Thank you so much Mr. Mahmood Majeed and Mr. Aamir Chalisa for organizing the Future of Everything Summit under the banner of OPEN Chicago. It’s a great event and I was especially pleased to see that you have ensured participation of students in this Summit. You have choreographed today’s events meticulously.
OPEN has now become an international brand and a clearing house for innovation, entrepreneurship and professional excellence. We feel proud to see Pakistani-Americans leading this endeavor across the United States and seven other countries with a sharp focus on Pakistan.
Let me first focus on Pakistan-US relations and then I will speak on emerging investment map of Pakistan.
Pakistan and the United States have had a strong strategic and economic ties for the past 76 years. This partnership continues and we foresee brighter prospects for its growth. The recent phase of our relationship starts from August 2021 when the US and NATO troops withdrew from Afghanistan. In the immediate aftermath, there were doubts if our relationship would survive without both countries’ involvement in a geo-strategic mission. The events of the past two years have demonstrated that Pakistan and the US would continue to collaborate and strike a new balance for building resilient foundations to take this relationship into the future.
We have recalibrated and rejuvenated the relationship by emphasizing equally the security and non-security dimensions. We would continue to work together to counter terrorism and create conditions for regional peace and security. More significantly, in the non-security realm, we are enhancing the space for economic partnership encompassing trade, investment, energy, climate change, health-care, education, agriculture, technology and people to people exchanges.
The United States and Pakistan deeply value this relationship. Washington has clearly said that it would have a stand-alone and broad-based relationship and would not look at Pakistan through the prism of Afghanistan, India or even China. At the same time, Pakistan would continue to be pivotal actor in regional and international politics.
My key message today is that this is an ideal time to invest in Pakistan and to promote Pakistan’s products and services in the United States.
In the recent past, we witnessed some difficulties – the pandemic, floods, political transitions and economic stress. We are moving past that stage. We will be holding elections in the first quarter of 2024 and all our macro-economic indicators are stabilizing.
The forecast for Pakistan’s economy is encouraging. The World Bank has predicted that Pakistan would be the tenth largest economy in the world by 2047, when Pakistan would be celebrating its 100th independence anniversary. Goldman Sachs has forecast that Pakistan would be the sixth largest economy by 2075. This economic revolution would be made possible by our talented and hardworking population. Be part of this revolution.
All fundamental elements are in place for Pakistan to grow. As of now, it’s the fifth most populous country in the world, with a population of 230 million. Nearly 64% of the population is young, which makes it the fourth largest Generation Z and younger youth. The median age of Pakistan is 22. A big chunk of this cohort is bilingual.
There are 190 million mobile telephone and 130 million broadband subscribers in Pakistan. We have fastest growing middle class, currently estimated to be more than 80 million which is leading the digital transformation in our country.
Pakistan is part of a new business ecosystem that is called MENAP (Middle East, North Africa and Pakistan) by venture capitalists. The population of this region is 600 million, out of which 230 million are Pakistanis. The Middle East has outpaced Pakistan but we are catching up fast. We are also part of another overlapping ecosystem of Central and West Asia.
In June this year, Pakistan established a Special Investment Facilitation Council (SIFC). This Council will act as a single window to facilitate investors, establish cooperation between all Government Ministries and Departments, and fast-track project development.
The core objectives of the SIFC include revitalization of our economy, integrating it with international capital markets, and ensuring steadiness and continuity of policies by adopting best practices and providing salutary investment milieu.
The SIFC will shorten lengthy business processes, develop a whole of the government approach and tap Pakistan’s potential in key sectors of information technology, energy, mining, agriculture and defence production by generating and attracting foreign direct investment.
Our high-speed internet has created a communication and data infrastructure. Growing gig-economy and human capital, among the highest in the region, are supported by it.
There has been exponential growth in tech startups in the past 4-5 years. In 2018 the venture capital funding for Pakistani startups was merely $10 million a year. Today it should be more than $1 billion. Our IT exports are $3 billion. It has been tripling year on year basis. We know that we are at a stage of nascent capitalization but would work to double this figure in the next 4-5 years.We also have one of the fastest growing market of free-lancers and e-commerce.
Angel investors – solo-capitalists and top brand venture capitalists – are feeding our tech startup ventures in finance, education, health, transportation, agriculture, retail and real-estate, bulk of them from the United States.
The US venture capitalists investing in Pakistan include Kleiner Perkins, Dragoneer, Global Tiger and Acrew. In addition, Kingsway from the UK, Invest Speed from Europe, Sharooq from UAE, Chinaccelerator and Fatima Gobi from China are investing in all these areas.
Incentives include income tax credit on IT exports, zero income tax on registered tech start-ups, tax holiday for venture capital funds, 100% repatriation of dividends and investments, and commercial loans at preferential rates.
We are grateful to the US government for supporting our efforts to increase collaboration between the US investors and Pakistani firms. Recently, a memorandum of understanding for investment of $40 million was signed between USAID and Pakistani-American led entity in the Silicon Valley. This is just the beginning. The US government recognizes Pakistan as a big and attractive market for investors in the IT sector.
Pakistan’s total energy today from all sources is 44, 943 mw, which is way short of our growing industrial, commercial and household needs. The energy mix is: thermal 62 %, hydro 24%, nuclear 8%, renewables 6%. We will, in years to come, alter this mix by reducing reliance on thermal and investing in solar and wind energy.
The incentives in this area include tax exemptions, import concessions on project plant and machinery, allowing 100% foreign ownership, force majeure and change in law, tariff indexation and three tier dispute resolution: discussions between parties; determination by an expert; and arbitration under LCIA/UNCITRAL rules.
Pakistan is rich in many minerals, especially in cooper, gold, lead, zinc, iron ore, coal, lithium, rare earth, bastnaesite, aluminum, chromite and nickel. Precious and semiprecious stones include ruby, emerald, topaz, tourmaline, quartz, peridot and aquamarine.
Barrick Gold is already aiming to initially extract 170,000 tons of copper and 300,000 ounces of gold every year.
Pakistan also has the expertise for manufacturing semiconductor chips for various electronic devices but does not have the resources. It has substantial lithium reserves, a key ingredient for battery production that would contribute to future sustainable energy solutions.
The incentives include concessional customs duty and sales tax of import of machinery, up to 100% foreign equity, expatriate facilitation, Export Processing Zones, inclusion in the China-Pakistan Economic Corridor (CPEC), protection from expropriation, and repatriation of capital and profits.
Pakistan is an agricultural country with vast swathes of land under cultivation. Our crops are some of the finest in the world because of fertile land and our unique geographic indications. There is even bigger, untilled cropland – which includes wasteland, rangeland and wetlands.
Right now, we are in the process of further modernizing our agriculture. Our objective is to increase the yields of wheat, rice, cotton, lentils, and soya bean through development of hybrid, climate resistant seeds. We are targeting big scale corporate farming, dairy farms and feedlots.
As for incentives, the foreign investor will be allowed to hold 60% of agricultural project, whereas 100 % holding rights would be admissible for corporate agriculture farming.
Ladies and Gentlemen
We urge the American sovereign wealth funds and investors in general to invest in these projects in Pakistan – IT, energy, mining and agriculture – for big wins.
Thankfully, you don’t have to start from the scratch, the United States has an elaborate infrastructure in place. Pakistan hosts some eighty American enterprises including Pepsi, Coco-Cola, General Electric, Abbot, Proctor and Gamble, Pfizer, Honeywell, Oracle, Microsoft, Dell, IBM, Caterpillar, McDonalds, Pizza Hut, and Domino’s Pizza. They find our market rewarding.
Secondly, Pakistani-Americans have invested heavily in Pakistan in businesses ranging from hospitality, hotels, hospitals, telephony, medical transcription and billing, diagnostics, fin-tech, health-tech and tele-medicine. You have your front and back offices there.
The response from the Gulf countries – from Saudi Arabia, United Arab Emirates and Qatar – for new investments in Pakistan is promising. Abundant capital is expected to come to Pakistan from the Gulf’s public entities. The US private sector can partner with these entities or they can take their own independent initiatives.
The total investment from the Gulf in the near future is expected to be around $25 billion by Saudi Public Investment Fund (PIF) – and its mining company Ma’adan will join Barrick Gold to extract gold and copper at Reko Dik.
In addition, talks have been held with Saudi Arabia to set up an oil refinery at the cost of US$ 14 billion. The Gulf investment will also cover solar energy, IT, and terminal services of three airports.
The SIFC will work as a catalyst to unlock ease of doing business in Pakistan. This would require a robust ecosystem comprising speedy registration of businesses, better broadband infrastructure, training, business development and stable payment cycles. Some regulatory reform has already been undertaken including electronic money Institution and digital banking licenses. Digitization of the economy including health and education sectors has been growing at a rapid pace.
The road ahead
We will increase the volume of services trade and use it to support growing entrepreneurship and mobilize capital in local markets. The results will also depend on targeted education and mentorship. Pakistan also has to work to increase its capital formation.
Finally, I would like to underline that 1 million strong Pakistani-Americans are valuable asset for Pakistan and are a bridge between Pakistan and the United States.
You are succeeding in your professions and your businesses. In fact, you have proven expertise in the four areas that I have identified for investment in Pakistan. We would like to attract and use your competencies in Pakistan.
It is also encouraging that you are passing the baton to the younger generation as is evident by the presence of students and young entrepreneurs in our midst today.
My appeal to you is to have faith in Pakistan. We as a nation are determined to succeed. We will persevere in this path despite all the challenges. Invest in Pakistan and invest in the future of Pakistan and Pakistan-US relations.
There is no room for either complacency or despondency. We in Pakistan are there to assist you in your endeavors to nurture existing enterprises and starting new ones.
Pakistan is going global beyond the region to MENAP, to Central and West Asia, to the United Kingdom and Europe, to China, most importantly to the United States. Join us, you are already there but scale up – that’s my appeal to you.
I wish OPEN more success especially OPEN Chicago!
I thank you!