Re: Over $ 3 b foreign investment in 2005-6 expected in Pakistan
Deregulation pushes foreign direct investment to unprecedented heights
Pakistan offers a very liberal and legally protected environment as the government strives to create the best investment climate possible. Spurred on by a consistently strong fiscal management and a stable economic environment, as well as an improved image abroad, foreign direct investment in Pakistan is soaring to unprecedented levels. An increase of 52% was registered in the first quarter of this fiscal year alone, totaling some $550 million. Add that to the recent privatization of 73% of the Karachi Electric Supply Company, which was acquired by the Kandooz Al Watan Group from Saudi Arabia, and you have an estimated total for the year set to exceed the $1 billion mark – a first in national history. This continues a trend seen throughout the last four years and represents a marked improvement over pre-1999 levels. FDI totals for 2003-2004 registered $949 million compared to just $376 million in the year 1998-1999. Sectors registering the highest levels of new investment are respectively oil and gas, telecommunications, energy, trade and financial services. The U.S. has been the top investor in Pakistan throughout the last few years, followed closely by firms from the United Kingdom.
President Musharraf has repeatedly emphasized that his administration is a strong believer in deregulation and privatization, and that Pakistan offers a very liberal and legally protected environment, backed by a stable banking and finance system. Consequently, investors in Pakistan are enjoying previously unknown benefits as the government strives to create the most liberal investment regime possible. All sectors are open to FDI and investors can hold unlimited equity. Additionally, companies have full access to foreign capital through the newly liberalized foreign exchange regime, and are entitled to full repatriation of dividends and profits. President Musharraf has also estimated that the profits of the largest 600-700 foreign companies in the country are currently running at 25% or higher. This is in part due to the low operating costs, which give companies an edge over those in other regional bases. Investors are also taking advantage of the fact that Pakistan in itself represents a market of 150 million people.
• $949.4 million during 2003-04 which was 19% higher than in the corresponding period of the previous year (2002-03)
**• $798.0 million during 2002-03 which was 65% higher than in the corresponding period of the previous year (2001-02) **
• $484.7 million during 2001-02 which was 50% higher than in the corresponding period of the previous year (2000-01)
Major opportunities for new investment exist in power and infrastructure projects. Pakistan has substantial untouched coal reserves and this market has yet to be developed. Moreover, only 3% of the country’s oil reserves and 15% of its gas deposits have been explored. Other areas for investment include IT and telecoms, agriculture, and small and medium-sized enterprises.
http://www.nytimes.com/ads/global/pakistan_banking_finance/four.html