Despite FATF woes: Foreigners mull investing billions in Pakistan

Published: December 10, 2019
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PHOTO: REUTERS

PHOTO: REUTERS

KARACHI: The Financial Action Task Force (FATF) is strongly expected not to blacklist Pakistan, however, the politically-motivated decision of placing Islamabad in the grey list has failed to demotivate foreign investors who are seriously considering pouring multibillion dollars into different sectors of the economy.

“When Afghanistan (the world flashpoint since 9/11) is white-listed, how come Pakistan will be on the grey list or black list,” Citibank Pakistan Vice President, Country Treasurer & Head of Markets Moiz Hussain Ali said at a media roundtable conference organised by the global bank, which facilitates transaction flows worth $4 trillion every day.

“Pakistan’s blacklisting (by the world financial transactions watchdog; FATF) is not on the cards,” he said very confidently as his bank advises foreign firms and institutions to make investments across the globe.

“It (Pakistan’s placement into the grey list) is more of a geo-political or political issue rather than the actual issue. So it is more how US allies with Pakistan…you view in that context,” he added.

Pakistan is showing progress. “If you were to ask me the threat level on FATF (black listing) I would say it is not that high, which is generally reported in the press. I think it will remain in the grey list in February…and for the rest of the year (2020).”

Pakistan will remain in the grey list because it will require some time to implement commitments on the given 27 conditions by the FATF. “You cannot do such things (fulfilling 27 conditions) overnight.  It will take some time,” he said.

“So we don’t see any material threat for our clients (including foreigner firms and institutions interested to invest in Pakistan),” he said. “Pakistan remains high on (foreign) investors’ radar,” he said. “They are waiting for the right time.”

Responding to a question, Citibank Pakistan CEO Nadeem Lodhi said several foreign firms and institutions are seriously considering investing billions of dollars in different sectors of the economy in Pakistan.

“There are at least four investors considering investing in FMCGs (fast moving consumers goods) in Pakistan,” he said, adding that they are big and new investors who have yet to enter into the country.

Besides, there are investors who are considering investing in energy sector, including renewable projects of big value in solar and wind, LNG import terminal, investors in China-Pakistan Economic Corridor (CPEC) and in China’s Belt and Road Initiative (BRI).

Several investors are considering investing funds valuing more than $500 million each. He said that the K-Electric sale to China’s Shanghai Electric Power Company (SEP) by the Dubai-based financially hit Abraaj Group remains one the potential transaction in the pipeline. SEP had agreed to pay $1.77 billion for K-Electric back in 2016.

He said that his bank has received queries on making foreign direct investment (FDI) in Pakistan from across the world, including Europe, Middle East and North Africa. “I think that’s because our markets have stabilised, our real effective exchange rate, our real effective interest rate, our currency, monetary policy, taxation…are on the right track.  So these are pretty fundamental changes in Pakistan,” he said.

“We are beginning to see green shoots of activities coming about,” he said.

International bonds issue

Lodhi said that Pakistan is right now working to float Panda bond in collaboration with the Citibank to build up foreign currency reserves. Reports suggest Pakistan has planned to float Panda bond worth $1 billion in China next year, most likely during Jan-Mar 2020.

Published in The Express Tribune, December 10th, 2019.

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