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Subject: Why Pkaistan could not attract foriegn investors
enlighten    1/31/2006 8:13:42 PM
From Dawn 01/31/06 DURING his recent visit to Washington, Prime Minister Shaukat Aziz spoke repeatedly about the openness of the economy he and his economic team manage. “We are perhaps the developing world’s most open economy,” he told his audiences. “You can come and invest whatever you wish and wherever you wish. You can take 100 per cent or 0 per cent share in the company in which you wish to invest. It is your choice, not the government’s.” In that respect, Pakistan is South Asia’s most open economy, certainly more than that of India. But India is on the move. A day after Aziz’s final public appearance in the United States’ capital, the cabinet in India took the decision to open that country’s large retail sector to foreign participation. “Consent to permit 51 per cent foreign investment in single brand retail operations was the most striking among a package of measures aimed at signalling the Indian government’s determination to kick start a stalled programme of economic reforms,” wrote the Financial Times about the new Indian initiative. This was a modest level of opening and it came with several restraints. In announcing the decision by his government, Kamal Nath, the Indian commerce minister said that “companies will be allowed to sell goods sold internationally under a single brand. Retailers of multiple brands, even if they are made by the same company, will not be allowed.” Constraints notwithstanding, foreign retailers including Wal-Mart, the world’s largest, are lining up to move into India. The new Indian policy, considerably more restricted than the one followed across the country’s northern border — in Pakistan — will still lead to large foreign investment in the sector. Foreign companies, while not totally delighted by the small Indian gesture, are likely to move into the country with billions of dollars of investment. Why are foreigners so eager to go to India but reluctant to come to Pakistan? One answer is the larger size of the Indian market. In 2005 the size of the Indian retail market was estimated at $258 billion and, according to Technopak, a consulting firm, it is set to grow to $411 billion within five years. The sector is currently dominated by nine million “mom and pop corner stores.” India is admittedly large and becoming larger, but Pakistan is small only by comparison to its neighbour. Otherwise it offers a large and rapidly expanding market. It should also attract foreign interest and investment. One of the points the prime minister repeatedly underscored in his speeches was the size of the Pakistani middle class. He didn’t offer any numbers but those are not hard to estimate. If by the “middle class” is meant the segment of the population that has the disposable income to spend on the products large retailers would like to sell, then a third of Pakistan’s population of 156 million falls into that category. That means 52 million people with combined incomes of $78 billion and a per capita income of $1,500. If these people spend 20 per cent of their income on goods that large retail shops would be interested in putting on their shelves, this means a market of $16 billion. This is probably increasing at the rate of 10 per cent a year and will, by 2010, amount to $23 billion. Given the size and openness of the Pakistani economy, why are foreigners not attracted to the country? Why has India become such a flavour of the day and why does Pakistan continue to be shunned by foreign investors? Why aren’t foreign investors attracted by the attributes Prime Minister Aziz kept referring to in his many speeches. I have attempted to answer this question in previous articles. I will go over some new ground today. A commentator in a letter written to this newspaper in response to some of my earlier writings about India said that I was taken in by Indian propaganda and was ignoring the Indian reality. He couldn’t have been more off-base in his reaction. Let me briefly recount as to what is really happening with respect to foreign investors’ interest in our neighbour by offering some concrete examples. In the space of a few days in December 2005, three of the biggest companies in the United States — JP Morgan Chase, Intel, and Microsoft — announced plans to create a total of more than 7,500 jobs in high value areas such as research and development and processing complex derivative trades. As a newspaper commentator wrote: “But for those worried about sluggish job creation by the US economy there was a snag. The jobs would all be in India. Worse, they would be jobs that in the past would have been in the US.” What is even more important and impressive from the Indian perspective is the fact that some of these companies have decided to bet their future on India. Under JP Morgan’s plan, 20 per cent of the global workforce of its investment bank will be in India by the end of 2007. HSBC, one of the world’s largest banks operating out of London, has similar plans with
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trustedsourceofinfo    RE:Why Pkaistan could not attract foriegn investors   2/1/2006 1:08:56 AM
I actually couldnt believe my eyes when I read this article.Could there be a sane guy in Islamic republic of Pakistan..Not because heunderlines India's success in the Global market but highlights reasons for Pakistan's dismal economics! let me put in the URL for the readers.. ...In other words the clear problem is Islamic values and militancy!
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enlighten    RE:Why Pkaistan could not attract foriegn investors   2/5/2006 9:19:38 AM
TSI: you are right.But no one in Pak has the courage to admit it.They keep putting everything under the carpet and still project Islam is not the cause for their dismal performance.People from Pakistan and India are ethnicall and racially same .Both countries were created ate the same time.Only difference is Islam.Pak people imported their god and religion from Arabs where as Indians did not lose their identity.
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