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Companies are making “very good money” here

Interview - March 1, 2016

Dr. Miftah Ismail, Chairman of the Board of Investment, discusses Pakistan’s growth potential and what it is that makes the South Asian nation such an attractive investment proposition


Pakistan has been dubbed by Forbes as the ‘next success story’ and the best-undiscovered investment opportunity by Bloomberg. How would you evaluate Pakistan’s growing pains over the last two years?
We have not lived up to our potential in the last fifty years, or twenty years. But the last two years have been really foundational for us, we’ve made a very solid foundation in the last two years, and fortunately for us the results have started coming in better than we expected and sooner than we expected. In this last fiscal year, from July to June, we have had growth of 4.25%, which is the highest in 8 years. The Inflation rate was 2.11% on a year-on-year basis, which is again the lowest in 13 years. The State Bank of Pakistan has been able to bring down the interest rate to 6.5%, which is the lowest in 42 years. We also have now the highest ever foreign exchange reserves in our history. So we have come a long way in terms of getting the right foundation in Pakistan although we are not where we need to be. We need to be at 7-8% growth or more. We’re not happy with just 4.25%, but we understand that the world´s economy is slowing down so this is a good achievement for us.

How would you evaluate the role of the BOI to attract and promote investment from the USA and which are the main challenges to overcome in your opinion
US is a large trading partner for Pakistan, US is a large investor in Pakistan, directly and also indirectly. US obviously is a large technology partner as well. The US government institutions are helping the Pakistani Government to develop better tools to govern, whether it’s the power sector or humanitarian aid. We enjoy very good relations with the US, probably the best in many years. They make a great effort encouraging both US investors and overseas Pakistanis to invest in Pakistan. We are trying to increase investments from the US based on sound key economic fundamentals. The US Exim Bank is providing more loans for US companies to invest in Pakistan.  Some companies that are already present in the country are doing a great job such as GE. They are very active in Pakistan; a third of all power generation in Pakistan comes through GE turbines. US obviously has unbeatable technology, therefore we want to use their expertise. The Prime Minister’s visit to Washington DC and Chicago will give a great and better understanding of the country and the wonderful changes that have happened already in Pakistan; this story needs to be told.

China is expected to invest about $46 billion into infrastructure and energy projects under the so-called China-Pakistan Economic Corridor (CPEC). In your opinion, how will this enormous inflow of FDI boost Pakistan´s economic growth? What will it change?
The corridor does two or three things for us. It improves our electricity generation capabilities because they will install power plants in Karachi, Sindh and Punjab as well as and solar and wind power plants. It also upgrades our transmission and distribution infrastructure because electricity is not just about producing it but also about transmitting it efficiently and distributing it to the final client. Our road and rail infrastructure will be upgraded. We also plan to establish special economic zones where you can have factories that are set up by Chinese investors or others. We are fervently promoting free trade and regional connectivity and we look forward to becoming a trade partner to all interested nations.


Reliable and liberal regulation is key to becoming an attractive investment destination. In your opinion, what advantages do Pakistan´s investment policies offer compared to other countries in the region?
FDI is as protected in Pakistan as it is anywhere else in the world. We have legal guarantees, Pakistani laws to protect investments. We have never nationalized a foreign industry in Pakistan and we have signed foreign arbitration clauses for large investment in Pakistan. So investment is much protected, there is no doubt about that. Is Pakistan an easy place to do business? I think so. Is Pakistan a lucrative place to do business? I think so as well. Is Pakistan as easy as Switzerland and Singapore? Probably not but there is another side to this equation. For instance, if you invest in Pakistan in power generation, you get a minimum 17% return on investment, that’s a guaranteed ROI in Pakistan. We are a very thriving democracy, with very independent media and very independent courts. Look at the KSE, in the last 14 or 15 years it has given more than 20-30% real return in dollar terms. So there is a history and record of KSE being one of the best performing stock markets in the world. P&G, Unilever Pakistan, Nestle Pakistan, all of those companies are staying in the country. Coca Cola is investing 350m dollars in Pakistan as well. There must be some reason they’re staying here.

There’s only one reason I would say, they’re making money, very good money.