Pakistan on the Road to Becoming an Asian Tiger
By Pervaiz Lodhie
Torrance, CA
Once again I am returning from Pakistan to LA after a successful trip. I now travel to Pakistan a few times a year. I am never disappointed with the progress I see, and I wonder where the negative articles about Pakistan come from. This time I went as a Corporate Board member of the US Pakistan Business Council (
www.uspakistan.org) with a fifteen-member high-level business delegation to Islamabad.
High-level is really an understatement for this delegation because the total market capitalization of the group exceeded one trillion dollars (Yes, one trillion with a “t”).
The delegation included executives like Ahmet Bozer of Coca-Cola, Kursat Ozkan of General Electric, Stephen Du Mont & Richard Mach of Cisco, Hassan Tavakoli of Motorola, Mohammed Ghafari of Lucent, Nigel Thompson of Merck Co, Robert Riordan of Black & Veatch, Norman Collins of Citigroup, Edward Jackson of Sweetwater Int’l, and Tom Slone of Touchstone (a recent IT-Call Center-BPO success story in Islamabad I have followed). Pakistani Americans in the delegation included Shoaib Kothawala of Hometex, Rafat Mahmood of Mahmood Investment, Mohammed Tahir of United American Lines, and myself, Pervaiz Lodhie of LEDtronics. Most of us in the delegation are members of the USPBC.
Five years of hard work by the top Pakistani leadership and placement of a good management team are starting to pay quick dividends. All key economic and fundamental indicators show that goals are being achieved faster than the set time limits. Though twenty years late, if this progress pace continues, there is little doubt that Pakistan will be the Asian Tiger of the near future.
There is a major shortage of hotels in Karachi, Lahore and Islamabad at this time, but several new hotels are currently being built. The day our delegation started arriving on March 14 at Serena Hotel, Islamabad was being visited by the world’s fourth richest man, Prince Al-Waleed bin Talal bin Abdul Aziz of Saudi Arabia, who is investing heavily in Pakistan.
There were high-level delegations from Malaysia, Europe, Central Asian Countries and other Middle East countries. The only foreign investors visibly missing from this center of the region that will be the highest growth region of the world are investors from The United States of America. Middle Eastern, European, and South Asian companies and investor groups are quickly grabbing the major government entities being privatized in Pakistan.
The American administration’s selective overreaction towards Muslims around the world after the tragedy of “9/11” and subsequent uncalled for invasion of the sovereign Muslim nation of Iraq iare turning global economies and new money away from America.
The signs are becoming more and more clear that America may not be the engine of the world economy of tomorrow. I made this statement couple of years ago. I now read articles in Newsweek, US News stating if America will remain No.1 in future. It will very likely be South Asia, which includes Pakistan.
The goal of our fifteen-member high-level USPBC business delegation was to work towards encouraging foreign direct investment opportunities into Pakistan and improve the bilateral investment climate between the USA and Pakistan. The strong travel advisory on visiting Pakistan by the US State Department and the insurance companies’ cancellations of insurance policies of those who travel to Pakistan have done more harm than good.
Fortunately, multi-national companies in the US like Coca-Cola, GE, Cisco, Motorola, Lucent and many others, are taking the lead, and making their own decisions to travel to Pakistan regardless of the current travel advisories.
The US Chamber of Commerce/USBPC delegation met Prime Minister Shaukat Aziz, Senate Chairman Mohammad Mian Soomro, Foreign Minister Khurshid Kasuri, Privatization Minister Abdul Hafeez Shaikh, Information Technology Minister Awais Ahmad Khan Leghari, Minister of State Umar Ahmad Ghuman, and Commerce Secretary Tasneem Noorani.
The delegation repeated the same message at all meetings: “Many good stories are taking place in Pakistan. The reality of Pakistan is lot more positive than the perception being created in the West. How can the USPBC help in telling the true story of Pakistan in the West and turn the wrong perception around?” The US Ambassador to Pakistan Ryan Crocker was not only a great host to our delegation, but truly committed to improving the ties of the US and Pakistan in all sectors. There is still a lot of work to be done in Pakistan; all is not yet perfect. Fifty years of gross mismanagement by a few cannot be fully fixed in five years except by some magic.
There are a few politicians, a few bureaucrats, and a few chairmen that are not helping the country. They are bad listeners, and they are arrogant “mister-know-it-alls.” A statement was made to me in passing that “we don’t care if America comes or not. We are doing great on our own.” Such remarks are uncalled for.
For the first time Pakistan is showing poverty reduction in the urban areas. The UN’s Millennium Development Goals (MGD) and the World Bank are looking for poverty reduction in the rural poor masses in thousands of villages. Only the poverty increase has now been arrested in the rural poor by the collective efforts of many NGO’s.
The revolutionary poverty-alleviation program of the National Commission on Human Development (NCHD) and Pakistan Human Development Fund (PHDF) is making major progress in bringing universal primary education and primary health to most rural villages through volunteering effort. As one of the active founding directors of NCHD/PHDF, I will be writing a report on their successes and achievements.
Other critical problems that need to be addressed include law and order, corruption, health care, and education. The Transparency International shows that the corruption index went up twenty percent in 2004 after declining for four years.
This may be due to reduced government focus on corruption. This sudden increase in the corruption index should be immediately analyzed, and appropriate, corrective actions should be taken.
Pakistan can become a model country through individual and collective efforts by all Pakistanis and Pakistani expatriates around the world. Pakistan has a very large number of financially successful individuals and corporations that need to participate in moving Pakistan forward.
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There has been a tidal change in the past five years in Pakistan. GDP has grown from 2% to over 8% per annum. Foreign exchange reserves grew from almost an empty vault to more than four months of imports. Domestic borrowing interest rates have fallen from 16% or more to less than 10%. Public debt has fallen from around 100% of GDP to about 60%, and is still falling. Policy continuity, reduced trade protection, improvements in the business environment and low interest rates have resulted in an increase in both domestic and foreign investment. Improved fiscal performance and growing fiscal space resulted from savings on interest expenditures, which fell from 6% of GDP to just over 3% now. This plus generous external support and improved revenue administration have enabled the government to exceed the targets for social spending. Social and poverty related expenditures have been raised from 3.8% of GDP in 2001/02 to 4.7% of GDP in 2003/04. In short, Pakistan has successfully laid the groundwork for sustained growth and significant poverty reduction.
The big business opportunities in Pakistan will come in the next 10 years. Sustaining GDP growth of above 6% per annum and reducing poverty from 35% to 15% in the next 10 years will bring about a social transformation that will throw Pakistan into a fit of modernization.
The coming decade will see a complete overhaul of the social infrastructure—education, health, urban, public administrative and security services.
The growing middle income families will express their consumption demand for modern living with major impact in the next ten years. Pakistan has already seen the doubling and doubling again of sales of motorcycles, cars, fridges, air conditioners, TVs and other consumer durables in the last five years. This has been accompanied by the growth of modern commercial banks’ provision of consumer loans. The real estate boom has some elements of asset speculation; but underlying this is a long-suppressed housing hunger that will sustain a housing construction boom for decades. This will feed back into the rising demand for urban services and energy of all kinds, and urban and rural connections to power and natural gas. Along with this the demand will rise for banking, financial assets, life insurance, credit, travel, culture, TV, radio, cable, Internet, advertisement.
