NEW BUSI­NESS PROSPECTS

Pak­istan-US Busi­ness Op­por­tu­ni­ties Con­fer­ence

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Se­nior govern­ment of­fi­cials and diplo­mats par­tic­i­pat­ing in the sec­ond US-Pak­istan busi­ness op­por­tu­ni­ties con­fer­ence in Dubai have high hopes about a pos­i­tive out­come and also that the two sides will make quick progress on re­mov­ing tar­iff bar­ri­ers and other ob­sta­cles that hamper bi­lat­eral trade and in­vest­ment.

They have stressed that Pak­istan was seek­ing tar­iff con­ces­sions and greater ac­cess to the US mar­ket in an ef­fort to boost eco­nomic growth in com­ing years.

“This meet­ing is a se­quel to the Lon­don con­fer­ence held in Oc­to­ber last year, which was a good start and we need to build on this and fur­ther the pos­i­tive trade be­tween the US and Pak­istan,” said Mu­nir Qureshi, Sec­re­tary Min­istry of Com­merce.

Both the US and Pak­istan made sig­nif­i­cant progress on the Bi­lat­eral In­vest­ment Treaty (BIT) at the con­fer­ence and progress in this re­spect was en­cour­ag­ing and may lead to an agree­ment.

Over­all, the con­fer­ence was termed as very suc­cess­ful and would lead to fur­ther un­der­stand­ing and fu­ture co­op­er­a­tion be­tween the US and Pak­istan. In an ef­fort to reap high div­i­dends of pref­er­en­tial treat­ment by the US, Pak­istan has urged for ex­ten­sion of the pe­riod of Gen­er­alised Sys­tem of Pref­er­ences (GSP) scheme to more than a year as it was presently re­newed on a yearly ba­sis.

As such Pak­istani tex­tiles may get ac­cess to the US mar­ket on favourable terms or at least on sim­i­lar terms as of­fered to other least de­vel­oped coun­tries. This may cause a neg­li­gi­ble im­pact on US man­u­fac­tur­ing but will help the Pak­istani tex­tile in­dus­try in re­gain­ing some of its lost mar­ket share.

Pak­istan’s ex­ports un­der the GSP pro­gramme stand at $195 mil­lion, which is 5% of Pak­istan’s to­tal ex­ports to the US but there is an im­mense po­ten­tial to in­crease this man­i­fold.

The “USPak­istan Busi­ness Op­por­tu­ni­ties Con­fer­ence” was held in Dubai, United Arab Emi­rates, on June 25 and 26. It was hosted by the US govern­ment and the Govern­ment of Pak­istan and about 200 Pak­istani, Amer­i­can and Emi­rati com­pa­nies at­tended the Con­fer­ence. The pur­pose of the con­fer­ence was to help Pak­istani and Amer­i­can com­pa­nies and in­vestors iden­tify new busi­ness op­por­tu­ni­ties.

Pak­istan’s Min­is­ter of Fi­nance, Ishaq Dar, led the Pak­istani del­e­ga­tion and was as­sisted by Science and Tech­nol­ogy Min­is­ter Khur­ram Dasti­gir, Wa­ter and Power Min­is­ter Khawaja Asif, Ad­viser on For­eign Af­fairs Javed Ma­lik and Sec­re­tary of Com­merce Mu­nir Qureshi.

USAID Ad­min­is­tra­tor Dr. Ra­jiv Shah led the US del­e­ga­tion. He was as­sisted by the Deputy Spe­cial Rep­re­sen­ta­tive for Afghanistan and Pak­istan Dan Feld­man, US Ambassador to Pak­istan, Richard Ol­son and Robin Raphel, who cur­rently serves as co­or­di­na­tor for non- mil­i­tary as­sis­tance to Pak­istan with the rank of ambassador.

Oth­ers who at­tended the Con­fer­ence in­cluded rep­re­sen­ta­tives from the State Depart­ment, the Depart­ment of Com­merce, the United States Trade Rep­re­sen­ta­tive, the Over­seas Pri­vate In­vest­ment Cor­po­ra­tion (OPIC), and USAID. In ad­di­tion cor­po­rate ex­ec­u­tives

from ma­jor Amer­i­can and Pak­istani com­pa­nies also at­tended, such as The Gil­lette Com­pany, Citibank, GE, Proc­ter & Gam­ble, Abraaj, Big Bird Group, Coca-Cola, Conoco Phillips, En­gro, Es­tee Lauder, Gold­man Sachs, IBM, Mon­santo, Nishat Group and the Saif Group.

Leader of the Pak­istan del­e­ga­tion Se­na­tor Ishaq Dar said the new govern­ment had taken a bold ini­tia­tive to set­tle such is­sues as cir­cu­lar debt and was tak­ing steps to en­sure that this did not re­cur in fu­ture.

“This one step should help raise the con­fi­dence of in­vestors and

A pre­dictable busi­ness regime was the fun­da­men­tal re­quire­ment of spurring in­vest­ment and con­se­quent eco­nomic growth in any coun­try.

in­vest­ment in this crit­i­cal sec­tor,” he said.

He said it was for this rea­son that the Pak­istan govern­ment had ex­tended its fullest sup­port for the suc­cess of the Con­fer­ence.

Wel­com­ing the busi­ness lead­ers to the con­fer­ence, Ishaq Dar said, “I see top busi­ness groups from Pak­istan and I am sure equally for­mi­da­ble groups are par­tic­i­pat­ing from the US side.

“Our econ­omy is fac­ing a num­ber of chal­lenges. First, it is the sig­nif­i­cant im­bal­ances in our macroe­co­nomic frame­work that pose ma­jor threats to eco­nomic sta­bil­ity. It is well known that the twin deficits of fis­cal and bal­ance of pay­ments are not in the best of shapes. Not only that suf­fi­cient re­serves are not avail­able com­men­su­rate with our trade vol­ume, do­mes­tic credit is largely pre­empted by govern­ment bor­row­ings, leav­ing lit­tle room for the pri­vate sec­tor to in­vest,” he re­marked.

“Se­condly, Pak­istan’s iden­tity as an econ­omy with a sta­ble pol­icy frame­work is miss­ing. Un­doubt­edly, over the last three decades, the coun­try has moved in the di­rec­tion of cre­at­ing an in­creas­ingly larger space for the pri­vate sec­tor and es­tab­lish­ing a reg­u­la­tory frame­work for pri­vate in­vest­ment in im­por­tant sec­tors like bank­ing and fi­nance, telecom­mu­ni­ca­tions, power, oil and gas and elec­tronic me­dia with a view to pro­tect­ing and safe­guard­ing in­ter­ests of all stake­hold­ers,” he as­serted.

He noted the prob­lems es­tab­lished the fact that a pre­dictable busi­ness regime was the fun­da­men­tal re­quire­ment of spurring in­vest­ment and con­se­quent eco­nomic growth in any coun­try. He added that it was for this rea­son that the PML-N govern­ment had come into of­fice with a clear eco­nomic vi­sion that would guide their eco­nomic poli­cies through­out the ten­ure.

“In view of its sig­nif­i­cance, we had the op­por­tu­nity to un­fold this vi­sion in my bud­get speech,” The Min­is­ter said. This vi­sion as­signs larger share of eco­nomic de­vel­op­ment to the pri­vate sec­tor, re­stricts govern­ment to reg­u­la­tory sec­tor, lim­its govern­ment ex­pen­di­tures within the larger bounds of rev­enues col­lected, mak­ing all cit­i­zens share the bur­den of rev­enue mo­bi­liza­tion, end­ing the cul­ture of ex­emp­tions and con­ces­sions in taxes, pro­vid­ing pub­lic sec­tor ser­vices on the prin­ci­ple of cost re­cov­ery, giv­ing sub­si­dies only to tar­geted pop­u­la­tions and fi­nally cre­at­ing a very strong so­cial pro­tec­tion sys­tem for the poor­est seg­ments of the pop­u­la­tion.

“As soon as we trans­late this vi­sion into re­al­ity our iden­tity will be firmly es­tab­lished in the eyes of the world. We will then have a pre­dictable in­vest­ment regime,” he claimed.

The Pak­istan Fi­nance Min­is­ter also ac­knowl­edged the strong eco­nomic part­ner­ship Pak­istan had with the United States. “In the months and years ahead, I am con­fi­dent this part­ner­ship will only grow stronger. We will wel­come US in­vestors and are pre­pared to fa­cil­i­tate their in­vest­ments in Pak­istan,” he re­it­er­ated.

He noted the key ar­eas that the con­fer­ence was fo­cus­ing on, such as en­ergy, agri­cul­ture and tex­tiles. He said: “We are also work­ing to bring new power based on gas and

coal and both of th­ese we will ini­tially im­port. All of you know th­ese projects will re­sult in sig­nif­i­cant busi­ness op­por­tu­ni­ties in Pak­istan and I urge you to be the first to line up for them.”

Pak­istan’s Fed­eral Min­is­ter for Wa­ter and Power, Khawaja Asif said the govern­ment was com­mit­ted to pro­mot­ing trade, com­merce and in­vest­ment for achiev­ing national pros­per­ity. He said the United States had emerged as the largest trad­ing part­ner for Pak­istan be­sides be­ing a source of sig­nif­i­cant in­vest­ments in Pak­istan and its co­op­er­a­tion in the fields of en­ergy, agri­cul­ture and ed­u­ca­tion would grow stronger and deeper in the days to come.

“I am quite con­fi­dent that this con­fer­ence would fa­cil­i­tate busi­ness deals di­rectly be­tween the US and Pak­istani com­pa­nies and in­crease global aware­ness of Pak­istani busi­ness op­por­tu­ni­ties.”

He said the con­fer­ence would high­light the in­no­va­tions un­der­way in Pak­istan’s econ­omy and sup­port high- growth ar­eas like in­for­ma­tion tech­nol­ogy, elec­tric­ity gen­er­a­tion, agribusi­ness, ed­u­ca­tion, tex­tiles, lo­gis­tics, and cold chain stor­age.

Speak­ing at the con­fer­ence, US Ambassador to Pak­istan, Richard Ol­son said, “The United States is one of the largest in­vestors in Pak­istan, and the US govern­ment sup­ports Pak­istani busi­ness lead­ers by of­fer­ing ac­cess to fi­nance, fa­cil­i­tat­ing busi­ness deals, and strength­en­ing busi­ness ed­u­ca­tion.”

He added, “The United States sees Pak­istan’s pros­per­ity as good for Pak­istan, good for the re­gion, and good for the United States: trade and in­vest­ment are the fu­ture of the US- Pak­istan re­la­tion­ship.

“With 190 mil­lion po­ten­tial cus­tomers, Pak­istan is a huge emerg­ing mar­ket op­por­tu­nity for US com­pa­nies,” Ambassador Ol­son ob­served and added: “We en­cour­age Amer­i­can and Pak­istani busi­nesses to work to­gether to cap­i­tal­ize on this op­por­tu­nity.

Com­ment­ing on the out­come of the con­fer­ence, for­mer ambassador

Javed Ma­lik, termed it as “a ma­jor suc­cess” and said that it was able to gen­er­ate a lot of pos­i­tive good­will be­tween Pak­istan and the United States and pave the way to en­hance trade re­la­tions.

He pointed out that al­though Pak­istan and United States are work­ing to­gether in a num­ber of ar­eas but the spot­light re­mained on se­cu­rity co­op­er­a­tion, which was one com­po­nent of a wide rang­ing en­gage­ment be­tween the two coun­tries.

“Trade is a very sig­nif­i­cant as­pect of our re­la­tions with United States and will be a defin­ing fac­tor of our fu­ture re­la­tions. Al­though the United States is al­ready Pak­istan’s ma­jor trad­ing part­ner but ob­servers on both sides are con­vinced that there is fur­ther scope to en­hance the vol­ume of bi­lat­eral trade by ex­plor­ing new av­enues as well as cre­at­ing a bet­ter frame­work of in­creased co­op­er­a­tion.”

Ap­pre­ci­at­ing the tim­ing of the con­fer­ence, Javed Ma­lik said that the Pak­istan-US Con­fer­ence could not have hap­pened at a more ap­pro­pri­ate time, be­cause a new demo­cratic govern­ment un­der the vi­sion­ary lead­er­ship of Prime Min­is­ter Nawaz Sharif has just taken of­fice in Pak­istan and the prime min­is­ter has clearly in­di­cated his govern­ment’s pri­or­ity in cre­at­ing an in­vestor friendly busi­ness en­vi­ron­ment that en­cour­ages for­eign in­vestors and fa­cil­i­tates them in ev­ery pos­si­bly way, and this has re­newed in­vestor con­fi­dence.

While un­der­scor­ing the pos­i­tive sen­ti­ment among the par­tic­i­pants of the con­fer­ence, Javed Ma­lik said that “all the busi­ness­men, and in­vestors that I spoke to dur­ing the con­fer­ence, were buoy­ant and pos­i­tive about the new govern­ment and Muhammad Nawaz Sharif’s elec­tion as Prime Min­is­ter has in­deed given the much needed boost to in­vestor con­fi­dence which would be in­stru­men­tal in en­cour­ag­ing for­eign in­vest­ment into Pak­istan.”

On whether the se­cu­rity sit­u­a­tion in Pak­istan would be a stum­bling block in this con­text, Javed Ma­lik said, “All sea­soned and se­ri­ous busi­ness­men un­der­stand that ev­ery busi­ness has

USAID will pro­vide a seed in­vest­ment to cap­i­tal­ize the funds and Abraaj Group and JS Pri­vate Eq­uity Man­age­ment have com­mit­ted to match or ex­ceed th­ese

seed funds.

its chal­lenges and op­por­tu­ni­ties, and while the se­cu­rity sit­u­a­tion, which is limited to cer­tain ar­eas of Pak­istan, may be seen as a chal­lenge by some in­vestors, there are many other in­vestors who also un­der­stand that the op­por­tu­ni­ties in Pak­istan are more than the chal­lenges. This is ev­i­dent from many suc­cess sto­ries of for­eign com­pa­nies op­er­at­ing in Pak­istan, in­clud­ing sev­eral US com­pa­nies, that are ac­tively en­gaged in busi­ness in Pak­istan and not only run­ning suc­cess­fully but also mak­ing sub­stan­tial prof­its and con­tinue to ex­pand their foot­print”.

USAID Ad­min­is­tra­tor Dr. Ra­jiv Shah an­nounced the Pak­istan Pri­vate In­vest­ment Ini­tia­tive at the Con­fer­ence. The Pak­istan Pri­vate In­vest­ment Ini­tia­tive will launch two new pri­vate eq­uity funds fo­cused solely on Pak­istan’s dy­namic and fast- grow­ing small and medium sized busi­nesses.

USAID will pro­vide a seed in­vest­ment to cap­i­tal­ize the funds and Abraaj Group and JS Pri­vate Eq­uity Man­age­ment have com­mit­ted to match or ex­ceed th­ese seed funds with in­vest­ments of their own, as well as pri­vate funds raised from other limited in­vestors.

“We are seed­ing in­di­vid­ual funds with $24 mil­lion each. The Abraaj Group and JSPE will match or ex­ceed our com­mit­ment. We fully ex­pect them to ex­ceed that con­tri­bu­tion,” said Dr. Ra­jiv Shah.

“Pooled funds will ini­tially be $100 mil­lion which we ex­pect will grow man­i­fold into hun­dreds of mil­lions of dollars in in­vest­ment for small and medium busi­nesses.”

By in­vest­ing in Pak­istani pri­vate busi­nesses, the United States is sup­port­ing pri­vate-sec­tor growth and job cre­ation - and Pak­istan’s role as a ro­bust and fast-grow­ing eco­nomic part­ner among its neigh­bors and within the global econ­omy.

Over the course of two days, par­tic­i­pants at­tended speeches, panel dis­cus­sions and net­work­ing events be­sides dis­cussing a wide range of US-Pak­istan busi­ness op­por­tu­ni­ties, in­clud­ing agri-busi­ness, en­ergy and ed­u­ca­tion, as well en­trepreneur­ship, ac­cess to the US mar­ket, con­sumer goods and franchising op­por­tu­ni­ties, ven­ture cap­i­tal, in­for­ma­tion tech­nol­ogy, and the eco­nomic and in­vest­ment poli­cies of the new Govern­ment of Pak­istan led by Prime Min­is­ter Nawaz Sharif.

Par­tic­i­pants wel­comed re­ports about Amer­i­can com­pa­nies al­ready suc­cess­fully do­ing busi­ness in Pak­istan. They heard about the many US govern­ment ini­tia­tives to ex­pand US-Pak­istan trade and in­vest­ment. They learned how to uti­lize ex­ist­ing US govern­ment pro­grams to over­come hur­dles to do­ing busi­ness in Pak­istan. Ev­ery­one ex­panded their net­work of busi­ness con­tacts and in­creased their aware­ness of po­ten­tial busi­ness op­por­tu­ni­ties.

U.S. Ambassador Richard Ol­son

Fed­eral Min­is­ter Kh. Asif (Cen­tre)

Javed Ma­lik

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