ISLAMABAD: British High Commissioner to Pakistan Adam Thomson has said that the verdict in international arbitration on the Reko Diq saga may have chilling affects on foreign investors.
“Supreme Court of Pakistan’s verdict in certain cases whether it relates to Reko Diq or others is a sign of discouragement for foreign investors,” Adam Thomson said while talking to selected journalists on Wednesday night.
Tethyan Copper Company (TCC) filed for international arbitration to protect its legal rights after Balochistan rejected its mining lease application. Tethyan Copper – a joint venture between Chilean copper producer Antofagasta and Canada’s Barrick Gold – owns the massive Reko Diq project in Balochistan with reserves estimated at 2.2 billion tons of gold and copper.
“There is a risk of misconception from some of its decisions and Reqo Diq is the latest one,” He said that Pakistan should think carefully about it.
Responding to questions about litigation between government of Pakistan and international companies, the British High Commissioner said that a strong judicial system will not only uphold Pakistan’s interest but was extremely important to foreign companies.
He said that Pakistan and the United Kingdom signed a Bilateral Investment Treaty (BIT) in 1994 providing protection to companies in both countries. Pakistan is attracting British companies after promulgation of this agreement, he added.
He said that the 10% increase in trade compared to the previous year was not bad keeping in mind the global recession.
“UK-based exploration company Premier Oil has been working in the oil and gas sector of Pakistan for the last 10 years,” he said adding that there are more such companies.
He said that British companies are doing very well in Pakistan which reflected from their profits. “These companies also face challenges with regulatory bodies being the biggest challenge,” he said. Although, he said, Pakistan in South Asia is comparatively a good place to do business, corruption is also a problem as few companies find it difficult to work in certain sectors.
UK has very stringent Anti-Bribery Act which governs UK companies in Pakistan so that they would stay clean. “Some changes in reorganisation in government, ministries, regulatory bodies after the 18th Constitutional Amendment are also challenging to those British companies considering to invest in Pakistan,” he said adding that perception of insecurity is very high among them. “When I’m in UK, I try hard to overcome such impressions,” he added.
“India is second largest investor foreign manufacture holder in UK,” he said adding that all Pakistani companies should also see UK as a gateway to European Union. “We are the second largest investor in Pakistan and aim to become the largest,” he concluded.
Published in The Express Tribune, June 29th, 2012.
COMMENTS (15)
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We should refine this gold in side pakistan not in Chili. Pakistan has so much man power, cheap, unemployed. If TCC do not want to invest in Pakistan. We should genrate our fund in side Pakistan and from friendly countries such as iran, arabs, china, broune etc etc.
Just because Rio has spent a lot of money to study, explore the quantum (reserve) and quality or grade of the mine ores does not entitle them to have mining lease rights, This research is highly essential for them to take decisions to go ahead or not and if to proceed what price payments. ( such projects are normally joint venture with any state owned company or a local corporate keeping in mind various purposes) If Supreme Court has imposed restrictions it must have been to protect the mine resources disallowing at cheaper terms which are favourable to foreign corporate. Decisions which are in the best of country's interest be adhered and protected.
By the time Pak decide about investments in these fields, mining will become uneconomical.
@Cautious: Outsiders doesn't know about Pakistan.. Pakistan have money and able to produce more but corruption seems to eat it like termites.
@Khan: You are wrong about that but its not Politicians will to develop Pakistan. Certainly we have potential.
@MM So forming a joint venture with Arabs is better than forming a joint venture with Canadians? Why is that? Does your comment imply that you could enter into a contract with the Arabs and they wouldn't sue you if you decided to renege on the contract - or is this just more Pakistani/Muslim xenophobia?
The Arabs have too much money and with their money we can easily hire expertise to extract copper and gold from reko dik - if Pakistan wants to cut a good deal where it can own a decent chunck of this mine then forming an alliance with one of Arab sovgn funds could potentially result in win win for Pak and for an investee as well....
it doesn't take much to form alliances when you sitting on a gold mine, sadly Pakistan struggles with that also!!!!!
@Salman Sheikh.
Real simple -- you don't have the money/capital to invest in these projects. I will remind you that Rio is a joint venture with Balochistan owning approximately 25% - and it could not fund it's share of the project. Further -- almost all of the large mining projects throughout the World at done by private corporations and are not state operated. The States receive the benefit of the jobs, taxes and royalties - the corporation receives the profit/loss based on their enormous investment (RIo has spent over $500,000,000 in exploration/development and hasn't even started mining). . If Pakistan wants to develop it's natural resources it has to attract investors who want a level/fair playing field -- reneging on contracts is a sure way of scaring off that capital.
@Salman Sheikh: Why our own companies can’t dig out what is Our Own??? Pakistan State should be in act to build this area and it can produce thousand of jobs and money as well..
Who is going to fund you? Taking into consideration of current climate in Pakistan in regards to Security and Goverance ? Dream on !
18th amendment was a big mess.
Companies are facing different regulations in each provinces .
A tabaco company faces different regulations in each province
Then we say why people don't want to invest in Pakistan despite of having so much to offer .I don't see a reason myself why should they invest ? Just think about it you spending $100 million dollars on research for something and in the end you get zero return on it because you are not allowed to capitalize your work . Companies do their own research before making any investment so political instability , energy crisis and now cases like this surely have a bad impact on any kind of future investment . If you don't treat them well why should they as simple as that .
@Salman Sheikh: We don't have such technology and required skills undertake such huge projects and research.
We can't do anything on our own. We need foreign investment in Pakistan. Totally agree with what current said earlier.
@ Saman. cuz were corrupt.. incompetent ... with corrupt politicians especially the balochistan ministers.. were driving away investment.. we need to attract FDI .. learn from these companies.. first.. At the moment we cant Even make a Damn Needle.. But yes.. If corruption was a product.. that we could export.. we would be masters at it..
Why our own companies can't dig out what is Our Own??? Pakistan State should be in act to build this area and it can produce thousand of jobs and money as well..