Big Win for Pakistan

Society Business and Career
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Cricket With India Is a Big Win for Pakistan: Andy Mukherjee
March 11 (Bloomberg) – Pakistani President Pervez Musharraf need only check himself into any Lahore hotel for the March 20 weekend to catch a glimpse of what good relations with India will mean for his country’s economy.

And he had better hurry. Hotels in the northeastern Pakistani city are chockablock, thanks to the 8,000 Indians who are assembling in Lahore to watch their cricket team clash with the hosts on March 21. Many fans will rough it out on a 12-hour bus ride from New Delhi because there aren’t enough flights between the two nations.

Qasim Jafri, general manager of the five-star Avari Lahore, says all 200 rooms in his hotel are taken, with Indian guests accounting for about 70 percent of bookings. The hotel manager, in his own words, is ``ducking for cover’’ because he has nothing to offer to cricket aficionados who haven’t managed to find lodging.

``I ought to be out fishing,‘’ laughs Jafri, who has rented rooms for the March 20 weekend at an average of 8,000 rupees ($177), compared with the usual rate of 5,000 rupees a night.

It may be modest in scope, but that 60 percent premium on room tariffs is a pure peace dividend for Pakistan, after a 15- year hiatus in which the two cricket-crazy neighbors didn’t face each other for a full tour, comprising one-day and five-day matches, because of political differences.

Trade and Investment

Musharraf should take note because tourism is just one of the many ways in which Pakistan can capitalize on the booming economy next door. Trade and investment flows, if they are allowed to move freely between the two countries, could add a much bigger stimulus to Pakistan’s $70 billion economy.

Take computer software. After two decades of hard work, software consulting and back-office work have become a $14 billion industry in India, employing more than 700,000 people. In Pakistan, it’s still a $50 million to $100 million business, shared by 350 small companies.

Indian software companies will increasingly reach a stage where it will prove costly to get the basic codes written in India. In fact, some of them are already subcontracting low-end programming work to China, where wages are lower. Yet, because of political tensions and restrictions on travel, they won’t parcel out that work to Pakistan.

Peace between the two nuclear-armed neighbors, if it’s allowed to take hold, can change that.

``Pakistan’s best economic hope is one that, admittedly, may seem far-fetched today: namely to hitch its own economic development on the dynamism of India’s economy,‘’ says Stephan Richter, president of online think tank TheGlobalist.com.

Blame Politics

It would be a shame if Pakistan’s 145 million people were left out in the cold, even as India’s billion-people economy reaches its potential. It would be a bigger tragedy considering that countries from Sri Lanka to Singapore are putting in place strategies to benefit from India’s growth. Pakistan, which has strong linguistic and cultural affinities with India, and a shared land border that makes for the easy movement of goods and people, is in a much better position to gain from its neighbor’s good fortune.

If Pakistan misses the boat, blame the outdated politics of jingoism that have gripped the national psyche in the two countries since India won independence from Great Britain and Pakistan was created as a separate Muslim state in 1947.

Relations between India and Pakistan hit a nadir in 1999, when their armies fought each other in a brief struggle for the control of the Himalayan territory of Kashmir, a disputed area that was also the cause of two of their three previous wars.

Kashmir Talks

Relations started improving last year, after Indian Prime Minister Atal Bihari Vajpayee offered Musharraf ``a hand of friendship.‘’ Diplomatic ties were restored, the bus service between Lahore and New Delhi resumed in July, and direct flights started in January. Next month, Pakistan International Airlines Corp. will double the number of flights to India.

The two countries have agreed to begin negotiations to end long-standing disputes, including over Kashmir. The talks will begin in May or June.

Any breakthrough in solving the 57-year-old Kashmir dispute could see Vajpayee and Musharraf locked in a happy embrace in Oslo City Hall, as the joint winners of this year’s Nobel Peace Prize.

Peace in one of the world’s most volatile regions will also mean greater confidence among international investors who may want to buy Pakistani state assets, such as Pakistan State Oil Ltd., the country’s biggest oil supplier, which the government is planning to put on the block to raise money.

Peace Dividend

``In the event that the bilateral peace negotiations can meaningfully reduce regional antagonisms, the potential exists for a reallocation of scarce resources from defense to social welfare programs in both countries,‘’ Moody’s Investors Service analyst Kristin Lindow said last month.

To that end, the symbolic value of the cricket series isn’t lost on the leaders.

``Win not only the game, but hearts also,‘’ Vajpayee wrote on the bat of Indian captain Sourav Ganguly, before the team left for Pakistan yesterday.

Meanwhile, online tickets for the game in Lahore, priced at 14 pounds ($25.50) and 12 pounds, are sold out.

Cricket is just a symbol of the backlog of goodwill that's only now starting to get cleared,'' says Jafri of Avari Lahore. There’s huge demand for visiting Pakistan on the other side of the border. Normalization of relations is good for business.‘’

Politics of hatred often obscure simple truths like that.

http://quote.bloomberg.com/apps/news?pid=10000039&refer=columnist_mukherjee&sid=ab48OmNQw3RU

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one thing goes wrong and Pakistan is in big trouble.

3

Some truth in it but mostly hype and biased view by Mukherjee

4

To pick the fascination with a cricket series (after 15 yrs of hiatus) to present a case for free trade between Pak & India is either the height of naivette on the part of the writer or he is assuming that the readers are suckers. I am more inclined to think the later.

India is many times bigger economy, and in a free trade model, Pak manufacturing will be bull-dozed by Indian companies dumping their fare. All such issues should be carefully evaluated and only those actions should be taken which are in our national interests. I am not anti-free-trade, but the rosy picture painted by Mukherjee is quite unreal.

5

faisal

if pakistani manufacturing is competetive it will have access to a much larger market than they have, and they could have better economies of scale and be profitable even on lower margins due to the higher volumes.

However if they are slow moving over priced bloated manufacturers, then they will have no prayer.

6

Its a trade-off.

We can go one route and put our kangri pehlwaan manufacturing in the ring with a 400 lb gorilla and pat ourselves on the back that we are allowing fair competition. This may result (may - not necessarily) in our manufacturers folding shop, laying off millions of people and creating joblessness and assorted other social ills in the society that come with joblessness.

Or...

We can go the other route and carefully allow and monitor the impact of foreign goods. This allows time to our manufacturers to come to speed with international competition, adopt efficient production methodologies with better quality and good pricing.

So, basically there are two extremes. Either we put our customers supreme and screw our manufacturing or we keep on protecting our manufacturers and be protectionist. I am sure there is a middle ground, and thats what I advocate.

7

yep. but to get to that middle ground Pakistani manufacturing should know that the govt is not going to protect it forever, and that they will have to compete. Give them some time to get their house in order and after that lets not baby them anymore.

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Indians are being very very challak about this and approaching the Pak-India negotiations very chalaak-ly.

Yesterday we were watching Prez Musharraf’s tele-press-conference by Indian journalists and he said that he’s upset by the fact that when Indians talk about peace they sideline the Kashmir issue. He said that there can be no peace without solving the Kashmir issue.

However, when the press conference ended and the Indian rep closed it with his comments, he said, let’s hope that Kashmir issue aside, we can still establish exchange of artists, players etc…

:expressionless: :fraudia:

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It’s a tricky one. Essentially, Pakistan is taking the view that India and Pakistan cannot be friends until the Kashir issue is resolved. India is taking the line that negotiations over Kashmir will be more fruitful if the two countries negotiate as friend-to-friend, rather than enemy-to-enemy.

Both sides have logical arguments to back them. The biggest weakness in the friend-to-friend argument is to look at the example of Britain and Spain over Gibralter - Britain and Spain have been very close allies, both politically and militarily, for over half a century, and yet their negotiations over Gibraltar on the southern tip on Spain are still completely deadlocked, and still taints their relationship.