suhaib
10th April 2005, 18:56
March 23, 2005
Pakistan Is Booming Since 9/11, at Least for the Well-Off
By SOMINI SENGUPTA
ARACHI, Pakistan - Umar Sheikh, 31, British-born, New York-trained and married to a woman from New Jersey, long dreamed of running his own restaurant. London was too expensive. New York was too risky. Karachi seemed just right.
His gamble, in this restive port city better known for its religious radicals than its ravioli, has worked so far. Limoncello, Mr. Sheikh's cozy Italian-inspired fine dining spot with lemon-colored walls and a kebab-free menu that features arugula and Norwegian salmon, is thriving.
Its success reflects an unexpected post-Sept. 11 boon: prompted by a mix of government policy, serendipity and changing global tides brought on by the American campaign against terrorism, Pakistan's economy is booming. The well-off, at least, are living extremely well.
In its first two months, Limoncello has brought in revenue that Mr. Sheikh did not expect for several more. Already, three investors have offered to pitch in on his next venture.
One recent Friday night, nearly all of the tables were occupied. Dinner for four - not including wine, since alcohol is banned at public accommodations - came to $70, substantially more than a Karachi housemaid's monthly salary.
"I'm getting a lot of corporate heads, a lot of nouveau riche, people who come from abroad who are not necessarily wealthy but are educated about cuisine," said Mr. Sheikh, the son of Pakistani immigrants to Britain. "People want high-end products."
The country's economy grew 6.4 percent during the last fiscal year, and Prime Minister Shaukat Aziz, a former Citibank executive, projects 8 percent annual growth in two years' time.
"Pakistan is a country today that has gone through a very intensive five-year reform," Mr. Aziz said in an interview in the capital, Islamabad. "We are seeing the results."
There are many factors behind the boom. Remittances that Pakistani expatriates once sent home through informal banking channels are now landing in the banks, lifting the country's foreign reserves to $12.7 billion a year, compared with $1 billion in 2001.
As an important ally of the United States, Pakistan has been able to slash its external debts. In the last five years, export earnings have doubled to more than $13 billion, mostly from textiles, according to the State Bank of Pakistan. "There's a lot of confidence in Pakistan's economy," said Ishrat Husain, the state bank chief.
Wealthy expatriates jittery about their futures in the United States and Europe since Sept. 11, 2001, have set aside nest eggs back home or returned. The Karachi stock market has soared. The real estate market has exploded. A residential plot that Mr. Sheikh bought two years ago in his mother's native Lahore has tripled in value.
"People are feeling more optimistic," Muhammad Yasin Lakhani, chairman of the Karachi Stock Exchange, said in a recent interview. "People want to put their money in a growing economy any day rather than in a developed economy."
Mr. Lakhani had cause for optimism. That morning, the stock exchange had jumped a record 295 points. Its market capitalization had reached $40 billion, up from $5 billion in 1998. Much of the stock market's rise, analysts say, is a result of the government's moves to privatize state-owned assets.
The big question now is whether such impressive growth can lift a majority of Pakistanis. Poverty grew steadily in the late 1990's, according to the last government study, conducted four years ago. In 2001, 32 percent of Pakistanis lived below the poverty line. That remains the most widely cited and reliable barometer of poverty.
A smaller survey done in 2004, Prime Minister Aziz said, showed a decline in poverty, but people outside the government noted that the survey was smaller in scale and therefore not comparable to the earlier studies. "The trickle-down effect has not really taken place," Mr. Lakhani said.
In a working-class enclave pressed against one of Karachi's high-toned neighborhoods, small girls filled up big buckets of water from a neighbor's tap and heaved it home on their shoulders. Only some houses here are connected to the city water supply. Those who can get water from their neighbors do so; others pay to have it trucked in.
It is not that people here are unaware of Pakistan's economic boom. "What's the change for us?" said a laconic Ishtiaq Malik, 28. "The rent has increased. The petrol price has increased. The electricity bill has increased."
Like many of his neighbors in the crowded slum of winding muddy alleys, Mr. Malik came from a village in rural Punjab to make a living in the city. Today, as a gardener, he fetches about $85 a month. After rent and food and electric bill, he says, there is not much left to send home to his parents, landless peasants back in the village.
Kaneez Gazar, a housemaid in her 40's who came to Karachi to escape the grinding poverty of her own village, offered a smile when asked about her country's economic growth. "We earn, we eat," is how she put it.
Between her own earnings and those of her two daughters, also housemaids, the family brings in about $100 a month. Half of that goes to rent. The prices of sugar and butter have gone up. She must buy water from a private tanker. With her heart ailment and her daughter's chronic cough, there are medical bills to pay. Hanging over her head is a $420 debt for an older daughter's wedding.
Still, she says, life in Karachi has meant a measure of dignity. "At least I'm feeding myself," she said. "At least we get clothes and shoes."
It is Pakistan's deeply stratified society that makes some analysts skeptical of how and when the spoils at the top will filter down to those among the 150 million Pakistanis who still barely scrape by. A study last December by the Social Policy and Development Center, a Karachi-based research institute, reported that of every rupee of economic growth, 34 percent went to the richest 10 percent of the population, and only 3 percent to the poorest 10 percent.
It is Pakistanis like Limoncello's owner, Mr. Sheikh, who have buoyed and exploited their country's economic boom. Some of it, he reckons, has been driven by overseas Pakistanis' concerns about their futures in the United States and Europe. Some of it, as in his case, was driven by opportunity: common sense told him there was money to be made here.
In the last few years, his father-in-law returned and bought up property across the country. A friend from London opened a call center. A woman who runs a bakery in London is now opening a patisserie, called Truffles, down the street.
Recalling those who had gone abroad before, Mr. Sheikh said, "There were all kinds of people, of all kinds of mentality, who were leaving and taking their money with them."
Pakistan Is Booming Since 9/11, at Least for the Well-Off
By SOMINI SENGUPTA
ARACHI, Pakistan - Umar Sheikh, 31, British-born, New York-trained and married to a woman from New Jersey, long dreamed of running his own restaurant. London was too expensive. New York was too risky. Karachi seemed just right.
His gamble, in this restive port city better known for its religious radicals than its ravioli, has worked so far. Limoncello, Mr. Sheikh's cozy Italian-inspired fine dining spot with lemon-colored walls and a kebab-free menu that features arugula and Norwegian salmon, is thriving.
Its success reflects an unexpected post-Sept. 11 boon: prompted by a mix of government policy, serendipity and changing global tides brought on by the American campaign against terrorism, Pakistan's economy is booming. The well-off, at least, are living extremely well.
In its first two months, Limoncello has brought in revenue that Mr. Sheikh did not expect for several more. Already, three investors have offered to pitch in on his next venture.
One recent Friday night, nearly all of the tables were occupied. Dinner for four - not including wine, since alcohol is banned at public accommodations - came to $70, substantially more than a Karachi housemaid's monthly salary.
"I'm getting a lot of corporate heads, a lot of nouveau riche, people who come from abroad who are not necessarily wealthy but are educated about cuisine," said Mr. Sheikh, the son of Pakistani immigrants to Britain. "People want high-end products."
The country's economy grew 6.4 percent during the last fiscal year, and Prime Minister Shaukat Aziz, a former Citibank executive, projects 8 percent annual growth in two years' time.
"Pakistan is a country today that has gone through a very intensive five-year reform," Mr. Aziz said in an interview in the capital, Islamabad. "We are seeing the results."
There are many factors behind the boom. Remittances that Pakistani expatriates once sent home through informal banking channels are now landing in the banks, lifting the country's foreign reserves to $12.7 billion a year, compared with $1 billion in 2001.
As an important ally of the United States, Pakistan has been able to slash its external debts. In the last five years, export earnings have doubled to more than $13 billion, mostly from textiles, according to the State Bank of Pakistan. "There's a lot of confidence in Pakistan's economy," said Ishrat Husain, the state bank chief.
Wealthy expatriates jittery about their futures in the United States and Europe since Sept. 11, 2001, have set aside nest eggs back home or returned. The Karachi stock market has soared. The real estate market has exploded. A residential plot that Mr. Sheikh bought two years ago in his mother's native Lahore has tripled in value.
"People are feeling more optimistic," Muhammad Yasin Lakhani, chairman of the Karachi Stock Exchange, said in a recent interview. "People want to put their money in a growing economy any day rather than in a developed economy."
Mr. Lakhani had cause for optimism. That morning, the stock exchange had jumped a record 295 points. Its market capitalization had reached $40 billion, up from $5 billion in 1998. Much of the stock market's rise, analysts say, is a result of the government's moves to privatize state-owned assets.
The big question now is whether such impressive growth can lift a majority of Pakistanis. Poverty grew steadily in the late 1990's, according to the last government study, conducted four years ago. In 2001, 32 percent of Pakistanis lived below the poverty line. That remains the most widely cited and reliable barometer of poverty.
A smaller survey done in 2004, Prime Minister Aziz said, showed a decline in poverty, but people outside the government noted that the survey was smaller in scale and therefore not comparable to the earlier studies. "The trickle-down effect has not really taken place," Mr. Lakhani said.
In a working-class enclave pressed against one of Karachi's high-toned neighborhoods, small girls filled up big buckets of water from a neighbor's tap and heaved it home on their shoulders. Only some houses here are connected to the city water supply. Those who can get water from their neighbors do so; others pay to have it trucked in.
It is not that people here are unaware of Pakistan's economic boom. "What's the change for us?" said a laconic Ishtiaq Malik, 28. "The rent has increased. The petrol price has increased. The electricity bill has increased."
Like many of his neighbors in the crowded slum of winding muddy alleys, Mr. Malik came from a village in rural Punjab to make a living in the city. Today, as a gardener, he fetches about $85 a month. After rent and food and electric bill, he says, there is not much left to send home to his parents, landless peasants back in the village.
Kaneez Gazar, a housemaid in her 40's who came to Karachi to escape the grinding poverty of her own village, offered a smile when asked about her country's economic growth. "We earn, we eat," is how she put it.
Between her own earnings and those of her two daughters, also housemaids, the family brings in about $100 a month. Half of that goes to rent. The prices of sugar and butter have gone up. She must buy water from a private tanker. With her heart ailment and her daughter's chronic cough, there are medical bills to pay. Hanging over her head is a $420 debt for an older daughter's wedding.
Still, she says, life in Karachi has meant a measure of dignity. "At least I'm feeding myself," she said. "At least we get clothes and shoes."
It is Pakistan's deeply stratified society that makes some analysts skeptical of how and when the spoils at the top will filter down to those among the 150 million Pakistanis who still barely scrape by. A study last December by the Social Policy and Development Center, a Karachi-based research institute, reported that of every rupee of economic growth, 34 percent went to the richest 10 percent of the population, and only 3 percent to the poorest 10 percent.
It is Pakistanis like Limoncello's owner, Mr. Sheikh, who have buoyed and exploited their country's economic boom. Some of it, he reckons, has been driven by overseas Pakistanis' concerns about their futures in the United States and Europe. Some of it, as in his case, was driven by opportunity: common sense told him there was money to be made here.
In the last few years, his father-in-law returned and bought up property across the country. A friend from London opened a call center. A woman who runs a bakery in London is now opening a patisserie, called Truffles, down the street.
Recalling those who had gone abroad before, Mr. Sheikh said, "There were all kinds of people, of all kinds of mentality, who were leaving and taking their money with them."