ISLAMABAD, 28 January — Is Middle East investment coming to Pakistan? Officials say, “yes.”

A Pakistani mission has just been in the Gulf region to promote and attract investment in this country. The mission is upbeat. World Bank’s private sector lending window, the International Finance Corporation (IFC), business sources say, is also considering financing of several energy-related projects, among others, in the private sector.

One of the immediate opportunities for foreign and domestic investors is that the government will finalize bids for sale of shares in nine oil and gas fields on April 15. Although a number of bids have already been received but other prospective buyers can send their Expression of Interest (EoI) bids to Privatization Commission (PC) of Pakistan, Islamabad, by Feb. 28. Altaf Salim, minister for privatization says that three Chinese companies and Shafik Gaabr, an Egyptian investor, have indicated interest to bid for this sale. Gaffney, Cline, & Associates and J.P. Morgan are the financial advisers to the PC for these sales.

Pakistan’s energy sector, which is being further deregulated, is expanding to meet the growing demand. It has a very promising business potential. At the moment 38 foreign and domestic companies are profitably engaged in exploration and production of oil and gas.

Salim also says Kuwaiti and Chinese groups, too, are interested in buying the state-owned Pakistan State Oil (PSO) that markets close to 70 percent oil in the country.

Disinvestment of the big United Bank Ltd. (UBL) is underway. It may be sold by May 31. A number of inquiries have already been received by PC.

But, more parties, including those from the Middle East wand UAE, wished to send EoIs as a result of which the date has been extended. PC Officials said that out of 10, three international companies were earlier prequalified to buy Pakistan government’s 51 percent share that is being disinvested, along with transfer of management. The three include the Union Bank, owned by a Saudi investor, a foreign consortium along with Pakistan’s Muslim Commercial Bank, and a UAE company that has joined hands with Pakistan’s privately-owned Bestway Cement. Bank Alfalah has already been purchased by a UAE group.

The telecom giant, Pakistan Telecommunications Company Ltd. (PTCL) is also on sale within the next few months, for which five companies have sent Letters of Intent (LOIs) while two more are expect to bid. The potential buyers include those from Saudi Arabia, Lebanon, Egypt and Australia.

The next in line for sale is the big Karachi Electric Supply Company (KESC), based at Karachi. It is the virtual electricity supply monopoly for the huge industrial city of Karachi and a large part of Sindh province. Price, Waterhouse & Cooper are the joint financial advisor to PC and the Asian Development Bank.

Private investors from the Middle East particularly, Saudi Arabia and the United Arab Emirates, are among those who have either offered bids to buy State Owned Enterprises (SOEs), or have sent Letters of Interest (LoIs). “The interest in buying Pakistani enterprises by Middle East investors has visibly increased in the days following Sept. 11 attacks, because they feel that the economic, political and social environment in US, and some other Western countries, is turning inhospitable,” said a senior government leader.

Pakistani banks and financial sector, energy, telecommunications, IT, electronics, even corporate farming, and fertilizers are some of the areas, manager of Foreign Direct Investment (FDI) funds are looking at.

An indication of interest is the just-launched Pak-Oman Investment Company (POIC). Three other investment companies that are likely to be established shortly in this country are: Pak-UAE, Pak-China and Pak-Syria.

Those countries have been attracted because several others, including Saudi-Pakistan, Pakistan-Kuwait, and Pak-Libya are already operating highly profitably in Pakistan for years.

The upbeat mood of the Middle East and Gulf investors about Pakistan is reflected by the decision of the Board of Directors of Pakistan-Oman Investment Company. In its first meeting, it decided: “The company should play a dynamic role in the economic development of the two countries and in promotion of business and trade relations between Pakistan and Oman.”

POIC will invest in manufacturing and agro-based industries, on commercial basis, and market their products in Pakistan and abroad. “Oman wants to make the company a vehicle for the future investment in Pakistan,” POIC Managing Director Zafar Iqbal says.

A Saudi group is planning to invest $200 million in Pakistan’s state-owned Habib Bank which is also for sale. Middle East groups are also interested in buying Pak-Saudi Fertilizer Company, PC says.

As a result of President Pervez Musharraf and Finance Minister Aziz’s recent visits to China, agreements have been signed with Chinese companies to establish two joint venture electronic companies, as well as for production of gas appliances, assembly of pick up vehicles, besides financing of hydroelectric projects, Gwadar port, Saindak copper, and Pakistan Railways.

Another major reason for an undergoing shift in investment is that the profit margins in the US and the Western nations are at the moment one of the lowest in recent history, and many companies have lost luster after suffering losses.