KARACHI - A PROMISING DESTINATION FOR FOREIGN INVESTORS
TARIQ AHMED SAEEDI (email@example.com)
Jan 4 - 10, 2010
In the midst of integrated communications that are leaving no propaganda machines unused to create a perception about Pakistan being a permanent investments' unfriendly country apprehensions are common about what will be the state of national economy without investors. However, there are still many sectors in the country that are real attractions for the long term foreign investments.
Karachi, which is the financial hub of Pakistan, has been a focus point of foreign investors for last couple of years because of its two sea ports on Arabian Sea connecting the city to the rest of the emerging economic destinations of the world and other sea ports. Energy, transport, food, agriculture, and oil refinery are some of the sectors which offer lucrative potentials to foreign investors. Federal as well as local governments are in negotiations with investors from U.S., China, South Korea, Japan, Turkey, Russia, etc. to start capital intensive and commercial viable projects in these sectors.
According to Director General board of investment, Syed Asghar Rizivi government is desperate to bring investments in these sectors. Since Karachi is the port city, investors prefer to get cost relief on logistics and transportation by setting up plants there, he said. A Kuwait-based company planned to establish an oil refinery at Port Qasim. Japanese Economic Zone was also planned at Port Qasim. As per the understanding, government agreed to build infrastructure in the hinterland to give road, water, gas, and other important links at the threshold of the zone and for which ministry of finance approved $200 million seed money, he said. Planned to be built on 2000 acres lands and with 250 companies, the zone would be economically resourceful for the country. Since the zone is earmarked near the ideal location of seaport, other countries are also interested, he tells this scribe. "It would not only be commercially viable for investors who have access to skilled manpower in the vicinity and because of relatively better infrastructure, but also for the national economy." LNG and gasification plants can also be established at industrial zones of Port Qasim. The port has capacity to handle significant tonnage of shipments. Jetties have been constructed. Lotte, one of the largest food and shipping group in South Korea and Japan, is ready to set up plant in the city, according to DG.
Law and order situation in the country is not good, but Karachi has not been hurt by the situation to the degree other central cities of the country are. Liquidity crunch in countries vying for investments in Pakistan, however, slowed down the inflows of FDI nationwide. For example, IT tower project in Karachi has reeled under the eccentric ups and downs of economic indicators. Cost was the issue that disintegrated the foreign-led consortium, said an official. However, the IT tower is now to be independently handled by the local government, and slated to be operational by March this year, he added.
Deputy Chief of American Embassy, Gerald M Feierstein during a Pakistani delegation visit to Huston led by chairman board of investment appreciated the vibrancy and participation of private sector in Pakistan. He expected growing opportunities for US investors in Pakistani markets. He told media there were opportunities for foreign investors in particular from U.S. in Pakistan. Reportedly, he went to the extent of saying that if investors invest now in Pakistan they would get long-term benefits. The objective of the delegation comprising of private sector from Pakistan and government officials was to seek U.S partners for investments in the energy sector of Pakistan. The expectations about this visit were high as chairman BoI hoped that outcomes would emerge soon.
Senior government officials associated either with the federal government, provincial, or local governments claim that they have complete coordination in efforts of attracting and facilitating foreign investments, although critics question the unnecessary delay in setting up of foreign projects, which, they observe, are because of lack of teamwork in government departments. There are overlapping government functionaries involved in handling and facilitation of foreign projects in Pakistan. It is full of absurdity in a given internal and external problems of the country to blame lack of coordination as the underlying cause of apparently slow start of any project, especially foreign one, argues director general BOI. He says normally a mega foreign project takes four to five years to come on the ground. 'It is a big achievement to bring foreign investors on the negotiation table, which we have been constantly doing since last one year under the new chairmanship of broad of investment. One should not forget the political and security atmosphere in the country.' The important thing to be remembered is that government wants foreign investments in all sectors of the country and policies reflect the inclinations of government towards foreign investments, he adds. Permission of 100 percent foreign equity in projects is an example of government's seriousness in seeking industrial developments through foreign investments.