- Dr. Miftah Ismail is a prominent industrialist and economist who is currently serving as the Chairman, Board of Investment. He holds a PhD degree in Public Finance and Political Economy from Wharton School of Business, University of Pennsylvania and worked at International Monetary Fund as a professional economist.
For the year 2014, oil and gas sector could be investors’ heaven. Some of major projects such as Thar coal mining, Sindh wind power and Gadani power project have been inaugurated while a number of projects are in the pipeline. The Government is providing an investment friendly environment but bringing substantial investment to finance these projects is a Hercules task as security is the foremost challenge being faced by investors, said Dr. Miftah Ismail in an exclusive interview with Economic Affairs.
What investment opportunities do you see in the oil and gas sector of Pakistan?
As a result of these financial and structural reforms, this sector has already emerged as one of the most attractive sector for investment in the country. Pakistan is rich in natural resources having huge sedimentary basins stretching over 825,000 sq. kms., offering immense potential for exploration and development of natural resources with an exploration success ratio of 1 : 3.5.
If we look at the existing options then coal in the deserts of Sindh is like gold mines. Every coal mine in Sindh is worth billion dollars. The largest coal reserves of Pakistan located in Thar has approximately 184.623 billion tons of coal. Furthermore, there are gold mines along Tethyan belt of Baluchistan that contains 25 million ounce of gold, 332 billion pounds of copper, 25 billion tons of marble and 1.5 billion tons of granite. Not having seized the opportunity yet, mainly due to security issues in the region, paints a murky picture of Baluchistan.
What are the factors hampering investment inflows?
Unfortunately, Pakistan has lost almost all positive indicators of the Global Competitiveness Index (GCI) which measures competitiveness of an economy on the basis of 12 major indicators. On account of poor performance, Pakistan is ranked 133 out of 148 in the global competitiveness for which I don’t want to blame the previous government. It was mainly the energy shortfall and the law and order issues hampering investment inflows.
What measures have been taken by the BOI to boost foreign direct investment (FDI)?
In order to boost FDI in Pakistan, specific investment policies and procedures have been designed for individual sectors, to create an investor-friendly environment. Various incentives have been offered to attract FDI, including repatriation of capital, capital gains, dividends and profits.
Pakistan is a huge consumer market and a big attraction for investors. To cash this potential of our country, the BOI is planning to organize an investor’s conference in Islamabad in May this year. In this conference we will showcase the variety of investment opportunities to our foreign investors.
Moreover, BOI would try to improve Pakistan’s ranking of ease of doing business which is currently 110th among the 189 world economies. We would like to see Pakistan at 80.
BOI is vigorously pursuing the target of raising the investments to 20 percent of the GDP in the next four to five years, which has been dropped to 12 percent at present.
How is our agriculture sector potential for foreign investors?
Our biggest sector having potential is the agriculture sector. I think it is still unexplored or it has not been really looked at by the real investors who are in the agriculture business. It is a vast area with a number of fields and businesses which can attract massive investment. If we take the example of milk, Pakistan is the 4th largest producer of milk and 80% of our milk is still sold loose. So it means all this 80% requires investment. Similarly we need huge investment in storage and warehousing. We still store our raw materials in open storages places. These days it is stored in silos around the world which maintains a certain temperature and moisture for every product. Hence exponential potential still exists in milk, meat, rice and fruit markets.
How successful was your visit to China?
It was the first state visit of President Mamnoon to China. A delegation led by Chief Minister Punjab Shahbaz Sharif was also visiting and there was JCC (Joint Cooperation Committee) meeting to attend. During the visit we held series of meetings with the top leadership of China and discussed a whole gamut of issues ranging from strategic bilateral relations to further cementing economic and trade relations.
The purpose of this visit was to strike agreements with China for joint energy and infrastructure projects that includes construction of a motorway from Lahore to Karachi, upgrading a stretch of road from China’s border to Islamabad, an airport near Islamabad, Gadani power plant, new roads in Gwadar and to upgrade rail infrastructure between Lahore and Peshawar.
The most focused thing during the visit was the Pak-China Economic Corridor that would prove to be a game-changer in ushering a new era of socio-economic development not only for the people of the two countries but also for the entire region. Generously, China agreed to extend its cooperation in all areas.
The economic corridor is a comprehensive infrastructure package worth $18-20 billion with a wide range of aspects including Gwadar-Kashgar Highway, construction of motorway from the eastern city of Lahore to the southern port of Karachi, upgrading railway infrastructure between Lahore and the northwestern city of Peshawar, bullet train, new roads in Gwadar, fibre-optic cabling and gas and oil pipelines. Work on these new projects will open enormous employment opportunities and generate demand for raw material e.g. cement, steel and subsequently give a new life to our industrial sector.
Within 3-4 years you would see roads on ground from China’s border to the Pakistani capital. Thus this mutual cooperation between both countries will be beneficial in terms of improving our economy and will take Pak China friendship to a next level.
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