ISLAMABAD, 15 December 2003 — Gulf, European and Far Eastern investors have shown keen interest in starting up energy and industrial projects in Pakistan to benefit from liberalized economic policies and growing incentives.

Major private investors from United Arab Emirates, Kuwait, Egypt, Lebanon, Turkey, Australia, United Kingdom and rest of Europe, Kazakhstan, and China have expressed interest in staring up new energy and industrial projects during the just concluded 2-day conference “Investing in Pakistan.”

Major foreign companies, already operating in Pakistan, organized this conference with the support of Board of Investment and UAE-based IBF Gulf Conferences. Establishment of new joint ventures, collaborations or fully-owned industries and companies are currently in the pipeline. Several dozen agreements were also signed between the Chinese and Pakistani business leaders during President Pervez Musharraf’s recent visit to Beijing.

Dr. Abdul Hafeez Shaikh, minister for investment and privatization, said, “more than 600 major foreign companies are already operating a wide range of industries and numerous sophisticated services.” “The organization of this conference by some of these corporates testifies to the fact that Pakistan offers great business opportunities, safety and security of their personnel, and high dividends and profits, ranging from 25 to 60 percent a year.”

The participation of a large number of major investors and their interest in doing business in Pakistan totally belies some of the foreign media reports that this country is unsafe, he also said. Australian, British and several Gulf delegates whose companies are doing business in Pakistan for years endorsed this view.

Why should anyone invest in Pakistan? Waseem Haqqie, chairman of Board of Investments, lists five reasons in his favor: (1) abundant land and resources including major crops, oil, gas & minerals, fisheries and livestock. (2) Large English-speaking work force & cost-effective manager & technicians. (3) Large, growing domestic market, with a sophisticated population. (4) Well established legal system & infrastructure including rail, roads, sea links, telecom, & IT. (5) Strategic location & gateway to Central Asian republics, close links with Middle East and South Asia, comprehensive tax-free facilities, tax holidays & zero or low tariffs for investors.

Liaquat Jatoi, minister for industries and production, informed the conference, areas with promising potential for investment include oil and gas, IT, telecom, consumer durables, engineering, electricity generation, and physical infrastructure. Jatoi said, “new investments are required in textiles, engineering, leather, fertilizers, steel, chemicals, paper and paper board, food and fruit processing and fisheries. These industries are now operating at full capacity as substantial domestic and export demand is growing.”

Jatoi, along with Finance Minister Shaukat Aziz and Hafeez Shaikh, the key economic managers of the country, are banking on the new pro-business policies and a string of incentives, announced for foreign and domestic investors.

Pakistan is a market of 145 million with a per capita income of $500, set to rise to $680 in five years. It is also a production base for the Central and South Asian markets that, together, will have a population of 1.51 billion in the next four to five years. Portfolio investment from abroad is up. The total market capitalization of the stock market has touched one trillion rupees for the first time in the country’s history.

Jatoi and Hafeez Shaikh, explaining the government’s “investment-friendly and liberal policies,” say good governance in the last four years has revived the investors’ confidence.

The regulatory framework for doing business in Pakistan is “transparent, predictable, and consistent, and regularly improved upon to make them more investor-friendly.”

Besides inviting investors to establish new businesses, Pakistan also is attracting FDI in existing state owned enterprises (SOEs) now being privatized. Most of these SOEs are high profit yielding. In one year alone, Privatization Commission sold SOEs worth Rs.17 billion.

More mega SOEs, and monopolies will be sold in the next 10 to 12 weeks. Pakistan Telecom, the telecom monopoly has shortlisted bidders to three bids. They include one each from Saudi Arabia, and Egypt. Telecom, both fixed telephones and cellular, are fast expanding, following deregulation. Cellular phones, now nearly four million, will surpass the five million fixed line phones in a year. Four cellular companies are already operating. The telecom regulator, Pakistan Telecommunications Authority (PTA), has invited bids for licensing two more in the next couple of weeks. Telecom, besides autos, is the fastest growing sector.

Habib Bank Ltd., the second biggest bank will be privatized this month. Together with the sale of Allied Bank, also this month, will raise from 60 to 80 percent the share privately owned banks in the banking sector.

State Bank of Pakistan Governor Dr. Ishrat Hussain invited the delegates to open banks in Pakistan, but they should have AAA rating. He said fifteen Pakistani banks, and about the same number of foreign banks, are doing very well, but more can come.

Besides oil exploration, Pakistan is endeavoring to increase the domestic output of natural gas, or import it. The country’s energy mix includes 40 percent of natural gas, which will rise to 50 percent in the next few years. The government is inviting foreign investment in exploration and production of gas.