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Key investment in the derelict infrastructure of Pakistan

Pakistan’s annual investment on its derelict infrastructure should be at least 8% of its nominal GDP which stands at $236 billion currently. This calls for investment of whopping $20 billion each year on the dilapidated infrastructure. Pakistan does not have financial muscles at present to afford such massive investment on its own. The debt-laden economy needs to do it at any cost to bolster the much-needed economic growth. Project financing by the financial institutions could play a pivotal role in this regard. It must be made mandatory by the regulators of the financial institutions and the capital market to launch products leading to project financing. This could trigger investment in the infrastructure projects leading to sustainable development and employment generation.

Pakistan has witnessed certain spans of economic growth which were solely contingent upon the spending either by the public or private sectors. Consumption-led growth can never lead any country to the path of progress. In order to become an economic hub, Pakistan needs to work on the turnaround in the infrastructure projects along with the investment in human capital as is being done by the contemporary Asian tigers. There is no denying the fact that the Asian economic tigers have been investing over 30% of their GDP on development projects to attract foreign direct investment in the primary and the ancillary sectors of the economy leading to enormous employment opportunities for the locals along with the transfer of technology by the investors laying robust foundation for the economic growth.

Pakistan’s investment to GDP is dismal 15% which needs to be hiked sooner rather than later to catch up with the rest of the world. Derelict as well as inadequate infrastructure, insufficient energy and water, negligence to promote Special Economic Zones along with poor quality of schools and hospitals cannot ensure the country the status of emerging economy. Public investment for facilitation to industry could bring about marvelous results in terms of economic activities. A lot seems to have been done in terms of reforms of the institutions and taxation however the fruit of these reforms is still awaited to be tasted.


It is the need of the hour to sift through the outcome of the federal and provincial planning and development departments and to see what actually has been done over the period of last couple of decades in particular regarding public-private partnership which is in vogue across the globe. Major Asian economies let alone the developed economies foster private investment since public spending may not suffice for the soaring demands by virtue of economic activities.

Pakistan could have become one of the major beneficiaries of mature industries in China which sought and are still seeking lower-cost locations, however, it did not materialize rather some other developing countries capitalized on the opportunities and bolstered their economies. It is still not too late to work on it since Pakistan is one of the foremost countries with cheap and literate labor force. The Asian Development Bank, Beijing-based Asian Infrastructure Investment Bank (AIIB), World Bank, the UK’s Department for International Development and many other global institutions could be vital for the turnaround in the infrastructure in Pakistan. In addition to this, massive development in Pakistan through the China-Pakistan Economic Corridor scheduled to be completed by 2030 would bring immense opportunities for the economy of Pakistan.

A couple of years ago, the then finance minister invited the Pakistani diaspora in Washington to invest in a development fund which was meant for the investment in major infrastructure development projects in the country. The result is still awaited. Leadership of the country should focus on actions rather than on rhetoric. The good news is that recently, the Asian Infrastructure Investment Bank (AIIB) talked about investing over $1 billion in Pakistan’s much-needed critical infrastructure projects. The cash-rich Arab nations could be a tremendous source of foreign investment in the infrastructure projects in Pakistan. In retrospect, Abu Dhabi promised in 2013 to invest $50 billion in India’s infrastructure. Pakistan may be one of the favorite destinations for the infrastructure investment at present.

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