KARACHI, May 6: The UK Export Credit Guarantee Department (ECGD) is likely to restore medium term political risk cover for British business making investment in Pakistan, sources here said.

Competing export credit agencies like US Eximbank and Hermes have started to open up, which, the UK investors feel, properly reflects the significant and expected ongoing positive changes in Pakistan.

These sources said that investment and trading foundations between the two states are strong. Yet these ties have stagnated over the past decade and have failed to develop strongly. In January this year, Prime Minister Tony Blair and President Musharraf agreed to breathe new life into commercial relationship.

Whereas British firms operating in Pakistan have been strengthening their business by making some investments, no new business has come here. If the ECGD political risk cover is extended, it would promote investment in new businesses.

The British investors have advised the UK government to contact the ECGD, with a view to seeking a review of policy on Pakistan and an early restoration of full medium term cover.

“It will help generate new business,” Pakistan-Britain Business Advisory Group has told British government seeking its support to the move whose “positive signal” the PBAG says “should not be underestimated.”

While appreciating the constraints, the PBAG urged the ECGD to take a full review of its Pakistan policies. Such a review in context of the changes happening in the country and the positive response from the IFIs and the international community, should lead to a change of heart of the UK investors.

The group hoped that the British government would be able to offer constructive advice.

When contacted by Dawn, the OCCI president Moin M. Fudda, expressed the hope that the medium term political risk would be restored.

The group, which has representatives of the two governments, submitted its report in late April, with a strong recommendation that the special commercial relationship needed right governmental backing. UK High Commissioner presented a copy of the report to the federal commerce minister.

Sources said many UK and European investors were waiting for October election results and for constitutional rule to be restored to have a serious look at the opportunities offered by the changing environment. And ECGD’s change of heart would impact positively on the investment outlook.

The group comprised ten members, eight from the private sector headed by Munnawar Hamid, Chairman, ICI. The two governments were represented by Waseem Haqqie Chairman, Board of Investment and David Pearey, British deputy high commissioner and director of trade development.