How will the economy cope and what are Pakistani-American entrepreneurs doing to help? Also, how do Pakistani-American business executives view the Pakistani economy and investing environment and what are they doing to promote Pakistan in the US?
Dawn spoke to Shahid Khan, a New York-based management consultant who heads the non-profit agency called Organization of Pakistani Entrepreneurs (OPEN) to find out.
Since October, OPEN has been involved in earthquake relief by partnering with other organizations to establish a website (saquake.com) which links donors and volunteers to non-profit agencies. “Because our network is the most powerful group of [expatriate] Pakistanis, it is our responsibility to avail our resources and help,” he says.
OPEN was founded in 1998 to foster entrepreneurship and professional business development among Pakistani Americans. The 800-member organization which is involved in mentor ships and networking has chapters in New York, Boston, Washington DC and Silicon Valley.
At first, OPEN persuaded a life sciences NGO in the US to donate some $5 million worth of medicines to earthquake victims and then through their members, raised $25,000 to cover the cost of sending the medicines to Pakistan. Then, because several OPEN members work at major corporations, they launched a letter-writing campaign to convince those corporations including Cisco Systems, Xerox and Bearing Point to set up matching donation programmes. A matching programme is when a corporation matches dollar for dollar every donation made by an employee of the company.
Similarly, OPEN members were asked to involve their local school districts in adopt-a-tent programmes and local Congress representatives were also contacted to help. The organization also hired a public relations agency to help improve coverage of the earthquake by the US media and a conference was held in Washington DC on November 13 to generate ideas for reconstruction.
A white paper will be published on the conclusions from the conference which will focus on construction and redevelopment, medicine and human aspects and media and political activism in America.
The result of all this: Khan says he cannot estimate how much OPEN raised for the earthquake but estimates direct and indirect contributions at several million dollars. “Our philosophy was to generate a multiplier effect,” he says.
Of course, not nearly enough has been generated—especially by the wealthy business sector both at home and among expatriates abroad—to cope even with immediate relief let alone longer-term reconstruction.
Khan says the Pakistan government should become more aggressive in raising funds from friendly countries, especially in the form of payback for being allies in America’s war on terror. “Before the earthquake, Pakistan was booming and Pakistanis here in the US were investing ,” he says. “But now, unless the funds are raised externally, they will have to be generated internally.”
Investment opportunities: How much will that hurt the economy? Khan thinks a key to propelling the economy is generating more foreign investment by homing in on the Middle East which is flush with capital and on the hunt for a place to put it. Nearby Pakistan, with buoyant telecom, media, technology and real estate sectors presents opportunities. “Everyone is raising a $100 million fund to do something in the Middle East but there are no real opportunities there,” he says. “The Investment Ministry and Board of Investment should capitalize on the abundance of funds there, the affinity to Pakistan [from the Middle East], and the fact that there is no fear from the West now. That card isn’t played well.”
He says the key lies in redefining and expanding the role of the BoI and Investment Ministry to include not just improvements in the facilitation process but soliciting investment as well. “The process [of investing in Pakistan] has come a long way from 10 years ago,” Khan says. “But still, it can be not so smooth.” He recommends heavy-duty promotional tours to help connect Middle Eastern investors with Pakistani entrepreneurs. Khan sees the financial services sector as a major area of potential for investment since little has been done in development beyond basic banking.
Additionally, telecom, business process outsourcing and media are ranked among favourites for investments. Another plus, of course, is the size of the market given the population. So, why has the turnaround in the economy not been followed with significantly higher investment activity? “The government is really, really bad with follow-ups,” Khan says. “They come, they give a good talk, they have great lunches but then there’s no follow-up.”
Another reason to target the Middle East is the continued violence in Pakistan that turns foreign investors jittery. Soliciting investors from the US is an uphill task while investors in the Middle East are far more familiar with Pakistan.
So what’s his solution? Treat overall foreign investment as you would treat a single transaction. “Just as when the government goes out to sell PTCL, they hire investment bankers, that’s what they need to do for Pakistan as a whole,” he says. “They should act as if they’re doing an IPO. Come up with five or six good ideas and then sell and then execute.” He says the key is for the BoI to change its role from just making policy to soliciting deals, closing them, monitoring the transaction and then monitoring after the transaction. Like textbook investment banking.”
To that should also be added a healthy dose of image improvement. The Information Ministry, Khan says, has failed to work on provocative campaigns to improve the image of Pakistan and resorts instead to simply putting out advertisements in the international business media.
This strategy is just what the government has failed to employ. Gwadar, for example, has generated great interest among expatriate Pakistani executives in the US but through mutual word of mouth rather than a push by the government. “I just don’t see that sort of guerrilla marketing that is needed,” Khan says.
This combined approach, of image issues and a new approach to marketing, he estimates, could help double the quantum of foreign investment every year from current levels. And would also help divert some of the large funds going from the Middle East to India.
And have Pakistani entrepreneurs done their bit to help? OPEN organizes conferences in the US to help facilitate investments in Pakistan. In 2005, they held a conference on investing in Pakistan’s business process outsourcing. And they have set up a project called “ Reimage “ to help improve the image of Pakistan through promotion of art and literature.
But right now, when the need for funds is most urgent and the economy is also in need to be propelled beyond a turnaround to an attractive destination for investment, the hope is that the government will consider an examination of alternative approaches and the Pakistani private sector both inside and outside the country will work harder towards both these critical goals.