Pakistan offers string of high-profit investments
By M Aftab

PAKISTAN has offered foreign and domestic investors a string of high profit businesses as part of its new industrial policy that totally opens up the economy. Investors are allowed a 100 per cent ownership and equity, full repatriation of total dividends, profits, gains and remunerations, wages and fees.

The offer has been made to 1,152 top foreign investors, industrialists, businessmen, fund managers, and Presidents and senior officials of Chambers of investment, commerce and industries, from 77 countries from across the globe who had meetings with President Pervez Musharraf and his senior ministers in Pakistan this week.

They are currently participating in Pakistan Expo-2005 and Conference on "Trade & Investment Opportunities" at Karachi. Commerce Minister Humayun Akhtar said the expo will be an annual event to "showcase all major Pakistani products under one roof." He also said after becoming a part of the international supply chain in textiles and clothing, Pakistan will soon transform itself into a regional hub for trade as markets of Central Asian States will open up, China will have an easy access, and the whole region will benefit from cost-effective and quick routes through pakistan.

The key delegations that discussed their business and investment plans with President Musharraf included those from Japan, Saudi Arabia, United Kingdom, the Gulf, Canada, Hong Kong, Morocco, Kazakstan Bangladesh, and Iraq besides others.

The financial and businesses results, nearly 600 foreign-owned companies have just announced, indicate their annual profits ranging from 20 to 50 percent. This return on investment in Pakistan is higher than offered in any other developing country.

Musharraf said: "the government constitutionally guarantees the security of investment. No foreign investor has ever been hit or businesses hurt or taken over in Pakistan. Pakistan offers a double digit profitability." In fact, a number of companies, especially foreign and Gulf-owned banks, have announced annul dividends as high as 200 percent plus. Many balance sheets are dotted with 60 percent or more profits.

"This is the best possible return on investment anywhere in the world. Foreign businessmen will have a conducive environment, where investment enjoys legal protection, a level playing field, " he also said.

International rating agencies like Moody’s and Standard and Poors have upgraded Pakistan’s ratings. The exchange rate is stables, and the central bank is enforcing a gradually tight monetary policy to contain inflation to 7.0 per cent in 2005, compared to an earlier projection of 5.0 per cent. The GDP growth in 2005 is officially projected at 7.5 percent — up from the actual of 6.4 per cent in 2004.

The stock market is performing well and its bench mark Karachi Stock Exchange KSE-100 index rose to a historic high of 7040 points coinciding with Expo-2005. Pakistan’s manpower is talented but inexpensive, Musharraf said.

The average per hour wage for labour in Pakistan is 0.37 dollars, compared to 0.58 dollar in India, 0.67 dollars in China and $ 30 in Germany. It also offers a pool of high skilled manpower. Musharraf also stressed, " a vast majority of the people of Pakistan are moderate, cultured, tolerant and broad minded," who welcome foreign nationals and foreign businessmen.

Pakistan has a domestic market of 150 million with an average per capita income of $ 700 a year, and still rising, according to Prime Minister Shaukat Aziz. Add to that a market of nearly 350 million in the Economic Cooperation Organisation (ECO) — a region that comprises the Central Asia, Iran and Turkey. One can still add a market of 1.4 billion people of seven South Asian Association for Regional Cooperation (Saarc) nations — Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.

Pakistan is staging Expo-2005 to show case the fruits of its five year long economic reforms ranging from banking to stock market, and tax system to free foreign trade, and business friendly governance to lower tariffs and taxes. It is endevoring to what Musharafs, calls "clearing the misperceptions about Pakistan which suffers from a wrong image, but where the reality is far better," as it continues improving security in the wake of 9/11.

Pakistan is also offering its geo-strategic location, consistency of business policies and development of a wide range of infrastructure, its new port of Gwadar close to the Gulf of Oman, and an upsurge in the telecom sector as attractions that are turning it into a major center of trade in the region. Pakistan wishes it to be seen as a regional hub as it will serve Central Asia, the Gulf, Western parts of China, and South Asia.

Where to invest? Government of Pakistan (GoP) and the business community have identified a string of industries and services that have a sound, high profit investment potential. These are led by high value-added textiles, as Pakistan, after WTO, already ranks the third among the biggest textile exporters after China and India. Its current, annual, textile exports are $ 8.0 billion (b). It has to focus on this sector as textiles alone contribute 67 per cent of its overall exports. Energy ranks pretty high — in terms of oil exploration, hydro and thermal power, coal-fired power, natural gas, and coal.

Telecom now is the biggest booming sector, especially in the cellular field that is pushing the present tele-density from 5.5 to 10 per cent in the next two years —or even earlier. Several foreign-based cellular companies already are in the field. These include Egypt-based Orascom’s local subsidiary Mobilink, Al Warid of UAE, Telenor of Norway, Ufone of stated-owned Pakistan Telecom Co. Ltd. (PTCL), and Paktel and Instaphone that, too, have foreign equity. The deregulated telecom sector is set to expand further as a number of companies who have got

WLL, LL, LDI licenses are now offering low-priced, competitive services.

IT, autos and auto parts are the biggest booming sector among the consumer durables, followed by freezers, refrigerators, television sets, electrical appliances, iron and steel and.

The list also includes: marble, leather products, pharmaceuticals, sports gear, surgical appliances, processed foods, Engineering products, chemical fertilizers, agro-based and dairy products, edible oils, jewelry, gems and stones, & synthetic fibers.

Tourism services including mountain, coastal and religious tourism for Buddhists, Hindus and Sikhs, hotels & resorts, construction and heavy construction equipment, shipping, and warehousing.

Commerce Minister Akhtar informed investors at Expo-Pakistan Conference 2005,that exports will rise to $ 14 billion (b) in 2005. Imports are rising, and are fully backed by $ 12 billion (b) official forex reserves. As such, besides investment potential, the country offers good opportunities in foreign trade—both exports from and imports to Pakistan.

Dr. Ishrat Hussain, Governor State Bank of Pakistan (SBP), the central Bank, said "intetesrt rates are low, bank credit is easily available, and the private sector has played a vital role in getting started the engine of economy. This trend will play a significant role in pushing the GDP targets beyond 7.0 percent," this year. This is a highly profitable environment for foreign investors.

Pakistan is pinning its FDI inflow hopes on this vast array of choices, a good environment, its microeconomic stability, and the fact that for the Saudi Arabian, Gulf and West Asian investors, its located nearest home.●