Showing posts from January, 2014

Japan Inc. Bullish on Pakistan; Plans Investment to Expand Business

Japanese companies have "strong intentions to expand their business for the reasons of “sales increase” and “high growth potential.” in Pakistan.  JETRO 2013 Report

Japanese companies doing business in Pakistan have ranked the country second in the world in terms of business growth, according to a survey conducted by the Japan External Trade Organization (JETRO).

JETRO surveyed 9,371 Japanese multinational companies operating around the world and reported that Pakistan is ranked number 2 in terms of current profitability and expected sales growth. Taiwan leads with 81.8% reporting profits, followed by Pakistan with 74.1% being profitable in 2013.

Pakistan also ranks at number 2 with 81.5% forecasting future sales growth, just behind Myanmar where  84.6% see growth in the next one to two years. Other South Asian nations, including Bangladesh, India and Sri Lanka, rank much lower for both profits and sales growth.

JETRO has been conducting such surveys for many years. Pakistan’s da…

Cricket's "Big 3" Power Grab Defies Established Sports Economics

Australia, England and India, the three biggest revenue producing nations in the world of cricket, are seeking to remodel International Cricket Council (ICC) along the lines of the UN Security Council. They are making a naked bid to get more money and power for themselves at the expense of the cricket boards of the rest of the ICC member nations including Bangladesh, New Zealand, Pakistan, South Africa, Sri Lanka, West Indies and Zimbabwe.

The "Big 3" Proposal:

The proposals, written by the ICC's Finance, Commercial Affairs (FCA) committee and leaked to the media last week, calls for the formation of a four-person executive committee, on which the representative of boards of Australia, England and India would be guaranteed a seat. Only one representative from the rest of the cricketing nations combined would be selected by the three boards annually.

Would this proposal, if adopted as is, strengthen the sport of cricket? Or would it spell doom for it? Its proponents argue …

Economic and Human Capital Development in Pakistan 1999-2007

Pakistan experienced rapid economic and human capital growth in years 2000 to 2008 on President Pervez Musharraf's watch. Savings, investments and exports hit new records and the rate of increase in human development reached new highs not seen before or since this period.

Savings and Investments:
Domestic savings rate reached 18% of the GDP and foreign direct investment (FDI) hit a record level of $5.4 billion in 2007-8. This combination of domestic and foreign investments nearly tripled the size of the economy from $60 billion in 1999 to $170 billion in 2007, according to IMF. Exports nearly tripled from about $7 billion in 1999-2000 to $22 billion in 2007-2008, adding millions of more jobs. Pakistan was lifted from a poor, low-income country with per capita income of just $500 in 1999 to a middle-income country with per capita income exceeding $1000 in 2007.

The PPP government summed up General Musharraf's accomplishments well when it signed a 2008 Memorandum of Understanding…

Rising Incomes Driving Meat Consumption in Developing Countries

A recent study published in Proceedings of the National Academy of Sciences and Nature magazine reports that Pakistanis are among the most carnivorous people in the world.

The scientists conducting the study  used "trophic levels" to place people in the food chain. The trophic system puts algae which makes its own food at level 1. Rabbits that eat plants are level 2 and foxes that eat herbivores are 3. Cod, which eats other fish, is level four, and top predators, such as polar bears and orcas, are up at 5.5 - the highest on the scale.
After studying the eating habits of 176 countries, the authors found that average human being is at 2.21 trophic level. It put Pakistanis at 2.4, the same trophic level as Europeans and Americans. China and India are at 2.1 and 2.2 respectively.

The countries with the highest trophic levels (most carnivorous people) include Mongolia, Sweden and Finland, which have levels of 2.5, and the whole of Western Europe, USA, Australia, Argentina, Sudan,…

Did Musharraf's Economic Performance Confer Legitimacy on His Rule?

Former President Musharraf's detractors argue that he lacked legitimacy because he came to power through a coup which removed a duly elected government in 1999.

Implicit in Musharraf's opponents' argument is the assumption that the electoral process is the only source of legitimacy for a ruler. It ignores the possibility that the will of the people can also be expressed in ways other than elections to confer legitimacy on a leader. It rejects the notion that a leader can earn legitimacy in the eyes of the people by delivering results to the people through good governance.

Public Opinion Surveys:

Such an expression of people's will can come in many forms, including results of frequent public opinion polls conducted by multiple professional pollsters in Pakistan and many other countries around the world. One such credible survey is done regularly by Pew Global Research.  It shows that the majority of the people believed the country was headed in the right direction in Mu…

Pakistan Terrorism Toll in 2013

Total number of deaths in Pakistan terrorist violence declined from 6,211 in 2012 to 5,279 in 2013, the lowest since 11,704 fatalities suffered in 2009, according to figures compiled by South Asia Terrorism Portal.

While civilian casualties remained essentially flat--down only slightly from 3007 in 2012 to 3001 in 2013-most of the overall drop from 6,211 to 5,379 occurred in fatalities suffered by the security forces and the terrorists.

Pakistan's biggest province Punjab with more than half the country's population remained relatively unscathed  by terrorist violence with just 81 terror casualties in 2013. By contrast, FATA, Sindh, KP and Balochistan suffered disproportionately  with 1,716, 1668, 936 and 960 terror-related deaths respectively.

Sindh suffered the most civilian casualties in 2013 with 1285 dead in terrorist attacks. It is followed by 718 in Balochistan, 603 in KP, 319 in FATA and 64 civilian deaths in Punjab. Few terror-related deaths in Punjab, Pakistan's …

KSE-100 World's 5th Best Performing Index in 2013

Karachi's KSE-100 Stock Market Index was up 49.4% (37% in US$ terms) in 2013, beating all but four stock indices in the world. It handily beat Morgan Stanley's MSCI emerging market index which remained essentially flat. By comparison, India's main stock index rose just 8.89% in the same period. The remaining three BRIC countries--Brazil, Russia and China-- all saw their key stock indices decline in 2013.

This is a continuation of the bullish trend seen in 2012 when KSE-100 also rose nearly 50% to top all Asian market indices. As of December 31, 2013, KSE-100 is up 329% since the end of 2008. It is being driven mainly by rapid growth in revenue and profits of the listed companies. Even after the strong run-up, the market still remains cheap—currently trading at over nine times trailing 12 month earnings—a common valuation measure used by stock analysts, according to Wall Street Journal.

Dubai finished up the most in 2013 with a gain of 107.69%. Japan was up the fourth most…

Pakistani-American Prof's Tool Helps SME Financing in Emerging Economies

Pakistani-American Prof. Asim Khwaja and his doctoral student Bailey Klinger at Harvard’s Kennedy School of Government observed that banks have money to lend, but even profitable small businesses in developing nations often cannot access it, choking growth.

Looking into the reasons, they found it was the lack of access to tools like credit agency reports and FICO credit scores which are common in developed economies. This discovery gave birth to Entrepreneurial Finance Lab to develop alternative tools for bankers to assess risks to lend money to small business owners. Their basic tool is a multiple-choice psychometric test. Here's how New York Times describes it:

The lab’s model asks questions that do not necessarily have a right answer; using an algorithm, it aims to predict whether an individual is likely to default based on how the answers relate to one another. For example, to assess their sense of personal control over outcomes — which tends to correlate with loan repayment…