Bilateral Investment Treaty with Germany next month

[Omar1984]

Treaty with Germany next month
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ISLAMABAD: The German government will provide ‘investment guarantees’ to German companies covering potential security and political risks to operate in Pakistan.

The decision was formally announced in a meeting held between Head of International Investment, German Ministry of Finance, Joachim Steffens and Board of Investment (BoI) Chairman Saleem H. Mandviwalla here on Tuesday.

Mr Mandviwalla said in this regard an upgraded Bilateral Investment Treaty (BIT) would be signed next month in Germany. Under the treaty the government of Germany would provide cover to losses of German companies arising out due to political and security risks in Pakistan.

‘The treaty would boost the confidence of German investors to enter Pakistani market,’ Mr Mandviwalla told a press conference held later at the Press Information Department and was also addressed by Joachim Steffens.

Germany and Pakistan had signed their first bilateral investment treaty in 1949. ‘However the volume of investments has remained low and one key reason for it was the perception issue of Pakistan,’ the BoI chief noted.

The German companies have invested in various sectors of the economy notably in the fields of power, petroleum and defence production. However, the German investment in 2008 totalled $350 million.

‘As a result of this treaty business activity was expected to gather momentum between the countries,’ Mr Mandviwalla hoped.

Joachim Steffens said that the request to sign an investment guarantee treaty with Pakistan had been forwarded by many German companies, which have not been in the Pakistani market before.

He said that with growing middle class and a vast population of youth, Pakistan was potentially a lucrative market but some efforts were needed to make the country more attractive to German investors.

‘At least five new companies have approached us to provide some support for establishing business in Pakistan,’ he said, adding that the companies already operating in Pakistan have expressed satisfaction over the business prospects in the country.

He said that Pakistan was faced with perception problem, but it was also a requirement that some more stability return to the country.

He said that investment was expected in the fields of production, energy including electricity generation, agriculture and engineering.

‘Germany has highly developed farm sector that includes production of farm machinery and seed development also,’ Mr Steffens said.

He added that certain recent regulatory developments would be helpful to invite investors in Pakistan as efforts had been made by the government to provide legal cover to the investors.