Commerce Minister’s Speech at the USPBC
Distinguished Guests,
Ladies and Gentlemen
I am delighted to be with you this afternoon at the US Chamber of Commerce – the world’s largest business organization.
The US Chamber, created a century ago to promote national economic welfare, is the symbol of American enterprise and the dynamism of its entrepreneurs. I would also like to avail this opportunity to thank the USPBC for being a close and trusted partner in promoting business collaboration between the US and Pakistan, and for providing a national forum for dialogue on key economic, political and other issues of interest to American companies operating in or exploring business opportunities in Pakistan. I would, particularly like to thank PRESIDENT, USPBC Espie Jelalian for her active role in promoting trade, economic and business relations between Pakistan and US.
The Prime Minister of Pakistan recently concluded a very successful visit to the United States, during which the two leaders emphasized the need for both sides to work together on a range of options to enable Pakistan to achieve a positive economic growth.
Prime Minister Sharif highlighted his keen interest in expanding bilateral trade and investment with the US, which is Pakistan’s largest trading partner, and a major source of foreign direct investment. Both leaders reaffirmed their commitment to this end.
The Government of Pakistan is committed to steering Pakistan away from its current economic turmoil, and onto a path of predictable economic growth through trade liberalization policies.
We have inherited immense problems related to our economy and security, where energy shortage alone causes a loss of about 2% of our GDP annually.
Promoting bilateral business, trade and investment in Pakistan is a key component of the Government’s policy.
We are currently engaging in efforts on economic recovery, improved security and good governance to attract local and foreign investment.
By the grace of Almighty, these efforts have started showing results.
Foreign Direct Investment, which had gone to its lowest in last decade, has started to pick up. From $820.7 million in the year 2011-12, it has registered a jump of 76.31%, taking it to $1447.3 million in the year 2012-13. Moreover, there has been a 6.1% increase in Net FDI in 2013-14 (July-Mar) as compared to 2012-13 (July-Mar).
An extended fiscal fund (EFF) of US$6.64 billion was negotiated with the IMF in September 2013, which enabled Pakistan to pay off installments of old debts.
We attach the highest priority to the energy sector, which is the ideal sector for foreign investors.
1700 MW have been added due to measures undertaken by the government including payment of the circular debt.
Work is in progress on several energy projects including Dasu Hydropower project, Nandipur, Jamshoro coal power project, CASA 1000, Energy-park at Gadani, and Neelum-Jhelum.
We are introducing structural reforms for market development and efficient public sector management. We will ensure fair competition, remove exorbitant taxes, rationalize tariff and policy distortions, ease entry barriers, reduce government involvement, and improve regulatory quality. Most importantly, we will ensure good governance as our core principle. New tax incentives were announced on 28th November, 2013 owing to which revenues have since registered 17% increase over the same period last year.
Austerity measures undertaken by the Government have brought about a 40% cut in expenditure in Prime Minister’s Office and 30% cut in all Ministries/Divisions and Foreign Missions.
We are working to restore confidence of the investors/businessmen, both local and foreign through our government’s pro business and transparent policies. Pakistan offers liberal investment opportunities. (SEZ. etc).
This is best reflected in the latest survey conducted by Overseas Investors Chamber, according to which business confidence has improved 36 points – from 34% negative in August 2012 to 2% positive in August 2013.
There is a keen interest by investors of several major international companies towards investing in Pakistan. Major sectors where opportunities exist include energy, infrastructure, housing, agriculture and others.
This is evidenced by the performance of the Karachi Stock Exchange, whose index rose by 43.74% from 19,916 on 11th May, 2013 to 28629.63 on 5th May, 2014.
Foreign remittances have increased by more than 10 percent to $9 billion in the first seven months of the current fiscal year.
The country’s Gross Domestic Product (GDP) grew by five per cent during first quarter of the current fiscal year as compared to only 2.9 per cent in the corresponding quarter of the previous fiscal year, a GDP growth of 4.4 per cent is the target for the full year 2014.
Within the next three years, the Government plans to raise GDP growth rate to 6-7%, raise Investment/ GDP to 20%, bring down fiscal deficit to 4% of the GDP, reduce public debt to below 60% of the GDP as per statuary requirement. The underlying fundamentals of Pakistan’s economy remain strong with a robust middle class consumer base rise in rural incomes, and rapid telecom & media penetration across the country.
Pakistan represents the 25th largest Economy in the world and boasts the 7th largest labor force.
Pakistan has faced the impact of global financial crisis, devastating floods in 2010/11, and negative effects of the Afghan war.
Factors that support FDI and FPI include the resilience of Pakistan economy. Pakistan has never defaulted on its loan repayments and has never stopped repayments of dividends.
Pakistan has also signed agreements on “Avoidance of Double Taxation” with 52 countries. This coupled with low corporate tax rates and a cost of doing business that compares quite favourably to its peers in the region, makes Pakistan an attractive destination for foreign investment.
The confidence of Pakistani Diaspora in the economic policies of the new government can be judged from the fact that the remittances for the month of July went up to $1.4 billion which is a record in our history.
Pakistan has huge investment potential in various sectors including energy, infrastructure and agriculture sectors. The advantage of the opportunities and participation in these sectors will work for the mutual benefit of our countries.
Pakistan’s exponential growth in technology adoption and the Government’s mandate to develop infrastructure allows for the youth based and fast growing technology sector to complement US innovation and industry.
For those businesses that operate in Pakistan, our country offers liberal and transparent investment policies in different sectors, and opportunities for the business communities of the two countries. We should strive to boost the bilateral economic relations between our countries in the private sector.
A number of major US Corporations and businesses have a long history of association with Pakistan, and boast an extremely good return on their investments. This has understandably encouraged some of these companies to expand their investments in Pakistan. We welcome this and strongly feel that US programs can play a key role in disseminating their good stories and business experiences in Pakistan to potential investors from US.
Wall Street Executives at New York expressed great interest and enthusiasm in looking at Pakistan as an emerging market during a meeting with Prime Minister Sharif in October last year.
Your motivation and your active interest in contributing to Pakistan’s economic growth is highly appreciable and the Government of Pakistan is committed to providing all possible assistance towards resolution of any issue that may require our assistance.
May 15, 2014
Washington D.C
