The magical Prof. Rosling forecasts health and prosperity for the developing world

For many hundreds of years, the West has symbolized development, prosperity and riches, while the rest of the world - the horrendously named, “Third World” in particular - has been synonymous with backwardness, disease and hunger. Let us, for the moment, forget that much of this disparity was actually a result of exploitation by colonialists from the West, and let us also ignore the fact that to this day, all too frequently, Western influence is exerted in most developing countries to the detriment of the local society. Despite the miserable history behind the exploitative abuse of the Rest of the World, the good news is that in the 21st century almost all countries will catch up with the wellness, HDI and wealth indicators of the West.

We’ve covered the case of Pakistan numerous times in the past. As the seventh largest country in the world, blessed with trillions of dollars of natural resources, there is no question that Pakistan will emerge as a power on the global stage. This will happen despite shortcomings in political leadership. The fundamental trends propelling Pakistan toward a developed future are far more powerful and basic than temporary considerations such as who occupies the Prime Minister’s house in a given term. 

For much of the rest of the world, while perhaps not to the same extent as Pakistan, development and a general uplift of HDI indicators is nonetheless inevitable. How is this happening? Is it because of increased mobility between populations? Better communication? The democratization of technology? The rise of alternate power centers like China, which have very different goals than the West? The growing sense of self-identity and desire for freedom in erstwhile underpopulated and easily exploited resource rich countries? Perhaps the answer is “all of the above”.

Prof. Hans Rosling, statistician, friend to the Third World, TED fellow and marvelous story teller, shows us how this empowerment is unfolding and when China, as a reference point, will reach the per-capita GDP of the US. While China’s rise is praise worthy and phenomenal, the reality is that as long as we are able to avoid major wars, over the medium-term, much of the world will achieve high standards of living and wealth. Development and prosperity can no longer remain the exclusive domain of the post-colonial West. Good news all around. And here it is from Prof. Rosling himself:

www.youtube.com/watch?v=WjVHvC9EeB4

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Lots of stuff will happen in 2012, but the world will not end. Sorry Mayans! (Image credit: TheAtlanticWire)

2012 is going to be a very interesting year. Elections are coming up in two very important countries, Pakistan (in early 2013) and the United States (2012). The US’ confrontation with Iran has both countries making threats and accusations and heading in a direction that seems to be escalatory. Further, the US has retreated from Iraq and violence there seems to be at an upswing. As someone said, the US-Iraq war is over. Iran won. Then, we also have the NATO drawdown in Afghanistan which has led to much drama and desperation on the part of the ISAF and NATO forces; as we predicted last year, the US is now openly saying that the Taliban are not a US enemy, the Taliban leader, Mullah Omar, has been removed from the FBI’s most wanted list and US diplomats are now negotiating with the Taliban with no preconditions. In that the Taliban have not laid down their weapons and continue to control over 75% of Afghan territory, these negotiations appear to be more about NATO giving in to the Taliban position and figuring out how to withdraw in haste than the opposite.

And that’s just the geo-strategic picture. Lots of exciting technology is going to be introduced also this year, and all eyes are on Europe and America as the economic troubles enter their fifth year. Will this finally be the bottom and will we start heading in the right direction? I thought this would have happened in 2011, but I was wrong. So, what happens in 2012? Read on to find out.

Political and Geo-strategic Predictions

1. The PPP government in Pakistan will not be removed. They may choose to go for early elections once the Senate elections are completed, but no other force (Army, PTI etc.) will compel them to leave office. This will be good as it sets the tone for a long running democratic dispensation which self-adjusts to find a workable solution to governance in Pakistan.

2. The PPP will pull off a successful senate election, strengthening the President.

3. Memogate will not lead to Asif Zardari’s resignation.

4. Mitt Romney will win the Republican nomination.

5. Romney will come pretty close to removing Obama, but Obama will scrape through. Personally, with all of Obama’s broken promises and false mantras of change, we would rather Romney win in his stead, not because we support Romney, but simply because we feel there should be some accountability for such a disastrous and damaging run in office.

6. The PTI will emerge as a political force post the next election, but nowhere near the numbers being claimed by Imran Khan who has suggested that it will be a Tsunami and will take an outright majority. Not even close.

7. 2012 will mark Pakistan’s strategic goodbye to America. There is still lots of discussion about whether regular business-as-usual relations between Pakistan and the US will resume, but we don’t think they will in the foreseeable future. In fact, the NATO massacre of Pakistani troops precipitated what had to happen anyway. Pakistan has simply had enough of the US pushing it around and asking for “more” when the US themselves, along with all their other allies, have done far less than Pakistan in prosecuting the WoT. The absolutely false claims of $20B in “aid”, which have been made repeatedly, have done nothing other than simply insult, irritate and anger both the Pakistani establishment and its populace. First off, it’s not as if this $20B was the figure of assistance for any single year. This paltry sum, which pales in comparison to the $600+B annual US defence budget, and the $1T+ spent on the lost war in Afghanistan, covers TEN years of supposed (and imaginary) assistance to Pakistan. Second, $20B have not actually been transferred, so the figure itself is nonsense. Third, the bulk of the money actually dispensed by the US has been for reimbursements, i.e. money ALREADY SPENT by Pakistan which the US OWES it. Fourth, the rest of this money has been spent through US agencies, contractors and mostly, on US goods. This means the effective value of every $1 spent by US AID is probably less than 25c of benefit to Pakistan. With the hefty, fees due to overpaid American consultants and vendors along with the unnecessary spending on transportation, very little actual benefit is accrued. In a nutshell, the real value of all US “AID” to Pakistan stands probably at 2-3% of the $80+Billion Pakistan has lost in the WoT. To top off the monetary exploitation, Pakistan has been bullied, the US press and media have been used as a veritable weapon in an unrelenting disinformation war against Pakistan and Pakistan’s interests (e.g. the IP(C) pipeline with Iran), on fundamental issues unrelated to the US or the WoT, have been repeatedly threatened. This simply cannot go on. We also believe that the death of this last US-Pakistan alliance will lead to Pakistan’s migration into the Asian camp, where it will work increasingly in concert with Russia and China in future, and will never again (at least for the next 30-50 years) consider an alliance with America.

8. Despite rumours, Gen. Pasha and Gen. Kiyani will not secure further extensions.

9. The bluster doesn’t past muster. The US will not attack Iran in 2012.

Technology Predictions

1. Windows 8 will be a significant force this year. It will rekindle interest in Windows as a consumer OS as a large number of tablets and phones will support it. 2012 is when Microsoft will really launch its counterattack against Apple, but unlike in the past, this will not be based on stealing marketshare from the iPhone, but grabbing as much interest from non-Smartphone and Blackberry users as possible. Windows Phone applications will touch 100,000 by the end of the year.

2. Microsoft will buy Nokia’s Smartphone division.

3. RIM had a terrible year, but the new Blackberry 10 products will begin to stop the bleeding. RIM still provides the most secure solution, and it is generating north of $5B in revenue every quarter, so it is a force to be reckoned with. There will be a lot of discussion around a RIM acquisition in 2012, but it will not happen.

4. Android will continue to grow at the expense of the iPhone and most of all, Symbian and RIM. In the end, though, we don’t quite understand what Android does for Google. In many respects, the fundamental desire Google had of owning the endpoint to ensure that access to its services would be smooth and uninterrupted, seems premised on the assumption that non-Google OSs somehow wouldn’t allow access (or at least, fair, open access) to Google. I am not sure this makes much sense, since Google services are available and used on all non-Android OSs. Either way, Android is definitely going to grow market share in 2012, probably by another 5-10 points.

5. Ultrabooks are going to be BIG this year. They will also, in concert with Windows 8, lead a PC renaissance which should stem Apple’s growth on the PC/Laptop side of the house. My gut tells me that Apple’s desktop/laptop marketshare will grow at 60-70% the rate at which it grew in 2011. Ultrabooks will put a dent…

6. The next iPad will come out with a) 2-3MP display resolution b) reduced entry level model price c) Siri integration d) dual core 1.2+Ghz processor. However, momentum for non iPad tablets will continue, especially with the advent of Windows 8 slabs. By the end of 2012, less than half of all tablets sold will be Apple iPads.

Financial Predictions

1. The KSE will post 10% growth this year. First, as explained below, the favourable USD-Rs. exchange ratio will make Pakistani stocks cheaper for foreign investors, and second, the continued reduction of WoT related violence inside the country will bring the stability necessary for growth in investor confidence. If it weren’t for 2012 being the run-up to an election and numerous political events punctuating the year (Musharraf’s return, court proceedings, PTI “jalsas”, Senate elections, pre-election politics and so on), this number would have been higher. In part, growth will also be helped by the beginnings of a global recovery in 2012.

2. The Pakistani Rs. will touch an exchange rate of Rs. 95 to $1 USD during the year. It may go as high as Rs. 100, but 95 is within reason. Some repayments to the IMF are coming up which will pressure the foreign reserve. We’ll get through it without all that much trouble, but a rise in the exchange rate can be safely assumed.

3. The Dow will show modest growth, around 5% for the year. The early part of 2012 will be marked with some optimism, with a dip hitting the middle of the year. The last few months of the year will show a recovery powered by fundamental improvements in economic indicators such as the unemployment rate, and some control over federal spending finally kicking in. The huge amounts of cash on corporate balance sheets also need to be spent at some stage and if 2012 looks safe, CFOs will let go of the purse strings, kicking off M&A and spurring some market growth.

4. Pakistan’s GDP will grow at about 4% during 2012.

5. There will be a reduction in the unemployment rate in the US, probably by about .3-.5%, ending at about 8.2% or so in December 2012.

6. Netsol touched a peak in 2011 and then fell to the ground in terms of stock value. 2012 will see improvement, but a peak of $1 is probably optimistic. Nonetheless, some money can be made on Netsol if it is bought around 40c and sold when it approaches 60-65c during 2012.

[Techlahore takes no responsibility for any financial projections or stock predictions. We are not advocating the purchase or sale of any security and are providing our opinions purely for general interest purposes. The reader assumes all responsibility for all his/her financial decisions, including the sale or purchase of any security.]

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TechLahore's 2011 predictions turned out to be the least accurate EVER! Hmph!

We’ve been publishing since 2007 and TechLahore is hence not exactly a “new” blog. As institutions age, they accrue tradition, and TechLahore is no different. Our December evaluations of the past year’s predictions have been happening now for the past several years. In January, we’ll follow-up with a new set of predictions for 2012.

Here are the past evaluations, in case you’re interested:

1. Evaluating TechLahore’s predictions for 2010
2. Evaluating TechLahore’s predictions for 2009
3. Evaluating TechLahore’s predictions for 2008

So, without further ado, let’s see how we fared this year:

Political Predictions

The parliament is not going anywhere. This PM may or may not last, but the Parliament is well on its way to completing its 5 years. I think it will navigate 2011 in tact. And if that happens, with less than a year to go in 2012, term completion will be well within sight and all but certain.

Spot on. The parliament is here and if the Army Chief’s recent statements are to be believed, no coup is in the offing.

The Congress Government in India will continue to get less popular and Mr. Manmohan Singh’s “clean” image will become a thing of the past. Corruption is going to be a massive story for India in 2011.

The Congress government has become a symbol of inefficiency and corruption in India. India has actually fallen further on the Transparency corruption index. Manmohan has lost the Mr. Clean image for sure. I’ll claim full credit here.

Mr. Obama will see an increase in his popularity rating. It currently stands at -12 according to the Rasmussen Reports. We’ll see how he ends the year up in 2011, but my guess is he could be close to neutral territory. This improvement will come from the improvement in economic conditions in 2011, as well as a greater willingness to work with the Republicans in the House.

Well, I was wrong on this one. Despite the fact that the Republicans were busy ripping each other apart, the Congress being a veritable ball and chain around the Presidency has resulted in a low approval rating. We said we’d use the Rasmussen Reports as our measure, and as per the latest poll in December 2011, Obama is still roughly where he started the year (-13).

Security and the situation in Northwest Pakistan

2010 saw a 35% reduction in the number of terror attacks. 2011 will continue that trend. There will be a close to 25% further reduction in the number of terror attacks. The reach of these attacks will, for the most part, stay limited to the Northwest. The Pakistan Army will make moves in the NWA region, but these will not be in the form of a full-fledged onslaught at the scale of the Swat operation.

According to the Pakistan Institute of Peace Studies, the number of deaths in 2011 fell by almost 40%! This was good news for Pakistanis, and in fact, the last half of the year saw an almost complete halt in terror attacks throughout the country. The few instances that did occur were limited to checkposts near or in the FATA areas.

NATO will begin to significantly ease up on operations in Afghanistan. They will still be there at the end of 2011, but will no longer be looking to aggressively take on the Taliban. Most of the fights between the two parties will occur as the Taliban attack NATO convoys, posts or bases. NATO may retaliate, but will not run a strategic campaign of any significance. 2011 is the year that will see an increase in outreach to Taliban and the beginnings of negotiating at a post-NATO agreement. The biggest priority for the US will now be negotiating an exit for themselves and NATO which will allow them to claim a victory, even though the reality will be far from it.

NATO has done almost nothing against the Taliban in Afghanistan. A couple of half-hearted thrusts here and there, with no real resolve for meeting any tangible goals. They have also talked about allowing the Taliban to setup an office in a Gulf state and have been engaged with negotiations with the so-called “enemy”. In fact, the only military action NATO engaged in this past year which made waves was an attack on two Pakistani checkposts, resulting in the martyrdom of 24 Pakistani soldiers. Viz the Taliban, the NATO mission in Afghanistan is pretty much finished. What remains is a negotiated settlement that allows the US room to depart without being chased.

2011 will see a reduction in the number of drone strikes in FATA, as compared to 2010.

The number of drone strikes this year was significantly less than last year. Here is the data.

Technology Predictions

Android will end 2011 as the dominant mobile platform. Apple will not be able to reverse the trend that began in 2010. I would predict that Android will go from its current 22.7% of the US smartphone market to close to 33%. Overall, while 30% of the current US population of cell phone users use smartphones, by the end of 2011, this 30% will grow to 45% at least. All these 2010  statistics are based on December estimates from Nielsen.

Hear hear! Android is now the defacto King of the mobile OSs. Android now accounts for 53% of smartphone shipments. I had said the US market share for Android will increase to 33%, and in reality, according to Nielsen it has gone past 42%. So I’ll take this one…

Tablets will be the major consumer device story in 2011. This shouldn’t come as a surprise. But non-Apple tablets will continue to increase their market share. Today, the iPad has 95% market share, but by the end of 2011, this will be reduced to 75%.

Yes and yes. Tablets were THE story of the year and non Apple tablets are now coming out the wazoo. As I had predicted, not only did the iPad’s market share fall, it fell a bit faster than I had predicted. According to IDC, it stands at 68% going into the holidays.

Mobile apps for phones and tablets will continue to attract more and more developer talent. I see 2011 ending with close to 700,000 apps available for all the major platforms. Currently, iOS and Android have about 400,000 apps between them and Blackberry probably another 12,000 or so. Windows Phone7 is so new, it hardly has any. By the end of 2011, you will likely see 400,000 iOS apps, 250,000 Android apps, 20,000 Blackberry apps and about 15,000 Phone7 apps. With tablet apps thrown in, this will get close to 700,000.

Apps grew much faster than even I had predicted. Apple announced that there are 500,000 iOS apps. Android stands at 250,000 apps. And Microsoft Phone7 is at 25,000. Blackberry hasn’t grown as fast, but net-net, the prediction I made of the total number of mobile apps exceeding 700,000 has come true. We are actually probably closer to a million than 750,000.

Pakistan’s software industry will see a good year. The momentum on the mobile development side will continue, and I see most of the established companies growing their teams and bringing on more talent. There are few metrics available to truly judge this, but we’ll pick a few leading illustrative cases in December 2011 and see how we fared.

Measured in almost every way, 2011 was a great year for Pakistani software. At APICTA, Pakistanis won more awards than ever before. Whereas 2010 saw one Pakistani mobile app make it to World #1, in 2011 there were two more. And the growth we are seeing has made many experts very hopeful. Current estimates suggest that we will exceed $10B by 2020.

Apple will launch the iPhone 5 this year, but it will be a defensive, bug fix kind of product rather than anything particularly innovative to help it leapfrog the numerous Windows Phone7 and Android devices hitting the market on a monthly basis. The biggest issue with the iPhone 4 was the antenna, and so the iPhone 5 will revolve around better antenna performance. Apple will do the usual dog and pony and claim that the iPhone 5 has the best designed antenna of any phone ever made etc. But in the end, the iPhone 5 will not succeed in stemming the tide of Android and Windows Phone7 phones. The important thing here is that 2011 will be the year of the commoditization of the Smartphone. There will be so many makes and models, with so many different OS choices that will offer basically equivalent functionality, that the market will start to make a shift towards the less expensive devices (i.e. Android).

I felt a shudder when I read that part about the new iPhone not being particularly “innovative”. Look at the new device. It wasn’t even a significant enough upgrade to merit the iPhone “5″ moniker. Apple stuck with 4S. And rightly so. The antenna issue is fixed, and other than the bundling of Siri, which was available as a free download for older iPhones prior to Apple’s acquisition of the company, there isn’t much to write home about. Android has left the iPhone in the proverbial dust. Yes, the iPhone is very much a market leader from an ease of use and proliferation of apps perspective, but Android phones now have faster radios, better screens, faster processors, more storage, better cameras and pretty much everything else.

We’ll learn a lot more about Windows 8 this year. While the central themes will be integration with the Cloud, make no mistake, this will be an honest-to-goodness PC operating system. It will showcase better visualization, add support for bigger, faster GPUs and will standardize 64-bit. We may see the first 128-bit mainstream OS among Windows 8′s several SKUs. No release in 2011 though, just more specificity on what the product will be and perhaps an alpha/CTP.

Windows 8 not only provides better visualization, it has an entirely reinvented Metro based UI for tablets. It does in fact standardize 64 bit and yes, there isn’t going to be a 2011 release. However, as predicted the CTP was launched this year. I’ll take this one… I was even right about it being an honest to goodness PC OS – one click and you’re back to the traditional Windows desktop.

Virtualization, which has commanded the enterprise IT airwaves since 2007-8, will begin to take a back seat to other trends. As services that were once virtualized start to migrate to the cloud and outsource PaaS infrastructures, the value of virtualization in the enterprise will diminish somewhat. Obviously, the level of adoption is tremendous so it will take some time to happen, but 2011 will be the turning point and this will become evident with the decreased “cool” factor and reduced coverage. On the desktop side, inexpensive PCs, numerous new form factors like tablets with native apps and cell phones equipped with projectors etc. will begin to chip away at the desktop virtualization value proposition. I don’t think this shift will be visible enough to most to cause a major reduction in, say, VMware’s stock price (hovering around $90 right now).

Cloud has overtaken the IT airwaves and while Virtualization remains a persistent meme, it is getting less airplay because it is becoming part of the “assumed” stack of capabilities. PaaS infrastructure has definitely grown, along with IaaS ala Amazon. Inexpensive PCs and tablets have been a core IT story throughout 2011, whether it be the Indian Akaash tablet, the Ainovo novo 7, the Amazon Kindle Fire or the about to be released Raspberry Pi. It’s all about sub-hundred dollar price points… So now let’s look at my VMware stock price prediction. I said there won’t be a huge increase because virtualization’s cool-factor will start to subside, but it won’t be significant enough to warrant a big price drop. Well, VMware stands at around $84 right now. A little less than last year, but just a little, as predicted.

Wateen and/or Warid will cease to be an independent operation in Pakistan. Their poor execution has cost them dearly. If it weren’t for the seemingly limitless capital available to them, they wouldn’t have survived as long as they have. They will likely be acquired by another major operator in the Pakistani market.

Wrong. Wateen is around. Crippled and in need of direction. But around.

Netsol stock on the NASDAQ (NTWK) will have a good year, with at least one close above $2.25 during the year.

Wrong. Netsol didn’t have a good year. I was right that it would close about $2.25, because it touched $2.39 in February. But it’s been a slide since then. So even though I was half right at least about the annual high, I won’t take this one.

Financial and Economic Predictions

Pakistan’s GDP will grow by at least 4%, likely 4.3%. The current estimates of two point some are utter nonsense.

Wrong. GDP was actually 2.37%, below what I had expected. Shucks.

The KSE will continue to rise. I expect it to benefit from the improvement in the global economic environment and the greater clarity in the regional strategic equation. I’m projecting an at-least 15% rise, but it could be as high as 25%. If it comes close to the latter, then we may approach KSE’s all-time highs in the 16K range!

Wrong. The KSE, along with world markets, declined. There was a high around 12,700 in January 2011, but the market trended southward given everything that has happened in the world from an economic standpoint this year. It ended the year about 4% in the red.

The US markets, the Dow and Nasdaq, will see an increase of about 8-10%.

Half right. The Dow went up by about 6%, but the Nasdaq declined by slightly less than 2%.

Job data will be watched super closely in the US. There will be some improvement this year, but I don’t think it will be very rapid. My estimate would say a .4-.6% reduction in the unemployment rate by the end of 2011.

Absolutely spot on. In Jan, unemployment was at 9%. By Nov 2011 it had declined by .4% to 8.6%.

The housing market in the US will begin a tedious, painful and slow journey to recovery. With properties having dropped anywhere from 30-70% over the last couple of years, this year will probably see a 5% increase in average home prices.

Wrong. While the housing market does appear to be turning around, it didn’t happen in 2011. There was probably a roughly 3% decline in average home prices across the US.

The Pakistani Rs. will see some weakening this year. It fought off pessimistic estimates of a drop to 100/$ but in 2011 we may see a 5% or so weakening with respect to the US$.

That’s just how it happened. Didn’t touch Rs. 100 to the dollar, but we’re at 90. So that does translate into a little over 5% weakening through the year.

Real estate prices will start to improve in Pakistan in 2011. More importantly, the number of deals being done will go up. I will use the index price of a 1 kanal plot in Gulberg, Lahore as an index when we revisit this in December 2011. The market price is currently at 1 crore 50 lacs.

This one is really hard to call. I have done a few informal tests with a few plots throughout the city and while there hasn’t been a decline, it’s not clear to me whether the asking price is something that is attracting buyers readily. I just don’t have enough data on this one to make a call. If you look at the lahorerealestate.com data for plots in Defence etc. the prices have risen just slightly.

So, where did we end up? 15 right (I’ll claim half credit for a couple) and 7 wrong. I think that might be the worst I’ve ever done. Most of where I fell short had to do with the economy in the US and Pakistan. Essentially, I was expecting a faster recovery than what has materialized. So what do I think will happen in 2012? Well, stay tuned for that post in January! Till then, HAPPY NEW YEAR!

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Ally China is pursuing a number of UCAV projects. So is Pakistan...

Since the war on terror started in Afghanistan back in 2001, the United States Air Force has employed various different UAV platforms to target insurgents and the Taliban. Both on Afghan soil as well as in Pakistani territory, with the covert approval of the Pakistan government. Observing the efficacy of UAV platforms like the Predator, the Pakistani military establishment requested the United States to equip it with UAVs so that the war on terror could be prosecuted with more efficacy on the part of the Pakistani military. However these requests were denied repeatedly and America cited the potential use of these UAV platforms in military theaters outside the Afghan Pakistan border (i.e. India) as a flimsy excuse. Faced with these denials, but unwavering in its resolve to achieve its objectives, Pakistan undertook a domestic UAV development program. Even prior to Predator requisition requests being turned down, the Pakistani military had already invested in various autonomous target drones, built both by the private and public sectors. Here at TechLahore, we covered Pakistani drone developments a couple of years ago. In fact, we pointed out that the level of sophistication was such that – in a rather ironic twist -private Pakistani drone  manufacturers were exporting UAVs even to the United States homeland security department for oversight applications on the US-Mexico border.

Since then, much has happened. Pakistan entered into a deal with the Italian firm, Selex-Galileo, for the licensed production of fairly capable UAV aircraft at the Kamra Aeronautical facilities. In addition, the Pakistan Navy also acquired rotorcraft drones from foreign sources. Separately, the Pakistan Army has pursued partnerships with China and has incented local manufacturers to continue to develop more advanced platforms within the country. One of the more promising UCAV projects currently in progress in Pakistan is the Burraq armed drone. Burraq is envisioned as a high endurance, long-range, over the horizon, armed UAV aircraft. For the last four years it has been under development and rumors are now surfacing that it may be ready for deployment. At the recent Zhuhai airshow in China, in which the Pakistan Air Force participated with its JF-17 Thunder fighter aircraft, Chinese manufacturers also displayed miniaturized lightweight missiles that were particularly suited for carriage on a drone. Various parts of this sprawling Pakistani drone development program are coming together, in partnership with China – weapons development, control systems development, propulsion, airframe, ground stations and much else. The Burraq will only the first in a line of capable, armed Pakistani drones.

And soon. The Burraq, it seems, will be flying in early 2012.

Pakistan's locally produced Falco UAV was built in collaboration with Italy's Selex-Galileo. The Air Force is now looking to arm it with miniaturized missiles.

The Pakistani UAV program is a wonderful example of the breadth of technological capability that exists in the country, its ability to collaborate internationally without relying on problem-ridden dealings with America, and the benefits of investing in local development and local manufacturing as opposed to wiring a ton of money to a foreign country and importing somebody else’s equipment (Saudi Arabia style). As with the JF-17 Thunder fighter aircraft, Pakistan will discover that the flexibility of owning and running a domestically developed military platform allows unending customization, full control of capabilities, and absolutely no worries with regards to security or someone else knowing its true performance, or even inhibiting the capabilities by doctoring the IFF system or other internal electronics. Not only that, but for private technological firms based in Pakistan a program of this nature creates tremendous economic opportunity. A variety of different inputs, ranging from materials to software to optics to electronics and propulsion technologies are required to build a high-tech UAV. A sophisticated military program such as the Burraq will lead not only to an improvement in Pakistan’s defensive and offensive military capabilities, but also in significant benefits for the economy and local industry.

We hope that in future, with military programs such as Burraq, the continued development of the spectacularly successful JF-17 Thunder fighter aircraft and its various space technology ventures, Pakistan will continue to create domestic research and development capabilities which will ensure a brighter future for its people and a credible defense against any would-be aggressor.

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Wheat fields in Haripur Hazara. Pakistan can be an agricultural powerhouse with just a little strategic thinking on the part of its government. (Photo credit: Daniyal Gilani, Flickr)

For 5,000 years, the economic well being of the people of what is now Pakistan has been secured through agriculture. Even as Pakistan has rapidly modernized over the last 6 decades since independence, a very large component of the economy is still agriculture based. And in these days of population pressure globally, shortfalls of cultivable land, food security issues and rising food prices, this can be a tremendous asset for the country. Our strength in agriculture and farming is borne out by the numbers. We are the world’s 4th largest producer of milk, we export more than $24B worth of textiles annually based on the strength of our cotton production, we have one of the largest populations of farm animals – over 50M – in the country, and our wheat production stands at number 6 in the world. There are many other areas where Pakistan has unassailable competitive advantages, for example, in the fact that the variety of citrus produced in Pakistan is far more diverse than in any other country of the world, or that the mangoes grown in Pakistan are – without doubt – the richest and best on the globe.

Yet, so much more can be done. I have always been of the strong belief that Pakistan actually has no economic problems beyond mismanagement and poor planning. There are no inherent, structural reasons why Pakistan cannot rapidly develop to the levels of a first-world economy, and take its population of 180M along with it. There are very simple and – in the grand scheme of things – tiny steps that we can take to completely alter our economic picture. Let’s take a part of our agricultural sector; wheat production, as an example. We produce 24M tonnes of wheat per year, which is quite a bit. Yet, our per acre yield, at between 23-25 Maunds per acre, is the lowest in the world amongst major agri economies. If we increased yield to Australian or European levels (as high as 70 Maunds per acre), we would have an excess of between 30-40M tonnes of exportable wheat per year, from the existing land under cultivation. This would mean a minimum of an extra $10B of exports annually, given current international wheat prices. The reality is that these prices have been increasing over the past few years and with the world population expected to hit close to 10B in 2050, they won’t be going in the other direction any time soon.

Our own domestic consumption is in the neighbourhood of 20M tonnes per year. So the difference between 24M tonnes, and 70M tonnes is massive from an economic perspective. It is the difference between merely fulfilling our own needs and reaping a windfall by exporting a precious commodity, and one of strategic importance for almost the entire agri-poor middle east; a region which is not only close to us geographically, but with which we also share strong cultural and diplomatic ties. To put things in perspective, just this one change alone – with all other things staying the same – would mean an immediate increase of 5.2% in our per-capita income. Not only this, the fact that this would be $10B in foreign exchange, the need for IMF programmes would simply not exist. Which further means that the conditionalities and high-interest rate debt servicing also goes away. So the net-positive effects of just this one small thing would be tremendous and would result in immeasurable benefits by freeing up what is spent in debt servicing today, so that it can be redirected to high-yield infrastructure and human resource development investments.

The reason I used the example of wheat was just to illustrate how simple it is for Pakistan to make a quantum leap forward, developmentally and economically. With nothing other than basic technology – which we are in possession of – the adoption of best practices, but most importantly, the political will, we could revolutionize our agricultural sector, and hence our economy. If a new government were elected to power tomorrow and all it did was focus on a three point agenda of 1) Bringing wheat yields to Australian levels 2) Implementing drip irrigation – which saves up to 60% of the water used in flood irrigation and 3) Investing in export-quality food processing industries, this alone would make Pakistan the world’s fastest growing economy. It would free us of all water woes, as 70+% of our water usage is for agriculture, and 60% of that is wasted due to our use of ancient flood techniques. Drip irrigation is far more efficient, and could reduce our national water consumption by up to a staggering 50%! If we could export the excellent halal meat, mangoes, citrus, flowers and other agricultural products we produce, not as bargain basement prices, but in processed, high-quality forms (by transforming our milk into branded cheese products, for example), it would bring revenue streams we have never had and connect them to the poorest Pakistanis, while earning mountains of foreign exchange for the country.

This is a small example of how incredibly small, inexpensive programs can have a massive impact on the national economy, our growth rates and the future of Pakistan. We hope those in power, and those with influence, will finally pay heed and stop artificially quelling Pakistan’s natural growth rate; a number which will approach or exceed 10% with even the smallest of strategic investments in promising sectors like agriculture.

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Bustling cities like Cape Town, South Africa, hold a lot of promise for Pakistani IT companies

Pakistan and South Africa have a connection dating back at least 150 years. During colonial times, a large number of people from the sub continent moved to South Africa to work and find business opportunity. Today, there is a significant presence of Muslim South Africans in the business community in that country and people of Sub-continental decent – including those from modern-day Pakistan – are doing very well socially and economically. Since the end of Apartheid, South Africa has entered the comity of nations and has been welcomed by all. In fact, their post-Apartheid reconciliation process and the peaceful manner in which internal conflict was ended is used as a modern-day example of good sense, peacemaking and humanitarianism.

Along with its newly restored international standing and reputation, South Africa has also emerged as a business destination. There has always been a very strong tradition of technological development in the country. During the period they were under sanctions, South Africans achieved numerous technical feats, including their own nuclear programme, the development of high performance aircraft such as the Cheetah, and the continued growth of impressive R&D firms such as Denel. 

Today, South Africa presents rich opportunities for business-people seeking to expand to international markets or forge partnerships at a global level. With per-capita income at over $10,000, a population of about 50 million and rising HDI indicators, South Africa is definitely going places. While there are some lingering issues with crime in parts of the country, cities like Cape Town are incredibly popular tourist hotspots for people from all over the planet.

Traditionally, IT companies in Pakistan have not really looked at South Africa as a strategic destination. However, this may no longer be the case. In a recent interview, Naseer Akhtar, CEO of Lahore-based InfoTech, shared his experience in the country and encouraged other Pakistani entrepreneurs to consider expanding to South Africa. There has been some technology collaboration between Pakistan and South Africa over the last decade, but this has been limited primarily to the defence sector. It would be great to see the partnership develop further and expand into areas of wider economic importance, such as ICT. For South Africa, this would mean access to Pakistan’s developing market, with 180 million people, and access to some incredible talent. And for Pakistani businessmen such a partnership would provide an entry to a middle-income country with a sizeable population and a strong R&D base.

If you have had experience working with South African IT companies, or serving the South African market, do share in the comments section below. In the meanwhile, we’ll stay tuned on future developments in this area.

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Despite challenges, Pakistan's resilient economy continues to strengthen and grow

There’s been a flurry of economy related news about Pakistan recently, and we’ve tried to hit the highlights at least. Another positive development is the substantial growth in Pakistan’s foreign reserve position which has now reached an all time historic high of $18.25B. This increase is due to many factors, the two most important being the increase in foreign exchange remittances being sent to the country by Pakistani workers abroad, and the improvement in the import/export gap. That this high has been achieved at a time when global oil prices are relatively steep, is even more expensive. One would imagine that as oil prices ease – which seems to be an almost universal expectation – the rate of growth of the national foreign exchange reserve would accelerate further.

The implications of this rise are interesting. In the near-medium term, one would imagine this addresses any fears of weakness in the Pakistani Rs. So for near/medium term investments of foreign moneys into Pakistan, value loss due to a depreciation in the Pak Rs. presents a much reduced risk. With that being considered, the KSE is still posting tremendous returns and numerous banks in the country are offering 11-14.5% returns on deposits, CDs and TFCs. 10-11% is fairly typical on CD-like instruments with a 90-180 day maturity. Research has shown that, in Pakistan, the foreign exchange reserve position actually has a positive correlation with the stock market levels. So a rise in the reserve levels almost certainly implies a rise in the KSE index. Thus, with the foreign exchange rising continuously, remittances increasing and hence the Pak Rs. stabilizing, an 11% return on a 90 day note presents a great opportunity for short term, almost no risk exposure to the Pakistani market, with tremendous return potential. There is nothing to suggest that a large number of folks have picked up on this opportunity, but we’ll see if this becomes a popular option in the weeks ahead. 

We continue to believe that the projections for Pakistan’s economy and investment potential in the country over a 5-year time horizon remain stellar. During this time, regional stability is expected to heighten with the announced withdrawal of NATO forces from Afghanistan. The financial burden of the WoT is expected to thus diminish within Pakistan and a return to the country’s “natural” GDP growth rate of 6-8% can be counted upon. With the backdrop of rising exports, an officially declared if rather conservative goal of bridging the power gap over a 5-7 year timeframe, and rising remittances, the prospects for Pakistan’s economy are sound.

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I don’t usually share stuff like this, but this particular piece of garbage is so preposterous - while at the same time – villainous, that it just has to be commented on. I chanced upon it at a financial website I visit quite routinely. The “presentation” in question is basically an ad for a company called Agora Financial, and what they’re peddling is financial/investment information. Their premise on why you would be interested in their crap is the “fact” that they have uncovered a gigantic coming tsunami that has been almost 1,400 years in the making!

Built on the illogic of ridiculously warped history which includes gems such as the, shall we say, “innovation” that the (“controversial”, according to this presentation) Prophet Muhammad passed away due to the consumption of poisoned lamb, this glorified ad goes on to suggest that a war between “shias and sunnis” is coming, and that it will engulf the entire Middle East. Yeah, right. That war between the shias and sunnis predictions of which have been tucked away in the back pages of 50c evening tabloids. That very same war which certain vested interest groups tried to spark within Iraq, but which never quite took off… why? Because, frankly, the shia/sunni divide is hogwash. Shias and sunnis have lived together throughout the muslim world, and but for the funded hatred by certain despots who also happen to be the favourite customers of the world’s largest arms vendors, there ain’t much raw material to work with there. We’re not talking about South African apartheid, or American Civil Rights era discrimination… but when did logic get in the way of fear mongering? And especially when such fear mongering is driven by the motivation for profit.

So take a peak at this documentary/ad/nonsense and decide for yourself whether it scares you enough for you to go running off into the safe embrace of Agora Financial. They promise to be your saviours and will sell give you all the information you need to weather this upcoming shia/sunni tsunami. Such a bunch of upstanding folks with zero ulterior motives… and history professors to boot!

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There’s quite a bit to feel good about with respect to the recent news regarding the Pakistani economy. Here is a quick summary:

1) When the floods hit, there was widespread reporting that the budget deficit would hit 7% and in fact, some commentators from across the border even speculated that it would reach 8%. In the Finance Minister’s budget speech, it was confirmed that the budget deficit actually reached only 5.1% for the year, a far cry from 7 or 8%. This is perhaps just one more indication that on the subject of Pakistan, whatever negativity you see in the press, you should generously discount. This economy was able to weather the WoT, the global financial crisis and the floods quite well in 2010.

2) The Federal Board of Revenue (FBR) has confirmed that tax revenue collections for the year have already exceeded last year’s collections and are trending up. Much has been said about the low level of tax collection in Pakistan and this news is certainly very welcome. This year a major initiative has been launched to further enhance tax collection. It is not unreasonable to expect that within 3-5 years the tax collection issue can be addressed to quite some degree.

3) Remittances continue to be a tremendously important, and fast growing, source of foreign exchange for Pakistan. These are funds being sent to Pakistan by the 7+ million overseas Pakistanis and represent the confidence of our expatriate community in the country’s future. For the 11 months of the financial year, these remittances have already crossed $10 Billion and since we’ve had multiple consecutive months each accounting for more than $1 BN in remittance receipts, it is not unreasonable to expect the year to close at or above $11BN. Not only is this almost 30% up from the previous year, it is also an all-time record.

4) While the NASDAQ and Dow have given up all their gains for the year, the KSE (Karachi Stock Exchange) is doing quite well. In fact, it closed yesterday (6/13/2011) at 12,353 which is within about 300 pts of its 52-wk high of 12,768.

There’s quite a bit of other positive news with respect to development projects and the increases in provincial development spending, but we’ll save those updates for another post. For now, the economy seems headed in a good direction.

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Hello Reality! The KSE heads to a 3 1/2 month high despite tipsy anti-pakistan diatribes being pushed in the US media

With all the nonsense in the press since May 2, you would think the world was about to come to an end. But no. As usual, the NY Times and WaPo have about as much credibility on the subject of Pakistan as do the predictions of that nutcase  Denver based right-wing priest, Harold Camping, and his Christian Family Radio on the subject of the Earth’s longevity. And if a loud echoing, face-reddening slap could be delivered to such naysayers for the animal excrement one now finds plastered on the front pages of the Post and the Times, it was this: The Karachi Stock Exchange, Pakistan’s largest bourse, has closed on a 3 1/2 month high at 12,198.12 points. Forget the PM’s speech in Parliament and forget whatever Gen. Kiyani has to say. Let’s focus on reality and the facts on the ground. Let’s focus on what thousands of investors and business people who are connected to the core of this country and are clued in to tens of thousands of active projects actually think about the future.

The KSE has done exceedingly well in the past couple of years and we’ve covered its performance here at TechLahore quite often. But beyond the economics, it’s important to keep in mind what the KSE represents. Usually, whenever we cover the KSE’s movements we get the odd, “Oh, but what does this really mean?” kind of comment. So for the sake of clarity, here’s what it means: The investors and participants in the KSE are confident about their future, which means they are confident about the future of Pakistan. No one throws money into a stock exchange because they think their investment will tank. So other than the financial implications, the main point of interest for us is how optimistic Pakistani businessmen and investors are in their future. And why shouldn’t they be? Pakistan is the world’s seventh most populous state, with the world’s fifth largest army and as Christina Fair put it, a country that “simply has many asymmetric options” which means that no one in their right mind is about to cross any red-lines with us. Moreover, Pakistan’s exports continue to do well in the EU with the recent positive movement on tariffs, remittances are growing fast, are at an all-time historic high and there seems to be national consensus on the issue that the “AID” bluff is exactly that, a bluff. The aid – mostly REIMBURSEMENTS – that “prop” up the economy in the vivid imagination of certain ill-informed senators in a foreign country and myopic media people, are actually neither necessary nor desirable. This aid bullcrap is simply used, at this point, as a political lever with no measurable impact on the economy or development of the country. And on this subject, I think the universal message from Pakistan is, “Stuff it!”. Indeed, the government of Pakistan’s most populous state, the Punjab, has voluntarily cancelled aid agreements with the USAID. How’s that for leverage? The KSE seems to be echoing this very signal because precisely during the period when noises were being made close to the banks of the Potomac about using aid as a threat, the KSE was heading into the stratosphere as if to laugh in the face of this nonsense which is everything but connected to reality.

We’ll try to do a longer piece on where we see things headed in the near future, but until then, let’s keep our eye on the jewel of Karachi. KSE FTW!

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