OFF-SHORE BANKING BY NON-RESIDENT PAKISTANIS
Like free zones established in the manufacturing sector, banking free zones offer great opportunities to attract investment if allowed
By AMANULLAH BASHAR
Oct 09 - 15, 2000
A group of non-resident Pakistanis, by consolidating their resources, are in the process to initiate off-shore banking with the prime objective to financially help out Pakistan.
Since off-shore banking registeration is allowed in Luxemburg, Bahamas, Isles of Man and Nuie (a Central Pacific Island under the domain of Australia) the proposed off-shore banking is likely to be registered in one of the four places mentioned above.
This was disclosed by S.M.Inam, the founder Chairman of SAARC Chamber of Commerce and Industry while talking to PAGE. He said that Pakistani have a special knack in banking which has been acknowledged all over the world. Quoting a senior Indian banker, Inam said that Indians while commenting on the banking skill of Pakistan generally say that they feel no threat from manufacturing sector of Pakistan. What they scare is the banking sector of Pakistan, Inam said.
Speaking as the spokesman of that group of non-resident Pakistanis, Inam feels that within developing world especially in South Asia the banking laws are so harsh that it was not possible for them to go through from this part of the world. He said that like free zones established in the manufacturing sector, banking free zones offer great opportunities to attract investment if allowed to be established in off-shore areas like Gwadar, Ormara, Pasni, Jiwani , Gaddani or Manora. Bahamas is the best example of rapid economic growth through off-shore banking, he cited the example.
The idea of consolidating resources of non-resident Pakistanis was taken from Chinese and Malaysians working on the same pattern, he said.
He said that mobilization of income generating and development oriented activities could not be materialized in the developing countries mainly due to depressed financial situation. The difficulties in the way of mobilizing financial resources at domestic level faced by all developing countries due to the poor financial structure inherited from the past. Setting up of the national priorities also did not permit to mobilize on income generating and development oriented activities.
The internal balance of trade deficit contributed to the lack of access to the capital markets abroad. The financing and even the current account deficit through external resources have impeded the economic growth still further. The continued dependence on foreign assistance is forcing to look for further avenues of foreign loans, which are mostly of tied nature, increase the dependence of developing countries on imports from the donor countries. The developing countries otherwise agree to the conditionalities of the donor agencies or developed world on one hand, and set apart a sizeable portion of the national incomes for loan repayments on the other hand.
The low rate of domestic saving and uncertainty about the exact amount of foreign remittances by the expatriates has also contributed significantly to the lack of generation of resources at home.
The net result of all these developments has crystallized in the shape of lack of investable funds to undertake project of economic developments. The dependence on foreign resources and absence of sufficient foreign exchange has further impeded the growth of trade, despite the availability of many of the commodities at competitive for offering to world market.
It is realized easily that under the present global order the developed countries, including the institutions like the IMF, the IBRD and other international agencies control the financial and capital resources.
The rapidly changing scenario of international development has complicated the position, since the emerging world order gives a preference to divert the investable funds and the foreign private investments to these emerging economies in a gigantic way, thus diverting even these resources from the developing countries.
The emergence of strong economic blocks especially in the developed world have decidedly inward looking, protectionism policies especially in matters of trade and foreign investment. This has been further complicated by signing of the World Trade Organization (WTO) forcing the developing countries themselves. The bulk of the imports of the developed countries in the shape of quotas and other preferential treatments from the developing countries will gradually be wound up.
All these developments have led the developing countries to realize the imperative of finding a solution to these problems through developing their own resources. The development of these resources aimed at overcoming the financial constraints by mobilizing own resources as far as possible and trying to meet the trade requirements both for exports and imports from within the region through arrangements which do away with the requirements of scarce foreign exchange. One of the important instruments which could enable South Asian Countries to meet their development pre-requisites would be to establish a South Asian Development Bank on the pattern of other foreign investment development banks and possibly with the institutional and financial assistance of some foreign banks and financial agencies as well as mobilizing the resources of South Asians working abroad.