delhi's abject failure in containing the coronavirus pandemic finally done what Indian Prime Minister Narendra Modi's extreme brutality and open hatred against Zakaria's fellow Indian Muslims could not do? Has he really had it with Hindu Nationalist government? While he has not used his perch on CNN to do it, it appears that he has started expressing his disapproval of the performance on other platforms.

 Here are a few of the key points Fareed Zakaria made while speaking with Shekhar Gupta:

1. There’s no doubt in my mind that the Indian government, and by that I mean the Delhi government, has handled this crisis (COVID19) very poorly.

2. Indian government functions very poorly, even in comparison to other developing countries. Coronavirus has highlighted that reality.

3. In a way, India seems like roadkill for China’s obsession with absolute control over their borders. I do think there is an opportunity here for diplomacy. I don’t think India needs to be confrontational about it (the LAC issue), but of course it should push back.

4. It is now a bipolar world. US and China are way ahead of the rest of the world. For the long term, India needs to decide it’s position with China.

4. Turkey under Erdogan has become more confident and independent. It is culturally proud. It is telling Americans to buzz off.

5. Popularity of political leaders around the  world is linked to their performance on the coronavirus pandemic. In India, however, the issues of religion and caste are still dominating.

6.  What I wonder about (Prime Minister Narendra) Modi is, is he really bringing all of India along with him? How many Muslims in Indian government? Or South Indians in BJP? It is much less diverse than Prime Minister Jawaharlal Nehru's cabinet.

7. I have been very sad to see how Indian democracy has developed over the last few years. It has become an illiberal democracy.

8. The India media is slavishly pro-government. Self-censorship is widespread in India.

9. The Indian courts fold in cases where government takes serious interest.

Summary: 

Singaporean diplomat, analyst and writer Kishore Mahbubani has argued in his latest book "Has China Won?" that America does not really respect India. Others, including ex US President Bill Clinton, current President Donald Trump, former Secretary of State Hillary Clinton and CNN GPS host Fareed Zakaria, have expressed similar sentiments. It has become increasingly clear that India's loudest cheerleaders like Fareed Zakaria are now starting to see the stark reality of Modi's India as a big failure on multiple fronts. Indian state has failed to contain the deadly COVID19 pandemic. India's economy is in serious trouble. The country's democracy is in decline. India seems like a roadkill for China. This turn of events has created serious problems for Pakistani "liberals" who have long seen and often cited India as a successful example of "secular democracy" at work in South Asia.

Here's a video clip from CNN GPS Show:

https://youtu.be/KpAMVLwBJkM





Related Links:

Haq's Musings

South Asia Investor Review

Is India a Paper Elephant?

COVID19 in Pakistan: Test Positivity Rate and Deaths Declining

Fareed Zakaria Never Misses Any Opportunity to Bash Pakistan

Retired Justice Markanday Katju on Modi's India

Lynchistan: India is the Lynching Capital of the World

73 Year After Independence, Caste-Ridden India Dominated By Brahmins

Pakistan's Pharma Industry Among World's Fastest Growing

Is Pakistan's Response to COVID19 Flawed?

Pakistan's Computer Services Exports Jump 26% Amid COVID19 Lockdown

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Strikingly Similar Narratives of Donald Trump and Nawaz Sharif

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Riaz Haq's Youtube Channel

Thursday, September 17, 2020

With Covid19 Under Control, Pakistan Enjoys V-Shaped Recovery in Manufacturing

With coronavirus spread contained, Pakistan economy is rebounding with V-shaped economic recovery.   Pakistanis have once again defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. The nation's monthly Quantum Index of Manufacturing (QIM) for July 2020 has returned to where it was a year ago in July 2019, according to data released by Pakistan Bureau of Statistics.  Meanwhile, the number of daily new cases has declined from over 6,000 a day in June to around 500 a day now. There has also been dramatic reduction in hospital admissions and the need for intensive care. The LSMI output increased by 5.02% for July, 2020 compared to July, 2019 and 9.54% in June, 2020.  The recovery in manufacturing is quite broad, extending from cement production to fuel sales and growing demand for automobiles to home appliances, according to Bloomberg News.  Pakistan has successfully overcome the challenges posed  by the pandemic and its economic impact. Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.



Covid19 Cases in Pakistan. Source: Our World in Data


Broad Recovery: 

The recovery in manufacturing is quite broad, extending from cement production to fuel sales and growing demand for automobiles to home appliances, according to Bloomberg News. The nation's monthly Quantum Index of Manufacturing (QIM) for July 2020 has returned to where it was a year ago in July 2019, according to data released by Pakistan Bureau of Statistics.  Meanwhile, the number of daily new cases has declined from over 6,000 a day in June to around 500 a day now.  There has also been dramatic reduction in hospital admissions and the need for intensive care. The LSMI output has increased by 5.02% for July, 2020 compared to July, 2019 and 9.54% if compared to June 2020. Month-wise trend of QIM from July, 2018 to July, 2020.    

Pakistan Monthly Quantum Index of Manufacturing. Source: PBS

Cement Sales: 

Pakistan is once again experiencing a construction boom with new incentives under Naya Pakistan Housing Program. Monthly cement sales rose to near all-time high of almost 5 million tons in July 2020 as construction activity picked up in both housing and CPEC-related projects. 

Pakistan Cement Sales. Source: Bloomberg


Car Sales:

Gasoline sales in June, 2020 hit new record  and local car deliveries rose to about 10,000 units as people returned to work after easing of lockdown in May, 2020. Kia Motors Corp.’s local unit is planning to add a second shift at its factory in Karachi from January.  

Pakistan Car Sales Recovery. Source: Bloomberg

Multiple Sectors Growing: 

Sectors including food, beverages & tobacco, coke & petroleum products, pharmaceuticals and non metallic mineral products saw an increase in production in July 2020.  Muzzammil Aslam, chief executive officer at Tangent Capital Advisors Pvt., was quoted by Bloomberg as saying, “It has surprised everybody".  Aslam expects Pakistan economy at 4%-5% in current fiscal year, higher than the government’s 2.1% target. “The growth is led by an aggregate demand push.”

Summary:

Pakistanis have defied all foreign and domestic doomsayers, including media, activists and think tanks of all varieties. Pakistan has successfully fought off the deadly COVID19 virus and begun to bounce back economically. Moody's rating agency has raised Pakistan's economic outlook from "under review for downgrade" to "stable". Pakistan's Planning Minister Asad Umar is talking of a "V-shaped recovery". Monthly cement sales have rebounded to pre-pandemic level, fuel sales have increased, tax collection is up,  exports are rising and the Karachi stock market is booming again. Prime Minister Imran Khan and Army Chief General Javed Bajwa have been on the same page in tackling the health and economic crises faced by Pakistan. Contrary to the critics of Pakistan's civil-military ties,  Khan-Bajwa cooperation has been one of the keys to the country's success in dealing with the twin crises.

Related Links:

Haq's Musings

South Asia Investor Review

COVID19 in Pakistan: Test Positivity Rate and Deaths Declining

Naya Pakistan Housing Program

Construction Industry in Pakistan

Pakistan's Pharma Industry Among World's Fastest Growing

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

Is Pakistan's Response to COVID19 Flawed?

Pakistan's Computer Services Exports Jump 26% Amid COVID19 Lockdown

Coronavirus, Lives and Livelihoods in Pakistan

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Pakistani-American Woman Featured in Netflix Documentary "Pandemic"

Coronavirus Antibodies Testing in Pakistan

Can Pakistan Effectively Respond to Coronavirus Outbreak? 

How Grim is Pakistan's Social Sector Progress?

Pakistan Fares Marginally Better Than India On Disease Burdens

Trump Picks Muslim-American to Lead Vaccine Effort

Democracy vs Dictatorship in Pakistan

Pakistan Child Health Indicators

Pakistan's Balance of Payments Crisis

Panama Leaks in Pakistan

Conspiracy Theories About Pakistan Elections"

PTI Triumphs Over Corrupt Dynastic Political Parties

Strikingly Similar Narratives of Donald Trump and Nawaz Sharif

Nawaz Sharif's Report Card

Riaz Haq's Youtube Channel

PakAlumni Social Network

Saturday, September 12, 2020

Thirlwall Law: Why Hasn't Pakistan's GDP Grown Faster Than 5% Average Since 1960s?

Pakistan's economy has grown at a compounded annual growth rate (CAGR) of about 5% since the 1960s. While Pakistan's average 5% annual economic growth rate is faster than the global average, it falls significantly short of its peer group in Asia. The key reason is that, unlike Pakistan's, the East Asian nation's growth has been fueled by rapid rise in exports. History shows that Pakistan has run into balance of payments (BOP) crises whenever its growth has accelerated above 5%. These crises have forced Pakistan to seek IMF bailouts 13 times in its 73 year history. Pakistan's current account deficits would be a lot worse without 23X growth in remittances from overseas Pakistanis since year 2000.  What Pakistan has experienced is BOP-constrained growth as explained in 1979 by Thirlwall Law, a law of economics named after British economist Anthony Philip Thirlwall.  Another reason why Pakistan has lagged its Asian peers in terms of economic growth is its lower savings and investment rates. The best way for Pakistan to accelerate its growth beyond 5% is to boost its exports by investing in export-oriented industries, and by incentivizing higher savings and investments. 

History of Pakistan's IMF Bailouts

Economic Growth Since 1960: 

The World Bank report released in June, 2018 shows that Pakistan's GDP has grown from $3.7 billion in 1960 to $305 billion in 2017, or 82.4 times. In the same period,  India's GDP grew from $37 billion in 1960 to $2,597 billion in 2017 or 71.15 times. Both South Asian nations have outpaced the world GDP growth of 60 times from 1960 to 2017.

While Pakistan's GDP growth of 82X from 1960 to 2017 is faster than India's 71X and it appears impressive, it pales in comparison to Malaysia's 157X, China's 205X and South Korea's 382X during the same period.


Thrilwall's Model: 

Thrilwall's BOP-constrained growth model says that no country can sustain long-term growth rates faster than the rate consistent with its current account balance, unless it can finance its growing deficits. Indeed, if imports grow faster than exports, the current account deficit has to be financed by borrowing from abroad, i.e., by the growth of capital inflows. But this cannot continue indefinitely. Here's how Jesus Felipe, J. S. L. McCombie, and Kaukab Naqvi describe it in their May 2009 paper titled "Is Pakistan’s Growth Rate Balance-of-Payments Constrained? Policies and Implications for Development and Growth"  published by Asian Development Bank: 

"The reason is straightforward. If the growth of financial flows is greater than the growth of GDP, then the net overseas debt to GDP ratio will rise inextricably. There is a limit to the size of this ratio before international financial markets become distinctly nervous about the risk of private and, especially in less developed countries, public default. If much of the borrowing is short-term, then there is danger of capital flight, precipitating the collapse of the exchange rate. Not only will this cause capital loses in terms of foreign currency (notably United States [US] dollars) of domestic assets owned by foreigners (the lenders), but it will also cause severe domestic liquidity problems. This is especially true of many developing countries as overseas borrowing by banks and firms is predominantly denominated in a foreign currency, normally US dollars. As the exchange rate plummets, so domestic firms have difficulty finding domestic funds to finance their debt and day-today operations, often with disastrous consequences."

Investment as Percentage of GDP Source: State Bank of Pakistan 


Pakistan's Rising Current Account Deficit:

Pakistan's external debt has been rising rapidly in recent years to fund its ballooning twin deficits of domestic budget and external accounts. It pushed the external debt service cost to $12 billion in fiscal 2019-20, and added to the trade deficit of nearly $24 billion. Remittances of $21 billion from Pakistani diaspora reduced the current account deficit to $11 billion, but still forced the new PTI government to seek yet another IMF bailout with its stringent conditions to control both fiscal and current account deficits. These conditions resulted in dramatic slow-down in the country's GDP growth. 

Pakistan's External Debt. Source: Wall Street Journal


Pakistan's Exports: 

Pakistan’s exports have continued to lag behind that of its South Asian competitors since the early 1990s. Bangladesh’s exports have increased by 6.2 times compared to Pakistan’s, measured in terms of exports per capita, and that of India by 6.8 times, according to Princeton's Pakistani-American economist Atif Mian. 

Exports Per Capita in South Asia. Source: Dawn 


Savings and Investment: 

The second reason why Pakistan lagged its Asian peers in terms of economic growth is its lower savings and investment rates. There's a strong relationship between investment levels and gross domestic product. The more a country saves and invests, the higher its economic growth.  A State Bank of Pakistan report explains it as below:

"National savings (in Pakistan) as percent of GDP were around 10 percent during 1960s, which increased to above 15 percent in 2000s, but declined afterward. Pakistan’s saving rate also compares unfavorably with that in neighboring countries: last five years average saving rate in India was 31.9 percent, Bangladesh 29.7 percent, and Sri Lanka 24.5 percent..... Similarly, domestic savings (measured as national savings less net factor income from abroad) also declined from about 15 percent of GDP in 2000s, to less than 9 percent in recent years. Domestic savings are imperative for sustainable growth, because inflow of income from abroad (remittances and other factor income) is uncertain due to cyclical movements in world economies, exchange rates, and external shocks".

Net Foreign Direct Investment Source: State Bank of Pakistan

21X Remittance Growth Since Year 2000:

Remittance inflows from Pakistani diaspora have jumped 21-fold from about $1 billion in year 2000 to $24 billion in 2020, according to the World Bank. In terms of GDP, these inflows have soared nearly 7X from about 1% in year 2000 to 6.9% of GDP in 2018.


Meanwhile, Pakistan's exports have declined from 13.5% of GDP in year 2000 to 8.24% of GDP in 2017.  At the same time, the country's import bill has increased from 14.69% in year 2000 to 17.55% of GDP in 2017.  This growing trade imbalance has forced Pakistan to seek IMF bailouts four times since the year 2000.  It is further complicated by external debt service cost of over $6 billion (about 2% of GDP) in 2017. Foreign investment in the country has declined from a peak of $5.59 billion (about 4% of GDP) in 2007 to a mere $2.82 billion (less than 1% of GDP) in 2017. While the current account imbalance situation is bad, it would be far worse if Pakistani diaspora did not come to the rescue.

Summary:

Pakistan's average economic growth of 5% a year has been faster than the global average since the 1960s, it has been slower than that that of its peers in East Asia. It has essentially been constrained by Pakistan recurring balance of payment (BOP) crises as explained by Thrilwal's Law. Pakistan has been forced to seek IMF bailouts 13 times in the last 70 years to deal with its BOP crises. This has happened in spite of the fact that remittances from overseas Pakistanis have grown 24X since year 2000. The best way for Pakistan to accelerate its growth beyond 5% is to boost its exports by investing in export-oriented industries, and by incentivizing higher savings and investments. 

Related Links:

Haq's Musings

South Asia Investor Review

Pakistan's Debt Crisis

Declining Investment Hurting Pakistan's Economic Growth

Brief History of Pakistan Economy 

Can Pakistan Avoid Recurring IMF Bailouts?

Pakistan is the 3rd Fastest Growing Trillion Dollar Economy

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