Syed Mohsin Raza
The trade volume between Pakistan and Germany oscillates around 2.5 to 3.0 billion US $ per annum. Germanyhas also an investment of around US $ 380 Million in Pak Economy. There is a huge potential still untapped in all sectors of economy which if properly exploited can transform the two countries into strategic partners. Pakistan has many export possibilities to cater the buyers of industrial and consumer goods like furniture, fruits and agricultural products, packing materials and so on while in return can get technology and assistance to uplift health, social, educational and energy sectors. Pakistan, certainly, can achieve sustainable development through the cooperation of German companies coming to Pakistan with investment, skills, knowledge and technology provided their confidence in Pakistan is heightened through boosters like increased facilitationand animproved security environments. In the wake of China Pakistan Economic Corridor (CPEC) and strategic geopolitical location of country there is a strong realization among the EU countries that Pakistan would be a hub of business and trade activities in near future.
In the backdrop of this realization, the Economic Affairs Ministry of the Government of the State of Bavaria, Germany took an initiative by sending a 36-Member strong business delegation to Pakistan in the last week of the last month after almost a 20 years gap. The Honorary Consulate of Pakistan in Munich coordinated this 5-day visit with the support of the Pakistan Embassy in Berlin. The back bone of Germany’s Economy is its Small and Medium Size Enterprises (SMEs) that constitute about 75 % of the total economy of the country and majority of the members of the delegation were owners or holding higher positions in their respective companies that fall in the category of SMEs.
The delegation started the visit by attending a German Pakistan Business Day Conference organized by the German Pakistan Chamber of Commerce and Industry. While addressing the participants, Chief Minister of Sindh, Mr. Murad Ali Shahemphasized on the German companies to invest in the energy sector where there is huge potential for the German companies known for their best technologies. He assuredthat government is going to provide 1000 acres of land to foreign companies and we definitely would designate a piece of land for German Industrial Zone to welcome the companies to establish auto industry, wind turbines, smart grids and others. Afterwards, B2B meetings were arranged which proved to be an icing on the cake.
Karachi chamber of commerce and industries beingthe country’s biggest chamber out of 39 chambers having 24,000 direct and about 55,000 indirect members, hosted the delegation. KKCCI office bearers expressed four concerns i.e.restoration of Lufthansa flights, increase in Deutsche Bank’s branches, visa barriers and vocational training.
Provincial Minister for Water and Energy, Sindh Mr. Imtiaz Ahmad Shaikh, while briefing the delegation, stated that Sindh was providing an ideal investment environment (Karachi is the port city, there are 6 economic zones in Sindh, facilitations are extended through investment promotion agency,virtual one-stop-shop, tax holidays, ease of doing business ranking has also been improved) for the foreign companies which have already invested in wind energy projects and there was a potential to generate about 50,000 megawatts of energy from wind in Sindh.
Trade Development Authority of Pakistan showed interest in both trade development in terms of investment and procurementand trade promotionto increase visibility of Pakistani products and establishing follow up committee. The Germandelegation urged the need of focusing on up-gradation of technology and improving the quality of work force to fulfill international standards.A digital facilitation service for international product queries was another area that needs improvement for boosting Pakistan’s Exports.
Chairman, Board of Investment, Mr. Haroonsharif briefed the delegation about the role of BOI in facilitation, promotion and investment of trade. He highlighted the importance of Pakistan’s economy in terms of its consumer market with 100 million youth having reasonably high consumption power and that Pakistan open avenues of trade to its neighbors like Afghanistan and china. Mr. Abdul RazaqDawood, PM’s Advisor on Commerce, Trade, Industry and Production discussed about the challenges Pakistan was facing like current account deficits, job creation, transmission and distribution of electricity. He emphasized that partnerships between B2B were broader than investment because we need more ideas to change liquidity into products. The leader of the delegation said that political stability, family owned businesses, vocational training and energy were the contributing factors to the strong economy of the Bavarian state of Germany.
Pakistan is expecting that CPEC projects on completion, would enable the transportation of goods worthUS $205 billion through one-road-one-belt. About 35% of global traffic is happening in this region and the route is safeguarded by 10,000 military security personnel and 5,000 by civilian security forces. In the IT sector, Pakistan is exporting services of $16.3m in value to Germany, whereas Pakistan is the third largest country having 3M IT workers and 4th largest freelancers in the world are found in Pakistan’s $1bn IT industry and by 2020 e-commerce is going to cross the digit of $1bn; the readiness of this particular market is almost 100%, burgeoning incubation centers, 151 million mobile subscribers, 57 million broadband subscribing and only 5% sales tax on IT sector are contributing to the ideal investment environment in Pakistan. Health sector, health insurance and health care systems are areas of foreign attraction. Similarly, petroleum sector offers opportunities for business development and licenses for exploration and so on. B2B meetings organized by the BOI were attended by a good number of representatives of local companies from almost every sector to interact and negotiate with the German delegation.
While briefing the delegation, German ambassador Mr. MartinKobler analyzed Pakistan’s current politico-economic situation; relations with neighbors;institutional capacity; transparency of CPEC and concerns of IMF and the ways to move forward. He said that the PTI government’s initiatives to improve the indicators in education, health and clean Pakistan were among the factors that provide a strong foundation for future economic growth. He emphasized that Pakistan should have more regional trade with India just as Europe did throughout history which ultimately led to European Union.
In nutshell, Pakistan has enormous economic opportunities and great potential for growth and development. It has every reason and perspective to become an ideal investment destination in the world provided that it succeeds in softening its image through lobbying, bringing necessary reforms in Pakistan through political will that encourage new frameworks, politico-economic models and other arrangements to practically involve and engage all the stakeholders (economists, industrial experts, academicians, financial advisors etc) to materialize strong Industry-academia linkage and to support Pakistani industry to become ready for exports. There is also need for international business networking to expedite export promotion activities.
