IN sharp contrast to local conventional wisdom, value investors in the West see Pakistan as one of the most promising destinations amongst emerging markets to commit their resources to gain a foothold, eying rich dividends in the future.

The technology companies, in particular, find the charm of the Pakistani market too compelling to heed Western governments’ security warnings or care for adverse assessments by global monitors.

Global platforms (WEF, WTO, UN) assessing national social and governance indicators often place Pakistan at the bottom of the pool.

Still, there is increasing evidence that many global venture capitals and brands, striving to diversify their investment portfolios, perceive Pakistan not just in the league of such states as Indonesia, China, Brazil, Thailand, Argentina and India, but actually at the forefront. At least so it seems by the launch of franchises and one tech start-up after another over the past few years.

The reluctance of the local traditional asset-owning class to realise the investment potential is reflected in the country’s dismal, comparative investment rate. According to the latest Economic Survey of Pakistan, the investment-to-GDP ratio slipped to 13pc in the last fiscal. It was near 40pc in India and 30pc in Bangladesh.

Does the nature of investment reveal lack of trust in the economy and its future? “The domestic business mindset clearly prefers quick return options over long-term business models,” an economist commented.

‘Pakistan has all it takes for a business to succeed: an expanding market; high level of connectivity; a young, tech-savvy population; a pool of talent and a drive in the people to catch up with the developed world’s living standards and style’

Businessmen cite a long list of factors, starting with the infrastructure deficit and ending at policy inconsistency, clubbing everything else in between. In a nutshell, most moneyed people loaded with surplus funds find the odds for long-term investment prohibitive.

“We know for a fact that wealthy Pakistanis lost billions when the property bubble burst in Dubai five years back, but they are still the second largest group of foreign real estate investors in the UAE,” commented a leading analyst.

“People probably like to exemplify risks in Pakistan. We take a long-term view and are more focused on the promise of returns in the future. Pakistan has all it takes for a business to succeed: an expanding market; high level of connectivity; a young, tech-savvy population; a pool of talent and a drive in the people to catch up with the developed world’s living standards and style,” Pedro Meduna, co-founder and CEO of Tripda, on a visit to Pakistan, told this scribe in a chat with this writer about his experience, ambitions and the business model.

“The fact is that the more we learn about this market, the more excited we get about the decision to arrive here. We are confident of success as the scope of a technology company is huge in a market where demand is still evolving.”

The company is a match-making, web-based platform that connects people for carpooling. “People require cost-effective transportation solutions and we are offering one that makes a perfect sense, as it offers both private and social gains to commuters and the society,” the young CEO asserted.

The company is being managed in Pakistan by a small team of young professionals. It is engaged in negotiations with multiple colleges and corporations to strike a deal.

Commenting on the business model, Pedro told Dawn that they are inspired by ‘Facebook,’ ‘Whatsapp,’ ‘Instagram,’ etc, and want to gain a critical mass in the market before looking at the revenue stream. He was reluctant to reveal the company’s actual investment in Pakistan or the exact timeframe when they expect to start earning. He, however, mentioned a recent $11m injection by investors in the company, which is operating in 13 countries.

“Let there be no illusion, we are in the game for profit, but we are not in haste. We are ready to wait for lady luck to shine bright. As soon as Tipda assumes critical mass, we expect returns to start flowing. Currently, we want to make the app a household name and want it on all 10m smart phones in Pakistan. We understand it is a new concept and will take time to gain traction,” he said.

Ahmed Usman, the company’s country manager, narrated several anecdotes to prove that Tripda has the scope to grow and it is gaining popularity among students and young professionals frequenting intra-city and the Islamabad-Lahore routes. “The feedback so far has been encouraging, as users find carpooling cheaper, convenient and time-saving,” he said.

Moin Fudda, the country head of the Centre for International Enterprise, attributed the contrasting attitude of local and foreign investors in the country to traditional ‘Seth culture,’ which feeds on accumulating wealth in ‘tijoris’ (safes).

“Seths and Sahukars can’t take a long-term view and get uncomfortable parting with the riches they have stocked. They rely on gut feeling more than on a broad vision and planning. The local investors think in terms of business cycles of 3-4 years. Any option that does not guarantee doubling of the invested amount in the next three years is shunned,” he said.

Commenting on the level of trust of the business community in the national economy, Fudda felt it would be wrong to suspect their loyalty to the country or their belief in its economic future.

“They may be critical of the government’s policies, but they are as passionate about Pakistan as anyone else. If they lack the capacity to value available assets in men and material and entrepreneurial skills to develop business models to capitalise on natural advantages, then that is something else.”

Published in Dawn, Economic & Business, March 9th, 2015

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