Web Link: http://epaper.brecorder.com/2014/03/21/3-page/553559-news.html
LAHORE: “Pakistan presents a confluence of interest for both US businesses and the people of Pakistan. Despite dire predictions, Pakistan’s economy has a number of structural factors that will translate investment into growth,” said Sadika Hameed, Fellow of the Centre for Strategic and International Studies (CSIS), at a roundtable organized by CSIS and Mishal Pakistan on Thursday.
Sadika Hameed is an expert on competitiveness, private sector development, political risk and frontier markets. CSIS is carrying out a series of roundtables and interviews to discuss the entrepreneurial potential and private sector development in Pakistan. This activity will result in a report for policy makers and the business community in the United Sates and Pakistan.
The businesses in both countries will also be brought together through investors conferences in Washington, DC and Pakistan as well. Representatives of political parties, the business community, education, media, and civil society attended the roundtable.
The participants also discussed and agreed on addressing international business and media perceptions of Pakistan. They reviewed international news coverage and public attention centres on the threats emanating from Pakistan and the strained relationship between the US and Pakistani governments.
According to the speakers only seven percent Pakistani small and medium enterprises (SMEs) have bank loans.
This figure stands in contrast to 32 percent of SMEs in Bangladesh and 33 percent in India, indicating potential for growth in the commercial lending sector.
From a development perspective, SMEs are more able to rapidly increase employment than large firms and their local ties ensure that they both invest and operate locally, even in the face of security threats.
Research by Pakistani economists indicates that the market correlation with Pakistan is even lower (around 0.05). As banks and institutional investors try to limit their exposure to risk, Pakistani investments are likely to yield good returns and could shield investors from market fluctuations elsewhere.
“In the longer term, existing US government institutions for promoting trade, including the Overseas Private Investment Corporation and the Export-Import Bank, can change their priorities to include small and medium business growth in fragile countries, as the Ex-Im Bank has already begun to do. Such a policy could help US companies invest in growing, but potentially risky countries, and at the same time further US foreign policy priorities of poverty reduction and increased stability in fragile states.
This approach would be especially appropriate for encouraging US business growth in the commercial centres of Karachi and Lahore,” economists mentioned.