Pakistan's Quarterly Tech Exports Have Jumped Over 6-Fold Since 2010

Pakistan's quarterly technology exports reached $635 million in the first quarter of the current fiscal year 2021-22, up more than 6 times since the first quarter of fiscal year 2009-10. The nation's overall quarterly merchandise exports have been relatively flat at about $6 billion average during this period. 

Pakistan's Tech Exports 2010-2021. Source: Arif Habib

Monthly technology exports soared 36% YoY to $ 215 million in September, 2021 from $158 million in the same month last year.  During 1QFY22, technology recorded exports of worth $ 635 million (40% of overall services’ exports), up by 43% YoY. 

Recent Tech Exports FY 2021-22. Source: Arif Habib. 

Pakistan also recorded the highest ever monthly exports average of $2.23 billion in fiscal year 2020-21 as textile and garment exports jumped 22.94% to reach $15.4 billion in Fiscal Year 2020-21 (July 2020-June 2021), according to data from Pakistan Bureau of Statistics.  At the same time, the country's technology exports surged 47% to set a new record of $2.12 billion for the last fiscal year that ended in June 2021. Pharmaceutical exports also saw 25.3% growth to $241 million in the first 11months of FY 2021, indicating Pakistan's export diversification with higher value added goods and services. 

Overall Monthly Exports 2007 to 2021

Overall, Pakistan's exports of goods for fiscal 2020-21 rose 13.7% to $25.63 billion. The nation's service exports increased 9.2% to $5.93 billion in fiscal 2021. Combined exports of goods and services added up to $31.56 billion in July 2020 to June 2021 period. 

Pakistan Tech Exports. Source: Arif Habib Ltd. 

Imports grew 23.2%, much faster than exports as the economy recovered from the COVID-induced slump, widening the trade gap in the process. Energy demand drove imports of oil and gas to new highs. 

Pakistan Current Account Balance. Source: Arif Habib Ltd. 

During the last two fiscal years,  Karachi has accounted for 51% of Pakistan’s exports, Lahore came in 2nd with 18%, Faisalabad 3rd with 12% and Sialkot 4th with 8.5%. 

Pakistan's Exports by Cities. Source: FBR

Record inflow of nearly $30 billion in remittances from overseas Pakistanis helped reduce the current account deficit to $1.85 billion in FY 2020-21. It's down 58.4% from $4.45 billion in FY 2019-20. 

Overseas Pakistanis' remittances represent 10% of the country's gross domestic product (GDP). This money helps the nation cope with its perennial current account deficits. It also provides a lifeline for millions of Pakistani families who use the money to pay for food, education, healthcare and housing. This results in an increase in stimulus spending that has a multiplier effect in terms of employment in service industries ranging from retail sales to restaurants and entertainment. 

Over 10 million Pakistanis are currently working/living overseas, according to the Bureau of Emigration. Before the COVID19 pandemic hit in 2020,  more than 600,000 Pakistanis left the country to work overseas in 2019. The average yearly outflow of Pakistani workers to OECD countries (mainly UK and US) and the Middle East has been over half a million in the last decade. 

Worker Remittances as Percentage of Pakistan GDP. Source: World Bank

Pakistan ranks 6th among the top worker remittance recipient countries in the world.  India and China rank first and second, followed by Mexico 3rd, the Philippines 4th, Egypt 5th and Pakistan 6th.  

Pakistan's technology sector is in the midst of an unprecedented boom. It is being fueled by the country's growing human capital and rising investments in technology startups. A recent tweet by Swedish fund manager Mattias Martinsson captured it well when he wrote, "Have followed Pakistan for 15 years. Can't recall any time time when VC activity was anywhere near we've seen in the last few months. Impact of reforms kicking in?".  New laws have made it easier to create startups and offered greater protection to investors.  Digital infrastructure has expanded with over 100 million smartphones and an equal number of broadband subscriptions. 

Soaring LNG prices are now adversely affecting Pakistan's balance of payments and threatening the nation's post-COVID economic recovery.  Pakistan's trade deficit has widened to nearly $12 billion in July-September 2021 quarter, up more than 100% from the same period last year. The nation's heavy reliance on expensive imported energy has been the main cause of prior balance of payments crises that have forced it to seek IMF bailouts more than a dozen times in the last 70 years. 

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Opioid Crisis: Indian-American Pharma CEO Jailed

Dr. John Nath Kapoor, Indian-American CEO of Insys Therapeutics, has been found guilty of conspiring to recklessly and illegally boost profits from the opioid painkiller Subsys, a fentanyl spray designed to be absorbed under the tongue, according to multiple media reports.

Dr. John Nath Kapoor

In 2018, data showed that opioid overdoses killed an average of 128 Americans everyday.  Last year, nearly 70,000 Americans died of opioid overdoses.  Opioid abuse has become a public health crisis with devastating social, economic and health consequences in vast swathes of America.  In spite of knowing the dangers opioids posed, drug companies like Kapoor's Insys heavily promoted such drugs by paying physicians to overprescribe, resulting in enormous company profits.

Kapoor has received five and a half years jail sentence.  CBS has reported that others working for him have been sentenced to serve from 12 to 33 months, in part because of the testimony of the government's star witness: Alec Burlakoff, the senior vice president of sales at Insys, who had pled guilty and cooperated with prosecutors.

Kapoor, billionaire entrepreneur and former CEO of Insys Therapeutics, was born in Amritsar, India. He studied pharmacy at Institute of Chemical Technology in Mumbai, India. He received a doctorate in medicinal chemistry from University of Buffalo, New York, in 1972. He became a major American success story until he was arrested and charged in 2017 under RICO (Racketeer Influenced and Corrupt Organizations) laws.

Earlier in June, 2020, three Indian-American physicians were found to have faked results of a hydroxychloroquine (HCQ) study they published in New England Journal of Medicine and The Lancet. Both journals were forced to retract it.

Last year, an Indian-American operator and several Indian-American and other doctors participating in a home health care business in Silicon Valley were charged by US federal prosecutors with fraud.

India and Pakistan are among the top three sources of foreign medical professionals in the United States.

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5 Pakistani Companies Among Forbes 200 Best Under $1 Billion in Asia

Five Pakistani companies are featured in the Forbes magazine’s latest annual ranking of the 200 best companies with under $1 billion in revenue in the Asia-Pacific  region. Pakistan's representation of 5 on the list is down from 7 last year. The number of Indian companies on the list is down to 3, less than half of the seven companies that made it in 2016.

Among Pakistan's five companies on the list is Ferozsons Laboratories which is making its debut this year. The company's revenue jumped 93% last year.

The list highlights 200 Asia-Pacific public companies with less than $1 billion in revenue and consistent top- and bottom-line growth. This year’s candidates come from 13 countries and averaged 55% growth in sales, a 24% profit margin, and 113% growth in earnings per share.

China tops the Forbes 200 list with 71 companies followed by Japan 41, Taiwan 30, South Korea 22,  Vietnam 10, Singapore 7, Australia 6, Pakistan and Malaysia 5 each, Thailand 4, and Hong Kong and India 3 each.

The Pakistani companies on the list are Agriauto Industries, Cherat Packaging, Ferozsons Labs, Gandhara Industries and Searle Companies. There are 3 Indian companies on this list: 8k Mile Software Services, Kellton Tech Solutions and Manpasand Beverages.

Of the 5 Pakistani companies on the list, two are in auto industry, two in pharmaceuticals and one in package manufacturing. Here are brief descriptions of the companies as published by Forbes:

Agriauto Industries Ltd. manufactures and sells components for automotive vehicles, motorcycles, and agricultural tractors. Its products includes shock absorbers and struts; motorcycle shock absorber and parts; sheet metal press parts; and other parts such as manual type window regulator and door/door hinges. The company was founded on June 25, 1981 and is headquartered in Karachi, Pakistan.

Cherat Packaging Ltd. is engaged in manufacturing, marketing and selling of paper sacks and polypropylene bags to the cement industry in Pakistan. It provides cement bags made from kraft paper and polypropylene granules. The company was founded in 1991 and is headquartered in Karachi, Pakistan.

Ferozsons Laboratories Ltd. engages in the manufacturing and trading of pharmaceutical products. It produces tablets, capsules, syrups, suspension, creams, and ointments. The company was founded on January 28, 1954 and is headquartered in Lahore, Pakistan.

Ghandhara Industries Ltd. engages in the manufacture and market of vehicles. Its products include pickup, trucks, and buses. The company was founded by M. Habibullah Khan Khattak on February 23, 1963 and is headquartered in Karachi, Pakistan.

Searle Co. Ltd. engages in the manufacturing of pharmaceutical products and a low calorie sweetener. It also engages in selling of food and consumer items and manufacturing of pharmaceutical items for other companies. The company operates through the following segments: Pharma, Consumer and Investment Property. Searle was founded on October 5, 1965 and is headquartered in Karachi, Pakistan.

Pakistani companies are riding the rising tide of the nations's middle class consumption. They are benefiting from increasing consumer confidence and growing demand for cement, branded food products, pharmaceuticals and vehicles. Overall consumer products and services companies have been on the rise on Forbes Asia list, an indication of Asia’s success in moving towards a consumer economy.

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