Investment and Industrial Climate in Pakistan

By Lawai, Hussain | Economic Review, November 1992 | Go to article overview

Investment and Industrial Climate in Pakistan


Lawai, Hussain, Economic Review


We are presenting below the paper presented by Mr. Hussain Lawai, President Muslim Commercial Bank, at recently held investment promotions seminars at Toronto and Los Angeles.

Pakistan has become an attractive destination for foreign investors, as a result of the reforms carried out by the present government and by the open market policy it is pursuing. In fact, Pakistan now offers the most liberal package for foreign investment than any other Asian country. The economy is buoyant, inexpensive yet skilled labour force is available and the government is committed to privatization, deregulation and development.

Recent Major Investments

Investors of many countries are making the most of the current favourable investment climate. ICI (Pakistan) Ltd. is investing Rs. 1 billion on the expansion of its soda ash plant, which supplies material to the glass industry. Pak Suzuki Motor Company a joint venture between the Government and Suzuki Motors of Japan has recently expanded its capacity and Suzuki has fully taken over management with 40 per cent shares ownership this year. Toyota will not out cars from is under construction plant from February 93.

The first private sector power project in Pakistan the Hub Power Project has been sponsored by Hubco involving Multinational companies of Saudi Arabia, Italy, USA, Japan and the UK will add 320 megawatts of power to the national grid. The Overseas Telecommunication Corporation of Australia (OTCA) in a joint venture with Olex Ltd. is participating in the A $ 40 million. Pakistan Optical Fibre Transmission project involving the supply, installation and commissioning of about 2000 km of optical fibre cable along the country's main communication route between Karachi and Islamabad connecting major cities where digital transit exchange are in operation. This turn-key project is fully complete and due for commissioning in the very near future.

OTCA has also recently approved in principle the setting up of a data and voice communication network, using sophisticated Satellite Technology. The total investment planned over five years is estimated at A $50 million.

Alcatel CIT of France, through a joint venture Alcatel Pakistan Ltd., shares of which are mainly held by Alcatel CIT, will supply about 120,000 lines annually, one part of which will be manufactured by the factory being set up in Pakistan while the other part will be manufactured by the French Units.

Pakistan Petroleum Ltd. which has operated successfully in Pakistan since 1950 in the energy sector continues to invest in new energy sources. This year it was granted licences for exploration of hydrocarbons in six blocks. These are joint ventures with different companies viz. OMV of Austria and Hardy, Tullow and British Gas of UK. This company also has a joint venture with Hunts and Sabre Petroleum for the Mazarani Mining lease.

Pakcom Ltd., a multinational joint venture is one of the two companies licensed by the Government to set up and operate a National Cellular Telephone Network in Pakistan. The company is marketing its services under the brand name of INSTAPHONE. The foreign partner is Millicom International Cellular (MIC) based in Luxembourg. They have invested US $25 million in Pakistan with plans to invest a further US $30 million over the next two years. This investment places Pakistan in the forefront of the world's developing nations and brings the very latest communication technology to its people.

Privatization

Since November 1990, the Government has systematically sought to accelerate the process of privatisation. The privatization of Muslim Commercial Bank Ltd. was completed in about three months, followed by Allied Bank of Pakistan. Upto 30 June 1992, about 50 State Owned Enterprises (SOE) have been disinvested, while another 100 SOEs are in the process of privatisation.

The industries earmarked for privatisation industrywise are:
- Chemical and Ceramics              15
- Steel                              02
- Fertilizers                        07
- Automobile                         12
- Engineering                        11
- Bakery                             16
- Cement                             14
- Energy                             10
- Vegetable                          28
Of these units, the following units have already been disposed
off:
- Chemicals                          04
- Engineering                        09
- Bakery                             09
- Cement                             07
- Vegetable                          07
  for a total bid price of Rs. 

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