Federal Commerce Minister Humayun Akhtar Khan has said that Pakistan should not be looked by foreign investors as a market for local and foreign products but as a regional hub for relocating their industries. He was delivering his inaugural speech at the conference on "Trade and investment opportunities in Pakistan" held at a local hotel on Thursday. The Export Promotion Bureau (EPB) had organised the conference.
The minister said that Pakistan was ideally located from where access to China, Iran, Turkey, Afghanistan and the Central Asian states was easy and cheap and, therefore, it provided opportunities to export-oriented industrial units of the developed countries to relocate themselves.
He said that the relocation of industrial units had already taken place in a number of countries, which were taking advantage of less cost of production and higher margin of profit.
The minister said that the government had given priority to improvement in infrastructure. A number of road projects were underway. There was road link with Afghanistan from where access to Central Asian states is convenient and economical.
He said that the Gwadar Port is another milestone that would facilitate movements of goods to a number of neighbouring countries on most economical basis.
The minister called upon the foreign businessmen participating in the conference to consider Pakistan as a place for investment through relocation of export-oriented industries.
Humayun Akhtar said that so far consumer items, pharmaceutical, oil and gas, telecommunication, fishing industry, marble and mining and a few other similar areas had attracted investment, but the areas that have potential for direct foreign investment (FDI) in core industries had not been tapped.
He identified many areas, including textile, engineering, sports goods, surgical instruments, food processing, fishing industry, marble and granite as the barren and ever expanding sectors for the FDI. "Export has grown from $7 billion in 1999 to $12 billion last year, and is expected to achieve $14 billion target this year.
Foreign reserves have gone up to over $12 billion, the textile sector is growing more than $4 billion as machinery has been imported during these years, and only $922 million machinery has been imported during the first half of the current financial year", he added.
The minister gave an overview of the national economy, privatisation policy and progress, banking sector and its role in discipline the banking and non-banking institutions and policies that the government was following in respect of rationalisation of tariff.
State Bank of Pakistan (SBP) Governor Dr Ishrat Husain presented a paper on 'Economy of Pakistan - an overview', and said that despite positive outcome of the various policies that had been taken during these five years the incidence of poverty was still quite high and unemployment rates were worrisome. "However, the poverty level has come down from 40 percent to 18 percent and needed to be lowered further", he added.
He said that the challenge for the next phase of the reform process was to accelerate the growth rate and reduce poverty and unemployment.
He said microeconomic stability had been achieved through reduction in fiscal deficit, acquiring surplus on the current account balance of payments, lowering of inflation, and a transformation external debt profile.
The SBP governor said that structural reform followed by privatisation, deregulation, and liberalisation had made participation in the national economy lucrative. He said that policies adopted in this regard were investor-friendly and risk-free.
He referred to tax reforms, tariff reforms, financial sector reforms, economic governance, and institutional reforms, saying that all these reforms had brought improvement in the national economy. It had begun to move toward self-reliance, he added.
Dr Ishrat Husain said that Pakistan should have been on the list of progressing countries.
"Had investment in educating the population and upgrading the training skills and health of the labour force been up to the level of East Asian countries and a policy of openness to world market would have been maintained without any break, Pakistan's exports would have been at least $100 billion instead of paltry $13-14 billion." Husain held rapid growth in population as one of the major factors that had eaten away many gains of the national economy.
He said: "Had the population growth rate been reduced from 3 percent to 2 percent, the problems of congestion and shortage in the level of infrastructure and social services would have been avoided, the poor would have obtained better access to education and health and the incidence of poverty would have been much lower than what it is today."
The SBP governor said that neglect of human development resulted in the slackness in 1990s, adding: "Growth began to slacken, export reduced, revenue went down and development spending reduced and got entrapped into external and internal indebtedness."
He said that it all was due to both fundamental structural and institutional problems as well as to poor governance and frequent changes in political regimes.
Dr Ishrat Husain said that the situation had now altogether changed, and a process of growth had set in all sectors that help boost economic activities.
He called upon the participants of the conference to look into freedom to invest and reap the harvest with complete ease.
The SBP governor said that an investor needed no government approval, and he could bring in investment, initiate a business and carry back his earning without any restrictions.
Finances from banks are available to all that desire to invest in Pakistan, he said, adding: "Banks in Pakistan do discriminate between the local and the foreign investor. Even the foreign investor can go to the Karachi Stock Exchange. They can come up with IPOs." He said Safta (South Asia Free Trade Agreement) was about to be operated in 2006. "The investors, local as well as foreign, will have access and the benefit of low tariff in the South Asian region", he added.
Earlier, EPB Vice Chairman Abid Javed Khan presented address of welcome, and said Pakistan wanted manufacturing for export, development and improvement in infrastructure and multinational companies to come and relocate their industrial units.