Foreign investment — Punjab at the forefront

All inroads of investment into Pakistan start from Punjab. A fact that is being underscored at the International Seminar for Investment in Lahore on November 6-7. The Punjab government is sharpening its pitch towards a gathering of some most trusted business partners — chiefly the Chinese and the Turks. The pitch is three-pronged: Punjab is investment-ready because a policy framework supports it; the project ducks are standing in a row and more importantly there has been a considerable focus on setting up the infrastructural backbone the province needs to attract FDI.

At the seminar, which is predominantly focused on infrastructure, the Punjab government aims to secure the low-hanging fruit first and for good reason too. Research points to the fact that the marginal productivity of investments on infrastructure rises with scale, and the spread of the network exceeds the average productivity of investment until the market is saturated. For a province that makes up more than half of Pakistan’s 190 million people, it will crumble under its demographic dividend if it does not provide access to opportunities for its populace whether it is in the form of employment, newer markets, educational facilities and better healthcare.

With around 500 international investors in Lahore, the good news is that Punjab is honing its investment promotional skills. According to the apex investment promotion body, World Association of Investment Promotion Agencies (WAIPA), this is the single-most important determinant in attracting investment — the sanctity of the information and facilitation investors need to make up their minds when entering a new emerging market. These and more best practices are critical for Punjab to learn from. It should also be noted that the Punjab Board of Investment and Trade holds the directorship for WAIPA in South Asia since 2010.

When the Punjab government says it is investment-ready, it means that it has projects worth $6,556 million ready to be invested in across 48 key sectors. Led by the provincial Planning and Development Department, these projects have the capacity and bite to accept investors as early as today, proving that not only the infrastructure projects, but all others that offer a competitive advantage have been diligently worked on and made feasible.

There is something to be said about the magnetism of an emerging economic region’s political will to be integrated into rising Asia. One undisputed credit that Punjab is given is for the passionate and hands-on approach to investment that Chief Minister Shahbaz Sharif has. His message to investors: “I personally guarantee your investments will be safe in Punjab and will grow multi-fold.” Pakistan needs more of this approach, not less. Sadly, many leaders don’t look at FDI with the respect it deserves. It has effectively changed the trajectory of many developing nations, with many in Africa being examples of this.

If Pakistan wants to move beyond its $5,060 GDP per head (in PPP terms), it will have to be more proactive in opening its doors to willing investors, of which there is no shortage. Given that Pakistan ranks 18th in the world for having the largest middle class according to Credit Suisse’s recent report, anyone with a buck would want a piece of this growth in potential and opportunity.

Sometimes opening doors is just what it takes to lure in investor friends. Or even foes for that matter. Investment flows where there is something to be gained. Pakistan’s policy framework allows no discrimination against foreign investors and they are treated like any local investor. This open and welcoming structure was established back when many Asian economies were extremely conservative in their economic outlook. While it should have been Pakistan in the lead based on its policy prerogative, it is sadly not. Still, the aggressiveness with which Punjab reigns the investment industry on behalf of Pakistan, after this area became a provincial subject, confirms the claims of economic pundits that the rise is around the corner — all things being equal, of course, in terms of geopolitics and disasters. FDI actually provides buffers to such shocks to the system. Hopefully, the conference not only helps the Punjab government’s pitching, it will also facilitate investors in pointing out their expectations and highlighting possible gaps. This is why international seminars such as this one lays the foundation of progressive work governments ought to be doing more of.

Published in The Express Tribune, November 7^th, 2015.

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