His Excellency, Mr. Muhammad Zubair, Chairman, Privatization Commission of Pakistan
Secretary, Ministry of Water and Power; Secretary, Privatization Commission;
Ambassador William Milam,
Distinguished representatives from the United States Energy Association and US-Pakistan Business Council
Ladies and gentlemen
I thank you all – and the Chairman Privitization Commission in particular – for affording this opportunity to share my perspective on Pakistan-US Economic Cooperation.
It is timely as Prime Minister Muhammad Nawaz Sharif is scheduled to visit the United Sates this month on the invitation of President Barak Obama.
I would also like to thank the World Bank Group for assisting the Privatization Commission of Pakistan in organizing this Market Consultation on Pakistan’s Power Sector Privatization.
I must compliment Minister Muhammad Zubair for lending his experience and professionalism in spearheading Pakistan’s Privatization process in an open, fair and transparent manner.
He deserves credit for successfully completing capital market offerings of United Bank Limited, Pakistan Petroleum Limited and Allied Bank Limited. I am aware that the Privatization Commission is pursuing privatization of around three dozens of Public Sector Enterprises, including those in the power sector, aimed at reduce the government’s fiscal burden and improving service delivery.
Ladies and gentlemen
Let me now focus on Pakistan-U.S. Relations, particularly economic cooperation.
Pak-US bilateral relations are multifaceted, ranging from cooperation in the fields of defense and counterterrorism to energy and education. This relationship has witnessed lows and highs over the six decades. I would say that it has stood the ‘tests of times’. Both countries have sustained constructive engagement in the interest of peace, security and stability in the regional as well as global context.
Economic Relations between our two countries have flourished but continue to be characterized by vast untapped potential. We need to act towards strengthening this important component of relationship, as resolved between President Barak Obama and Prime Minister Muhammad Nawaz Sharif during the Prime Minister’s visit to the United States in October 2013.
The Strategic Dialogue Process initiated between the United States and Pakistan in early 2013 established Working Groups in key areas including Energy as well as Economy and Finance. With the recent addition of new Working Group on Education, Science andTechnology, the Process contains a robust economic component.
The United States has consistently been the largest destination for Pakistani exports. In the last year, Pakistani exports to the US were $3.672 billion, which were around 16 percent of Pakistan’s total exports. The US is the fifth largest trading partner of Pakistan in terms of total trade volume. We crossed $ 5 billion mark in bilateral trade in 2013 but need to work towards increasing the overall trade volume between the two countries.
When we see Pakistani exports in percentage terms of total imports of the United States, the situation is not very encouraging.Pakistan’s exports are only a very small portion of US global imports. My mission as the Ambassador of Pakistan has been to improve this ratio by exploring avenues of broader access to the US markets.
Pakistan is one of the beneficiaries of US GSP scheme. In 2013, GSP products amounted to 5 percent of the year’s total exports (US$ 225 million). The program had expired in July 2013 but was re-authorized in June this year and would now be available until December 31, 2017.
Our focus during the Prime Minister’s forthcoming visit to the United States would primarily be on working out measures for enhancing trade and economic cooperation between our two countries. We need to work on a few signature projects with larger impact and visibility. Energy sector would be of foremost interest and significance to that end.
Ladies and gentleman
The US side appreciated Pakistan’s progress on economic reform agenda during the last meeting of Pakistan-US Working Group on Economy and Finance, held in October 2014. We are working closely with the U.S. to hold its next meeting this year or early next year.
Recognizing Government of Pakistan’s top priority accorded to Energy Sector, USAID has contributed noticeably in this field. The US-funded projects have added around 1,500 megawatts of electricity to Pakistan’s national grid between 2010 and 2015.
We would like that the US should invest in repair and up-gradation of electricity transmission system. In this regard, Pakistan would like to have some progress during the forthcoming visit of the Prime Minister.
In the last meeting of the Pak-U.S. Energy Working Group held in Islamabad in April 2015, both sides agreed on an initiative, under which the U.S. Government will work with Pakistan to advance reforms that will allow the U.S., Pakistani, and international private sector developers and investors to add 3,000 megawatts of clean power to Pakistan’s national grid within the next 3-5 years.
The U.S. supports Pakistan’s desire to build large hydropower projects. The USAID is conducting a feasibility study for Diamer Bhasha Dam. USAID and the US Chamber of Commerce hosted the Diamer Bhasha Dam Business Opportunities Meeting in Washington last year. World Bank’s funding of Dasu Hydropower Project has also been supported by the US.
In regional connectivity, the US is engaging the four TAPI member countries (Turkmenistan, Afghanistan, Pakistan and India) to expedite the project and supporting CASA-1000 project as an important regional connectivity initiative. Pakistan is also committed to IP gas pipeline project in view of its growing energy demand.
Ladies and gentlemen
Trade and Investment Framework Agreement (TIFA) between Pakistan and the US was signed in 2003. We have since held seven TIFA Council meetings. The last one took place in 2014 here in Washington.
During the 2014 TIFA Council meeting, the United States and Pakistan agreed on a Joint Action Plan to expand bilateral trade and investment flows over the next five years.
Signing of a Memorandum of Understanding on Joint Efforts to Empower Women and to Promote Women’s Entrepreneurship was a significant development during that Meeting. Dates for the next meeting in Islamabad by the end of this year are under consideration.
US-Pakistan Business Opportunities Conferences provide with an important avenue of economic cooperation. These Conferences have been held regularly since 2012. This March, US co-hosted a Pak-US Business Opportunities Conference and the First US-Pakistan Business Opportunities Week in Islamabad. Secretary Commerce, Penny Pritzker led the US delegation to the Conference with a robust participation by the private sector.
This year, with Houston available as a second port of entry for Pakistani mangoes, the mango export to the US is expected to be in excess of $ 5 million. It may also be viewed as positive development that signifies growing prospects of economic cooperation.
Ladies and Gentlemen,
I have shared this profile of Pak-US economic cooperation with a view to providing a backdrop for your deliberations. I consider it equally essential to highlight that Pakistan’s economy is back on upward growth trajectory. Our GDP is expected to grow at a higher rate than projected. Foreign Exchange reserves have reached $ 20 billion, highest in our history. Inflation has fallen below 3% mark which is lowest since 2003. Remittances have crossed $18.45 billion, for the first time in our history.
Pakistan’s economic recovery is being appreciated by independent international agencies:
• MSCI (formerly part of Morgan Stanley) announced in June 2015 that it will consider Pakistan in 2016 review for a potential reclassification to emerging markets.
• In August 2015, Forbes stated that Pakistan has the potential to be a global turnaround story and ought to be US strategic partner.
• Japan External Trade Organization (JETRO) has declared Pakistan as likely to be the 2nd choicest place for FDI.
• In June 2015, Moody’s upgraded Pakistan’s bond ratings to B3 with a stable outlook. In March 2015, it raised Pakistan’s Foreign Bonds ratings from Stable to Positive.
• Standard and Poor’s in May 2015 also upgraded Pakistan’s outlook from Stable to Positive and reaffirmed Pakistan’s sovereign rating as “B-“ for long term and “B” for short term.
• IMF Board successfully cleared 8th review last month and observed that the program is on track.
• Bloomberg ranked Pakistan 3rd amongst top ten Best Performing Markets in 2014 and 14th amongst top potential investment locations in 2016.
In essence, Pakistan has written a new chapter in the history of reforms, privatization and economic progress. It is a country brimming with promise. It has been certified as the best undiscovered investment opportunity of the world for investors. Pakistan’s economic indicators are strong and getting stronger day by day. Pakistan offers a great opportunity for investment in different sectors. I invite the US investors and businessmen to explore Pakistani markets and build lasting relationships between the two nations in the economic field.
To end, I reiterate my best wishes to all the stakeholders in Pakistan’s privatization process.
I thank you all.
October 08, 2015