Omar1984
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Feb. 12 (Bloomberg) -- Pakistan aims to attract $5 billion from its emigrants with a new law protecting their investments to help revive an economy that was bailed out by the International Monetary Fund in November, a government minister said.
If the international corporate sector can get sovereign guarantees, then why not overseas Pakistanis, Muhammad Farooq Sattar, the federal minister for expatriates, said in an interview in Karachi yesterday. Once we introduce legislation within the next four months, it will give them confidence to invest.
Pakistan is appealing to a community that Sattar said numbers 8 million people to resuscitate an economy that slumped last year after a seven-year boom, forcing the country to seek a $7.6 billion IMF loan. Overseas investment tumbled 38 percent last year, rocked by increased terrorist attacks and a slowing economy.
I dont see overseas Pakistanis investing in industry or business in the current environment, said Farid Khan, director equities at Credit Suisse Pakistan. They may buy stocks or property but its unlikely that they will go for long-term investments.
South Asias second-biggest economy plans to raise $10 billion in foreign direct investment by December, Investment Minister Waqar Ahmed Khan said in an interview last month. Emigrants could contribute an additional $5 billion provided the new legislation is in place soon, said Sattar, 49, who was appointed last month. He didnt give details of the proposed law.
Slowing Growth
Pakistans economy, which expanded at an average annual pace of 6.8 percent in the past five years, is forecast by the IMF to grow 3.5 percent in the 12 months ending June, the slowest pace in seven years.
Pakistan will also introduce as many as four reserved seats for expatriates in the 342-seat National Assembly, and one seat each in the four provincial parliaments, to ensure the direct involvement of overseas Pakistanis in policy making, Sattar said.
Most of Pakistans diaspora lives in the U.S., U.K., Saudi Arabia and United Arab Emirates and the number of emigrants is rising by as much as 20 percent a year, Sattar said. Reluctant to keep money in Western countries after the Sept. 11, 2001 attacks on the World Trade Center, emigrants fueled an 11-fold increase in the stock market in the six years to 2007 and sent property prices to record highs.
Political Uncertainty
I know Pakistanis in the U.S. who flew to Lahore to buy a piece of property and during the time it took to fly back to New York, the price had appreciated 30 percent, said Ali Almakky, a 35-year-old banker in New York. Expatriate Pakistanis are least bothered about political uncertainty. Its all about liquidity and returns.
Pakistan, which has been ruled by the military for more than half its 61 years, suffered further instability since opposition leader Benazir Bhutto was assassinated in December 2007. Her husband Asif Ali Zardari replaced Pervez Musharraf as president last year and is grappling with militancy and strained relations with neighboring India.
Pakistan aims to double remittances by overseas residents next year from an estimated $7.5 billion in the 12 months ending June 30, by simplifying banking procedures and allowing cell phone transfers, Sattar said. Overseas investment fell to $5.2 billion in the year ended June 30 from a record $8.4 billion a year ago.
Underutilized Diaspora
The Pakistani diaspora is underutilized, said Adeel Shah, a member of the Washington-based U.S.-Pakistan Business Council. Pakistanis residing in the U.S. can contribute a lot if they can find a credible vehicle through which they can identify serious projects and get better returns.
Overseas investors fled Pakistans stock market when the Karachi Stock Exchange, the biggest, imposed four-month long trading curbs that prevented the benchmark index from falling below its Aug. 27 level. The index has fallen 42 percent since the curbs were lifted on Dec. 15.
The index freeze will keep investors wary of Pakistan equities for some time, said Credit Suisses Khan. However, overseas Pakistanis should come back before foreigners given their better understanding of the country.
Bloomberg.com: India & Pakistan
If the international corporate sector can get sovereign guarantees, then why not overseas Pakistanis, Muhammad Farooq Sattar, the federal minister for expatriates, said in an interview in Karachi yesterday. Once we introduce legislation within the next four months, it will give them confidence to invest.
Pakistan is appealing to a community that Sattar said numbers 8 million people to resuscitate an economy that slumped last year after a seven-year boom, forcing the country to seek a $7.6 billion IMF loan. Overseas investment tumbled 38 percent last year, rocked by increased terrorist attacks and a slowing economy.
I dont see overseas Pakistanis investing in industry or business in the current environment, said Farid Khan, director equities at Credit Suisse Pakistan. They may buy stocks or property but its unlikely that they will go for long-term investments.
South Asias second-biggest economy plans to raise $10 billion in foreign direct investment by December, Investment Minister Waqar Ahmed Khan said in an interview last month. Emigrants could contribute an additional $5 billion provided the new legislation is in place soon, said Sattar, 49, who was appointed last month. He didnt give details of the proposed law.
Slowing Growth
Pakistans economy, which expanded at an average annual pace of 6.8 percent in the past five years, is forecast by the IMF to grow 3.5 percent in the 12 months ending June, the slowest pace in seven years.
Pakistan will also introduce as many as four reserved seats for expatriates in the 342-seat National Assembly, and one seat each in the four provincial parliaments, to ensure the direct involvement of overseas Pakistanis in policy making, Sattar said.
Most of Pakistans diaspora lives in the U.S., U.K., Saudi Arabia and United Arab Emirates and the number of emigrants is rising by as much as 20 percent a year, Sattar said. Reluctant to keep money in Western countries after the Sept. 11, 2001 attacks on the World Trade Center, emigrants fueled an 11-fold increase in the stock market in the six years to 2007 and sent property prices to record highs.
Political Uncertainty
I know Pakistanis in the U.S. who flew to Lahore to buy a piece of property and during the time it took to fly back to New York, the price had appreciated 30 percent, said Ali Almakky, a 35-year-old banker in New York. Expatriate Pakistanis are least bothered about political uncertainty. Its all about liquidity and returns.
Pakistan, which has been ruled by the military for more than half its 61 years, suffered further instability since opposition leader Benazir Bhutto was assassinated in December 2007. Her husband Asif Ali Zardari replaced Pervez Musharraf as president last year and is grappling with militancy and strained relations with neighboring India.
Pakistan aims to double remittances by overseas residents next year from an estimated $7.5 billion in the 12 months ending June 30, by simplifying banking procedures and allowing cell phone transfers, Sattar said. Overseas investment fell to $5.2 billion in the year ended June 30 from a record $8.4 billion a year ago.
Underutilized Diaspora
The Pakistani diaspora is underutilized, said Adeel Shah, a member of the Washington-based U.S.-Pakistan Business Council. Pakistanis residing in the U.S. can contribute a lot if they can find a credible vehicle through which they can identify serious projects and get better returns.
Overseas investors fled Pakistans stock market when the Karachi Stock Exchange, the biggest, imposed four-month long trading curbs that prevented the benchmark index from falling below its Aug. 27 level. The index has fallen 42 percent since the curbs were lifted on Dec. 15.
The index freeze will keep investors wary of Pakistan equities for some time, said Credit Suisses Khan. However, overseas Pakistanis should come back before foreigners given their better understanding of the country.
Bloomberg.com: India & Pakistan
