"ATTRACTING $7BILLION FDI THIS FISCAL NOT A TOUGH TASK"
An exclusive interview with Mr. M. Muslim Abbasi,Chairman Chief Minister's Investment Cell.
Jan 01 - 14, 2007
PAGE: Please tell us something about yourself?
M ABBASI: I am basically an Engineer (B.E) by profession from University of Karachi and have taken crash courses in Business, Finance & Marketing from various institutions from Pakistan and abroad. In the past, I served many multinational, public sector & reputable private companies like EMI, PACO, Agfa-Gevaert, Dawood Group, Habib Group and Dadabhoy Cement before leaving for the USA. There I availed the opportunities of participating in 35 gift shows per year at the West Coast in USA, where I introduced onyx marble and granite of Pakistani origin and sold goods worth millions of dollars. This gave me an opportunity to acquire deep routed interest in trade, commerce & Industry and side by side I managed to raise investment in a number of segments from USA, Europe, UAE, South Korea and China to Pakistan, having had successful track record of introducing and establishing a number of reputable companies like Water-well Corporation Inc, House of Herbs, Cyber Net, La Meridian chain of Hotels from France, CNW Corporation from South Korea, etc.
After returning from USA in 2002, I was selected on merit for the assignment of Chief Executive for Provincial Committee on Investment, Government of Sindh, an extended arm of Federal Board of Investment (BOI). The job entails wide-ranging responsibility for attracting/increasing investment in the province of Sindh from local / domestic sources, foreigner investors as well as Pakistanis living world over. Side by side the responsibility also includes organizing stellar growth in exports from the province by exploring new markets/tapping new avenues.
Formation of feasibility studies of variety of projects included development of new concepts in the light of worldwide rapid global changes and adaptation of new trends in its true form and application, in the light of enforcement of WTO regime. In addition monitoring and holding international exhibitions and fairs within the country and overseas involve wide parameters encompassing the entire product range manufactured or grown within the country. My job also entails:
- Major task to uplift & develop the role of SMEs on top priority basis.
- Organize to develop Telecom and I.T.
- Single country exhibition under exchange program
- entire product range.
- Stage cluster product wise exhibition.
- Targeted non-traditional items exhibition.
- Agro based value addition projects & fisheries, Agro Expos.
- Development / Exploration of Mines and Minerals.
- Create new avenues to develop tourism & allied industry.
- Help to organize new ventures/boost exports from EPZA in Pakistan.
PAGE: Pakistan was able to attract FDI amounting to $3.6 billion in the last fiscal year (including the privatization proceeds) and now there are expectations that our country would be able to attract around $7 billion during the current fiscal year. Do you think it is achievable?
M ABBASI: FDI amounting to $3.6 billion in the last fiscal year plus expectations of attracting $ 7 billion during current fiscal year is in my opinion not a tough task. All this is possible due to continuity in policies of the government and the reliance of the people in general. Once further stability in continuity of policies is achieved, Pakistan has the potential to attract FDI multifold. The areas, which are still virgin are processing, manufacturing and exports of non-traditional items like Basic & Light Engineering, Agro-based value addition industry, Housing & Infrastructure etc. This information needs special attention of the Overseas Pakistanis who are presently on the lookout to put their investments in under developed countries, other than America, Europe and the Middle East. Pakistan due to its strategic geographical situation, equipped with young, educated, skilled cheap manpower is ideally suited safe haven for prospective investors.
PAGE: During 2003-04 and 2004-05, banking sector was the biggest sector in terms of attracting FDI but now telecom sector has led all the sectors in FDI. What could be the reasons for that?
M ABBASI: In the year 2003-04 and in the corresponding 2004-05, banking sector attained substantial growth with regard to FDI, which was the dire need to offer freehand to businessmen and industrialists, benefiting from healthy, secured available money market. The most lucrative segment is obviously telecom and I.T which is still in the state of infancy and needs massive development. There are more entrants needed to organize this sector to achieve top class efficiency, enabling to cater to the needs of many consumers at affordable prices, who are still deprived of this up to date and most modern media of interaction with each other mostly in rural areas of Pakistan.
PAGE: Do you think that the insurance sector would be among the leading sectors in terms of getting attention of the foreign investors?
M ABBASI:Insurance sector certainly needs an instant boost, as the concept of insurance is still alien to a common man. In order to attract investment in variety of insurance package, ranging from general insurance, commodity bulk insurance, property & warehouse insurance, health insurance (which needs special attention to be linked with compulsory / mandatory premium deduction from salaries / bank accounts in order to avail cheaper benefits from a larger canvas, to take advantage from the scheme Health for All) as is the practice in the developed world. It would be a measure to create a secured and business friendly environment, in an effort to augur soft image of the country.
A pre-insurance cover of at least one million rupees or more, should be offered to all overseas investors at the time of landing on any airports in Pakistan, on nominal upfront of $ 20 / 30 per visitor. Introduction of this scheme / program by insurance companies shall multiply visits of investors / tourists in Pakistan at the same time as well as proving a leverage in foreign exchange earning.
PAGE: Pakistan offers cheap labour and skilled workforce comprising young and energetic people. Even then China is able to attract over $60 billion in FDI per annum. What do you think are the basic issues needed to be addressed?
M ABBASI: Cheap labour and skilled workforce is not the only criteria for attracting significant amount of FDIs, competitiveness is key factor, which determines the inflow of FDIs in any country. Barriers to world trade are diminishing, and in many countries exports account for increasing the proportion of gross domestic product. With this in mind, businessmen and policy makers have become more concerned with the competitiveness of their countries" exports. Although there are several variables that can be used to gauge industries" competitiveness, the most obvious is the price of the product, which a particular industry produces, backed up by quality, timeliness of delivery, after sales service, etc. Still, price is the leading factor and as a measure that changes the quality of the product to attract customers, and achieve stronger performance in trade. Hence competitiveness is the ability to provide products and services more effectively and efficiently for sustained success in international markets without protection or subsidies.
China's success in acquiring $ 60 billion in FDI per annum is the extreme business friendly approach in facilitating projects from the grassroots level, right up till its pilot production. In addition of China's offer to genuine investors and exporters to set up any manufacturing unit, free land is being provided on "Pay As You Earn Basis". The Chinese rule of thumb and its philosophy for the economic growth is "Produce More, Buy More and Sell More", a unique concept derived for achieving growth potential, ever seen by the world.
PAGE: Would it be possible for our government to attract significant amount of FDI in agriculture sector to address the double digit food inflation?
M ABBASI: Agriculture sector in Pakistan is still in the struggling stage because of non-availability of state-of-the-art storage facilities. By virtue of that at least 30% of fruits and vegetables are wasted and the country survives with only on 60% leftovers. There is great potential that exists in value addition of fruits and vegetables to be processed and exported to international markets, which is eagerly waiting for tomato ketchup, mango, orange, sugarcane pulp, fruit concentrates, syrups, etc. Export of fresh fruits and vegetables can earn colossal foreign exchange for the country by adopting drip irrigation, sprinkler technology, canopy cultivation to enhance the present yield per acre, bringing at par with those countries, which follow the most scientific and progressive methods to obtain optimum yield per acre.
Pakistan has the best citrus, melons, bananas, peaches, apricots, apples and pomegranates, which can be bottled through value addition process, and can be exported in abundance to international markets for earning huge premium in dollars.
PAGE: Pakistan is among the 11 favourite destinations of the foreign investors, besides the four emerging economies such as Brazil, Russia, India and China known as 'BRICs'. Do you think that Pakistan has the potential to be one of the leading countries in attracting FDI in five years?
M ABBASI: For Pakistan to become a major player in world trade, an all encompassing and comprehensive view needs to be taken for the overall development of the country's foreign trade. While increase in exports is of vital importance, we have also to facilitate those imports, which are required to stimulate our economy. Coherence and consistency among trade and other economic policies is incorporating the existing practice of enunciating an overall policy, it is necessary to go much beyond and take an integrated approach to the development requirements of Pakistan's foreign trade. Trade is not an end in itself, but a means to economic growth and national development. The primary purpose is not the mere earning of foreign exchange, but the stimulation of greater economic activity.
To double our percentage share of global merchandise trade in next five years; and to act as an effective instrument of economic growth by giving a thrust to employment generation and manpower training.
These objectives are proposed to be achieved by adopting, among others, the following strategies:
- Unshackling of controls and creating an atmosphere of trust and transparency to unleash the innate entrepreneurships of our businessmen, industrialist and traders.
- Simplifying procedures and bringing down transaction costs.
- Neutralizing incidence of all levies and duties on inputs used in export products, based on the fundamental principle that duties and levies should not be exported.
- Facilitating development of Pakistan as a global hub for manufacturing, trading and services.
- Identifying and nurturing special focus areas which would generate additional employment opportunities, particularly in semi-urban and rural areas, and developing a series of 'initiatives' for each of these.
- Facilitating technological and infrastructural up-gradation of all the sectors of the Pakistan economy, especially through import of capital goods and equipment, thereby increasing value addition and productivity, while attaining internationally accepted standards of quality.