Pakistan: Recent Economic Developments and Future Prospects
PAKISTAN: RECENT ECONOMIC DEVELOPMENTS
AND FUTURE PROSPECTS
ISHRAT HUSAIN
Most of the news emanating about Pakistan in the Western media relate to terrorism, bomb blasts, Islamic fundamentalism, nuclear non proliferation, military rule etc. Seldom does one see a positive story appearing about Pakistan’s remarkable economic turnaround. But the fact of the matter is that despite such negative image Pakistan is one of the favored destinations for foreign direct investment. Foreign direct investment flows have surged by 95 percent during July – February 2007 and are expected to touch $ 5 billion or 3.5 percent of GDP – several times higher than FDI flows to our large neighbor in relative terms. Pakistan’s international bond issues and equity floatations through GDRs have been consistently oversubscribed and are priced at fine margins. Standard Chartered Bank has made acquisition of a domestic private bank for around half a billion dollars. China Mobile – the largest mobile company in terms of subscriber base – has bought out majority shareholding in one of the local cellular phone companies for over $ 400 millions. Philip and Morris has entered into an agreement to purchase 50.2 percent shares of the second largest Cigarettes Manufacturing Company of Pakistan for US 339 million. A number of other similar mergers and acquisitions are in the pipeline.
2. What is that inspite of such adverse publicity, perceived security risk and travel advisories the global investors, fund managers and international financial institutions from the United States, Europe, East Asia and Middle East all look upon Pakistan favorably and show such tremendous amount of confidence in the economy. Sophisticated investors from all over the world are willing to purchase billion of dollars of sovereign paper issued by Pakistan for 30 year duration. There must be something right the country ought to be doing which fails to reach the radar screen of the popular and highly influential
AND FUTURE PROSPECTS
ISHRAT HUSAIN
Most of the news emanating about Pakistan in the Western media relate to terrorism, bomb blasts, Islamic fundamentalism, nuclear non proliferation, military rule etc. Seldom does one see a positive story appearing about Pakistan’s remarkable economic turnaround. But the fact of the matter is that despite such negative image Pakistan is one of the favored destinations for foreign direct investment. Foreign direct investment flows have surged by 95 percent during July – February 2007 and are expected to touch $ 5 billion or 3.5 percent of GDP – several times higher than FDI flows to our large neighbor in relative terms. Pakistan’s international bond issues and equity floatations through GDRs have been consistently oversubscribed and are priced at fine margins. Standard Chartered Bank has made acquisition of a domestic private bank for around half a billion dollars. China Mobile – the largest mobile company in terms of subscriber base – has bought out majority shareholding in one of the local cellular phone companies for over $ 400 millions. Philip and Morris has entered into an agreement to purchase 50.2 percent shares of the second largest Cigarettes Manufacturing Company of Pakistan for US 339 million. A number of other similar mergers and acquisitions are in the pipeline.
2. What is that inspite of such adverse publicity, perceived security risk and travel advisories the global investors, fund managers and international financial institutions from the United States, Europe, East Asia and Middle East all look upon Pakistan favorably and show such tremendous amount of confidence in the economy. Sophisticated investors from all over the world are willing to purchase billion of dollars of sovereign paper issued by Pakistan for 30 year duration. There must be something right the country ought to be doing which fails to reach the radar screen of the popular and highly influential