Haq's Musings

RAAST: Pakistan's Instant Payment System

2021: A Banner Year For Tech Startups in Pakistan

Pakistan Projected to Be World's 6th Largest Economy By 2075

Digital Pakistan 2022: Broadband Penetration Soars to 90% of 15+ Population

State Bank of Pakistan to Issue Central Bank Digital Currency

Socioeconomic Impact of New Infrastructure in Rural Pakistan

Solar Power Boom in Pakistan

Pakistan at 75

Growing Presence of Pakistani Women in Science and Technology

Riaz Haq's Youtube Channel

Friday, March 28, 2025

Pakistan to Explore Legalization of Cryptocurrency

Islamabad is establishing the Pakistan Crypto Council (PCC) to look into regulating and legalizing the use of cryptocurrencies, according to media reports. Cryptocurrency refers to digital currencies that can be used to make purchases or investments using encryption algorithms. US President Donald Trump's endorsement of cryptocurrencies and creation of a "bitcoin reserve" has boosted investors’ confidence in it.

The State Bank of Pakistan, the nation's central bank, has not authorized any individuals or organizations to carry out the sale, purchase, exchange, and investment of digital currencies, coins, and tokens. But the country has not officially banned the use of cryptocurrencies either, allowing about 20 million users to engage in crypto transactions. “We are coming on number three and four globally and there are many blockchain technology opportunities in Pakistan", said Bilal Saqib, the chair of the PCC.

Saqib told Bloomberg that regulatory sandboxes were being developed to create fast-track systems for crypto startups, enabling them to operate within a controlled and compliant environment.

There are media reports that Pakistan is working on lower electricity tariffs to attract crypto mining and blockchain-based data centers, aiming to utilize surplus power at marginal costs while fostering growth in the digital asset industry. Demand for grid electricity has been declining amid a solar power boom in the country.

Cryptocurrencies are managed in a blockchain, which is a digital ledger that utilizes blocks of data and time stamps to create a digital transaction record. Similar to a traditional digital spreadsheet, a blockchain contains a log of transactions. However, it uses a distributed structure in which data is stored on multiple machines, and all copies need to match before a transaction is considered valid. Blockchain in finance allows for faster and cheaper transfers and more accurate accounting records. Blockchain technology is seen as the future of fintech (financial technology). It can help streamline tens of billions of dollars worth of remittances from overseas Pakistanis.

Downplaying the fear of the abuse of cryptocurrencies for criminal activity, Saqib told the media: “Globally 0.24 percent cryptocurrency transactions are used for wrong things,” he said. “We want to use this technology for other things like real estate, agriculture and to unlock their liquidity.”

Talking about taxation, Saqib said the government intends to implement a “balanced pro-growth tax structure” to encourage foreign investment in the crypto sector. He believes cryptocurrency can significantly boost Pakistan’s fintech sector, positioning the country as a regional leader in digital finance.

There is a lot of interest in enabling the use of crypto currencies around the world. It is not just developing nations like Pakistan. There are many countries actively developing regulations for cryptocurrencies, with some groupings like the EU implementing measures to protect users and combat criminal activities, while others, like the US, are slowly approaching regulation through existing market regulators like the SEC and CFTC. The jury is still out on the potential for success of such efforts.

India Among Most Unequal Nations. Source: World Inequality Report

Saturday, March 22, 2025

World Happiness Report 2025: Poor Ranking Makes Indians Very Unhappy

Pakistan has outranked India yet again on the World Happiness Index, making Indians very very unhappy. Indian media commentators' strong negative emotional reaction to their nation's poor ranking betrays how unhappy they are even as they insist they are happier than their neighbors. Coming from the privileged upper castes, these commentators call the report "absurd", citing India's higher per capita incomes and its space program. They seem detached from the real conditions in which the vast majority of Indians find themselves. They fail to acknowledge the high levels of inequality and unemployment prevalent in their country. A CNBC report last year found that one billion Indians have a per capita income of just $1,000 a year, lower than that of sub-Saharan Africans. 92.5% of Indians live in conditions similar to or worse than those experienced by the poorest countries in sub-Saharan Africa. No wonder India ranks alongside the poorest sub-Saharan African nations in the World Happiness Report 2025.

World Happiness Map. Source: World Happiness Report 2025

Pakistan (109) has not only outranked India (118) but also ranked higher than Sri Lanka (133) and Bangladesh (134). The authors of the 2035 happiness report said new evidence indicates that engaging in acts of generosity and believing in the kindness of others are “significant predictors of happiness, even more so than earning a higher salary”. The family is a source of joy and support for most people, the report found. Couples who live with at least one child, or couples who live with children and members of their extended family, have especially high average life satisfaction.

Income Inequality in India

An inequality report on India found that 92.5% of Indians live in economic conditions similar to those found in the poorest nations of sub-Saharan Africa. Only 0.5% of Indians enjoy incomes comparable to average Singaporeans, while 2% have incomes of average Polish citizens and 5% similar to Mexicans.

Finland tops the World Happiness Report 2025 rankings, making it the happiest country for the eighth year in a row. It is followed by Denmark and Iceland. Other nations in the top 15 include Sweden, the Netherlands, Costa Rica, and Norway.

Even the higher-income Indians are unhappy. Millions of them are voting with their feet and leaving their country of birth in droves. India is losing its best and brightest to the West, particularly to the United States, at an increasingly rapid pace. A 2023 study of the 1,000 top scorers in the 2010 entrance exams to the Indian Institutes of Technology (IIT) — a network of prestigious institutions of higher learning based in 23 Indian cities — revealed the scale of the problem. Around 36% migrated abroad, and of the top 100 scorers, 62% left the country, according to a report in the science journal Nature. Nearly two-thirds of those leaving India are highly educated, having received academic or vocational training. This is the highest for any country, according to the Organization for Economic Co-operation and Development.

Example of The Great Indian Brain Drain. Source: Boston Political Review

Brain drain is defined as the loss of precious human capital of a nation. It is a “consequence of an education system designed for ‘selecting’ the best and brightest in an economy that is still too controlled and cannot create opportunities for its best and brightest”, according to Indian economist Shruti Rajagopalan. High-profile examples of India's human capital loss include Satya Nadella (Microsoft), Sundar Pichai (Google), Shantanu Narayen (Adobe), Arvind Krishna (IBM) and Ajay Banga (World Bank).

Foreign-Born STEM Workers in America. Source: American Immigration Council

Growing number of Indian students are going abroad for higher education each year and 90% of them never return home after completing their studies. In 2022, the number of Indian students leaving the country for higher education reached a six-year high of 770,000. And a 2021 report estimated that around two million Indian students would be studying abroad by 2024.

Many developing countries are experiencing brain drain. But India is losing its best brightest at a much faster rate than others. Some call it "The Great Indian Brain Drain". This is the reason why Indians in the United States are the best educated and the highest earning group. In a recently published book titled "The Other One Percent", authors Sanjoy Chakravorty, Devesh Kapur and Nirvikar Singh explain this phenomenon.

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RAAST: Pakistan's Instant Payment System

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STEM Enrollment in Pakistan Exceeds One Million

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Pakistan at 75

Growing Presence of Pakistani Women in Science and Technology

Riaz Haq's Youtube Channel

Tuesday, March 18, 2025

Pakistan Purchasing Managers Index (PMI) Points to Growth in Manufacturing

Pakistan Purchasing Managers Index (PMI), jointly launched by Habib Bank (HBL) and S&P Global, is showing sustained growth in manufacturing for the last several months. It has been consistently above 50, indicating expansion. This indicator disagrees with contraction reported by Pakistan Bureau and Statistics (PBS) Large Scale Manufacturing (LSM) indicator. What accounts for this discrepancy? Is it because the LSM tracks only a subset of industries tracked by PMI? Is there a difference in methodology?

Pakistan PMI Trend. Source: S&P Global

Here's one plausible explanation offered by analyst Humaira Qamar at HBL: "As per the Pakistan Bureau of Statistics, Large scale manufacturing (LSM) contracted 1.8% in the latter half of 2024. However, excluding the hefty decline in the low-weight furniture segment, LSM trended positively. Our PMI release suggests that the recovery has extended into 2025, with demand-side conditions taking cue from a sharp reduction in the policy rate".

Another possible explanation for the discrepancy between PMI and LSM can be seen in the fact that power generation for the grid, a key component of the LSM indicator, is in constant and substantial decline. However, the power generation data tracked by PBS excludes rapidly rising solar electricity production by consumers, including industrial consumers in the country. Pakistan's grid-connected electricity production and electricity consumption are given as around 110 TWh for 2024, but appear to be declining compared to 2023, which contradicts expectations of increasing demand, but could be a sign of the massive expansion of solar energy, according to an article in PV magazine titled ‘The Solar Blitz’: How crisis-ridden Pakistan is leading the world on the ‘Solar March’. Based on rather imprecise Chinese solar panel export figures and extensive satellite imagery, Bloomberg energy analyst Jenny Chase has concluded that rapid solar expansion in Pakistan is real.

In August 2024, Chase tweeted as follows: "Pakistan's energy regulator, NEPRA, notes that power consumption is down 9.1% year on year in 2023. NEPRA attributes the drop mainly to high power prices cutting economic activity and making residential consumers curb consumption, with rooftop solar only a third factor. But NEPRA doesn't know how much solar the country has, either. We think it has about 12.7GW of solar already (compared with 50GW on-grid power capacity) and will add 10-15GW of solar in 2024".

In addition to the decline in grid power generation, the reported drag in LSM growth is primarily due to a few low-weight sub-sectors, which have more than offset positive momentum in key sub-sectors such as textiles, pharmaceuticals, automobiles, and POL (petroleum, oils and lubricants), according to the State Bank of Pakistan, as reported by the Express Tribune.

Pakistan Manufacturing Orders, Output and Employment. Source: S&P Global

High-frequency data like monthly PMI help in gauging real time economic activity in terms of orders, output and employment in the manufacturing sector. Here's an excerpt of the HBL/S&P Global PMI report for February 2025 published in March:

Manufacturers in Pakistan also responded to strengthened operating conditions by raising their staffing levels in February, marking the second increase in as many months. Several firms commented that they required additional capacity in response to higher production requirements, while others mentioned longer operating hours. Increased capacity allowed firms to stay on top of outstanding business in February, as indicated by a sustained and steeper fall in backlogs of work. The latest depletion was the most pronounced in five months. Finally, companies expressed confidence in the future path for output during February, with optimism remaining marked overall. This optimism was underpinned by hopes for further new product launches and improvements in product quality, alongside expectations of softer price pressures.

Tariffs Comparison. Source: BBC

Tuesday, March 11, 2025

Trump's Policies Ringing Alarm Bells in Delhi

"We are in Zelenskyy’s shoes now", read a recent headline in a major Indian newspaper. There are similar concerns being raised in other world capitals in Asia and Europe after President Donald Trump's decisions to cut military supplies and stop sharing intelligence with Ukraine following a White House summit with President Volodymyr Zelenskyy of Ukraine who is facing the military might of Russia on the battlefield in Europe.

From L to R: Putin, Trump, Xi and Modi

“My absolute priority will be to strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA,” said Friedrich Merz, Germany's chancellor-elect. Singapore Defence Minister Ng Eng Hen said the US has “changed from liberator to great disruptor to a landlord seeking rent”.

The events of last week have revived the memory of a quote attributed to former US Secretary of State Dr. Henry Kissinger who is reported to have said: "The word will go out to the nations of the world that it may be dangerous to be America's enemy, but to be America's friend is fatal."

New Delhi has been counting on Washington's help to fend off hostile China which sits on its doorsteps. There are some Indians who believe Russia would come to India's help in the event of war with China. But former US National Security Advisor Jake Sullivan threw cold water on this idea when he said: "In fact, it (Russia) is becoming the junior partner to China. And in that way, they would side with China over India any day of the week".

Trump has fundamentally changed the geopolitics of Asia and Europe. Old alliances no longer matter. Now it's all about each transaction which Trump wants to ensure favors the United States.

During the last Trump Administration in 2019, India's friends in Washington argued for a US policy of "strategic altruism" with India. The new Trump administration seems to be rejecting such talk. Prior to his recent meeting with Prime Minister Narendra Modi at the White House, President Donald Trump described India as the "worst abuser of tariffs" and announced "reciprocal tariffs" on Indian imports to the United States. At the same time, Mr. Trump cracked down on both legal and illegal immigration from India. His administration is deporting thousands of illegal Indian immigrants in handcuffs and shackles on US military aircraft. Meanwhile, stringent new regulations on temporary work visas could significantly delay visa processing times and reduce the number of Indian workers employed in the United States on H1B visas.

In a 2019 piece titled "The India Dividend: New Delhi Remains Washington’s Best Hope in Asia" published in Foreign Affairs journal, authors Robert Blackwill and Ashley Tellis argued that the Trump Administration should continue the US policy of "strategic altruism" with India that began with US-India nuclear agreement. They asked President Trump to ignore the fact that the US companies and economy have only marginally benefited, if at all, from this policy. They see India as a "superpower in waiting" and urge Washington to focus on the goal of having India as an ally to check China's rise. They see Chinese support for India's arch-rival Pakistan and China’s growing weight in South Asia and beyond as a threat to India.

India Tops Source Countries For H1B Visa Holders. Source: USCIS

Trump's trade and immigration policies are going to hurt India at a time when its economic growth is declining and job growth is stagnant. The latest Indian annual budget has offered middle class tax relief to spur growth. But economists warn it may not be enough for the vast majority of Indians, whose income still falls below taxable limits and who may still be reeling from the impact of the COVID pandemic, which devastated their earnings, according to a report in Aljazeera. “There is a vast base [of people] where recovery has not come back after the pandemic,” says Kaushik Basu, professor of economics at Cornell University. “We see this in data that the agricultural labour base has increased. And agriculture may well be just a parking spot.”

Illegal immigration from India to the US has dramatically increased on Prime Minister Modi's watch. A Pew Research Center report said that as of 2022, India ranked third, after Mexico and El Salvador, on the list of countries with the largest number of undocumented immigrants — 725,000 — living in the U.S.

India has a serious unemployment problem, particularly for the young people entering the job market by the millions each year. This problem is concealed by headline economic growth figures highlighted by the Modi government. At the same time, India is losing its best and brightest in a massive brain drain.

President Trump has clearly not taken the advice of India's friends in Washington. He is in no mood for "strategic altruism". Instead, the Trump Administration has signaled that it will treat ties with India as just another transactional relationship.

Related Links:

Haq's Musings

South Asia Investor Review

Guess Why Pakistani Analyst Uzair Younus is Making Headlines in India!

Is the West Unwittingly Helping Modi Realize His Akhand Bharat Hindutva Dream?

Chinese AI Lab's DeepSeek Shocks Silicon Valley

Tuesday, March 4, 2025

Growing China-Pakistan Space Cooperation

A Pakistani astronaut is scheduled to be the first non-Chinese person to go to Tiangong, the Chinese Space Station, according to media reports. Last year, China put a Pakistani satellite ICUBE-Q aboard its historic Chiang’e 6 mission into the moon’s orbit, designed to retrieve samples from the little explored far side of the moon. Weeks later, Beijing put another Pakistani communication satellite into orbit. The two sides have also announced that China’s Chang’e 8 moon lander mission in 2028 will carry a Pakistani rover to explore the moon's surface.

Space science is a lot more than rocket science. It goes well beyond building booster rockets for satellite launches. It includes various fields like physics, astronomy, biology, chemistry, and engineering to study phenomena in space and collect and analyze data about activities on earth. Pakistan-China space cooperation is yet another confirmation of the close and growing scientific ties between the two countries. Tens of thousands of Pakistani students are currently attending Chinese universities which are among the best in the world. Thousands of Pakistani engineers and scientists are closely working with their Chinese counterparts on multiple projects. It is great opportunity for Pakistanis to learn from astounding scientific and technological achievements of their Chinese counterparts.

Chinese researchers dominate global AI research, according to Marco Polo which tracks global AI talent. China dominates the top 10 science institutions, with the Chinese Academy of Sciences (CAS), the University of Science and Technology of China (USTC) and Tsinghua University taking the top three spots, according to the Science Journal Nature. Only two non-Chinese institutions broke into the top 10 – the Max Planck Society in Germany at No 4 and the French National Center for Scientific Research at No 10. The top three US institutions – the Massachusetts Institute of Technology, Harvard University and Stanford University – were ranked at 13th, 16th and 20th, respectively.

Analysts believe that China's real focus is on industrial applications for Artificial Intelligence (AI) rather than chatbots like ChatGPT or DeepSeek. Chinese are working to use the underlying technology to develop affordable, commercially viable business solutions, according to Jacob Dreyer who recently wrote an article for science journal Nature. "Its applications can then be exported, especially to lower-income countries. In other words, China’s target is not necessarily ‘frontier AI’, but ‘mass-market AI’. Its emerging AI playbook mirrors its approach to other technologies, such as electric vehicles and clean energy: not the first to innovate, but the first to make them affordable for widespread use".

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Riaz Haq's Youtube Channel

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Solar Power Boom in Pakistan

Pakistan at 75

Growing Presence of Pakistani Women in Science and Technology

Riaz Haq's Youtube Channel

Tuesday, February 25, 2025

Silicon Valley Helping Build Pakistan's Human Capital

Last week I attended a Silicon Valley fundraiser by iCodeGuru, a Pakistani-American group focusing on arranging training and guiding young men and women from underprivileged backgrounds to get full scholarships for advanced STEM (Science, Technology, Engineering and Mathematics) degrees at universities in America. The well-attended event held at Chandni restaurant raised over $180,000. It featured iCodeGruru alumni who shared their success stories.

iCodeGuru Alumna Afsheen Ghuman Speaking at Silicon Valley Fundraiser.

The story of Afsheen Ghuman from Gujranwala shows how a poor girl from a small town can succeed in defying the odds with a little help from iCodeGuru team headed by Dr. Zafar Shahid. She was able to take advantage of the online platform remotely from her home. She is now studying at an American university with a fully funded scholarship. iCodeGuru uses its online platform to offer advice, training and financial assistance to get advanced technical education, scholarships and initial funding for successful candidates to come to the United States. Currently, there are 22,000 students signed up for help via the iCodeGuru platform.

There are several similar efforts underway by Silicon Valley Pakistani-Americans to help build Pakistan's human capital in technology. Ashar Aziz Foundation, created and funded by Pakistani-American technology entrepreneur Ashar Aziz, has sponsored Advanced AI Bootcamps at the National University of Science and Technology (NUST) in Islamabad. The bootcamp series not only provides theoretical knowledge but also emphasizes practical, project-based learning, according to NUST.

The first AI bootcamp, which focused on Deep Neural Networks (DNNs), was successfully completed at NUST in November 2023. The second bootcamp provided participants with in-depth knowledge and hands-on experience in the development and application of LLMs (Large Language Models). Ghulam Ishaq Khan Institute of Engineering Sciences & Technology (GIKI) also joined this initiative in 2024, conducting its own DNN-focused bootcamp. Participants have the opportunity to work with advanced technologies, including access to a 10xH100 NVIDIA GPU AI supercomputer, ensuring they are well-prepared to tackle real-world challenges in AI. As part of its ongoing efforts, NUST plans to partner with additional universities across Pakistan to further scale this initiative, ensuring that more students have access to high-quality AI training, according to NUST.

Smaller towns in Pakistan are also setting up AI programs with the help of Pakistani-Americans. For example, Stanford educated AI expert Shoaib Lari and Silicon Valley based technology executive Jalil Shaikh have helped Islamia University Bahawalpur start an AI program. Jalil Shaikh is now working with US-based companies to place the first group of graduates from this program.

STEM education underlies Artificial Intelligence. Pakistan stands 4th in the world with 642,562 students enrolled in STEM courses– behind Nigeria (675,371), the US (4,639,771) and India (6,000,967), according to Coursera's Global Skills Report 2023. My own estimate based on HEC data is that STEM enrollment in Pakistan exceeds one million.

Tariffs Comparison. Source: BBC

Wednesday, February 19, 2025

US-India Ties: Strategic or Transactional?

India Tops Source Countries For H1B Visa Holders. Source: USCIS

Related Links:

Haq's Musings

South Asia Investor Review

Guess Why Pakistani Analyst Uzair Younus is Making Headlines in India!

Is the West Unwittingly Helping Modi Realize His Akhand Bharat Hindutva Dream?