[Mb-civic] Guardian Unlimited: Pakistan's rich blaze a trail in their Porsches

[harry.sifton at sympatico.ca]

Harry spotted this on the Guardian Unlimited site and thought you should see it.

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Note from Harry:

Interesting, since it is thought that Bin Laden is hiding in North Western Pakistan
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To see this story with its related links on the Guardian Unlimited site, go to http://www.guardian.co.uk

Pakistan's rich blaze a trail in their Porsches
Luxury cars hit showroom after an economic boom prompted by September 11
Declan Walsh in Lahore
Monday May 08 2006
The Guardian


Wheezing rickshaws, ornately decorated trucks and tottering motorcycles, often carrying a family of six, crowd Pakistan's bustling roads. Now there is an incongruous newcomer to the street chaos - the latest Porsche.

The German sports car heralded its arrival in Pakistan last month with a glitzy ceremony at one of Lahore's most exclusive clubs. Abukhar Bokhari, the importer, has already sold 30. "Business is booming," he said.

The invasion of the Pakistani Porsches, which are sold at a starting price of £52,000, represents the flashy end of a little publicised economic boom. Last year Pakistan's economy grew by 8.4%, second only to that of China's. This year's rate is expected to top 6%. After years of spurning their country's unhappy association with al-Qaida and Islamic extremism, the monied elite is celebrating.

"It's the best it's ever been," said Asif Kamal, an industrialist who has just bought an investment bank and is building a 20-storey office in downtown Lahore. "There's never been so much money and so many opportunities."

To celebrate, he bought a Porsche Cayman S for £72,000, a car costing £30,000 more than it would in the UK due to the import tariffs. "It's a nice toy, just for fun," he said, adding that a Rolls-Royce concession had found two customers even before it had opened.

The iconic Porsche 911 is going to be the most popular model, Mr Bokhari predicts. It is an irony since September 11 is largely responsible for Pakistan's dramatic turnaround: Pervez Musharraf, Pakistan's president, won key economic rewards that revived his basketcase economy after turning his back on the Taliban, joining the hunt for Osama bin Laden, and thereby "cooperating" with George Bush's "war on terror" after September 11 2001.

The US dismissed Pakistan's $1.5bn debts, offered $3bn in economic and military assistance, and ended sanctions linked to the controversial nuclear bomb programme. Coupled with this, wealthy Pakistanis abroad began sending home their savings, to be invested in houses and stocks. Since then property prices in the country have soared, Karachi has Asia's top-performing stock exchange, and sales of television, mobiles and luxury cars are booming.

"September 11 was a horrible tragedy but it saved Pakistan," said Nassir Kasuri, the 28-year-old son of Pakistan's foreign minister and the owner of a new Porsche 911.

The prime minister, Shaukat Aziz, who was a formerly a New York banker and who helped knock the country's ailing finances into order, has collected the plaudits for the growth.

But the sparkling statistics mask a worrying downside. The spending splurge is limited to a small minority. Most of the country's 160 million people remain desperately poor, barely able to afford a motorcycle, and the rich-poor divide is wider than ever.

Mr Kamal said that 1% of citizens were richer now, another 3% were slightly better off, and the rest were "just poor".

Inflation, which touched 11% last year before easing to 8%, is the main difficulty.

Outside Mr Kamal's office Abdul Rehman, a 55-year-old "tea boy" with 30 years' service to the company, said that it was difficult to make his £55-a-month salary meet the soaring prices of flour, sugar and transport. "A bag of sugar that used to cost 25 rupees [22p] two years ago is now 40 rupees," said the father of six. "It's really terrible."

In contrast with India and China, Pakistan's economic boom has done little to swell the ranks of the middle class, which remains small. Only about two million Pakistanis pay income tax. The government has increased health and education expenditure but continues to pour funds into expensive military hardware. Last month President Musharraf ordered 62 F-16 jets from the US at an estimated cost of $2.5bn.

More worryingly, economists say the boom is built on "foundations of sand". The stock market is considered to be dangerously overvalued, property prices have started to dip sharply in some areas, and the central bank recently made front-page news with a stern warning on the dangers of inflation.

Shahid Javed Burki, a former World Bank vice-president, believes Pakistan is in the grip of a "casino culture" and is showing symptoms of financial crisis.

One British analyst, who said credit-card spending had left many consumers vulnerable to a downturn, added: "Pakistan is going in the right direction but it's travelling on a tightrope." The uncertainty is also linked to political issues such as next year's elections which are expected to pose the greatest challenge yet to Gen Musharraf's power and Pakistan's stability.

Copyright Guardian Newspapers Limited