Pakistan hopeful of achieving $10 billion FDI target

[LahoreEstate]

MUHAMMAD RIAZ
LAHORE (May 24 2009): Federal Minister for Investment Senator Waqar Ahmad, while expressing his optimism about substantial increase in foreign direct investment (FDI) into Pakistan, has hoped that the country would achieve the target of 10 billion-dollar foreign investment during the current year.

Speaking at Lahore Chamber of Commerce here on Saturday, the Federal Minister said that Pakistan was an attractive place for investment in construction sector due to shortfall of eight million houses in the country. The Pakistanis, who had invested 8.5 billion dollars in the United Arab Emirates (UAE) real estate business, could be the prospective investors in Pakistan, he said.

Besides, the UAE-based investors were also expected to think over investing in Pakistan to tap the existing potential in the housing sector, he added. He said the business carried a return of 40 percent on investment, and added the Federal government was planning to offer land as its equity to these investors, who had a capacity to construct 60 houses per day with an investment of four million dollars only. The construction of a million houses under the programme could generate a cash flow, amounting to 15 billion dollars, the minister added.

Taking about the measures taken to mitigate the power shortage issue, Waqar Ahmad Khan said the Qatar government had agreed to give liquefied natural gas (LNG) provided the government of Pakistan entered into a long-term agreement. Headed by the Federal Minister for Petroleum, a delegation would visit Qatar very soon to finalise details, he maintained.

The LNG, being an efficient fuel, would not only bridge gas shortage in the country, but would also help increase the efficiency of all power generation thermal units that would be generating an extra 1200 to 1300 Megawatts of electricity.

He said that on completion of all formalities with the Qatar government, the LNG could reach Pakistan within three months time. He said that the agreement would also help curtail existing import bill. Waqar further said that legal coverage would be provided through legislation to all agreements to be made with the investors so that these could not be scrapped in future. He said that despite all odds, a number of potential foreign investors were ready to make investment in Pakistan in various sectors.

He said that the Ministry of Investment had decided to set up a task force in collaboration with the private sector to attract foreign investment, and urged the LCCI to give the names of the businessmen so that they could be included in the task force.

Appreciating the Federal governments efforts aimed at promoting investment in the country, LCCI President Mian Muzaffar Ali said that there was a dire need for foreign investment in labour-intensive industries because every year four million new people were adding to the existing workforce.

He said that it could easily be done through active participation of commercial attaches, working in foreign countries, and private sector's collaboration with the chambers of commerce in other countries.

The LCCI President said that like 2008, the current was witnessing a terrible state of affairs, whether they existed in the shape of terrorism, higher energy prices, an exceptional surge in food inflation or in the form of a financial market crisis to match the great depression of 1930s. He said these developments had adverse consequences of differing degrees for economies in different parts of the world, including the US and UK.

He said these external developments had equally played an important role in stressing Pakistan's macroeconomic imbalances while unsettled domestic political conditions and an uncertain security environment had adversely affected the performance of the Pakistan economy.

As a result, the foreign investment was constantly shrinking, he said, adding that the overall foreign investment during the 2008 fiscal year had declined by 32.2 percent and stood at 3.6 billion dollars as against 5.3 billion dollars in the comparable period of the previous years. He said the worst of all, severe energy crisis had increased the cost of doing business in the country. The LCCI President said if present alarming situation continued, the wheel of industry, which had already slowed down, would get jammed due to the growing energy shortage in the country.

He said the LCCI had repeatedly requested the government to seriously focus on the increase in production on a sustainable basis, and to fully exploit renewable energy resources so that "we can promote our businesses on sustainable lines." He said the government also needed to develop a strong liaison with the business community and whatever the decisions it took must be on permanent basis and not on ad hoc basis.

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