Business | Markets
Foreigners paint rosy picture of Pakistan
The significant boost to Pakistan's telecom prospects in the wake of Singapore Telecom's decision to buy a 30 per cent stake in the south Asian country's privately-owned Warid cellphone operator, provides evidence of growing foreign investor interest in the country.
- By Farhan Bokhari, Special to Gulf News
- Published: 00:35 July 1, 2007
Islamabad: The significant boost to Pakistan's telecom prospects in the wake of Singapore Telecom's decision to buy a 30 per cent stake in the south Asian country's privately-owned Warid cellphone operator, provides evidence of growing foreign investor interest in the country.
The financial year which ended yesterday saw a record rise in activity by foreign investors, heading to invest directly as well as in Pakistani equities.
For now, the conclusion has to be that Pakistan remains on the radar screens of analysts and investors linked to markets within the country and abroad.
Chua Sock Koong, Singapore Telecom's chief executive in a statement announcing the purchase of Warid said; "SingTel has made substantial investments in markets with high growth potential in South Asia, such as India and Bangladesh. Warid Telecom in Pakistan is a natural fit".
Warid, owned by Abu Dhabi investors and which began its operations in Pakistan in 2005, already has emerged as the mobile phone service provider for about 17 per cent of Pakistan's 58.4 million mobile subscribers according to figures from end April.
In the past year, entries to Pakistan made by other foreign investors have included the decision by Standard Chartered, the global bank, to buy out Pakistan's Union Bank and the purchase of Prime Bank of Pakistan by ABN-Amro, the Dutch bank.
Challenges
There are indeed many indications of foreign investors seeking entry to Pakistan. There are indeed some plausible reasons for the optimism among investors.
One is that Pakistan remains a largely solvent country. For the moment, Pakistan is not positioned to return to its difficult economic past.
But as foreign investor activity remains somewhat robust, Pakistan faces three equally pressing challenges which it can not ignore in its own interest:
First, reliance on General Musharraf's continued presence on the scene as a measure of reassurance for investors, does little to tackle a fundamental political void.
While he may reassure investors, the problem is that Pakistan has gone through a disarray of its institutions in a way never seen before. Consequently the long term prospects have become blurred.
Fundamentals
Pakistan needs to reignite confidence in the ability of its institutions as the fundamental pillars of continuing economic policies. Rather than drive stability through the presence of one individual leader, long term success lies in driving stability through a collective institutional arrangement.
Second, Pakistani politics may not have so far caused a dent in prospects for the economy. But there's no assurance of this remaining so as the country heads in a potentially turbulent election period end of this year. Once crowds of political activists are out on the streets, only then it would be possible to tell if indeed confidence levels among the community of investors remain comparable to the sentiment expressed today.
Finally, while investors remain unperturbed over Pakistan's socio-economic realities, its obvious that the growing gap between the rich and the poor will only increasingly bedevil policy makers as time goes by. For now, investors have taken little notice of realities such as mounting crime rates in parts of Pakistan. But a closer analysis of such situations can just not discount the reality of anywhere between a quarter to a third of Pakistan's population of at least 160 million living below the poverty line.
As Pakistan's ruling establishment celebrates what it terms as an econ-omic success story, there's a great deal of danger for Pakistani leaders to embrace just a part of the picture and play it up to their advantage. There's another part of the picture - the unnoticed one, which probably holds the key to un-solving the riddle of the long-term prospects.
- The writer is a journalist based in Pakistan.
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