Uncertainty drives foreign investors away: Dutch diplomat

Says companies waiting for suitable conditions to invest.

LAHORE:

Mapped at one of the best locations on earth and blessed with plentiful natural resources, Pakistan has always been on the radar of multinationals to invest and earn huge profits, but current uncertainty has driven many countries away, which have halted their investments until the scenario gets clear.

The Netherlands is also among these countries, which has the same feelings. Though it believes Pakistan is among the best potential markets for Dutch multinationals, conditions here have made it tougher for companies to consider investing at this stage.

“Pakistan’s population of over 180 million is itself the best reason for Dutch companies to invest here. Next five years of democratic government will be crucial, if things start moving in the right direction, then there is a big possibility for Dutch companies to invest in this emerging market,” said Robert Dresen, Head of Economic Affairs, Embassy of the Netherlands.

He was sharing his thoughts about strengths and weaknesses of Pakistan in doing business in an interview to The Express Tribune.

Dresen stressed that the Netherlands was focusing on deepening economic cooperation with Pakistan, with the aim of forging equal partnership. He highlighted that the Netherlands was among top 20 economies of the world in terms of gross domestic product (GDP), which makes it four times the size of Pakistan’s economy, but with a population only equal to that of Karachi.



The Netherlands and Pakistan have had bilateral ties for over 50 years and trade volume now stands at $800 million per year. Around 20 Dutch companies, including multinational giants, are operating in Pakistan like Unilever, Shell and Noble. Many of them are market leaders.

Despite all odds, Dresen said, a growing middle class of Pakistan was actually driving the economy and creating a big consumer market. He saw the middle class improving its lifestyle and spending on luxuries, but said the government was not fully utilising the available human capital.

Pointing to the vast agricultural land in Pakistan, he emphasised the need for adopting latest farming technologies as per acre yield of majority of the crops was still very low.

Being the second largest exporter of agricultural products, he said the Dutch had expertise in this segment along with dairy farming, which is a growing sector. “They have an interest in helping Pakistan in this segment,” he said.

Mineral exploration is another area of interest for Dutch companies, once things get normal.

He described political uncertainty, security lapses, corruption within government institutions – a concern for majority of the companies – and energy crisis – the real drawback – as issues hampering the growth of Pakistan.

Lack of credit offers is another area, which is restricting growth of small-scale industries. The banking sector is going fine, but it is putting money into government papers, a trend which he said should be checked in a bid to encourage flow of capital to consumers.

Dresen said these were profitable sectors for Dutch companies, but “we are waiting for some suitable time to convince and prepare our companies to invest in these areas.”

“Pakistan is currently unsafe, but many multinationals are still operating in such a scenario, the security issue is quite manageable,” he said rather optimistically.

Published in The Express Tribune, February 24^th, 2013.

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