A trade mission from Russia will shortly be visiting Pakistan


Aug 25 - 31, 2003

There are highly bright prospects of private Russian investment in Pakistan especially in agriculture and agro-based industrial sector. This was disclosed by the Federal Minister for Food and Agriculture on his return from an official visit of Russia. According to him he found a number of privately-owned leading companies that were interested in exploring investment opportunities in Pakistan.

Disclosing that a trade mission from Russia will shortly be visiting Pakistan, the Minister said that traders were specifically interested in projects involving assembly and manufacture of tractors, wheat harvesters, bulldozers etc., besides establishment of food grain silos and participation in scientific research in agriculture. The prospects of Russian investment inflows will be seen as a welcome outcome of investment promotion activity in the country. So far foreign investment in Pakistan has been marked by the predominance of multinational companies with their roots in the West, especially USA and the United Kingdom. The latter, as a colonial power, was already involved in economic activity in the Indo-Pakistan sub-continent until independence in 1947, and therefore multinational companies held away over the vast markets in this region.

Soviet public-sector's participation in the establishment of Pakistan Steel Mills was reflective of a dispersal of Russian interest even in countries, which pursued private enterprise system and closer relations with the capitalist west. Thus economic relations between Pakistan and Russia, the heart of the Soviet Union was already in existence years ago. Bilateral trade between the two countries was also going on, though on a modest scale. The Russians are thus well acquainted with Pakistan's economic landscape. The scope of expansion in the co-operation between the two countries has certainly widened due to the emergence of strong private sector in Russia after the collapse of the Soviet Union. There can be no two opinions about Russia's high level of scientific and technical advancement, especially in the capital goods industry.

The flagship of Pakistan industry Pakistan Steel Mills was built with Russian financial and technical assistance. Thousands of young Pakistanis received education in Russia and Pakistani garments and textile were quite popular in Moscow.

The greatest impetus to development of bilateral trade and economic cooperation came after the official visit of President Pervez Musharraf to Russian Federation in February 2003, when in a joint statement Russia and Pakistan stressed the importance of further intensifying mutually beneficial cooperation especially through close economic interaction and augmentation of their bilateral trade. Cooperation in such sectors as energy, metallurgy, telecommunications and several infrastructure development projects were identified as promising areas of cooperation. One of the major results of that visit was removal of obstacles to development of large-scale bilateral cooperation. More than that economic environment for Russia, Pakistan cooperation is now as favourable as never before, because national economies of both states are now developing on common free market principles.

Russian-Pakistani economic cooperation is now developing in a better way. Successful implementation by the Russian specialists of an important contract on repairs and modernization at Pakistan Steel was for almost $5 million last year, when most of foreign specialists had left the country. That paved the way for signing this February MoU on increasing of the mill productivity from 1.1 up to 1.5 million tons of metal per year. And this Memorandum is already working: two groups of Russian specialist visited Pakistan Steel recently and are now preparing the necessary technical documentation for the work to be done.

The reported offer form Russian companies to invest in Pakistan for setting up industrial units to manufacture tractors, wheat harvester and other agricultural implements needs to be welcomed by the all concerned, especially the Pakistani entrepreneurs who may promote joint ventures with Russian companies. Although the tractor manufacturing industry in Pakistan is relatively well developed with a high level of deletion of imported parts and components, they are still assemblers and are associated with one or the other overseas manufacturer of tractors. Furthermore, tractors manufactured in Pakistan are of a limited range of horsepower and design. This industry may be further diversified by manufacturing other suitable types of tractors, which may prove economical in price and also in terms of their usefulness for smaller landholders or farmers. This objective may be realized through collaboration with Russian manufacturers.

The range of other agricultural implements and machines presently manufactured in Pakistan has also remained narrow with the result that mechanization process in the agriculture sector is yet to pick up the desired pace. In this context, the prospects of Russian investment in this field may pave the way for initiating local manufacture of a number of other sophisticated agricultural implements.

It is no less important that Russian investors are interested in participating actively in the fields of agricultural research in Pakistan. The field is at present a relatively very limited and that too in the public sector. The need to broaden research in the agriculture sector with the induction of private sector cannot and should not be overlooked. Russian investment in this area is likely to contribute significantly to the growth and expansion of the agriculture sector a whole. It may be pointed out here that a productivity in Pakistan's agriculture sector remains conspicuously low. The per acre yield in both cash and food crops being low, the cost of production is on the higher side. The interest shown by Russian companies in establishing modern, scientifically equipped silos for the storage of food grains need to be seriously explored.