In 2018, during a press briefing, a senior official associated with an investment company cheerfully remarked that “foreign investors don’t really make money in Pakistan. It’s the locals who make the money”. His remarks were not well received, but this person got away with it because 95% of the audience was local and they couldn’t care less about the repercussions of such a statement. His point of view hit a nerve, but years later, when you reflect on it, you see why it makes sense.
The PTCL transaction, which has since evolved into an amalgamation of Ufone, Telenor, has covered two separate continents. When news broke of Telenor Pakistan operations being sold off, the words regulatory and cost-side pressures were the themes. Very recently, it was the P&G operations that wrapped up, but that has different elements to it. You speak to officials from the pharmaceutical industry and they will mention regulatory pressures and massive government intervention.
In the IT sector, several entities have established operations in Dubai and Singapore simply because channeling funds into Pakistan and then offering returns to their investors abroad could prove to be a pain at any point. Remember the forex fiasco in which there was even talk of freezing foreign currency bank accounts? Absurd as the news may have been, the reason why there were elements of believability in it because it has all been done before.
In a report released earlier this week, a major advisory firm, Henley & Partners, put Pakistan at 222nd place out 225 on the ‘Global Investment Risk and Resilience Index’. The score was 31.83. Switzerland, which was placed first, had a score of 88.42. Only Sudan, Haiti, and Lebanon were ranked below Pakistan.
Want further proof of Pakistan’s investment and resilience climate? How about an even further interesting fact? Pakistan had an impressive score of 91.5 on the business entry metric of the Business Ready (B-READY) Report 2024 of the World Bank. The score was close to Singapore’s that had 93.57. However, this is where the divergence occured. On labour, utility services, business location, international trade, taxation, dispute resolution, and market competition, the scores dropped between 40-60.
There is a very simple explanation for this: Pakistan attracts investors (big market, good location, port services, access to markets and general welcoming attitude) but it fails to retain them. This is a crucial line. Pick up that senior official’s comment at the start of this article and then browse through the news with that assumption as if it were true.
This would be Pakistan’s story. If there was ever a script, its start would be like this: a potentially wonderful place, with talented people, waiting for an opportunity. A growth story waiting to happen. So why is it still waiting?
Because the people responsible for writing the script, or curating it, are still deciding what they want. It’s almost like as if they say they want a foreign investor. They want their skillset, professionalism, and foreign currency. But when it comes to making a profit, their foreign skin is what puts them off. Our writers do not want outflow of any money in this script. But why exactly would a foreign investor pour any dollars if they were unable to make a profit. Why does a profit put us off? Is it because the gross domestic product (GDP) per capita in this country is still hovering around $1,600, translating to roughly less than Rs40,000 per month. This is close to the minimum wage in the country. Hence, a profit of even a billion rupees sounds a lot. But at the same time, shaving off billions in earnings is okay.
K-Electric, the entity responsible for supplying power to Pakistan’s largest city, comes to mind. Its foreign investors has been wondering if it makes sense to stay. The company’s share price has gone nowhere in the time the index skyrocketed 4x. This fact alone explains the company’s misery.
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But how does it all matter? It does because news coming out of Pakistan is never about its positive side. There isn’t a lot anyway. The media may have some blame for it. The bigger blame, however, is the script and writers. Successive governments have failed to attract investors. If they have, they have been unable to retain them. A question to ChatGPT gave this answer: Pakistan is a high-risk, high-reward investment destination. Of late, their high-reward has also vanished.
The article does not necessarily reflect the opinion of media or its owners.
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