Chinese investment likely to flow at a massive scale

Dec 17 - 30, 2001

Pakistan is likely to attract a massive investment in the textile and leather sectors as a result of President Gen. Pervez Musharraf's visit to China next week.

China has already been providing financial and technical assistance for development of projects like Saindak, coal mining in Thar, port development at Guwadar and Tea cultivation and processing at Shankiari, in NWFP.

The government has also conducted 5 studies in Oil and Gas, 7 in Basic Metals, 23 in Power and Hydel, 6 in Social Sector, 20 in Tourism, 7 in Mining and 5 in Paper and Board for the potential investors.

Besides inviting Chinese investors to these identified areas, studies are also being presented to world's potential investors through Pakistan's foreign missions abroad.

More studies for investment have been conducted in the areas like Small and Medium Enterprises where 76 projects have been identified, 37 studies have been made available in agro-based projects, 22 in Chemicals, 16 in Electronics, 8 in Automotive, 9 in Engineering and 5 in Information technology.

If Pakistan succeeds in attracting Chinese investment especially in leather and textile sectors aimed at value addition Pakistan's exports can make a quantum jump. It may be mentioned that despite having a strong industrial base in leather sector, Pakistan has an insignificant share of $500-600 million out of world's total exports estimated at $50 billion in leather sector.

A high profile 30-member industrial and trade delegation will accompany President Pervez Musharraf in the forthcoming visit to China next week to probe into possibilities of joint ventures particularly in textile, leather and fisheries sectors.

Efforts are also being made to invite world renowned computer giant Bill Gates and other top international business executives to Pakistan by the middle of next month in an effort to introduce the country as potential investment zone.

During visit to China, President Pervez Musharraf will address a joint session of Chinese and Pakistani businessmen in Guangzhou an industrial city from where annual exports are around $100 billion per annum.

Basically Pakistan will be looking for joint ventures in textile, leather, oil exploration and fisheries.

There are number of textile quotas in which Pakistan does not have enough expertise for value addition, hence these quotas usually remain unutilized. If foreign investment is made possible in the value addition area of different products, Pakistan can make a quantum jump in its exports especially in textile, leather, fisheries and minerals. That is the major reason for taking industrialists from various sectors to accompany the President during his visit to China. Pakistan could develop the best leather and textile expertise if the two friendly countries join hands.

Another potential area is the polyester fibre industry. Though this industry was late to develop in 1982 but now it has been included in the list of value added industry. By the year 2002 over 300,000 tons per year capacity will be available for exports. This is an area in which joint ventures with Chinese partners will be discussed during the visit.

Another area is the soft stuffed toy manufacturing with Chinese. The soft stuffed toy industry in Pakistan is at cottage industry level as Pakistani manufacturers are not aware of international standards. Chinese entrepreneurs will be asked for assistance in this sector.

Possibilities are strong that textile and leather sector in particular witness an inflow of Chinese investment for the value addition thus boosting the exports of these sectors, the industry sources felt.

The agenda of discussion, with Chinese counterparts, will be to seek help in up-gradation of quality products, switch over to value addition, use of quality raw materials, balancing, modernization and replacement of obsolete plants and equipment, professional business ethics, meeting schedules and reducing delivery times, maintaining price competitiveness and promoting joint ventures.

Before September 11, the international community had the negative impression about Pakistan but things have changed considerably with sanctions gone and access to OPIC of USA, EXIM banks, JBIC of Japan, CIDA of Canada and KFW and HERMES of Japan available the flow of Foreign Direct Investment to Pakistan will start improving from coming January.

It is worth mentioning that during the last 13 months investment of around $700 million is made available to improve and modernize the textile sector in Pakistan. The European Union has increased the textile quota and now textile sector has to equip itself to meet the new challenges. The changing scenario however demands for quick and large-scale investment in the textile sector to get the maximum benefit of the potentials in this important sector.

Textile experts are of the view that with the increased accessibility, enhanced quota and friendly attitude of the buyers in US, EU and Japan, Pakistan's textile sector currently having an export of $5-6 billion can easily hit the mark of $10 billion. Similarly, leather and leather products currently earning $600 million could also double its size. However, it is the need of the hour that the trade and industry goes for proper value addition, aggressive marketing techniques and timely BMR to achieve the desired results.