REMARKS BY
HIS EXCELLENCY AMBASSADOR JEHANGIR KARAMAT
AT THE TRADE AND INVESTMENT LUNCHEON AT
THE CHICAGO CLUB UNDER THE AUSPICES OF
THE WORLD TRADE CENTER, CHICAGO AND
CHICAGO LAND CHAMBER OF COMMERCE

(Saturday, 24 January 2005)

Thank you Mr. Ross Harano, the representative of the Secretary of State for Illinois for your kind remarks.

Ambassador Allen Lever,
Distinguished guests, ladies and gentlemen,

It is a great pleasure for me to address this important gathering of promising members of the Corporate World.

The long standing ties of friendship between Pakistan and the United States are based on shared values, common perceptions on international issues and similar ideals of working for peace security and prosperity in the world. United States is Pakistan’s single largest trading partner in the world as well as the largest source of FDI to Pakistan. Our bilateral trade of around $4 billion and the flow of US FDI to Pakistan are a clear reflection of the potential for enhanced interaction in these two important areas.

Distinguished guests,

Allow me to use this opportunity to share with you my thoughts on the opportunities offered by Pakistan for the international business community and briefly mention our economic and investment policies. I will also address the concerns of the business community that they have about the security environment in the country.

Pakistan’s economy has made significant progress over the last 5 years. Overarching legislative and institutional reforms, macro economic policies, financial readjustment and consistency and continuity in policies have transformed Pakistan into a resurgent economy. The country is all set to achieve an unprecedented economic growth.

It would not be an exaggeration to say that Pakistan has turned the corner as far as the revival of the economy is concerned. Pakistan has opted out of the Poverty Reduction and Growth Facility of the IMF. The IMF, the World Bank, the UN and all other multilateral agencies have lauded the achievement of macro-economic stability in Pakistan.

Pakistan’s credit rating has been consistently upgraded by the international credit rating agencies and the OECD. Pakistan has successfully issued sovereign bonds in quick succession to register its re-entry into the international financial market.

Pakistan’s foreign exchange reserves have crossed $12 billion from around $1 billion five years ago. The balance of payments is in surplus, while both imports and exports are picking up at a high rate. Our textile sector, the main stay of our economy, is showing great confidence in the post quota regime. Interest rates have remained low and stable. Inflation has been contained within single digit. Latest estimates put the growth rate of the economy at 6.4%. We are projecting to cross the 8% mark soon and join the ranks of the fastest growing economies of the world.

There has been a gradual increase in the flow of FDI. Pakistan attracted over $ 700 million last year. We expect to attract over $ 1 billion this year.

The KSE 100 index has crossed 6400 points to make it one of the best performing stock markets in the world.

In our efforts to attain economic development we have attached the highest importance to inflow of foreign direct investment. We believe that it holds the key to the success of our economic revival. The institutional reforms are aimed at transforming Pakistan into an attractive investment destination.

Pakistan offers some distinct advantages for investors. It is a large market of 140 million people, its banking and financial sectors are well developed, it has high quality of professionals and a well disciplined and competitive work force. The country offers an established industrial base and raw material to support and sustain the industrial activity.

Our investment regime is considered one of the most liberal in the region. We make no distinction between foreign and local investment. All sectors of the economy open for the private investment are also open for the foreigners. Our corporate laws, security and exchange regulations, the taxation regime and other regulatory arrangements are fully in line with the internationally accepted practices.

Some 700 well-known multinational corporations are operating in Pakistan. They are active in all sectors of the economy including banking and finance, pharmaceutical, oil and gas, power generation, telecommunications, aviation and manufacturing.

All sectors of our economy are open to FDI. We would, however, particularly like you to look at energy, IT, textile, mining, telecommunication, and oil and gas sectors. We are blessed with tremendous hydal power generation potential. Investment in this area will bring attractive returns. Information technology is emerging as the new growth sector where Pakistan could have more trade and investment. There is also vast potential in the mining sector.

Textile is the mainstay of our exports. Most simulation studies carried by World Bank, USITC, and independent consulting firms give credence to the view that China followed by India and Pakistan will be the main beneficiaries of the elimination of textile quotas. Our textile sector is both horizontally and vertically integrated i.e. from producing best quality cotton all the way to the finest value added textile products.

Some splendid investment opportunities are being offered by our privatization program in oil and gas and telecommunications sectors. Our privatization program is fully transparent, competitive and regulated under a specific law.

Moreover, Pakistan is also well poised to extend its economic and trade relations with the South and the Central Asian countries. As a bridge between South, West and Central Asia it is in a unique position to spur the movement for regional cooperation and become the hub of transit trade among these regions. Pakistan is a member of two important regional trading arrangements namely South Asian Free Trade Area (SAFTA) and Economic Cooperation Organization Trade Agreement (ECOTA).

Ladies and Gentlemen,

While expressing my optimism about the opportunities presented by Pakistan to the corporate world, I must also address some of the widely publicized concerns about the security environment in the country. Let me first admit that I fully subscribe to the notion that investment is a coward and it shies away form troubled areas.

The image of insecurity in Pakistan has in fact done us the greatest harm during the past several decades. In reality, the security situation in Pakistan has been far better than many countries in our own region as well as other parts of the world. Business activity has continued in these countries without any concern for security because they have remained out of the glare of world media. On the contrary, Pakistan has remained under active spotlight, mainly because of the importance of what it had been involved with, be it the Afghan struggle against the occupying Red Army or the international war on terrorism.

Security situation in Pakistan has vastly improved during the past few years. There is a sharp decline in terrorist incidents. In fact, extremism in Pakistan has largely been controlled. This was a difficult task, as for a long time, the extremist forces were appeased rather than confronted. This policy, however, changed completely under President Pervez Musharraf. The Government policy ever since has been to fight terrorism head-on and confront the extremist forces without any reservation.

The way this challenge was confronted by the Government has finally paid-off. A large number of terrorists have either been killed or captured. The remaining terrorists are on the run. Several extremist groups with terrorist links have been banned. No country can guarantee that it is totally immune from terrorism but in case of Pakistan we can say that the days ahead are of peace and stability and that the ugly face of extremism and terrorism is finally behind us.

Ladies and Gentlemen,

The picture is equally positive and optimistic when we look at the situation of security at the regional level. The crises in Afghanistan - one of the prime sources of insecurity in Pakistan - are finally coming to an end. The transformation that took place with the elimination of the Taliban regime and the recently concluded first ever general elections in Afghanistan has led to the formation of a moderate and liberal government in Afghanistan. The country is slowly and gradually returning to normalcy. Afghanistan is now well poised to become the hub of regional trade and transit of goods, manpower and energy rather than extremism.

Similarly, in other regions surrounding Pakistan, from China to Central Asia, the mood is one of pragmatism and maturity. There is growing realization of the benefits of peaceful coexistence and mutually beneficial economic cooperation in order to improve the quality of life of the people.

In South Asia, the realization of the huge economic potential seems within reach with the ongoing dialogue between Pakistan and India. The reduction in tension along the LoC in Kashmir and international border between India and Pakistan has created considerable space for productive economic activity.

I can see the representatives of some of the companies already doing business in Pakistan. I commend their efforts and wish them every success.

We are determined to create a propitious environment for promotion of trade and investment. It is my hope that the business community from both countries would take full advantage of the unprecedented opportunities in Pakistan. I invite you all to participate in our development efforts.
Pakistan is a land of diverse opportunities. I am glad that today’s event has provided me with an opportunity to share with you my thoughts on the prospects and incentives available for foreign investors and traders. I assure you of Government’s full support to protect the foreign business interests in Pakistan and invite you to explore the vast potentials and tremendous prospects available for lucrative investment opportunities under the prevailing friendly regime.

I sincerely thank Ambassador Allay of the World Trade Centre, the Chicagoland Chamber of Commerce, Motorola and all those who have organized this wonderful luncheon in this magnificent city.

Ladies and Gentlemen,

I stop here. I would be glad to take questions.

Thank you