Rare Earth Metals: From America's dominance to Chinese hegemony

The recent discovery of rare earth metals in Japanese deep sea proves that rare earth metals are not that rare as their name signifies.

Today’s modern life is impossible without rare earth metals. Rare earth metals are 17 elements including 15 separately presented lanthanides as well as scandium, and yttrium.

These metals are used in manufacturing batteries, vehicles, LCDs, plasma screens, fiber optics, medical imaging, hybrid vehicles, wind turbines, microphones, speakers and other green technology devices. This group of metals is indispensable for high performance optics and lasers and key to the most powerful magnets and superconductors in the world.

Their various applications have given rise to western powers’ fear of Chinese dominance in high technology. China currently has near monopoly in Rare earth metals supply.

  "The Middle East has oil; we have rare earths ... it is of extremely important strategic significance; we must be sure to handle the rare earth issue properly and make the fullest use of our country's advantage in rare earth resources." Deng Xiaoping, a Chinese politician from the late 1970s to the late 1980s.

China is rapidly reducing export quota of rare earth in order to strategically move Chinese manufacturers up the supply chain so that they may sell valuable finished goods to the world rather than lowly raw material.

This presented America with a challenge in keeping its dominant position in high tech but also its hegemony over developed nation, who are in dying need of the elements.

The significance of the metals can be gauged from the fact that many geopolitical experts consider these metals to be the sole reason of U.S. stay in Afghanistan. United States, according to them, wants to make European powers their ally, against China, by controlling the supply of Afghanistan’s rare earth metals.

In 2010, Pentagon estimated Afghanistan’s mineral deposits to be worth 1 trillion $, once mined. The New York Times reported that White House officials are looking at Afghanistan’s mineral resources as compelling reason to extend their stay in the country.

“We live in a different world than the past, where commodity prices mattered because a monopoly allowed sometimes a single nation or a group of nations to charge an extremely high price for that material, and people are still thinking along those lines,” Michael Silver said. “That’s not the world we live in today, particularly with rare-earth metals, which is kind of what got me involved in the Afghanistan situation.” Michael Silver head White House Initiative and CEO of American Element

Critics on the other hand points to the fact that Afghanistan is a war zone moreover; mining and refining these metals from the mountain is costly. Another factor which goes against America is Afghanistan has no coast of its own and the only cost effective route for the metals is through Pakistan’s pushtun belt.

Using customers' money for your startup

Beijing has the world’s costliest rental housing, according to a survey of 15 global cities, with average prices more than 1.2 times average salaries, says a report by the Global Cities Business Alliance, a UK-based not-for-profit organization. The rise in rent, in developing countries like China, India, and Pakistan, has provided developers an opportunity to make money out of thin air.

What they do is to purchase a piece of land and then announce construction of residential plaza or shopping mall over it. Advance booking is announced for residential and commercial units. The advance money collected is then used for completing the project. Unheard in many developed countries, realty development is one of the most lucrative areas for investors.

The use of customers’ money for growth isn’t limited to realty sector only; entrepreneurs can use this method to grow their startups in other areas as well. Take the example of TutorVista, which successfully leveraged this customers’ money model of financing. It started when Krishnan Ganesh hired three teachers and provided them with VoIP internet connection, PC displaying a digital whiteboard along with webcam. It quickly became a 100$ per month tuition service.

Dell is another example of customer funded business. Michael Dell, founder of Dell, started by selling customized PCs to small businesses. The core percept in his business was to collect cash before having to lay out money on chips and computers to be sold. 

Customer funding provides many benefits to the startups. Usually, startups receive higher valuations if they performed successfully for an extended period of time, without external funding. Additionally, strong cash inflows, from customers, allow entrepreneurs to focus on proving business model rather than wooing investors.

In this model of business funding, balance sheet shows more current liabilities than current assets. In accounting term it is called negative working capital. Ironically positive working capital is assumed to be good as it poses less insolvency risk to the business.

Not every startup can be run using customers’ funding. Capital intensive projects need to rely on traditional way of financing. 

Foreign investment in Pakistan: boon or bane?

In the last couple of days, Pakistan has witnessed an increase in foreign investment. Many local companies were acquired by foreign multinationals. Dawlance, Pakistan’s white goods manufacturer was acquired by Turkish group Arçelik . Furthermore, in the same week a Dutch based dairy cooperative FrieslandCampina acquired stakes in Engro for around $460 million.

This shows that international investors are viewing Pakistan as a growing market. Its huge population provides huge consumer base. The rise in middle class along with young population makes it attractive location for investment.  Many European countries are having population as much as Pakistan has graduates.

But is there any benefit to the nation of these huge investments from multinationals. In a nutshell we would say yes. But on a deep analysis we would say it is hard to say anything precise unless we take into account other factors.

Let us assume that Turkish group would enhance the quality of the products, manufactured by Dawlance, and would make them attractive to export markets. Definitely, in this case it would be good for Pakistan. Multinational companies have huge research and development departments with billions of dollars in budget which helps them in developing new and better products. Small companies like local ones cannot expend that much on research and development. Furthermore, small companies have issues with protecting patent rights. Hence, from this particular angle it is good that foreign companies are making inroads into Pakistani market.

With better quality and increased foreign clients’ satisfaction, country would be able to earn foreign exchange. This would also help Pakistan to move from exporter of low-tech to exporter of high-tech products.

The ability of multinationals to get a better deal from Govt. in matters of tax rebates is another thing to ponder. In countries like Pakistan, Govt. rules are more favorable to foreign big investors rather than local small investors. The exemption of duties and taxes extended to Chinese companies working on CPEC is one such example.

Exemptions in taxes make it more likely for these companies to earn heavy profits and pay high salaries to its employee. This would mean more and high paying jobs for locals as well as better employee retention for the multinational companies.

But there are more cases in which these companies hire foreign people than local ones. This would mean snatching jobs which could be provided by local companies to local people. Moreover, huge portion of profit earned, through getting tax rebates, by these companies is repatriated back to their country of origin.

Thus foreign investment is good for host country if it leads to transfer of technology; increase in exports, provides employment to local ones, pays taxes and duties to host country Govt. and improves quality of manufactured goods.

Indian Silicon Valley

San Jose; California, is nick named silicon valley, owing to presence of large number of technology companies in this city.

Now the term Silicon Valley has become so popular that any area having sizeable number of technology firms is known as Silicon Valley.  Bangalore, India is one of these cities famously dubbed as Indian Silicon Valley. It is home to as many as 900 IT firms.

The Indian Silicon Valley Bangalore has increased in size to more or less the same size as that of San Jose, The American Silicon Valley. The estimated GDP of the city during 2007 was 83 billion us dollars.

The rise of Bangalore as IT city is attributed to various factors.

First of all its location helped it to be the hub for defense technology and supply companies. As it was situated away from Pakistan and China, Indian planners considered it to be suitable for locating strategic industries. Hence they located important defense equipment manufacturing factories in Bangalore.  For example The Hindustan Aeronautics Limited (HAL) headquarters is based in Bangalore, and is responsible for research and development activities needed to develop indigenous fighter aircraft for the Indian Air Force. Other such companies which were homed in Bangalore were HAL, DRDO, BHEL, and ISRO.

Owing to these strategic industries and defense manufacturers skilled engineers were in high demand in this city. Engineers from neighboring regions shifted to Bangalore. Later on these highly skilled engineers supported the growth of IT. In other words the growth in IT was a direct result of external economies of scale generated by the defense equipment manufacturers.

Another reason was boom in engineering colleges in Karnataka.

Boost came from the liberalization policies adopted by the Government is also one of these factors which established Bangalore as IT capital of India. In 1991, Government actively pursued the liberalization of the economy. This provided the best environment for start ups.

High speed internet was another reason as Bangalore was technology intensive city hence Bangalore was first city to be connected to internet. The Internet boom along with economic liberalization of 90’s provided double boom to IT industry of Bangalore.  

Special Economic Zone (SEZ)   Karnataka was among the first to setup tax free zones to support technology companies. This further encouraged ICT companies to set their businesses in Bangalore.

Low crime rate and great weather Compared to other metropolitan and bigger Indian cities, Bangalore has relatively low crime rate. Weather of the city is also pleasant almost throughout the year. This encouraged entrepreneurs to move to Bangalore.

The rise of Indian information technology has created many millionaires in this city. Now the city is the third largest hub for high-net-worth individuals. The city can boost over 10,000-dollar millionaires and about 60,000 super-rich people who have an investable surplus of US$714,299 and US$79,400 respectively.

These Information Technology firms located in the city contributed 33% of India’s 23 billion dollars IT exports in 2006-07.

The dark side of Bangalore growth

The growth of IT has presented the city with unique challenges. The encouragement of high-tech industry in Bangalore, for example, has not favored local employment development, rather it forced out small enterprise. The state Government has also resisted the massive investments, required by Cities’ IT moguls, to reverse the rapid decline in intra-city transport which has already begun to drive new and expanding businesses to other centers across India.

6 thirsty industries

Water, the most abundant compound on earth, is used by many industries. When you use computers, wear cotton shirts, drink beverages you are actually consuming water. The industries which are most water thirsty are listed below. In terms of direct water usage, agriculture and power-generation industries top the list, which together are responsible for 90 percent of direct water withdrawals.

1.       Agriculture

Agriculture is the major water consumer of all the industries. For India more than 90% fresh water usage is in agriculture industry.

 The room for improvement in water usage efficiency is also in this industry. Using modern techniques like sprinter irrigation, drip irrigation etc can help to make use of water efficiently. In developing countries huge amount of water can be saved by simple improvements in the method of irrigation.

2.       Power generation

Generation of electricity is another bigg consumer of water.  Ultimately, it takes a staggering 95 liters of water to produce one kilowatt-hour of electricity, according to Tamim Younos, research professor of water resources at Virginia Tech.

Pumping oil, cooling the power plant, removing pollutants from power plant exhaust, generating steam to run turbines, and washing away residue after fossil fuels are burned all involve water usage.

All sources of power generation are not equal in water consumption efficiency. For example natural gas is the most efficient source of energy in terms of water consumption.

3.       Food processing

Huge water is used to wash and rinse fruits, vegetables and meat. Food processing industry uses water to

1.       Wash raw food,

2.       washing after steaming/peeling/ size reducing,

3.       Balanching

4.       Filling

5.       Sanitation and plant cleaning

Half of the water used in the fruit and vegetable sector is for washing and rinsing

4.       Textile and garment industry

Textile and garment industry is very water intensive. Most of the water used is in wet processing and dyeing fabrics. The textile industry uses 100 liter of water to process only 1 kg of textile fabrics.

5.       Meat production

According to a study by the UNESCO Institute for Water Education, conducted between 1996 and 2005, “29 percent of the total water footprint of the agricultural sector in the world is related to the production of animal products.”

 It takes more than 1,800 gallons of water to produce 1 pound of beef

6.       Semiconductor manufacturing

Semiconductor Manufacturing Plants can use as much water as a small city. These plants use water in washing the silicon wafers with ultra pure water. One manufacturing plant uses anywhere between 2 to 4 million gallons of very, very pure water— ultrapure water—per day, and that is roughly equivalent to the water usage of a city of around 40,000 people.

Ultrapure water is a term in the semiconductor industry to emphasize the fact that the water is treated to the highest levels of purity for all contaminant types, including: organic and inorganic compounds; dissolved and particulate matter; volatile and non-volatile, reactive and inert; hydrophilic and hydrophobic; and dissolved gases.

Cybersecurity Billionaire Ashar Aziz Butt

Ashar Aziz Butt is founder, CTO and chief strategy officer of cybersecurity firm, FireEye. FireEye provides companies with technology and services to protect them against malwares and cyber attacks.
For a short duration Ashar Aziz, being the largest individual shareholder of the company became cybersecurity billionaire. He is the son of Asghar Butt, renowned Editor of the leading daily ‘The Nation’ and a former Pakistani bureaucrat.

Aziz's previous venture was Terraspring, which was later acquired by sun microsystem, a company where Aziz  worked for 12 years. Today Aziz is one of the top experts in internet and computer security. He is the original inventor of the set of technologies used by FireEye.
Owing to his holding in the cybersecrity giant, his net worth in the month of march 2014 jumped slightly more than a billion us dollars, as the share of his company hit 96$. His billionaire status was quickly taken away by a fall in the share price. Recently his company's share lost considerable value. His company's share is currently valued at 27.53$. This makes his net worth at 269.548 million dollars. At present he holds 9,791,096 shares of FireEye Inc.
 His company has acquired another company nPulse Technologies. In January the company acquired Mandiant, a cybersecurity firm based in Alexandria, for $1 billion.
Aziz holds Bachelor's degree in electrical engineering from Massachusetts Institute of Technology and Master's in computer science from University of California, Berkeley. He has one brother named Dr. Ahmer Aziz Butt.

State of Internet industry

Recently Facebook has acquired the whatsapp for reportedly 19 billion us dollars. This massive figure acquisition has made the silicon based founders of whatsapp billionaire. Both the founder Jan Koum and Brian Acton has become the owner of massive fortunes. According to the estimates the worth of Jan Koum is 6.8 billion dollars while Brian Acton has become the owner of 3 billion us dollars. These new billionaires are the recent example of the possibilities of the cyber world.

Global phenomenon

The sudden rise of billionaires in the internet industry is the first phenomenon of its type. Owing to zero marginal cost in the internet industry, the number of millionaires in internet industry is rising at an increasing pace.

The rise in the number of internet super rich is global phenomenon and for past some decade many billionaires have risen to the scene including the facebook billionaires. Google and yahoo founders were the first internet billionaires. They organized the information present on the internet, and paved the way for future genius to become successful internet entrepreneurs.

Later on billionaires like Mark Zuckerberg (Facebook), Jeff Bezos(Amazon), Masayoshi Son (Softbank), Pierre Omidyar (Ebay), Robin Li(Baidu), Mark Cuban (broadcast), and many others rose to the status of billionaire. As the number of billionaires rose same was the case of millionaires. These online super rich are generally young.

New opportunities for entrepreneurs are arising owing to increase in number of internet users. Internet not only provides opportunities to entrepreneurs but also has become a tool for social change.

Arab spring in the Middle Eastern countries is an example of the change brought by the internet.

Middle East

The Middle Eastern region has recently seen Arab spring. This Arab spring is attributed to the advent of internet technology. Although the society has seen an evolution but number of cyber entrepreneurs is very small. It will take time for many of the Middle Eastern people to enjoy startup spring along with the Arab spring.

The only country that has sizeable number of internet entrepreneurs is Jordan. It has proved itself to be the hub for technology startups of the region. From many of small internet firms to Maktoob, a Jordanian internet portal, were started in Jordan. Maktoob proved to be an inspiration for many young entrepreneurs of the region, as it was later acquired by Yahoo for as much as 175 million us dollars.

Many Middle Eastern internet entrepreneurs want to serve Saudi market, the juicy market of the region, because of its huge population of 28 million. Saudi Arabia is the largest economy of the region and rich consumer base having money to spend along with good internet connectivity. This makes Saudi Arabia ideal market for the regions internet entrepreneurs.

Like Saudi Arabia, other Middle Eastern countries are also close to intense outside competition, owing to language barrier.

Pakistan

Unlike majority of the regions’ countries, Pakistan has no such barrier of language, as Pakistanis can speak and understand English. Thus the large population of Pakistan can prove to be the large consumer base for the internet companies from around the globe. This already has happened in case of Facebook, Google, and many other online companies. Number of Facebook users in the country has already touched the mark of 10 million.

The rising number of internet users can be an opportunity for country’s entrepreneurs. As majority of people who uses internet are from young strata of the society so is the case of internet entrepreneurs.

There are number of success stories of Pakistani entrepreneurs

Investorguide360, for example, is a Pakistani financial portal. It was Asia’s fastest growing financial portal before its acquisition by AMZ MAK Capital Limited. AMZ MAK Capital Limited is a partnership between Aref Mohammed AlZarouni and Mir Mohammad Ali Khan.

The interest by the investors speaks volume about their confidence in the startups. Recently a Frenchman has made an investment in Pakistani real estate portal Zameen.com. The terms of the agreements were not disclosed although the investment in this portal was confirmed by the investor, Gilles Blanchard. Earlier Mr. Blanchard was associated with SeLoger.com as its co founder. SeLoger.com is French leading real estate portal.

The trend of getting foreign investment started when Monis Rahman, founder of Pakistan’s premier online recruiting website Rozee.pk, got first round of investment from Silicon Valley based venture capital funds, Draper Fisher Jurvetson and ePlanet Capital. Today Rozee.pk is used by more than 16 million professionals for their job search and is used by as much as 54000 employers.

Though Monis Rahman was the trend setter by becoming the first venture fund backed entrepreneur, in Pakistan, it was Abid Beli who first successfully started commercial online venture by starting beliscity.com. Later on his site was sold.

As the trend of blogging is increasing in Pakistan, more and more successful startups will surface. Though presently there are many problems faced by entrepreneurs in starting their own hi-tech ventures. One major problem is lack of financing sources as there is no developed venture capital fund industry. Venture capital funds are more likely to invest in new technology companies. It is owing to this reason that venture capital funds have become synonymous to technology financing.

Related links.

Whatsapp billionaire

Middle Eastern startups

Zameen.com investment

Iqbal Zafaruddin Ahmed

Iqbal Zafaruddin Ahmed is a Pakistani entrepreneur and philanthropist. His business group, Associated group, was founded by Iqbal and his father. It was 1965 when they laid the foundation of this energy group.

Today his group has become the largest producer, transporter and marketer of liquefied petroleum gas in private sector. The member companies of this group are jamshoro joint venture limited, lub gas, mehran LPG, Pakistan Gasport limited, AG omnimedia, AG publications, and associated estate developer. This group has revenues in excess of 200 million us dollars.

The group has extended its interest in the media and property development by launching AG omni media, AG publications, and associated estate developer.

Iqbal Zafaruddin Ahmed is a self made businessman who started business at the young age of 16. He was born in Patna, India to Z. Z. Ahmed, who later becomes deputy inspector general police (Pakistan). Iqbal Ahmed has been featured in Newsweek international and Forbes. His family has produced lawyers, judges, politician, and bureaucrats. Some leading names from his family include moulvi Ziauddin Ahmed, first Indian to serve as DIG (deputy inspector general) Bombay sindh presidency. Pakistan’s ambassador Riazzuddin. Former (Pakistani) Supreme Court Justice Sabihuddin Ahmed was his cousin.

Mr. Iqbal played an important role in improving Pakistan US relations.

related links

wikipedia

forbes 

Pakistani people in private equity industry.

Private equity represents a class of investors, their funds, and their subsequent investments, which are made in private companies or public companies with the goal of taking them private.

Below are some notable Pakistani people from private equity industry around the globe.

1.      Riaz Siddiqi is a Founder and Managing Partner of Denham Capital, a private equity firm that manages over 4 billion dollars and invests in the commodity and energy sectors globally.

2.      Faysal Sohail is a venture capitalist and has served as a General Partner at CMEA Capital since 2002. 

3.      Wahid Hamid is a Senior Partner at Abraaj Capital and Head of Portfolio Management and Operations Group.

4.      Dr. Moeen Qureshi - Chairman of EMP Global, a multi-billion private equity fund; Former Prime Minister of Pakistan; Former CFO of World Bank

5.      Arif Naqvi is founder Abraaj Capital, a leading private equity firm that invests in Middle East and North Africa.

6.      Aamer A. Sarfraz is founder of Indus Basin Holding, a developer of agribusiness projects in Pakistan.

7.      James Caan is also the founder and currently CEO of the UK-based private equity firm Hamilton Bradshaw

8.      asad zain Founding Member at Manara Equity Partners

9.      Abdul Hafeez Sheikh, General Partner New Silk Route Partners (a private equity firm that invests in Asia and middle east)

10.  Sardar Sherazam Mazari. In May 2009, he established Rojhan Capital as Managing Partner, which is an investment and management company focused on Pakistan.

11. Asad Jamal of ePlanet Capital is global venture pioneer. He has offices in Asia, Europe, U.S. he led investments in many hi-tech firms including Baidu ( China’s google), HiSoft (information technology and business process outsourcing company headquartered in China), median technologies (cancer detection company based in France), SiliconFile Technologies(chips for cell phones and cameras, South Korea) 

Related Link
asad jamal
moheen qureshi
arif naqvi
indus basin holding
sardar sherazam mazari

Saltflow, Inc.

Saltflow, inc. is a conglomerate and has stakes in diverse fields. Saltflow was founded in 2005 by Arif Ayub, a Pakistani national. This group is based in Dubai, UAE.

Saltflow has annual revenues in excess of $570 million annually. Group is involved in a number of fields including construction industry, trade and retail industry, and technology industry. Group has expanded its presence to North America through acquisitions.

Group’s technology business is heavily centered in Russia and controls internet companies primarily targeted at mobile and financials solutions for consumers.

In North America group has stakes in retail and trade sector. Group has invested huge amounts in retail brands and is expecting good returns.

Group also has stakes in construction industry.

Presently group provides employment to more than 500 people.

related link 

Saltflow, Inc.

Success achieved by Pakistani bloggers.

Income diary has a post named ‘20 top blog sales’ that has a list of blogs that were sold for millions. In recent past a name of Pakistani blog appeared in ‘top earning blogs’ on incomediary. According to incomediary Saad Hamid’s blog Sizlopedia was making 11000 us dollars per month.

Blogging has become common in Pakistan and there are many successful bloggers in Pakistan. Recently another success has been achieved in this area by Pakistanis. Gagism.com, a humor blog, co-founded by Farrukh Zafar and Salman Saeed, has been acquired by an Australian firm for rupees 10 million (105000 us dollars approximately).  Presently gagism has a team of 6 members including two founders. 

related link
propakistani

Pakistan’s fastest growing information Technology Companies.

Following are the companies that topped the Pakistan fast growth 25.

1. NayaTel. Founded by three university friends in 2004, now has over 500 employees. Nayatel’s network offers ultra broadband Internet, modern telephone and digital video services to business and household users. It is the state of art fiber wiring serving 6000 household and business units. Now nayatel has over 500 employees.
2. i2c Inc. is an electronic payment processing, point of sale activation solutions and prepaid application service Provider Company. It was founded in 2001, and currently has more than 250 employees. It has offshore office in Lahore Along with this it has sale and support offices world wide.
3. TradeKey.com is world’s fastest growing online trading platform. It was founded in 2005. With in short span of 4 years it has established itself as among top 5 online B2B marketplaces. Tradekey has a member base of over 5.7 million businesses from 240 different countries. It has offices in Saudi Arabia, china, and Pakistan.
4. Arpatech is an information technology company established as a small software house in 2004. It focuses on software development, business process management and network and security services.
5. Sofizar is a business to consumer Internet Company. It started in 2004 and in 2009 it had annual revenue of 20 million us dollars.
6. Abacus Consulting is one of the largest professional services firms in the region, employing more than 2000 employees. It has offices in Lahore, Karachi, Islamabad, and Dubai. It offers wide range of products and services.
7. Folio3 is a proud name in Outsourced Software Product Development. Folio3 has worked with larger clients including many fortune 500 companies.
8. Corvit is a trusted business technology advisor and strategic partner offering solutions spanning the entire spectrum of Information and Communication Technology. Corvit was established in 2000.
9. Multilynx was a company established in 1996, by Mr. Nuaman Mazhar and Mr. Hamid Chaudhry. It is a system and networking solution providing company.
10. Rozee.pk founded by Monis Rehman. It is Pakistan’s largest job portal. 5,000 companies, many of them multinationals, actively post openings on Rozee.pk

List of top hi tech Pakistani companies

Many Pakistani companies are doing fairly well in hi tech business. Following is the list of some extremely successful businesses.

1. INTEGRATED DYNAMICS. It is a private company that designs and manufacture unmanned aerial vehicle in Pakistan. According to chief executive Raza Sabir Khan Company has exported air frames to many countries.
2. NetSol technologies. It is a software company founded in 1995 by three brothers. NetSol now have offices in Australia, China, Pakistan, Thailand, United Kingdom and head office in United States of America.
3. Tradekey.com is third largest business to business website in the world. It was formed in 2005, and now facilitates transactions worth 100 million dollars in a month.
4. Technocraft is a web hosting company started in 2001. It also provides search engine optimization (SEO) services to businesses for just 200$.
5. Softronix is a software developing company incorporated in 2001.now it has 6 franchise offices in country, while head quartered in Canada.
6. Rozee.pk is Pakistan’s leading job portal. Over 30000 employers including multinationals like McDonald’s, Coca-Cola and many others.
7. Nayatel is a company offering broadband internet, modern telephone and digital video services in twin cities. Having 500 employees, it serves 6000 household and business units.
8.  Multilynx is a systems and networking solution providing company.
9. Mindstorm studios. A Lahore based company develops video games and other software. Its product cricket revolution was declared to be the official video game by ICC.