Joint efforts between Pakistan and the UAE are advancing in a variety of industries. One particular area is business, with dual efforts being made in the food, textile and service regions, as will be witnessed in two days’ time at Karachi’s 10th Annual Expo Pakistan. There will be around 50 UAE delegates there from both the public and private sectors. The Pakistan Business Council will also be participating and business council members are expected to arrive from Africa, America, Australia, Jordan and the UK.
Figures for 2015-16 Pakistan-UAE bilateral trade stood at $7bn (with $1.06bn exports from Pakistan). but this increased in 2016-17 by 9.4 percent, reaching $8.3bn. During the show alone, it is anticipated that there will be in excess of $1bn trade transactions taking place. As Dubai’s Consul-General of Pakistan, Syed Javed Hassan noted:
“The climate of investment in Pakistan is very conducive for investment as red-tapism and regulations have been eased to quite an extent to attract foreign direct investment. The government has also created certain tax free zones for a period of four to five years for investors from abroad. Besides that, the CPEC [China-Pakistan Economic Corridor] is another milestone for investors to invest. When this rail linking through Gwadar becomes operational, the commodities would be transported to China, Central Asia and most of European countries, benefitting about 40 per cent of the population of this [Gulf] region.”
Just a few weeks ago there was the Pakistan Property Show in which over 50 exhibitors showcased their real estate options at the Dubai World Trade Centre, offering Pakistanis from overseas an opportunity to purchase properties in their home countries. At the show, foreign investors were able to increase exposure of their portfolios.
It appears – from a global bird’s eye view – that Pakistan could be the next hub of innovative business. Over the last few weeks, three different regions have announced upcoming partnerships or collaborations in Pakistan that they plan on undertaking.
First off is France. Thierry Pfimlin, the President of the Pakistan-France Business Council and VP of the (Asia Pacific Region) TOTAL contacted Parisian Senator Ishaq Dar, the Finance Minister. Pflimlin made him aware of an upcoming business delegation from France. This is because there are currently quite a few companies in France that are considering the possibility of establishing partnerships in Pakistan while bolstering the business relations that already exist there. The main industries that would be engaging in such collaboration are: food processing, gas, infrastructure development, mining, oil and railways.
In Bahrain the Pakistan Embassy there set up the first conference focusing on Pakistan Bahrain business opportunities that took place three days ago. Participants included over 350 delegates from the GCC region, Bahrain and Pakistan. Overseas Pakistani businessman that work in Gulf countries (along with delegations from Qatar Kuwait, Saudi Arabia and UAE) also took part in the conference.
China is likewise looking at Pakistan for investor relations. It is Huawei Technologies Co. Ltd. that – given the upgraded Pakistani security situation – is looking into business expansion. This Chinese multinational networking and telecommunications firm plans to develop five safe cities in Punjab while providing services in execution of CPEC-based projects, primarily for placing data cables for improved telecom connectivity at home and abroad.
With the improved security situation as well as the most recent signing of the multilateral convention on tax co-operation, the region is becoming an attractive one for FDIs.
Given the recent economic reforms, the economy in Pakistan has encountered significant improvements. According to numbers put out by the IMF, Pakistan’s growth has been bolstered to 4.2 percent, which is a large change since the 3.7 percent figure it was in 2013. There has also been a substantial decline in inflation in the region in the last few years and a “steady” development of foreign exchange reserves. All of these are indicators of a bourgeoning economy.
Perhaps this was why there was news just a few days ago that efforts are being made to “make Pakistan the 25th largest economy of the world in the next ten years.” Vision 2015 has been set up to guide this process. According to Ahsan Iqbal, Federal Planning Minister, it is “the export sector [which] has the key role to achiev[ing] this goal.” Indeed, without the active participation of the private sector, there is no hope for the completion of these economic development projects.
In addition, with the China-Pakistan Economic Corridor project, the region has received a “splendid gift” and with its successful launch, the augmentation of Pakistan will become “irreversible.” Ultimately Iqbal believes that with all the upcoming plans for the region, Pakistan will become an “economic hub for Afghanistan, Central Asian states and China.” And that 2016 has been declared a “Year of Productivity, Quality and Innovation.”
No, not exactly. But at least the region just got an amusement park. With hand-turned Ferris wheels, trampolines and camel carousels, the amusement parks by Islamabad and Rawalpindi are offering street food markets, swing rides and more. These are a true gift for the people of Pakistan. While America has over 400 amusement parks and Europe 300+, Pakistan has few and far between. Even the ones that do exist are remote or too expensive, rendering it almost impossible for most families to enjoy.
It is actually so much more than just an “amusement” park as it is giving people – who have fled their villages because of the presence of militants – a sense of normality and a bit of light relief and escapism. They’re not the same as the ones in the west but it is something. And, it’s a start. Maybe Pakistan and other troubled areas can move more into entertainment and further away from the battlefield.
In addition to this project, there is a follow-up one which is set to deal with damage caused by the 2014 floods as well as the reconstruction work needed following the 2010 floods. This will also look at the issues of what happens with these kind of challenges in the future, maybe through a trust fund.
The Pakistan government has also agreed on the authorization of a Pakistan Infrastructure Finance Corporation as a way of financing the gaps that currently existent in the region’s infrastructure.
In addition, China is putting its money into developing the infrastructure in Pakistan. The government and banks there are going to give Chinese companies $45.6b to set up energy ($33.8bn) and infrastructure ($11.8 billion) projects in Pakistan over the next six years. This helps Pakistan believe that China will be playing a key role in power shortages that have to date been very destructive to its economy (with blackouts lasting more than 24 hours resulting in violent protests).
The Pakistan economy is improving. Even though the region has undergone an energy crisis, the future of the Pakistan economy looks pretty bright with inflation remaining at single digit level and a rise in foreign incomes. As well, there was a maintenance from the State Bank of Pakistan of the key interest rate, at 10 percent with a forecast for CIP inflation rate at 7.5-8.5 percent for the year.
According to Ashraf Mehmood Wathra of the bank, even though this is positive, “more tax reforms have to be undertaken to overcome the budget deficit and also improve the overall economic scenario.” As well, there has been a reduction in the last fiscal year of government borrowing from banks, during the same time that the private sector took loans valued at 329 billion rupees. This is a positive sign for the Pakistan economy, indicating optimism in its private sector.
Given all this, it is perhaps not surprising that Pakistan is now being viewed as a stable investment environment. Indeed, its stock exchange today was described by the country’s Minister of Finance, Revenue, Economic Affairs, Statistics and Privatization, Mohammad Ishaq Dar as one of the “best performing bourses in the emerging markets.” In addition, for over 13 months now, market capitalization has increased 40 percent in rupee/dollar.
There is optimism on the horizon for Pakistan’s economy 2014. The business community believes there is a more positive outlook for 2014 as compared to 2013 with significant economic-political improvements about to emerge.
The economy is set to get back on track through various means, including: removing stringent budgetary measures, strengthening consultation between the public and private sectors and other related business incentives. According to The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President, Zubair Ahmed Malik Pakistan is likely to encounter “relative stability” this year which will positively influence the overall situation in the region.
In addition, the rupee will become more stable and Forex reserves will improve. Malik believes the key to Pakistan’s stability for 2014 is with economic managers, military and politicians. Terror and bhatta mafia must be stopped so that the business community can thrive in a safe environment. This sentiment has been further reiterated by the Pakistan Industrial and Traders Associations Front (PIAF) that hopes 2014 will prove to be a year of economic rival for the region.
This has to be achieved soon. Nawaz Sharif recently lost control over the army. The IMF loan is now only providing a temporary respite as the region’s currency is facing heavy pressure and efforts to resolve the crisis in the power generation sector. So that has to change.
Still, on the flip side, Pakistan is offering substantial investment opportunities in the energy infrastructure and textile industries. The region is also hoping that its new investment-friendly policies will result in global business individuals (most notably Chinese ones) to invest more.
The International Monetary Fund is paying a visit to Pakistan. This will be the first major challenge Nawaz Sharif – the country’s new Prime Minister – will have to face as he tries to defend the policies in the Pakistan economy 2013.
Sharif may have even been elected on the basis of his promise to fix the Pakistan economy. It’s not doing well at all so he has to come good or face major discontent from his people. They want jobs. They want better social services and fewer power cuts. Without improvement in the Pakistan economy 2013, increasing amounts of violent protests will erupt.
Now that the IMF is coming to Pakistan, it wants answers. Having consented to boost the Pakistan economy 2013 with a loan of $6.7b over three years, Jeffrey Franks, its regional adviser, wants to see what the PM is doing in return. This loan IS conditional upon quarterly reviews and results.
Sharif is trying. He has been attempting to deal with the country’s financial problems. But critics are claiming that nothing will happen without a punishment on tax evaders that the government doesn’t seem to be taking care.
In addition, the IMF is getting impatient, given how Pakistani governments have behaved historically. Since 1998, a staggering 11 (out of 12) IMF programs have basically been abandoned as the government has simply not implemented the necessary reforms. Sharif is now promising the IMF that he will “privatize loss-making state industries, reform a faltering energy sector, expand Pakistan’s tiny tax base and cut government borrowing.”
Time will tell if he lives up to these promises, justifies the help from the IMF and enhances the Pakistan economy 2013. Therefore, he will just have to hope that the IMF is patient.
One method of scrutinizing a country’s economy is how it is viewed by other nations. When taking stock at the Pakistan economy 2013, the same rule applies. Currently, Denmark actually wants to help the Pakistan economy since it will be able to benefit from any developments the Pakistan economy encounters too. Indeed, according to Denmark’s Ambassador, Jesper Moller Sorensen, officials in Denmark see tremendous “economic potential” in Pakistan. Advancing its trade and economic relations is one way forward.
Sorensen recently discussed the matter with the business community. In his address to the Islamabad Chamber of Commerce and Industry (ICCI), Sorensen pointed out that he had developed a connection with the business community in an attempt to advance current trade between Denmark and Pakistan. Denmark has a lot to offer vis-à-vis wind energy and understands how much Pakistan needs energy for its industry and economy. Thus Sorensen believes Denmark will be investing in Pakistan’s energy sector in the future, with many energy companies seeking to establish relationships with their Pakistani counterparts to reduce its energy problems. Companies in Denmark have a lot to offer Pakistan, particularly in this area as well as: food processing; clean technology; health; education and others.
The ICCI’s President, Zafar Bakhtawari spoke along similar lines in his introductory address to the conference. He said since Denmark is a wind energy leader and Pakistan requires sustainable energy, the former country can be of great help. He advised private sectors in both regions to “develop close contacts to explore new avenues of improving trade relations.” There is a similar situation vis-à-vis the strength of pharmaceutical companies in Denmark.
But the question is, what would Denmark get out of all of this potential collaboration between the two regions? While it seems like a lot of help would be on the way for the Pakistan economy 2013, how can Denmark benefit? Pakistan does boast high quality and cheap manpower and a very large consumers market. With Denmark’s advanced technology in the areas discussed above, both countries should seek to develop closer collaboration in trade. Further, with Denmark aiding Pakistan, this would open the door for it to accessing exports in the South Asian region.
At the conference, Sorensen said that his government had given him permission to open a Commercial Section in Denmark Embassy for promoting trade and commercial relations between Denmark and Pakistan.
This news is most welcome given that the matter was discussed four months ago in Karachi. Denmark’s Pakistan Ambassador, Ole E. Moesby, said that while relations between the two countries were “stable” and had “improved,” still greater work could be done. And that is what is being encouraged today.
Denmark also needs to be aware however, that it is not Pakistan’s only source of power vis-à-vis its somewhat weak power supply. The nation gets a lot of help from China too, being one of its largest business partners with 120+ Chinese companies conducting business there. During Nawaz Sharif’s visit to China, an economic agreement was signed between the two countries giving Pakistan foreign investment. In 2012, the value of bilateral trade between China and Pakistan was $12bn and leaders of both countries have pledged to increase this figure in the future.
The Pakistan economy, 2013, is probably facing the worst statistics in over 10 years. However, there still seems to be an air of optimism in the region. It is the widely-held belief these days that the new government is going to reverse this trend. When Nawaz Sharif – leader of the Pakistan Muslim League – was voted back in to lead the country, a clear message was sent to the Pakistan People’s Party – you failed to build up the region and we want to give the Pakistan economy 2013 the best chance ever – we want to see what Sharif can do. It didn’t help matters that the Party that has now been booted out failed to curb other socio-political issues such as corruption, violence and power cuts either.
Sharif supporters hope that when he comes back to lead the country, he’ll do a better job of enhancing the region’s economy – especially given the mess his predecessors left it in. He has already proven somewhat worthy through his political platform pledging economic revival and improving governmental finances. It is crucial to ensure the Pakistan economy 2013 encounters nothing less than a complete “turnaround,” which will then have a ripple-on affect of stability in the political realm which is crucial for America’s battle against Islamist militancy.
Still, it has to be remembered that given the region’s economy has been deficient for so long, even Sharif will not be able to work miracles. It is going to take time to get the Pakistan economy 2013 to a place of respect and in a place of true potential competition vis-à-vis its rival India. One of the first tasks the new government is going to have to implement is collecting owed taxes and completely restore power companies enabling them to produce enough electricity without being a drain on public funds. Since less than one million of Pakistanis pay income taxes, this has resulted in exorbitant fiscal deficits that reach nearly 8 percent of GDP. This has to change and it is hoped that it will be one of Sharif’s first moves which will ultimately result in the Pakistan economy 2013 booming in the way those who voted for him feel it has the potential to do.