Pakistani Potentials: To Invest or Not To Invest?

 

Global business news items are constantly filled with the doom and gloom of investing in Pakistan.  We therefore thought now would be as good a time as any to investigate just how true this is, or, if perhaps there has been some exaggeration in the perils of Pakistani businesses.

If you ask the country’s Foreign Minister, Hina Rabbani Khar, she’ll tell you that the country has a lot to offer potential investors abroad, but there again she’s probably just a little bit biased in favor of her country.  Chairing a business roundtable in the country with Alistair Burt, the England’s Minister of State for Foreign & Commonwealth Office, she explained about her government incentives for companies, pointing out how Pakistan is always looking to make things easier – and more attractive – for foreign investors.  She also pointed out the needs of the country vis-à-vis creating more business opportunities, especially in the field of energy.  Despite the country’s pitfalls however, Burt did comment that he found British businessmen making significant profits when bringing their businesses to Pakistan and indeed many more are set to start working there in the near future, given this environment.

Pakistan’s Problems

Talking of environment, even though the country hasn’t exactly got the best track record for natural disasters (like the high level flooding it encountered in 2010-11), terrorism, political crises and economic instability, it seems there is still reason to look to invest there.  But let’s look at the stats. Let’s look at the good news: between 2001-7, there was a 10 percent reduction in poverty levels, but an increase in unemployment in 2008-9.

Nonetheless, this still doesn’t have to discourage British investors.  Clearly, the political relationship between Pakistan and the UK are in a good place.  For example, as noted by Tweeter glenoglazaSky, Pakistan's Foreign Minister, meeting William Hague, expressed his gratitude to the UK for giving "650 pounds sterling" to the country’s education aid, although the Tweeter did note that she probably meant 650 million pounds sterling!  So if Pakistan likes the Brits, it could be a pleasant place for them to take their businesses.

Global Pakistani Business: Pros and Cons

In the middle of last year, Helen Coster of Forbes took a trip to Pakistan, meeting with members of the Lahore chapter of The Indus Entrepreneurs, an entrepreneurs networking group.  She discussed the pros and cons of conducting business in the world’s sixth most highly populated country. There are problems for sure: legalities don’t seem to be implemented – there is somewhat of a free-for-all-anything-goes mentality which certainly doesn’t bode well for foreign investors unfamiliar at best with the workings of the country.  It seems there is a large gap in knowledge on who will be there cracking the whip when a contract is broken or business ideas stolen.  Further, it’s not easy finding quality workers since many choose to go abroad for jobs. As well, getting a commercial loan is virtually impossible and all this culminates in huge frustration.

Moreover, if you’re Indian, don’t even think about trying to strike it rich in Pakistan. The Reserve Bank of India has forbidden Indian nationals from investing in Pakistan's manufacturing sector.  It seems to have made no difference that New Delhi is sticking by its claim that no Pakistan-specific Non-Tariff Barriers (NTBs) have been imposed. It seems a bit bizarre, especially given the fact that those in India are not restricted vis-à-vis making investments in any other part of the world.

Pro-Pakistani Profits

So what other hope remains for those seeking to invest in Pakistan?  There are some great stories actually.  One just has to take a look at what Concentrated Solar Thermal Power has achieved.   Head of the company Samir Hoodbhoy initiated and successfully directed the creation of the Central Design Bureau of Pakistan Steel Mills in 1988-92. It wasn’t easy back then, but over the last two decades-plus, he has been able to establish the groundwork for three leading educational institutions in the field of ICT and been on the Board of Advisors of several other civic and educational organizations.  In the field of wind power and solar energy, Concentrated Solar Thermal Power technology has been hugely successful, providing an alternative to Photovoltaic cells; boasting conversion efficiencies of 30 per cent.  And that’s all in Pakistan – the region we seem to be led to believe is not the place to invest in without a whole lot of trouble and strife.

In conclusion, it seems that yes indeed, there are challenges in Pakistan; no-one can deny that, but as the Chinese symbol of “challenge” states “challenge is the same as opportunity.”  Clearly as we have seen, there are plenty of business opportunities in Pakistan as well.

 

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