Prime Minister Zafarullah Khan Jamali, addressing the executive officers of over 200 corporate companies in Hong Kong on Monday (April 26), highlighted the salient features of the investment-friendly policy of his government and invited private investment to Pakistan in almost all the sectors of the economy.
The conference was organised by the Board of Investment of Pakistan, which is headed by the Prime Minister himself. He assured the potential foreign investors that their investment would be fully protected under the relevant legal Acts of parliament.
He informed them that 100 percent foreign equity ownership was permissible in Pakistan, while there were no restrictions on the remittance of profits, capital gains, dividends and capital goods to the country of origin and foreigners could invest in any sector of the economy.
The Prime Minister referred to the positive trends in the country's economic fundamentals, and the growth of the economy, he pointed out, was likely to exceed the target of 5.3 percent this year.
At the same time growth in exports was close to the target of 13.26 percent and revenue collections were up by 12 percent between July 2003 and February 2004.
He also mentioned Pakistan's recent flotation of Eurobonds for an amount of $500 million at a very competitive coupon rate in the international capital market.
The Eurobond was oversubscribed by four times thanks to the highly favourable ratings assigned to Pakistan by the international credit rating agencies in addition to the IMF's commendations of Pakistan's successful economic performance.
The highly favourable response to Pakistan's Eurobonds could be seen as a testimony to the sound investment climate in Pakistan at present. Pakistan's stock market was among the six best performing markets of the world as its capitalisation recently jumped from $13 billion to $22.5 billion.
The Prime Minister invited Hong Kong's corporate sector to consider the possibility of cross-listing of their companies in Pakistan's stock market where portfolio investment from foreign investors has registered significant progress.
The Prime Minister offered an exclusive industrial zone for the Hong Kong investors to establish their projects, availability of all the infrastructure facilities being assured.
He also told them of the marked advancement in information technology in Pakistan, which could be used for project development on modern lines.
The participants of the conference were also informed that foreign investors from several countries, including USA, European Union and China were showing increasing interest in making fixed capital investment in diversified viable projects.
The progress in foreign investment was more significant in the oil and gas sectors besides the establishment of power projects. The privatisation of banking in Pakistan was yet another field which had attracted foreign investment.
This was evident from the transfer of management control in two leading banks through privatisation recently.
The emphasis on foreign private investment is common to most of the developing countries of the world including China, where the domestic resources are not as scarce as they are in some other countries like Pakistan.
The reason is that foreign investment not only contributes to accelerated pace of economic development but also serves as an alternative to foreign loans which otherwise would have to be raised by a country having meagre capital resources. In Pakistan the rate of savings is as low as 14 percent of GDP as compared to 25 percent in India.
Export earnings are not enough even for financing total imports and the deficit is made up by home remittances and loans from donor agencies. Under these circumstances, inflow of foreign investment would appear to be the most feasible recourse for this country to explore vigorously.
The investment conference in Hong Kong was definitely a timely effort by the government to explore the prospects of foreign investment from one of the largest business and industrial centres of the Far East. Since it is a part of mainland China, with which Pakistan has a close relationship, the possibility of positive results from the investment conference cannot be ruled out.
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