By S. Sadia Kazmi
Pakistan today has become the most preferred destination for investment. Despite the weak economic indicators which touched the lowest point in past few months, the forecast of return on investment have hinted on promising figures for both domestic and international investors. The situation is said to becoming increasingly “low risk – high return”. As per the latest figures the GDP of Pakistan has reached US $312.6 billion. At the moment China is the biggest investor with US $19 billion already been invested as part of CPEC projects. The figure is further going to go up to US $62 billion including the construction of Special Economic Zones. As per the various economic analysts the time is ideal for investors to come to Pakistan and explore opportunities in various sectors. It is largely because of the new Special Economic Zones under China-Pakistan Economic Corridor with complete tax exemptions to the investors. This in itself serves as a great incentive for the industrialists and international companies.
This prospect is not only lucrative for the investors but the FDI helps the local economy by essentially bridging the trade deficit. Right now several countries are keenly looking at the rapid developments under CPEC especially the development of SEZs. Whether they formally be part of CPEC or not is yet to be seen but the inclination to bring in investment is there. This is evident from the recent visit by the Saudi Crown Prince Mohammad bin Slaman who signed investment deals worth more than US $20 billion during his recent visit to Pakistan. Kingdom of Saudi Arab definitely feels its money being invested in the safe destination with the expectation of good returns. US $10 million will be invested for refinery and petrochemicals complex in Gwadar. It is also expected this this refinery will be functional within the span of less than 2 years. And in next three to five years this facility will be in a position to produce 250,000 barrels refined oil products. This in turn entails huge savings for Pakistan. At the moment Pakistan is annually spending US $ 2billion importing these products. Saudi companies are also expressing the desire to invest in Pakistan’s renewable energy sector. ACWA Power is keen to bring in around US $4 billion investment and recognizes huge opportunities for production of cheap energy to fulfill the growing local demand. Simultaneously Pakistan has offered tax incentive packages. The latest example is that of Abu Dhabi which has been given a tax incentive package to establish oil refinery in Hub. It is expected that when completed it will have the production capacity of 10,000 barrels per day.
It is also expected that the upcoming visit of Turkish President to Pakistan in next month will bring more FDI into Pakistan. Turkish Consul General in Pakistan Tolga Ucak shared that the Turkish president is expected to make a formal investment-related announcement during his visit. Turkey will also extend its cooperation in the defence sector in addition to bilateral trade and technology transfer. The Turkish government is very interested in China Pakistan Economic Corridor (CPEC) and is already discussing its participation in projects with Pakistani authorities. Turkish companies’ investments in Pakistan currently stand at US$ 900 million. There are still various areas for Turkish investors to explore in the vibrant and potential sectors of tourism, information technology, food processing, agro-based products, dairy development, hotel industry and resorts development. Both countries are willing to enhance bilateral trade to US $3 billion.
UAE is yet another candidate expressing interest for investment in Pakistan. UAE companies are also investing heavily in Pakistan, especially in telecom, refinery and ports, among others. Total investment from the UAE at the moment is US $3 to US $4 billion. Also the bilateral trade between the two countries reached US $8.6 billion (Dh31.59 billion) for the financial year 2017-18 compared to US $6.2 billion in the previous financial year (2016-17). There were US $7.2 billion worth of exports from the UAE to Pakistan mostly consisting oil and petrochemicals while exports from Pakistan touched US $1.5 billion for 2017-18.Pakistan main strength is its huge domestic market with cheap workforce, High GDP growth, and lucrative investment policies. In view of these officials in Pakistan are quite hopeful and believe that given the conducive environment in Pakistan at the moment, there is a hope to secure up to US $50 billion foreign investment over the period of three to five years. As is also expressed by the Minister for power who maintains that Pakistan offers an opportunity of US $60 billion investment in power sector alone. Such an investment will be collectively used for power generation and upgradation of power transmission. Hence one feels justified in believing that Pakistan is fast becoming a global investment destination.