TwO Korean companies with combined turnover of $100 billion have entered Pakistan with the investment of at least $200 million. The Korean giants, Lotte and POSCO, have come to Islamabad with two years’ efforts made by the country’s Board of Investment (BOI). POSCO has recently entered into joint venture with Tuwarqui steel and would expand capacity of Tuwarqui steel, according to Saleem Mandviwala Chairman BOI while addressing “The American Business Council’s Economic Summit 2011” here at a local hotel on Saturday.
Besides the Korean firms, he said that international firm Yamaha was also at advance stage to make investment of $150 million in Pakistan, which would create about 45000 jobs. Another foreign company Foton Group is also working on a project to bring 2000 CNG Busues in different phases in Sindh province, he said adding that the BOI was in negotiations with many other companies from China, Korea, Turkey, Germany, USA, Canada and other countries to come and invest into Pakistani. The government realises the importance of greater private sector participation in key areas of infrastructure development and delivery of services. In Pakistan today, 100 per cent of the textile and telecommunications sector, over 77 per cent of the commercial banking sector, and a significant part of the cement, sugar, automobile and fertiliser sector are in the private sector. Over 50 per cent of the industrial sector has been successfully privatised.
This year, he claimed, Pakistan has improved five ranks on the Global Competitiveness Index (GCI) securing the rank of 118 out of 142 economies. “We have also introduced for the foreign investor a “Visa Online” system that speeds up the process. This system assists in automating investor facilitation services by cutting down the number of days for documentation work. Addressing the summit former finance minister Shaukat Tarin said in order to ensure sustainable growth in the economy, the government while making major structural changes, should balance its books and limit its role to policy making. Besides the, the improvement in the security situation and social indicators, are also necessary. Talking about the grave situation of tax collection, he said though the constitution of the country has the agricultural tax at provincial level, the rule was not implemented by the government so far. As the prices are now set at international level, the agricultural products should be taxed.
Nadeem Naqvi, Managing Director of Karachi Stock Exchange, criticised that the role of the private sector, in manufacturing particularly, has always been secondary to the public sectors over arching priorities in the country. Interestingly, he said in terms of FDI, overwhelming source of funds for investment in above sectors was from GCC/Middle East, with relatively small, with the exceptions of cement and to some extent banking, all the other sectors received government support via tariff concessions/guarantees/input cost subsidies. According to Naqvi though non-democratic administrations have seen periods of GDP growth above the 4.5 per cent long term average growth rate for Pakistan but a more in-depth analysis would show that these periods were actually those when there was a significant rise in foreign/external bilateral and multi-lateral funding. The subsequent political blowouts meant that the benefits of these episodic growth periods could not be sustained and growth slipped below long term average.