Prospects & dividends of foreign investment in Pakistan

CONNECTIVITY and interdependence is an imperative for contemporary times. Shift from geo-politics to geo-economics has rendered connectivity the principal determinant of global politics that is defining the tone and texture, colour and contrast of international relations.

States are balancing and counter-balancing each other on the fulcrum of interdependence. Strategically aligned, mutually rewarding and prospering interdependence are evolving into bilateral strategic partnerships – beyond geographical constraints.

Neighbours one cannot choose, friends one always can! Geographically distant yet connected, interdependent, trustworthy, rewarding, partners are growing economic brotherhood.

What such prospects of economic connectivity and interdependence Pakistan offers to foreign investors as geo-economics takes the centre stage in global affairs?

In terms of connectivity, foreign investors, both public and private, should leverage on the strategic location of Pakistan to be a trade gateway to the vast market in the Southeast Asian, East Asian and the South Pacific regions, and the South Asian, West Asian, Central Asian and Southern Chinese regions, respectively.

Moving the beam of focus on any latitude across the world, international organisations, regional forums, multilateral and bilateral mediums are sprouting everywhere, and rightly so.

The world is vying for common aim of shared prosperity and growth. Today, Pakistan is setting up to be hub world’s connectivity in the form of the China-Pakistan Economic Corridor (CPEC), a flagship project of Chinese Belt and Road Initiative (BRI) aims for shared future for shared growth.

China-Pakistan Economic Corridor is a grand charter of regional connectivity and shared growth.

The enhancement of geographical linkages would be home to greater volume of flow of trade and businesses, producing and moving energy to have more optimal businesses and enhancement of cooperation by win-win model for the investors, the region and countries associated.

CPEC will result in a well-connected, integrated region of shared destiny, harmony and development.

CPEC is a journey towards economic regionalization in the globalized world. All countries, including those of Ease Asia, can greatly benefit from it.

This global project of connectivity and growth has Gwadar as its gateway. Enormous business opportunities have emerged by CPEC.

The opportunities are knocking at the doors of governments and their entrepreneurs – friends and brothers – across the globe, to benefit from this partnership for collective good.

Pakistan, under the BRI and its CPEC segment, would be the junction of connectivity across China, Central, East and South Asia, Middle East and Africa. Mammoth network of roads and rail infrastructure is being built in Pakistan along with the range of communication network, energy, Special Economic Zones equipped with all the infrastructural facilities.

Pakistan has made the Law of Special Economic Zones to meet the global challenges of competitiveness to attract Foreign Direct Investment (FDI).

Despite the huge impact of the Covid-19 pandemic on the Pakistani economy, the volume of FDI in Pakistan has maintained an upward trend.

The SEZs law by Pakistan allows creating industrial cluster with liberal incentives, infrastructure, investor facilitation services to enhance productivity and reduce cost of doing business for economic development and poverty reduction.

The Law further envisages reducing processes through SEZs in Pakistan. SEZs offer colossal range of opportunities for foreign investors – public and private.

The connectivity and excess, which Pakistan provides, is magnetic, grand and exceptional from the investors’ perspectives.

Pakistan is a gateway to a large regional market of around three billion people – little short of half of the world; Friends of Pakistan in East Asia and other regions must exploit it.

Pakistan is rich in natural endowments, like minerals, fertile agricultural land irrigated through one the largest canal system, rains and tube well; five seasons, deserts, mountains; a very hard working dedicated cheap labour force and deep sea ports of Karachi and Gwadar.

Government of Pakistan is establishing a number of special economic zones and offering long-term liberal tax regime to the investors who will establish business units in those zones.

As a tandem of Pakistan’s ‘Look East’ policy vis-à-vis the booming economic stature of friendly nations of East Asia, their positive, robust and expanding engagement with Pakistan offers multitude of mutual gains.

Though Pakistan is a member of Association of South East Asian Nations (ASEAN) Regional Forum, yet Pakistan has not been able to capitalise on its membership.

In 2020, the estimated total GDP of all ASEAN States amounted to approximately 3.11 trillion US dollars, boasting itself as the 5th largest globally with a market of estimated 651 million people. For instance, trade figure of Pakistan with ASEAN is 6 million US dollars in comparison to around 96 million US dollars of Indian trade with ASEAN.

Thus, to have robust ingress of Pakistan in ASEAN is an imperative vis-à-vis Pakistan’s current struggling socio-economic growth. At present, Pakistan is having a Dialogue Partnership but sectoral level.

Elevating of Pakistan’s status to Full Dialogue Partnership in the organisation is also in limbo owing to lesser focus of Pakistan on its East in comparison to West.

Countries of East Asia offer an opportunity for Pakistan to open up the ASEAN market for trade and investment through strategic partnerships.

Foreign countries must explore new possible areas of economic investment and cooperation with Pakistan in range of fields: trade and investment, renewable energy, natural resources, aerospace and aeronautical, digital technology, artificial intelligence and e-commerce.

Foreign governments should encourage their respective Chambers of Commerce and Industry, in particular the respective Business Councils if already established, to kick-start the needed initiatives to stimulate private sector-driven bilateral trade and investment partnership.

Diaspora of Pakistan abroad and that of country contemplating FDI in Pakistan ought to play their proactive role in promoting economic and investment ties between the two brotherly societies.

Significantly, in contemporary scenario hinged on regional connectivity and interdependence, CPEC, its SEZs and investor-friendly regulatory regime by Pakistan must be optimally exploited by foreign entrepreneurs for mutual growth and socio-economic prosperity of respective masses.

For collective vision of prosperity to transpire into reality, connectivity and interdependence is key. Economic and investment ventures beyond geographies can make it happen; and developments of strategic partnerships between Pakistan and investing partners from abroad hinged on bilateral interests is an omen to that – a silver lining in era of competing balance of power and resurgence of geopolitical competitions.

—The writer, an international affairs analyst, regularly writes on national security, foreign policy, international diplomacy and maritime affairs.