Can Pakistan gain the confidence of GCC Investors?
A 15-member high-level delegation of the Saudi government under the leadership of Chairman of the Saudi-Pakistan Business Council completed their visit of Pakistan last month. The delegation discussed mutual business interests and possibilities of joint ventures in Islamabad, Lahore, Sialkot, Faisalabad and Karachi.
At a time when Pakistan is faced with a trade imbalance and the need to quickly ramp up its export competitiveness, this visit has certainly given hope to stakeholders in both – new faces in federal government (under pressure to perform and showcase legitimacy provided by international visitors) and Pakistan’s private sector at large.
It is important to keep in mind that all countries are competing to receive international investors particularly at a time when economists are hinting towards the possibilities of global recession. Keeping this in view, I have often advocated that our business associations particularly the Federation of Pakistan Chamber of Commerce and Industries, needs to be prepared with out-of-the-box ideas and present specific ideas which could create a pull for foreign investors. It is equally important that the focus of trade and investment cooperation should not be limited to traditional sectors.
It is now heartening to note that the embassy of Saudi Arabia has informed about the delegation’s interest in IT & IT-enabled services, fintech, renewable energy, and livestock – all sectors which host a large segment of Pakistani youth, women and startups. In line with new foreign interests, it would be timely for the Ministry of Commerce to continuously revisit the focus areas defined in Strategic Trade Policy Framework (STPF).
What was the follow-up mechanism with the Saudi government and private sector involved in this potential project; are there any timelines in place by which Pakistan will be able to host the Saudi facilities on ground?
Dr. Vaqar Ahmed
Equally important is to keep a regional balance while presenting opportunities all over Pakistan. It is not clear why the government didn’t prioritize the economically backward provinces in greater need of engagement with foreign investors. While Khyber Pakhtunkhwa has vibrant industrial and special economic zones and an equally competent KP Board of Investment & Trade – ready with sector specific pitch-- still the delegation was not taken to the provincial capital Peshawar. Balochistan’s private sector, particularly those in mining and minerals, have often voiced such concerns.
We should also bear in mind that this is not the first time the Saudi government has expressed its interest in Pakistan. During the PTI government, there was a similar effort and visitors from Saudi Arabia (and later the United Arab Emirates) expressed interest in the oil and gas sector and setting up of an oil refinery. However, since long there is no update if Pakistan’s offering was in line with investor preferences; what was the follow-up mechanism with the Saudi government and private sector involved in this potential project; are there any timelines in place by which Pakistan will be able to host the Saudi facilities on ground?
Equally important is to check if the interest of those who visited Pakistan has diminished and what may be the reasons. Only such an introspective evaluation following each investor’s visit can help Pakistan close the expectations gap and learn about the other better things being offered by competitors. The feedback from all delegations visiting Pakistan and who don’t end up ultimately investing here, could help immensely to improve the pitch for the future.
This is important if Prime Minister Shahbaz Sharif really wishes success for the three year economic growth strategy being formulated at the Planning Commission. The government has also embarked on formulation of industrial and agricultural growth strategies which will require capital, expertise, and technology from abroad.
While business-to-business relationships are delicate, equally important is to show prompt and responsive behaviour when it comes to government-to-government transactions. A slowdown in projects under the China Pakistan Economic Corridor (CPEC) also shakes the confidence of non-China investors. For example, the Saudi Development Fund (SDF) has pledged support for various projects including critical investments in the energy sector - Mohmand Dam, Shounter Hydropower project, Jagran-IV Hydropower project, Shagarthang Skardu project, Attaabad & Hunza project, and Gravity Flow Water Scheme Mansehra. These and other potential initiatives by SDF in Pakistan should not see the bottlenecks which Prime Minister Shahbaz Sharif has recently pointed out in CPEC projects.
Finally, the free trade agreement (FTA) between Pakistan and the GCC again featured during the discussions between this 15-member delegation from Saudi Arabia and their counterparts. This is a perfect example of Islamabad dwelling upon decades-old non-starters when this time could have been utilized for other more productive engagements. In an environment where the International Monetary Fund will not allow any further tax exemptions, the possibility of signing another FTA simply doesn’t arise. Even during the good days, our export-oriented units struggle to meet the orders from abroad due to energy and input shortages. Therefore, for any FTA to be a success, Pakistan first needs to attract fresh capital and technology in sectors with expanding demand abroad – an area where GCC support could help.
- Dr. Vaqar Ahmed is an economist and former civil servant. He tweets @vaqarahmed