2018: South Asia in review
We’re documenting the unstoppable rise of South Asia and South Asians around the world. This week, we’re highlighting 10 trends we saw in 2018 and five trends we’re following in 2019.
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The ten big trends we saw in 2018:
1. The rise of tech colonialism and ensuing regulation
Walmart’s $16b acquisition of Flipkart; Amazon’s $5b investment in India; Softbank’s $2.5b in Flipkart, $1.5b in Paytm, $1b in OYO Rooms; and South Africa’s Naspers $1b in food delivery startup Swiggy. Outside investors are willing to pay billions to court the South Asian consumer and outpace rivals. Unlike China, which was closed to the West, India is open.
And companies are changing to fit in. Uber now accepts cash payments and local digital wallets and launched Uber Lite, a slimmed-down version of its app for lower-fidelity data plans
But the Indian government is taking cues from China’s story: more regulation. A Reserve Bank of India mandate in April ruled that all payments data on Indian citizens could be stored only within the country — the likes of Google Pay and Mastercard now need local servers for data storage that cannot be accessed by global servers. Just this past week, the government released new rules that come into effect February 2019 on e-commerce: no product can be sold exclusively on just one e-commerce platform and no single company can own more than 25% of a marketplace’s inventory at a time. Amazon and Walmart-owned Flipkart will now need to rethink their strategy of investing heavily in private label brands. Both Amazon and Flipkart have set up their own partially-owned affiliated companies to get around the Indian government’s strict bar. We may see yet another side-step.
Uber India had $1.6b worth of bookings in Q3’18 (12/4/2018, CNBC)
2. China’s role in South Asia grows and grows and grows
From tech to infrastructure, China is all over South Asia. Chinese e-commerce giant Alibaba bought Pakistan’s top online retailer Daraz.pk and invested in Telenor’s microfinance bank. Neither Amazon nor Flipkart sell in Pakistan. In India, Alibaba has invested in online grocer Big Basket, payments company One97 (Paytm), logistics startup XpressBees, and online ticketing startup TicketNew. Shanghai Fosun Pharmaceutical Group pumped $1.1b into India’s Gland Pharma — the maximum 74% FDI limit. And Bytedance’s viral music video app TikTok has drawn millions of Indian teens.
And through its $1t+ Belt and Road initiative to develop infrastructure across the world, China has invested $62b in Pakistan, as well as in Sri Lanka, Nepal, Bhutan, and the Maldives. In fact, Sri Lanka signed off its Hambantota Port on a 99-year lease to China after it failed to meet debt obligations. In response, India has become cozier to its neighbors and increased aid to Bhutan, the Maldives, and Nepal. In December 2018, Modi pledged a ~$643m assistance package to Bhutan — but India’s check sizes are dwarfed by China’s. It will have to think of other ways to buy influence; the cultural similarities it shares with South Asian countries may help.
On China’s deal with Sri Lanka to develop its Hambantota Port (6/25/2018, NYT)
China and US play the great game in South Asia (12/29/2018, Nikkei Asian Review)
3. Populists promise, but can’t deliver
Prime Minister Narendra Modi (BJP) won with the promise of good jobs in 2014. The opposition party, Congress, took a page out of BJP’s book in 2018 and promised farm loan waivers to win state elections in Chhattisgarh, Rajasthan, and Madhya Pradesh. With competitive populism, BJP governments in Gujarat and Assam responded with utility and farm loan waivers. In Pakistan, Imran Khan promised affordable housing for the poor, increased austerity (by selling off the office’s buffalos and cars), and other measures to win votes, all while the country sought out its 13th bailout from the IMF as its foreign exchange dwindled. It is relying on $6b from Saudi Arabia and China for help. Can populists deliver on their promises?
Pakistan’s currency plunges again as country seeks IMF loan (11/30/18, AP)
Buffaloes, BMWs, and free lunches end as part of Pakistan austerity drive (9/19/18, Bloomberg)
Why farm-loan waivers are a waste of time and money (12/21/18, Quartz)
4. France wins the world cup, India beats France soon after
In July — soon after France won the 2018 World Cup — the World Bank announced that India had officially superseded France as the sixth largest economy in 2017. The world order for the top 10 now stands as the US, China, Japan, Germany, the UK, India, France, Brazil, Italy, Canada. As the center of GDP continues to move east (as it used to be before the Industrial Revolution and British imperialism), it highlights how outdated even the UN is: India does not have a permanent seat in the Security Council, even though it sent thousands of soldiers to fight Britain’s war in World War II.
How the world’s economic centre of gravity has shifted (6/28/12, The Economist)
5. South Asians continue to take the global stage (and weddings) by storm
Hasan Minhaj and Hari Kondabolu get Netflix shows. Lilly Singh (Superwoman) launches her clothing line (and attends the Chopra-Jonas wedding and meets Barack Obama!). Riz Ahmed raps in NYC and releases a single. MIA speaks at the NY Public Library and releases her documentary. Aziz Ansari goes back on tour after sexual assault allegations and hangs out with David Chang in Bombay. Kamala Harris may run for the 2020 presidency. Google CEO Sundar Pichai defends Google in Congressional hearings. Satya Nadella (Microsoft) and Shantanu Narayen (Adobe) crush earnings. Indra Nooyi (Pepsi) steps down.
On weddings: Deepika Padukone and Ranveer Singh, Priyanka Chopra and Nick Jonas, Isha Ambani and Anand Parimal all wed in quick succession in late November and early December. Padukone and Singh kept the ceremony intimate in Lake Como and hosted four receptions in India. The Chopra-Jonas wedding saw an apology from The Cut writer Mariah Smith for calling Chopra a global scam artist. The Ambani-Parimal wedding drew ire for costing $15–100m (petty change for Asia’s richest family).
The South Asian artists making their mark on the Western scene (12/18/18, NYT)
Adobe CEO Shantanu Narayen and Adobe are killing it (9/14/18, MSNBC)
6. The fall of section 377 is heard around the world
The chipping away of British legacy continues. Though India still hasn’t gotten back the Koh-i-noor, its Supreme Court struck down Section 377, a colonial-era law that could spell life imprisonment for “whoever voluntarily has carnal intercourse against the order of nature with any man, woman or animal.” Though it had been repealed in 2009, Section 377 was put back in force in 2013, and repealed for the second time — finally — in 2018. South Asians across the world rejoiced. Now, Singapore and Kenya are trying to strike down their versions of 377. Who knows? The fight against 377 may even spread to Nigeria, Ghana, and other former British colonies.
Pakistan’s first transgender pride march took place in Lahore yesterday (and no one noticed) (Twitter)
7. Me too, says South Asia
In 2008 and 2013, Bollywood actress Tanushree Dutta filed and publicly accused fellow actor Nana Patekar of sexual harassment. But Dutta had the odds stacked against her: Patekar was an admired industry veteran. But in October 2018, when Dutta again accused Patekar of harassment, something was different. Police filed an FIR (a first information report, or the written document needed to officially start investigating) against Patekar. Actresses, comedians, musicians, and others came out with stories of their own. Best-selling Indian author Chetan Bhagat, veteran actor Alok Nath, award-winning Tamil poet Vairamuthu, ex-Minister of State for External Affairs MJ Akbar were all accused. Some criticized the victims for lying, seeking attention, or using it to their own benefit — but anti-defamation laws in India can jail an accuser if they can’t come up with proof. In South Asia, where sexual harassment is so common, women have been waiting to be heard for a very long time.
In Pakistan, women riding bikes fight taboos (12/29/18, NPR)
India’s twin taboos: Sexual assault and child abuse once again in the national spotlight (ABC)
8. As South Asia grows, its natural resources deteriorate
Twelve out of 15 of the World Health Organization’s list of top cities with small particulate pollution are from India. Kanpur, Faridabad, and Varanasi lead the list. #12 and 13, Peshawar and Rawalpindi, are in Pakistan. The culprit? Rural households rely on emission-producing wood and manure for heating and cooking. Farmers burn leftover waste from crops after harvests. When those emissions float to cities, they mix with other emissions such as construction dust. When these float over hills and mountains, they get trapped inland. The once-white walls of the Taj Mahal are turning green, nighttime photos reveal particulates looming in Dhaka’s air like ghosts, and Lahore’s smog has been nicknamed its “fifth season.” A Lancet Planetary Health survey linked 1.2m deaths in India to air pollution.
Air pollution is just the start of it. In 2017, the UN predicted that at least 41m across India, Bangladesh, and Nepal had their homes and livelihoods directly affected by bad planning from monsoon flooding. From Kathmandu to Assam and Bihar, more than 1,400 people died. In 2018, millions of Keralans were displaced in monsoon flooding, and more than 400 were reported dead. And just this past month, over 60,000 people were affected by flash flooding in Sri Lanka. On one side of the South Asian story is growth. On the other is its deteriorating natural resources and environment.
Why is India’s air pollution so bad? (5/8/2018, Vox)
Eerie photos of Dhaka’s polluted skies (7/5/2018, Financial Times)
9. Fighting for freedom: censorship, internet shutdowns, and genocide
Myanmar jailed two Reuters journalists for reporting on the Rohingya genocide. Bangladesh jailed photojournalist Shahidul Alam for speaking out and dissidents via a purported drug crackdown. Bangladesh Prime Minister Sheikh Hasina prevented her opposition from running in the December 30 elections — and even shut down mobile internet. By August 2018, the Indian government had shut down Kashmir’s internet 97 times over the span of six years. And although Pakistan’s Supreme Court acquitted Asia Bibi, a Christian woman, of blasphemy charges, she has had to go into hiding due to death threats. Her fate is still uncertain. And let’s not forget that the Rohingya genocide is still alive and well.
Bangladesh’s slide toward authoritarianism is accelerating (10/4/18, Economist)
Bangladesh elections: a choice between freedom and prosperity (12/24/18, FT)
Reuters journalists Wa Lone and Kyaw Soe, jailed in Myanmar, to lodge appeal (12/23/18, Guardian)
2018: A year of media suppression and rights abuses in Pakistan [Op-Ed] (12/29/18, Al Jazeera)
10. Mo’ money, mo’ problems: currency woes hit imports, debt repayments, and prices
The end of 2018 has been shaky for markets globally. Public tech valuations have plummeted. Facebook has been hit by scandal after scandal (WhatsApp lynchings, fake news from the Burmese military that perpetuated the Rohingya genocide, fake profiles pre-Bangladesh elections). The Indian rupee (and thus Bhutanese ngultrum and Nepali rupee, which are pegged to it) hit their lowest 2018 point against the dollar October 10; both have slowly inched up. The currency fluctuation kept away some investors, and increased prices for imported goods. The Pakistani and Sri Lankan rupees declined for all of 2018, making it even harder for them to repay debts denominated in other currencies (and pay their debts to China). Only the Bangladeshi taka has emerged stronger by the end of 2018 but fluctuated during the year, dipping to its 2018 nadir in October. Sri Lanka’s rupee continues to fall.
Five things brewing in 2019:
1. The election results in India and Bangladesh: more of the same?
The people of India, the world’s largest democracy, will vote in the country’s general elections from March to May 2019. Unlike other countries, since India has cities, towns, and villages with varying levels of infrastructure, the election occurs over multiple weeks to select the 543 elected members of the Lok Sabha, India’s legislative assembly. The President of India nominates an additional two members from the Anglo-Indian community. Since India is a parliamentary government, the party or coalition with the majority gets to select the Prime Minister. The BJP, Narendra Modi’s party, is part of the center-right National Democratic Alliance coalition. Congress, led by ex-Prime Minister Indira Gandhi’s grandson Rahul Gandhi, is part of the center-left United Progressive Alliance. Though for a while, BJP’s re-election seemed certain, the most recent opinion polls show that neither coalition has a majority. Vocal criticism of the BJP’s performance over the past four years has also increased in recent months.
Sheikh Hasina, who is likely to win December 30’s elections, will also have the opportunity to chart a new course for her country. Over her 10 years of rule, the economy has grown on average 6.3% annually, and even matched or exceeded that of both India and Pakistan. Bangladesh has also drawn $42b in Chinese investment. Childhood mortality rates have declined from 43 deaths per 1,000 live births to 26, and school attendance has risen by 10%+. She has welcome 700k+ Rohingya refugees. But at the same time, Hasina has befriended Islamist groups — some who call for sharia law — and endangered secularism in her country.
2. South Asia’s internet gets faster and better, but also goes back to its manufacturing roots
India is setting itself up for success for the 300m new internet users that will come online over the next few years. It has launched four new satellites into space for improved connectivity, run 5G tests with Huawei (persona non grata in the US), and makes life easy for Reliance Jio as it reduces mobile data prices. Streaming is easier than ever before: Spotify will launch in India in 2019. Tencent Cloud, the cloud computing arm of Tencent will be building its second data center in Mumbai (the first was built in March) to serve as a hub for Tencent’s cloud services through South Asia. It plans to serve both international and Chinese companies looking to reach the Indian market. After all, TikTok, one of the fastest growing apps in India, is by China’s Bytedance.
At the same time, from tech to home decor to fashion, South Asia is increasingly a site of manufacturing. Beyond Bangladeshi garment factories that supply H&M and Zara, the US-China trade spat means that Apple’s Taiwanese part-maker Wistron has opened a plant in Bengaluru, Karnataka, India. Apple could lower its India phone prices by manufacturing more parts within the country, thereby avoiding import taxes. IKEA has invested over $1.5b and is creating manufacturing hubs in India to keep costs low not only within India, but to also build up volume to export to other parts of the world. And India was exempt from US tariffs on solar tech components from China and Malaysia.
3. Sports and South Asia — a ‘match’ made in heaven?
Lest we forget, India (or rather South Asia) pre-partition, had a world-class level soccer team. The team was invited to the World Cup to play but didn’t have the shoes or potentially even the money to travel that far. As India gets wealthier, sports companies and gyms are realizing that there’s immense potential to grow there. The NBA is playing its first game in India in October 2019, thanks to Mumbai native Vivek Ranadive. IPL and Kabbadi are some of the most watched sports. And soccer and basketball might be on the rise again. One of the men behind the rise of the professionalization of sports is MS Dhoni’s manager Arun Pandey. We also have sports to thank for Deepika Padukone’s immense discipline (she was a former professional badminton player).
World Cup economics: Why don’t big countries like China and India produce more world-class athletes? (7/6/10, Economist)
4. India sets its sights on renewable energy
India’s growth, much like China’s, has been heavily powered by coal. But India has set ambitious goals to wean itself off: 175GW of wind and solar by 2022. For reference, 1GW of power is enough to power roughly 700k US homes, which means 175GW could power as many as ~122m US homes. The entire world hit a total of 1000GW of renewable energy in 2018. And Softbank’s Masayoshi Son has promised to invest $20b in Indian solar projects. But the path to clean energy isn’t easy. India has wavered on setting steep 25% tariffs on cheap solar technology imported from China and Malaysia. Although India added a record amount of renewables in 2018, growth is projected to slow in 2019. Projects are stalling, investors are less bullish about the profitability of renewables, and, with the 2022 target fast approaching, India is still addicted to coal.
Rooftop solar just isn’t taking off in India (12/10/2018, Quartz)
India will miss its 2022 renewable energy target (10/22/2018, Greentech Media)
5. Something’s rotten in the state of Afghanistan: Indo-Pak tensions likely to increase after US troop withdrawal
Violence in Indian-administered Kashmir has spiked after Burhan Wani, a popular rebel commander, was killed in 2016. Rebels have been fighting Indian control since 1989 — most Kashmiris support the rebels and want the territory under Pakistani rule or an independent country. The trouble with Kashmir began in 1947: Kashmir had a Hindu prince but a majority Muslim population, and there was no easy way to divide the region when India and Pakistan were created. India believes Pakistan arms and trains the rebels. The ongoing conflict has killed 70k+ people. With the significant withdrawal of US troops from Afghanistan, India fears the continued rise of the Taliban and increased influence in Pakistan and Kashmir, which could lead to more terrorism in India. Afghanistan’s response has been to delay its April election and appoint two critics of Pakistan to two top posts: Amrullah Saleh will be the next Minister of the Interior and Asadullah Khaleed will be the Defense Minister. Both have blamed Pakistan for the Taliban’s resurgence.
Four rebels killed in gun battle in Indian-administered Kashmir (12/29/18, Al Jazeera)