ISLAMABAD, Feb 23: Pakistan is expected to hire the services of Hernando De Soto, a Peruvian economist, to legalize the titles of estimated $9.3 trillion worth of dead assets of land , properties and businesses of the informal economy for creation of additional assets, development of the small and medium enterprises, sustainable growth and poverty reduction.

Mr De Soto, on the invitation of President Gen Pervez Musharraf, on Monday delivered a three-hour lecture to an extra- ordinary gathering of over 150 people including cabinet members, senior officers of the general headquarters (GHQ), civil bureaucracy and economists about his experiences in Peru and some other economies.

The lecture was presided over by the President himself and attended also by the Prime Minister at Presidential camp office in Rawalpindi. Currently, the economist is assisting Egypt to turn its shadow economy into formal economy.

Mr Soto is the President of the Institute of Liberty and Democracy (ILD) in Lima (Peru) and has been Principal adviser to Peru's President Alberto Fujimori. He claims he drew up and negotiated a plan in 1993 that reversed Fujimori's coup d'etat and returned the country to electoral democracy.

The President had read a book "The Mystery of Capital" by the author and had directed the finance ministry to invite him to Pakistan, said finance minister Shaukat Aziz at a joint news conference with the economist.

He said Pakistan had already talked to some donors excluding the Brettonwoods institutions to fund De Soto's project in Pakistan because the government wanted to improve the life of the common man and this could be done through giving life to the country's dead assets.

An official, requesting anonymity, said the project resembled the demands of the IMF and the US authorities to do away with the benami land holdings and introduce the anti-money laundering law to legalize every money transaction to stop channelling of terror financing.

Hernando De Soto told journalists that major reason for slow progress of the developing countries was that their properties, lands and businesses did not contain legal title and legal papers, which could be used as guarantee for securing credits for additional asset generation and wealth creation.

He said most of such properties in the developing countries belonged to the middle and low income people and since they did not have access to the credits because of the lack of legal documents the economies could not grow.

Similarly, the informal sector or the black market was outside the legal system because they were not satisfied with the existing laws and if they were assured of fair play and better costs of business, they would turn to the formal sector which would eliminate the scope for terrorists and so on.

He said even in the developed countries like the United Sates about 75 per cent of employment was coming from the SME sector because they are able to get loans against their houses, businesses and lands.

On the other hand, buildings and businesses in developing countries are not recorded and hence their owners have nothing to put on the table to get credit or to issue shares of the business.

He said his team would visit various parts of the country and estimate city by city and mile by mile to identify the size of the informal and black economy, examine the existing rules and regulations and see how these could be changed which was acceptable for the informal economy to become formal.

For this, he said, a national consensus was required for which he saw commitment from the president and the prime minister to build on the prevailing macro-economic stability.

He said a 100 per cent legal system gives sense of security to international investors because the system becomes predictable.

Responding to a question, he said Peru's growth rate improved from six per cent to 10-12 per cent because of his reforms programme that was put in place there between 1990-95, brought social stability, blocked terrorist financing and its exports grew from $3 billion to $10 billion a year.

Finance Minister Shaukat Aziz said that a plan by Hernando De Soto would be reviewed very soon and then it would be taken to the competent authority for approval and implementation.