NEW BUSINESS PROSPECTS
Pakistan-US Business Opportunities Conference
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
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)