.

1- IFC EXPANDS PAKISTAN OPERATIONS
2- REVENUE COLLECTION
3- BOOM IN CORPORATE SECTOR
4- THE PRIVATIZATION OF PPL
5- POWER THEFT
6- THIRD PARTY INSURANCE
7- WHAT WOULD YOUR CUSTOMER PREFER: A CALL OR A CONTACT?

.
IFC EXPANDS PAKISTAN OPERATIONS

 

Some innovative financial guidelines may give a new direction to private investment in Pakistan

.
By AMANULLAH BASHAR

July 12 - 18, 2004
.

 

 

 

 

The International Finance Corporation (IFC) has expanded its Pakistan Operations by expanding its network from Islamabad to Karachi in view of the growing role of the private sector in the economic development of Pakistan. Since Karachi is the major center of private sector investment, the IFC find it fit to open its Karachi Branch to facilitate the private sector.

Inaugurating the Karachi Office, the Governor State Bank Dr. Ishrat Hussain expressed the hope that the three areas identified by the government i.e. Housing and Construction, SME and Infrastructure development would open tremendous opportunities for private sector investment. He said that under the situation the international skill of the IFC can play a significant role by providing professional and innovation financial guidelines to produce positive results.

The governor said that at least $3 billion are required annually for public sector development which the government cannot afford single handedly, hence the participation of the private sector in the development activities becomes imperative to make the development activity a success. In this connection, the IFC can support the development project in collaboration with the private sector in this country.

On this occasion, Sami Haddad, the Regional Director for South Asia said that the opening of IFC office in Karachi is with the objective of being closer to the clients most of whom is based in Karachi. Since 1958, IFC has been a key player in support private sector development in Pakistan, Haddad said and added that Pakistan is IFC's thirteenth largest portfolio with outstanding investment of over half a billion dollars.

Moving forward, IFC encouraged by the government's commitment to housing finance, SME growth, infrastructure development and manufacturing with continue to support the development of these sectors.

The Karachi office will be headed by Zunee Muhtashim.

The IFC is the private sector arm of the World Bank group. IFC's mission is to promote private sector investment in development countries, which will reduce poverty and improve people's living standard. IFC, finances for investments with its own resources and by mobilizing capital in the international financial markets. IFC also provides technical assistance and advice to governments and businesses.

 

 

BACK GROUNDER

IFC is the world's largest multilateral source of equity and loan financing for private enterprises in development economies. Its financing is long term and market priced. IFC's share capital is provided by its 175 member countries, which collectively determine policies and approve investment. IFC committed 204 projects in the financial year 2003, provided $3.9 billion of its own financing and $1.1 billion from private firms through its loan syndication program in 2003.

IFC share project risk with sponsors and financial partners but does not participate in project management. It finances only a portion of the cost of any project. For every $1 of IFC financing, other investors and lenders provide $5. Its charter requires it to be a profitable project. The Corporation has made a profit every year since its inception. IFC does not accept government guarantees.

IFC's investment in Pakistan since 1958, with cumulative commitments including syndications to date, was close to $1.8 billion. As of march 31, 2004, IFC's held portfolio in Pakistan consisted of investment in 31 companies, with a total committed exposure of $428 million, of which $325 million was for IFC's own account.

Currently, IFC is focusing its activities on Housing Finance, SME Development, Environmental development, Health. Power, Oil and Gas sector and Repeat Business.

In the Housing Finance, it is planning to development capacity of creditworthy banks for establishing a mortgage finance business and provides credit enhancements for raising long term funding through bonds for the identified banks.

In the development process of the Small and Medium Enterprise, IFC is working with the financial intermediaries. IFC is also structuring a SME Linkages program with the Dewan Group, an IFC client and one of the major local business groups.

Since the Housing Finance is on top of the agenda of the government for using it a tool for economic development, IFC is likely to enhance its financial assistance to the financial sector of Pakistan engaged with the housing finance and construction activities.

The analysts are of the view that the Housing and the Construction industry is likely to become the center of economic activity in view of the tremendous rate of return in this sector which is second to none besides risk-free investment as compared to other areas of investment.

 

 

Another area of interest is Power sector. In an attempt to develop alternative clean technology, IFC is working on the first Wind Power project for the country.

Another significant move on the part of IFC is its assistance to some large scale manufacturing companies which at present are in the process of establishing operations abroad. These projects, if produced encouraging results, may give a new direction to the private sector investment in Pakistan.