While some eyebrows were raised on the US Overseas Private Investment Corporation CEO’s visit on the heels of the Dubai conference — attributed to the US move to neutralise PM Nawaz Sharif’s recent visit to China, where plans for some big projects were inked — many believed it to be a genuine desire of the US to support investment by American firms in Pakistan.
The US private sector is exploring possibilities of investment in Pakistan’s energy, small and medium enterprises, telecommunications, financial services, and health and education sectors.
By investing in Pakistan, the Oversees Private Investment Corporation (Opic) is supporting private sector growth and job creation.
US Ambassador to Pakistan, Richard Olson, said as much. “With 190 million potential customers, Pakistan is a huge emerging market opportunity for US companies.”
Business leaders from the US and Pakistan have been engaged in discussions to identify key areas of cooperation in an effort to promote business, trade and commence activity between the two countries.
And, while the business leaders pin faith on the Nawaz Sharif government to be ‘business-friendly,’ the Opic activity in the last two months scarcely appears to have been prompted by the change of government.
Opic CEO Ms Elizabeth L Littlefield told investors at the Karachi Stock Exchange last week that Opic’s portfolio of financial support to Pakistan had risen three-fold in the last three years, from $80 million to $299 million.
Opic, as the US government’s development finance institution that supports American businesses’ investment in developing markets, has a portfolio of $16 billion. Its $299 million portfolio in Pakistan is spread across 14 projects.
Going by the fact that foreign portfolio inflow into the local capital market is around $4 billion, much of which emanates from the US, Opic’s share in the country’s foreign direct investment looks modest.
The institution, however, has the power to make a point. Since its inception in 1971, it has provided its services to new and expanding businesses in more than 150 countries. To-date, Opic has supported more than $200 billion of investment in over 4,000 projects.At the KSE last Thursday, Ms Littlefield urged the new ‘administration,’ meaning the Nawaz Sharif government, to address the prevailing malaise in order to promote overseas investment into the country on a sustainable basis.
And in doing so, the American political and economic minds voiced the concerns of US companies operating in Pakistan. A stock exchange official said that some of the top executives of major firms present at the ceremony were nodding their heads. Big stakeholders in the country’ economy, representing the Gillette Company, Citibank, Proctor & Gamble, Coca-Cola, Phillips, Engro, Goldman Sachs, IBM and many more, were present.
Ms Littlefield put the law and order situation at the top of three major constraints, as she saw it, with the other two being the shortage of power and lack of good governance, particularly in the public sector.
However, if official statements are to be analysed, it does not seem to have yet dawned on many in the administration that this is indeed the case.
At the conclusion of the two-day ‘US-Pakistan Business Opportunities Conference’ in Dubai on June 25-26, adviser to PML-N chief Nawaz Sharif, Javed Malik, was asked if the security situation in Pakistan was a stumbling block in promoting foreign investment in the country. In a roundabout way, he argued that “opportunities in Pakistan were more than the challenges, and that several US companies were doing roaring business in the country”.
The major constraints to the inflow of foreign direct investment in the country are neither new nor unknown. The shortage of power has put the Nawaz Sharif government on the back foot.
As the new government gropes for ways to grapple with the problem, former government officials are found chuckling, for they know that the menace of circular debt, which is at the heart of the power crisis, is almost unmanageable in the short-term.
And good governance, particularly in the public sector, is also difficult to infuse, and the solution possibly lies in the privatisation of state-owned units; something which the government has declared it proposes to begin with.
But it is the top priority issue — overcoming law and order conditions, particularly in the country’s financial capital — that leaves officials speechless.
Even with full force, successive governments have not been able to flush out warlords, mafias, gangsters — all armed to the teeth — from different fortified city areas.