- Feb 17, 2009
Pakistan eyes five billion dollars in foreign investment
Sunday, 28 Feb, 2010
Chart showing yearly foreign direct investment in Pakistan since 2001. Pakistan aims to attract foreign investment worth five billion dollars this year, but needs to tackle reform, maximise anaemic growth and stem rampant violence to clinch its ambitious target.—AFP
ISLAMABAD: Pakistan aims to attract foreign investment worth five billion dollars this year, but needs to tackle reform, maximise anaemic growth and stem rampant violence to clinch its ambitious target.
Last fiscal year, Pakistan recorded its worst economic growth in more than a decade, at two per cent, and attracted only 3.7 billion dollars in investment.
Yet Board of Investment chairman Saleem Mandviwalla is optimistic despite Pakistan's immense challenges.
“Traditionally the investment pace that we had kept — which was an average of five billion dollars a year — I think we should be able to go back to it very soon depending on if the global situation improves,” he told AFP.
“Pakistan faces the global crisis which is going on, the financial crisis, the energy crisis and then on top of these we have the security situation,” Mandviwalla, who is also a state minister, conceded.
Security has plummeted in Pakistan over the last three years with militants on the rampage, killing more than 3,000 people in bomb attacks to avenge the government's alliance with the United States in the war on Al-Qaeda.
Then there is the crippling energy crisis. Power cuts have become routine all year round, choking industry and causing misery for millions.
“With these conditions prevailing on us, which is terrorism and energy shortages, this stops us from really moving the investment the way it should come in,” Mandviwalla acknowledged.
While Pakistan languishes behind regional giants India and China, Mandviwalla takes comfort from the fact that his country, with its relatively advanced infrastructure, does better than other developing countries.
Close ally the United States has tripled non-military aid to Pakistan to 7.5 billion dollars over the next five years, spurring hopes that the cash can boost economic growth and improve security.
“We have to market Pakistan, we have to overcome the local issues,” Mandviwalla said, highlighting opportunities in energy generation, agriculture and infrastructure.
The top three countries providing foreign direct investment (FDI) so far this fiscal year are the United States, with 347.5 million dollars, Britain, 119 million dollars and the United Arab Emirates, 121.8 million dollars, according to the Board of Investment.
The biggest investments flowed into oil and gas, communications and information technology, and power generation, its documents said.
The investment board touts success stories such as investment from mobile phone operators Orascom (Egypt) and Telenor (Norway), Japan's Toyota, Citibank, Standard Chartered Bank and consumer product giant Procter & Gamble.
The board recently signed a memorandum of understanding with General Electric to identify energy, power, transport and water projects.
Azmat Ranjha, the minister for trade in the Pakistani embassy in Washington, acknowledged that investment from the United States — the country's largest trading partner — had slipped because of the security concerns.
But he said it was largely a matter of perception and pointed to fresh investment by large US companies with long experience in Pakistan such as Coca-Cola and Procter & Gamble.
“If you're a start-up, the perception you get once you read all these newspapers is that it looks fairly scary,” he said.
“But those familiar with the region know that most of the problems are in the north near Afghanistan while most industry is in the central and southern part of the country.” Economic analyst Salman Shah said the five-billion-dollar target would be achievable if the government focused more on boosting the economy's disappointing growth rate and lowered interest rates to single digits.
“To achieve the five billion dollars investment, the BOI has to work hard, conduct roadshows and accelerate the privatisation process,” he said.
“Another important thing is the economic growth. With just two percent growth rate, it is difficult to attract the investors.” Despite the 7.5 billion-dollar US aid package, Ranjha said it was crucial for the United States to lift tariff barriers. Proposals to help Pakistan by liberalising trade have been stuck in Congress.
“If the United States wants to hold our hand on the path to the development, there is no better way than by providing market access and that hasn't really happened,” he said.— AFP