- Under CPEC Pakistan set to become an investment hub in the region
Interview with Mian Nasser Hyatt Maggo – President, Federation of Pakistan Chambers of Commerce & Industry (FPCCI)
[box type=”shadow” align=”” class=”” width=””]Profile: Hailing from a Chinoti business family, Mian Nasser Hyatt Maggo was raised in Karachi. After completing his formal education, he ventured into the intricate world of business and established Al Riaz Group, an indenting company in Pakistan. The company’s phenomenal success can be attributed to Maggo’s sheer hard work, passion, and commitment. Today, Al Riaz Group is recognized as one of the most reliable company in Pakistan dealing in Petrochemicals, Textiles and Steel sectors. Mian Nasser Hyatt Maggo Possesses excellent management and leadership skills and is actively involved in business and community affairs, regularly contributing his time and effort for the benefit of business community of Pakistan. He served as President Karachi Chamber of Commerce and Industry KCCI (2002-03). He also served as an Acting Chairman of Pakistan-China Business Council and Senior Vice Chairman of Pakistan-Turkish Business Council of FPCCI. He is a life Member of SAARC Chamber of Commerce and Industry and has also served as Executive Committee member of FPCCI for several years. His commitment to national interests, economic and trade development, profession, and humanitarian pursuits, combined with impeccable knowledge of international trade, Industry, finance and economy has resulted in numerous accolades and achievements. Mian Nasser Hyatt Maggo’s professional acumen and remarkable understanding of complex trade, finance, economic, social investment and industrial issues are his forte, which not only earned him wide acknowledgment, but also helped him earn his spurs as a thorough professional.[/box]
PAGE: Foreign Direct Investment (FDI) received by Pakistan was $2.406 billion in FY17, $2.780 billion in FY18, $1.362 billion in FY19, $2.561 billion in FY20 and $1.847 billion in FY21. What is your perspective about it?
Mian Nasser Hyatt Maggo: Yes, it is unfortunate that for the past 5-6 years I can say during this decade investment inflow in Pakistan particularly FDI remained low except the Chinese investment in the mega project CPEC. Pakistan’s foreign direct investment (FDI) grew to $2.56 billion in 2019-20, up from $1.36bn in 2018-19 but less than $2.78bn recorded in 2017-18. Foreign portfolio investment (entirely in government debt securities due to the then prevailing lucrative high yields) had shot up to $2.45bn in 2017-18 but then plunged to minus $1bn in 2018-19 and finally stood at minus $241 million in 2019-20. As you are well aware determinants of investment in Pakistan are law and order situation which is up to some extent is better now. The other determinant is political uncertainty. Investment inflow in Pakistan also depends upon the ups and downs strength and weakness of the government. On the other side regional environment gives positive or negative signals to the investors. Since long in our neighbouring countries economic scenarios are not good that permit investors to bring investment in our region. You can observe that investment is also declining in other neighbouring countries. However business community and I am very optimistic government announced various policy measures in the budget policy so investment would hopefully increase. Soon this problem of pandemic COVID will be controlled economic activities will be normalised and you will see increasing trend in FDI because Pakistan offers very attractive environment for investment.
PAGE: Pakistan attracted FDI inflows of $5.6 billion and $5.4billion in 2007 and 2008 respectively mainly in telecom, power generation and financial services. What has gone wrong regarding the dip in the FDI?
Mian Nasser Hyatt Maggo: After receiving record FDI inflows of $5.6bn and $5.4bn in calendar years 2007 and 2008, respectively, Pakistan could not sustain such high levels as terrorism and militancy gripped the country, complicating economic challenges. On the other hand, economic fundamentals were not strong and fast-changing dynamics of geopolitics demand too much from the country if it wants to attain sustainable economic growth and development. These two factors, combined with the Covid-19–triggered recession in major economies make it difficult to accelerate growth of foreign investment. The political instability, lack of good governance, bad economic policies and inefficient utilization of the resources were the contributing factors that discouraged for the key players of the international, domestic traders and service providers. Pakistan has made the bilateral investment agreement with nearly 46 countries but owing to the potential threats, and lack of economic laws and bad governance, Pakistan has suffered the trade deficit problem. There is an imperative need to implement the laws in its true letters and spirit and to introduce friendly, moderate and transparent economic policies for the stockholders and participants of trade and investment in Pakistan. In Pakistan, there is a mixed common law, which is combination with common law with the element of customary law. However, to procure the domestic and foreign investors, government should take remedial measure to attract and protect investors.
PAGE: Foreign direct investment in South Asia was $71 billion in 2020 according to the World Investment Report 2021 of the United Nations Conference on Trade and Development. Why couldn’t Pakistan capitalize on it?
Mian Nasser Hyatt Maggo: During the period you mentioned, we see a Paradigm shift in our policies. Though China is our historic friend has now become a strategic partner China is receiving attractive position in our economic trade and investment policies. The Chinese share in FDI increased gradually, however, replacing the once-dominant share of the other countries. Power generation, oil and gas exploration, financial services, information and communication technology (ICT), transport, food, pharmaceuticals, textiles and retail businesses remained favourite for FDI and foreign exchange inflows into these sectors kept growing. Besides China other countries, including Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Turkey, Malaysia and Indonesia, have shown interest to invest in Pakistan. But they are highly influenced by global politics and their foreign investment plans are of medium to long term in nature.
PAGE: The FDI from the UAE, the second largest trade partner of Pakistan, increased last year to $86.6m. How would you comment on it?
Mian Nasser Hyatt Maggo: UAE and Pakistan are tied in decades of brother ties and the overseas Pakistanis living in the UAE have provided further impetus to the historical and friendly ties between the two states. The UAE is Pakistan’s largest trading partner in the Middle East and a major source of investments and remittances. The trade volume between the two countries amounted to around US$ 5 billion. UAE investors are keen to come to Pakistan for investing in various sectors, of which the agriculture sector is the most important sector. Both countries have undertaken work on a framework to boost trade and investment and to avoid double taxation. under the liberal investment regime and attractive incentive in various sectors , SEZs EPZs IT Technology Part etc. the Private investors are encouraged in all major sectors of the economy, especially manufacturing, hydro-electric power, transport, communication, agricultureand social services.
PAGE: Pakistan received only $90 million as FDI during July this year against $128.7 million in the same month of the previous fiscal which is the decline of 38.7%. Some people presume that the foreign investment would further fall in the coming months due to instability in Afghanistan. What is your take on it?
Mian Nasser Hyatt Maggo: This argument may be accepted up to some extent. However, as the Taliban has clearly expressed in the press conference that they will keep good relations with the world. Their attitude seems quite liberal and friendly and they have also offered coalition type of government in Afghanistan. So I think there should be no fear after all they also need established relationship with the world they had to take economics exchanges trade. Of course to run the government machinery remind their vision and plan definitely need and seek financial diplomatic economic and trade relationship and in the coming days environment and scenario would be clear to the world. On the other side Pakistan has been playing very positive role. Global political community is appreciating our policies so I think there should not be any impact on our economic and investment relations with the world. China’s visionary project belt and Road BRI has involved so many countries huge investment for which Pakistan is a major player. Many countries from the Middle East Central Asia has on their interest to participate in this China Pakistan Economic Corridor. I am quite optimistic that instead rather saying that investment in the region or in the Pakistan will decline is not true as far as Afghanistan condition is concerned.