LAHORE - The speakers at a roundtable organised by CSIS and Mishal Pakistan have proposed the US companies to invest in hydel power generation, having great investment potential, ensuring high profit rate, as the energy crisis has almost wiped out the small and medium sized industry in the country.
Besides Sadika Hameed, the fellow with the CSIS, the round table discussion was attended by eminent personalities from different walks of life including former education minister Imran Masood, LCCI former president Mian Ajnjum Nisar, American Business Forum secretary general Ayesha Hamid and Mishal Pakistan CEO Amir Jahangir.
Sadika Hameed, fellow with the Center for Strategic and International Studies (CSIS), said that Pakistan presents a confluence of interest for both U.S. businesses and the people of Pakistan. “Despite dire predictions, Pakistan’s economy has a number of structural factors that will translate investment into growth.” Ms Hameed is an expert on competitiveness, private sector development, political risk and frontier markets.
As the CSIS is carrying out a series of roundtables and interviews to discuss the entrepreneurial potential and private sector development in Pakistan, LCCI former president Mian Anjum Nisar observed that without energy solution no business particularly the small businesses, can survive here. So, the first step is availability of cheaper energy which can only be generated through hydel sources and the US can help Pakistan in this regard.
The Pakistan govt provides sovereign guarantees to foreign investors who are ready to invest in hydel power generation and the US companies can benefit from this business potential which has 20 per cent earning growth, he argued.
The participants also discussed and agreed on addressing international business and media perceptions of Pakistan. International news coverage and public attention centers on the threats emanating from Pakistan and the strained relationship between the US and Pakistani governments. This focus obscures: first Pakistan’s tremendous economic potential, with its 180 million potential consumers, rapidly growing private sector, second, location as a shipping hub, and third, one of the most favorable demographic age distributions in the world.
Lack of access to finance in Pakistan also presents opportunities for financial investment. A very low percentage of Pakistani small and medium enterprises (7%) have bank loans. This figure stands in contrast to 32% of SMEs in Bangladesh and 33% in India, indicating potential for growth in the commercial lending sector. From a development perspective, small and medium enterprises 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.
Foreign investors have another reason to invest in Pakistan. As Western investors seek to hedge against market volatility, they seek to diversify their investments and reduce exposure to any one market. Recent external research has examined the potential for Africa to provide regional diversification through its low market correlations with the United States and Europe.
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.