ISLAMABAD, 4 June — Expatriate Pakistanis say there can be no significant investment in Pakistan unless facilities improve. They have reasons to complain. And, they said so bluntly in front of another expatriate until 18 months ago, Shaukat Aziz — the finance minister. Aziz admitted that much of the criticism leveled is valid.
And, he and his colleagues are earnestly trying to improve things to reduce the problems the overseas Pakistanis face. They are succeeding, but slowly, Aziz admitted.
The occasion for this crossing of the swords was the round-table arranged at Islamabad by the Lahore-based, privately-run Institute of Overseas Pakistanis (IOP). It happened in front of Shaukat Aziz, Privatization Minister Altaf Saleem, Chairman Board of Investment (BoI) Waseem Haqqi, and Chairman National Investment Trust-cum- Agriculture Development Bank of Pakistan (NIT & ADBP) Istaqbal Mehdi, besides people from business, finance, industry and the bourses. The officials explained the opportunities and incentives available for short, medium and long-term investment in various fields and profitable instruments.
Who are these overseas Pakistanis, and what did they say: Saeed I. Chaudhri, president and chief executive officer of Prime Bank, has worked in Bahrain, Saudi Arabia, Canada and many other countries, before returning to Pakistan to establish the Lahore-based Prime Bank. “Patience” was his key to operate in Pakistan successfully. When you plan to invest in Pakistan come back with your entire family, watch things, orientate yourself for two years or so, and select your Pakistani partners right. “Screen, screen, and screen,” them before selecting partners.
Javed Nawaz, managing director Agro-Development and Commercial Projects LLC, Oman, is a prominent businessman in the field of agro-development, with plans to invest in Pakistan. He says Pakistanis send remittances home via ‘hawala’ or ‘hundi’ because it is very convenient. The remittance arrives in Pakistan in three minutes. Banks can never compete with ‘hawala-wallahs’.
Perhaps the only way to stop the ‘hundi’ channel is for the Supreme Court to declare it un-Islamic. Most Pakistani workers are laborers who have never been to a bank. They are scared of going to a bank.
Nawaz, coming to bigger business and investment said, the tiny Oman imports $6 billion worth of poultry and milk annually, mainly from US. Why can’t Pakistan, located only a stone’s throw away from Oman, capture the market and replace US? His own farm produces 4.5 million birds a year. Pakistanis are successful investors, industrialists and businessmen abroad.
But, they are scared of their own country, where there is no good governance. There is a general lack of information on what projects are available for investment. There is no liaison between the government and the Pakistanis living in Oman.
Shahzad Asgharali, is a third-generation Pakistani in business in Bahrain. Saleem Asgharali, chairman, Asgharali & Sons heads this group based in Bahrain for 40 years. The group, is internationally highly-rated quality producer of consumer goods, and suppliers to the some of the world’s biggest chain stores like Walmart and K-Mart. Shahzad asked: Why cannot Pakistan capture such multibillion dollar purchasers to sell goods globally through their chain stores? The group has also invested in industry and other sectors in Pakistan. Shahzad’s candid assessment of the situation in Pakistan is that it repels, rather than attracts, investment from abroad. He said two textile industrialists, who were prominent value-added exporters, were murdered in Pakistan a few days ago.
That’s Pakistan’s loss, and erodes the confidence of expatriate Pakistanis deeply. “The Privatization Commission should be privatized,” as it is doing no good. The tax system should be drastically simplified. Harassment of industrialists and businessmen should be stopped. Everything here moves at snail’s speed. It took 15 months to complete transfer of land required by his group for establishing industry in Pakistan. It can be done in Bahrain in a matter of days. When an industrialist goes to the government’s “One-Window” to make investment, 20 more windows pop-up. There is no such thing as a One-Window. There are frequent power breakdowns, that drastically hamper production and productivity, adds to the cost of production, and leads to inefficiency.
In Bahrain all import consignments are cleared at the port within two hours, while in Pakistan, it takes weeks. The Bahrain port operates round-the-clock and 365 days a year — no holidays. In Pakistan you have weekly holidays, official holidays, and host of other shutdowns.
“The freezing of $11 billion Foreign Currency Accounts by Pakistan government in May, 1998 was the biggest cheating of Pakistanis and humiliated them. They should at least be compensated for the losses on account of FCAs.” “Pakistan has a very negative image abroad.” Although Pakistan’s exports consist of 60 percent textiles, there are only two textile training institutes whose equipment, technology and teaching is totally outdated.
Pakistanis should get modern training in textiles from Hong Kong or even India, to improve quality, production and exports.
Hamayun Khan, Director, Aer Rianta International Pakistan Ltd., an Ireland-based overseas Pakistani, who has partnered with the renowned Irish business house to establish duty free shops in Pakistan, said Pakistanis should be encouraged to send home remittances through official channels, and one of the ways to do it is to encourage them to buy at duty-free shops in Pakistan.
The $450 baggage allowances allowed each returning Pakistani was prescribed 20 years ago. It is inadequate. Shaukat Aziz said it will be revised, and enhanced at least to compensate for the inflation over these years.
Hamayun Khan said his duty-free organization finds it difficult to compete with goods smuggled into Pakistan. He proposed that all shops should be turned into duty-paid shops where any Pakistani can purchase imported goods by paying in dollars and the duty. Talking about the lack of government cooperation with expatriates, he said, “it is more painful to visit a government department than a dentist, because the dentist at least gives the patient the anesthesia. Government gives only pain, no anesthesia.” Aer Rianta’s Irish Director and Hamayun’s partner Stephens said his company has lost $100 million in frustration. Investment will come only if it is protected. I don’t see such protection is available. Remittances are different than investment and to encourage either different policies and procedures and enabling environment will have to be created.
“When you go to a government official to discuss investment and problems, he will talk to you for some time, give you ‘chaey’ (tea) and then you are bugged off to someone else. There is a lack of attention from all of them.” Hafeezullah Khan Niazi, a businessman from Jeddah, said mere words and promises cannot “bulldoze the expatriate investors in giving up what they have earned the hard way.
There is a complete breakdown of all systems in Pakistan, financial, cultural, social, and governmental. Government reeks of corruption. Governments in Pakistan change whimsically. Labor has no work ethics. As such, investors cannot be a party into what is going to fail. Investors want responsible, long-term, and transparent policies. Good governance in Pakistan is nowhere to be seen. How can one invest here?”
Tahir Andarabi, a Ph.D. from the Massachusetts Institute of Technology (MIT), said the risk to capital investment is very high in Pakistan. The cost of breach of trust is also very high. Investors have hearts of chickens and memories of elephants. They run away from danger. In view of this, the rate of return has to be very high to attract any investment.
Zahid Badshah, Director, Systems Engineering, Gulfnet, Riyadh, Saudi Arabia, an IT professional who has extensively researched the subject of speedy transactions of Overseas Pakistanis’ remittances, said the ‘hawala’ system is very well organized. In order to increase the use of the official channels, the banking system has to eat into that market. He said according to one estimate, Pakistan loses $6 to $7 billion a year in remittances because these are channeled through ‘hawala’.
Incentives should be provided to discourage the use of this channel. He said low-cost technology is now available to speed up remittances. The State Bank, he proposed, should provide a rebate or bonus to remitters so that they are encouraged to use the official channels. There should also be no handling charges.
The peak inflow of remittances was recorded in 1992 when it was $2.88 billion, while a low was $1.0 billion. Remittances this year will be $1.2 billion. There are an estimated 3.2 million Pakistanis working abroad, mainly in the Gulf, Middle East and North America.
R.A. Kaleemi, senior executive vice president, National Bank of Pakistan, said the total annual inflow of remittances is $6.0 billion — of which $5.0 billion is coming through ‘hawala’ and $1.0 billion via the banks. He suggested that the present difference in encashment value of the dollar between the interbank and kerb market should be reduced in order to increase the inflow through banks. He also claimed that 87 percent of remittances coming though his bank are disbursed within 24 hours.
In view of what the overseas Pakistanis said, the question is: Will the government wake up and do something tangible before dreaming of more of their remittances and investment flowing in?
