Amid lingering doubts about the success of similar past programmes, the United States is going to launch the Pakistan Private Investment Initiative to provide financing and equity to small and medium enterprises in the country.
The Pakistan Private Investment Initiative (PPII) will be launched formally at the US-Pakistan Business Opportunities Conference, which will be held in Dubai next week, US Ambassador to Pakistan Richard Olson announced here on Friday.
The private equity fund will contribute to the development of entrepreneurship in Pakistan. About 150 companies are expected to participate in the conference.
While extending assurances that the US will not abandon Pakistan after withdrawing from Afghanistan, Olson said “trade and investment is the future of the US-Pakistan relationship.”
Although the US had been working on the equity fund for the last one year, it is being launched now, at a time when commercial ties between the two countries are expected to grow.
The conference will be attended by the US deputy representative for Afghanistan and Pakistan and other senior officials. From Pakistan, ministers of finance, water and power, planning, and science and technology will take part in the two-day discussions.
Olson did not disclose the details of the initiative, but according to initial reports, the US will offer loans ranging from $500,000 to $5 million to small and medium sized businesses in Pakistan to help them expand and create jobs.
The US will contribute about $80 million to the fund, and the amount will have to be matched by private equity funds. There will be multiple funds, each having a minimum size of $45 million.
Olson said the Dubai meeting will serve two key purposes – to “show the American companies investment opportunities in Pakistan and to emphasise for Pakistani companies the trade opportunities in US markets.”
Kerry-Lugar aid package
Responding to a question about past initiatives which yielded below-expectation results, like the Friends of Democratic Pakistan forum, electricity import from Central Asia, the Pak-US Business Council and the Kerry-Lugar Act, Olson said all these projects were alive, conceded that progress might have been slow on them.
He admitted that disbursements for Pakistan under the Kerry-Lugar-Berman aid package were taking time. There have been challenges following the adoption of 18th Constitutional Amendment, as many subjects were devolved to the provinces and the donors have to deal with many departments which took more time in developing projects to be financed by the Kerry-Lugar programme.
According to another US official, the US remains committed to providing the $7.5 billion promised under the package, irrespective of the number of years needed for disbursement. Initially, the target was to disburse the amount in five years.
Coalition Support Fund
On the issue of disbursements under the Coalition Support Fund, Olson said the US had just received the request for disbursements for the period July- September 2012 and it was processing it expeditiously. So far, no decision had been taken on continuing or winding up the CSF after the US pulled out of Afghanistan, he clarified.
Discussing the delay in signing a Bilateral Investment Treaty (BIT) discussed earlier by Pakistan and the US, Olson said the matter had been put off as the Pakistan government did not complete its consultation with its agencies. “We would like to conclude the BIT, which is a useful step to demonstrate that Pakistan is open to businesses,” he added.
He said the US was helping Pakistan meet its energy requirements through supporting the Diamer Bhasha Dam. The US is working with multilateral institutions for arranging funds for the $13 billion dam, he added.
Published in The Express Tribune, June 22nd, 2013.
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