Sunday, 4 May 2014

Pakistan: Preferred Investment Destination

Most of the local and foreign investors often fall prey to tinted media reports about Pakistan. They may also be fully aware that foreign media ignores positive news, but loves to give prominence to items that are not even newsworthy according to international reporting standards. In todays blog effort has been made to put the record straight. 

Many overseas analysts say that foreign investors prefer to stay away from Pakistan, which is not correct. If one looks at the history spread over more than six decades, any company that entered Pakistan never took an exit  due to security reasons or unfriendly working environment. Those who left Pakistan, the decisions were driven by their policies, either pulling out of that particular business or this particular region. Some of the congloramates like Abbott, Glaxosmithkline, Linde, ICI, Siemens, Racket Binkezer, Unilever, Pepsi, Coca Cola and Standard Chartered Bank have been doing thriving business and increasing their stake in Pakistan. Those who have a rather brief history are KFC, Mc Donald, Nestle, Procter & Gamble, Colgate Palmolive and Gillette.

Pakistan enjoys a strategic location, enjoying common borders with China, (second largest economy of the world), India (third largest economy of the world), oil rich Iran, Afghanistan (gateway to energy rich Central Asian countries), more than 1,200 kilometers long coastline with three deep sea ports offering the shortest and most efficient transit facilities to Afganistan, Central Asian countries and even China. It will be correct to say that Pakistan is a natural trade and energy corridor.

Two of the proposed gas pipelines: 1) Iran-Pakistan-India (IPI) and 2) Turkmenistan-Afghanistan-Pakistan-India (TAPI) have to pass through Pakistan. These would not only help in earning millions of dollars as transit fee, but supply of gas to Pakistan will help in containing furnace oil import, an expensive fuel as compared to natural gas. 

Though, India is constructing Chabahar port in Iran and also linking it with central Asia by rail and road, it will be difficult to undermine the importance of Gwadar port and Pakistan. Keeping in view the success of (PARCO) Pak Arab Refinery (often termed mid-country refinery) some other Middle Eastern countries have shown keen interest in setting up three refineries near the coastline. First black and then white oil pipelines have been constructed that link PARCO with ports located in Karachi.

Those investors who decided to invest in Pakistan are fully aware of the real potential of the country. Some of these are: 1) market comprising of nearly 200 million people, 2) country enjoying ‘food security’, 3) having a vast cultivable area with world’s largest man-made irrigation system, 4) country among the top  producers of cotton, rice, sugarcane, wheat, milk and fruits like mango and kinnow (tangerine). 

Manufacturing sector, comprises of textiles and clothing units, sugar mills, fertilizer plants, automobile (four and two wheeler) assemblers, crude oil refineries, polyester staple fiber manufacturers, etc. Most of these industries have been operating below optimum capacity utilization due to failure to undertake timely BMR and shortage of electricity and gas.

In fact Pakistan has around 28,000MW power generation capacity, but output hovers around 16,000MW due to outdated power plants, also suffering from liquidity crunch which does not allow them to buy required quantity of fuel. Expolration and production companies face some difficulties in operating in Baluchistan and northern parts of Pakistan due to the ongoing war on terror, as militants hibernating in Afghanistan often indulge in cross border terrorism.

The average yield of major crops in Pakistan is low as compared to other countries located in the region, but the country has been a major exporter of textiles and clothing, rice, sugar and wheat. Nearly 15 percent of food cereals and 40 of fruits go stale before reaching the market because of inadequate storage and logistics. If modern storage facilities and farm to market transportation could be improved, not only the income of the farmers will be increased, but Pakistan would be able to earn more foreign exchange. Going for value addition will further increase the country’s exports.

If anyone foreign investor still has some doubts, he/she should approach the Overseas Chamber of Commerce and Investors (OCCI), American Business Council (ABC), German Business Forum.  The details may also be respective embassies and high commissions. Think about your business interest first and then about geopolitics. Is is not a fact that some of Fortune-500 companies are stronger than the governments of many Middle East and North Africa (MENA) countries?

1 comment:

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