**Pakistan best suited for investment
BY KHALID KHOKHAR
**One of the most important features of President Musharraf’s government is to revive the economy of the country and to build an atmosphere where foreign entrepreneurs can invest without any fear. By the time Gen Pervez Musharraf had taken over in 1999, the country owed foreign creditors over 25 billion US dollars. Debt servicing had become the largest element of the annual budget. Most of these debts had been incurred under Benazir Bhutto’s and Nawaz Sharif’s government. Between 1947 and 1970, Pakistan had a foreign debt of only 3 billion dollars. The international donors praised the country as particularly credit-worthy. Bhutto and Zia, started to be more extravagant taking foreign debt to 13 billion dollars in 1988. In only one decade, Benazir Bhutto and Nawaz Sharif doubled that debt to over 26 billion dollars. This money was used for some major infrastructure projects like the motorway between Islamabad and Lahore. Some money, however, remained unaccounted for. All this bad and mismanagement may be attributed to the two Prime Ministers personally. Corruption charges amongst the upper political and administrative echelons were rampant. Pakistan was on the verge of being declared as a failed and default State. In this general atmosphere, General Pervez Musharraf took over the country.
When the General came into power, majority of Pakistanis felt relieved.** The current government’s wide-ranging structural reforms, prudent macroeconomic policies, financial discipline and a consistency and continuity in policies have transformed Pakistan into a stable and resurgent economy. Foreign debts have been reduced by $6bn in the last three years. Foreign currency reserves stand at an all-time high of almost $13bn. The Karachi Stock Market (KSE), which has never crossed 2,000 points since the creation of Pakistan, is almost touching 8,000 points.** The progress shows that Pakistan is moving in the right direction as government is spending substantially to provide an infrastructure to facilitate and help private sector investments. Pakistan’s economy has made significant progress over the last five years and the growth rate would be higher than the target of 8.4 per cent of GDP.
Prime Minister Shaukat Aziz has been instrumental in making a broad-based economic recovery, which has gathered momentum, macro-economic stability has been achieved and the external balance of payments is much stronger today than ever before.
The PM forecast that a stage is now set for economic growth to accelerate to more than 8 per cent per annum over the next three to four years with private sector playing the leading role. Pakistan’s industry has the potential to compete in the world, but there is need to work with dedication and commitment taking advantage of liberal economic policies and open competition provided by the present government.
Due to liberal economic polices marked by investment friendly atmosphere, Pakistan is increasingly becoming an ideal place for investors and industrialists for growth.
Significant foreign investment is taking boost in oil and gas sector in Pakistan as a result of special emphasis given towards attracting foreign investment especially in oil and gas sector. The most recent CBMs between Pakistan and India have led to a 30 percent jump in bilateral trade with the neighboring countries. Pakistan’s exports have been increased by 22 percent in 2003-04 as compared to the previous year. In an analysis conducted by Indian PHD Chamber of Commerce and Industry (PHDCCI), it was established that the trade between the two countries has the potential to grow exponentially since the trade that is taking place through the non-official route and through third countries would then be direct. Nevertheless, Pakistani Prime Minister Shaukat Aziz held “cordial and friendly” talks with his Indian counterpart Manmohan Singh but insisted further progress in bilateral ties hinged on a solution to Kashmir. “We can use the resources once we settle our disputes with neighbouring countries”, said the Prime Minister Shaukat Aziz.
Aziz, on his first official visit to India, told reporters he and Singh had covered bilateral and regional topics, including a proposed natural gas pipeline from Iran to India via Pakistan. Pakistan would like India to participate in the project.
In the meanwhile, a six-member Chinese delegation visited Pakistan and evinced keen interest in Pakistan Steel Mills revamping and expansion project. Yang Mingde, the vice president of China Metallurgical Construction Corporation (MCC) informed that the MCC was a large state-owned Chinese corporation that had carried out construction of many strategic steel production bases like Baosteel Complex of Shanghai and Anishan Steel Works. Pakistan welcomed their investment offer as Pakistan is pursuing a liberal industrial policy aimed at attracting investments both local and from abroad through joint collaborations. The present government is committed to create an investors-friendly environment in the country with a special focus on further opening up the economy and marketing potential for direct foreign investment. The Chinese company should also invest in other robust sectors for which the government would provide every possible facilities and technical assistance to them. The production ministry would identify six sites within a week where iron ores deposits exist but had yet to be exploited due to their low grading or being deep-seated in the ground. Yang Mingde, the head of the Chinese team, appreciated the economic reforms introduced by the current government during the last five years. He said Pakistan, now, offered great incentives and conducive environment for foreign investment.
The business community should take full advantage of investment friendly policies and work hard, invest more and make competitive products to compete in the world market. The government is trying hard to project Pakistani products amongst the potential international buyers and investors. In this direction, a committee of federal ministers has been composed which would formulate a strategy of attracting foreign investors in the country. More than 18.1 per cent growth rate has been recorded in large- scale manufacturing in the first three months of current fiscal year and a robust performance has been witnessed in services sector. In the first quarter of current fiscal year, there has been a strong rebound in investment, particularly in private sector, relatively low inflation and an investment-friendly interest rate. The fiscal policy stance has remained decidedly growth oriented and Pakistan has made significant progress on fiscal front in recent years. Now, Pakistan’s overall budget deficit that averaged nearly 7 per cent of the GDP in the 1990s has been reduced to 2.4 per cent in 2003-04.
The foreign exchange reserves are in comfortable position and exchange rates remained stable more or less during the first quarter of the current fiscal year. On the whole, Pakistan’s economy have been doing just fine so far and there are indications that like last year, will over perform in many areas this year as well. The Prime Minister urged the business community, to make every effort to find new markets for the exports.
There are many examples in front of us, look how China, Japan, Latin America and the Asean region have progressed and reinvigorated their economic activity to become opulent countries. With Pakistan becoming member of the Asean Regional Forum (ARF), the task of the businessmen is to establish contracts in that part of the world and exploit the advantage that now exists for us as a member of the Asean Regional Forum.
The government has created a business-friendly environment to facilitate local and foreign investors, resultantly, several foreign investors and overseas Pakistanis had showed interest in setting up industrial projects in Pakistan. Industrial growth would automatically bring down the unemployment graph and create job opportunities. The Prime Minister Mr. Shaukat Aziz has announced a comprehensive agenda for overall socio-economic development, poverty alleviation, employment generation, speedy dispensation of justice, improvement of law and order and increased agricultural and industrial production.
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The Prime Minister has a vision of Pakistan that enjoy a rightful place and respect in the comity of nations and people have social justice and equal opportunities to progress and prosperity. The time has come for the realization of such a dream. Pakistan is a country of hundred and fifty million people whose potential are second to none in the world and after becoming a nuclear power against all the oddities, it has proved that everything is possible with sheer hard work and commitment. **