Exim Bank of US has renewed interest in Pakistan

Published: April 14, 2016
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President and chairman says bank sees a number of opportunities in country. PHOTO SOURCE: FXHQ

President and chairman says bank sees a number of opportunities in country. PHOTO SOURCE: FXHQ

President and chairman says bank sees a number of opportunities in country. PHOTO SOURCE: FXHQ Pakistan International Airlines (PIA) Chief Operating Officer (COO) Bernd Hilderbrand shaking hands with US Exim Bank Chairman and President Fred Philip Hochberg at PIA headquarters. PHOTO: INP
KARACHI: 

It is rare for the head of a large American bank to visit Pakistan. Rarer is a visit by the president of a bank that is backed by the “full faith and credit” of the United States.

Fred P Hochberg, chairman and president of the Export-Import (Exim) Bank of the United States, recently visited Pakistan to look for growth opportunities in what can potentially be one of the major export markets for US manufacturers.

US companies show interest in Pakistan

The specialised bank set up to meet financing needs of US-based businesses to increase American exports worldwide has a renewed interest in Pakistan. “The economy is doing better, security situation is improving, and its credit rating is up. Exim Bank sees a lot of opportunities to expand its exposure to Pakistan,” Hochberg said while speaking to a group of journalists on Tuesday.

Exim Bank is different from a typical commercial bank that offers trade financing. It exists as the official export credit agency to grow the share of “Made in America” goods in global trade. Where private-sector US banks are unwilling to provide exporters with financing in view of country and credit risks, Exim Bank offers export credit insurance and loan guarantees to American manufacturers as well as direct loans to their foreign customers.

Business in Pakistan

According to Hochberg, Exim Bank has not done much business with the private sector in Pakistan so far. “That’s why the purpose of my visit to Pakistan is to meet private-sector representatives,” he said.

Trade map: Why are Pakistan’s exports declining?

Exim Bank has been financing the purchase of American goods by public-sector Pakistani companies for nearly two decades. Its total financing in different forms over the two decades has been “north of $2 billion” in Pakistan, he said.

For example, Exim Bank has financed eight aircraft for PIA. Three are still on the portfolio of Exim Bank while repayments for the rest of the aircraft are over, he said. In addition, Exim Bank also financed PIA’s purchase of five 777s in 2012, which will be delivered next year, he added.

As opposed to India where it had a total exposure of $5.8 billion at the end of the last fiscal year, Pakistan appears to be largely off the radar of Exim Bank. Its total exposure to Pakistan amounted to only $514.3 million at the end of 2014-15.

Lack of efforts on the part of Exim Bank to develop business relations with Pakistan’s private sector seems to have hurt US exporters. American exports to Pakistan registered a decline of 6% per annum for 2010-14 and clocked up at just $1.5 billion in 2014. In contrast, Chinese exports to Pakistan amounted to $13.2 billion in 2014 after increasing 17% per annum over 2010-14.

Pace of fall in exports 3 times faster than imports

In other words, the world’s second largest exporter is gradually losing an export market of 200 million people without putting up a fight. Hochberg says Exim Bank is now eager to expand its footprint in Pakistan, especially in the areas of infrastructure, aircraft, rail, power and textile equipment.

There is no upper limit when it comes to increasing Exim Bank’s total exposure to Pakistan, he said. “All we require is a reasonable expectation of repayment,” he said.

 

Published in The Express Tribune, April 14th,  2016.

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Reader Comments (9)

  • Majid
    Apr 14, 2016 - 12:07PM

    Mian Nawaz Sharif, this nation owes you. You brought back future of our next generations to the desperate land of Pakistan.Recommend

  • Shakil Ahmed
    Apr 14, 2016 - 2:00PM

    It exists as the official export credit agency to grow the share of “Made in America” goods in global trade!

    Whats in it for Pakistan? only buying American planes and other goods!Recommend

  • Shakil Ahmed
    Apr 14, 2016 - 2:03PM

    @Majid:
    really? he stashed ill gotten wealth out of Pakistan! how does this helped your generations?Recommend

  • Brainy Bhaijan
    Apr 14, 2016 - 2:45PM

    The world wants to see real action against Islamists in Pakistan, which in clear term means that there should be no secret romances within the system i.e., JuD/LeT/Afghan Taliban.
    Macro level investing by large institutions does not create the kind of economic upheaval, that is required to turn a third-world into a first-world.
    When normal day-to-day entrepreneurs in say places like the US or the UK, start visiting the streets of Karachi or Lahore to setup small/medium term partnerships with the local businessmen – like they do in places like India and Bangladesh – only then one would be able to successfully transition in to the upper echelons of the modern world.
    Economic progress cannot happen if the basis of our existence is war and hate against Hindus and not trade.Recommend

  • Ayaash
    Apr 14, 2016 - 5:14PM

    So we are only going to get the EX (from the US’s perspective) part of the EXIM bank. Getting fancy imported stuff on credit is not an achievement. We should export more to these consumer oriented rich countries so we won’t need loans or a begging bowl for buying the things that we actually need. Recommend

  • Humza
    Apr 14, 2016 - 6:49PM

    @Shakil Ahmed: How easy for people in Pakistan to pass judgement without knowing facts. His kids have in the order of 10 million US dollars in legal overseas accounts as do so many children of prominent business people and families all over the world. Nawaz Sharif was a billionaire before he entered politics and we all know that. What’s different is that the amount
    (10 million range ) for a supposed billionaire father pales in comparison to the amount held by other people there which is in the billions. I agree everyone should pay their fair share of tax and everyone keep money close to home – whether in Pakistan, China, UK, USA or anywhere else in the world. The whole global banking system should be fixed to prevent this type of legal money parking. This article instead is about the EXIM bank coming back to Pakistan which shows more confidence in Pakistan’s economy thanks to Nawaz Sharif’s government. Love them or hate them, the economy in Pakistan is improving under him.Recommend

  • hamza khan
    Apr 14, 2016 - 9:44PM

    @Humza:

    the family was rich, but not billionaires in the 80s. go do your research before you talk. Recommend

  • AJ
    Apr 14, 2016 - 9:49PM

    @Brainy Bhaijan:
    Like the East India Company one can relate to, I reckon and the geographical disaster that entailed. That has really pushed you in the upper echelons of the modern world. They have already divided you, they have no vested interest left in you then to pit you against the other and that they are doing it successfully by lending you the echelon you are speaking of and mind u, it is not earned.
    But I do agree with your comment about the infighting between the Hindus and Muslims, I think that’s what you wanted to say, that nonsense should stop.Recommend

  • Humza
    Apr 15, 2016 - 8:05AM

    @hamza khan: So by your logic if the family were rich industrialists in the 1980s, you should be surprised that the children living abroad have 10 million dollars in an account now that it is 2016? Explain where my math is wrong. I think all industrialists in the world should park their money at home and not abroad and even the kids of those industrialists settled abroad should invest in Pakistan but what point are you making about research? I agree its fishy that the Chinese Premier’s kids have billions ( not millions) in the Panama accounts and his family are not industrialists from the 1980s.Recommend

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