Unfair ratings

LAHORE: Despite huge economic potential Pakistan was earlier unfairly rated very low as an investment destination by most of the rating agencies that base their decision on the security perception, and the recent political unrest has not helped our cause.

That Pakistan is a safe place for investment has been proved by numerous multinationals that have been constantly expanding their businesses in Pakistan. Pharmaceutical sector is an exception where the impediment is not the security issue but over regulation by the state regulator.

The three car manufacturing plants all from Japan are operating for over three decades in the country. Even here the expansion has been lopsided and again it was linked to the lopsided government policy instead of security concerns.

Still periodic expansion in capacities encouraged other global carmakers to try their luck in Pakistani market during 2013-18. In the same way, a dairy and chocolate manufacturing multinational has regularly expanded its manufacturing facilities despite complaining about certain policies.

This encouraged other multinationals in this sector to acquire some famous Pakistani brands and expand their capacities and product range through fresh investment. None of the foreign investors faced any security issue in their decades of exposure to the Pakistan market where their foreign executives live in harmony with Pakistanis, some for decades facing no issues.

Most of them admit that the negative perception about Pakistan is far from reality on ground. It is unfortunate that the negative sides of Pakistan are projected more in the media (both local and foreign) than its good practices.

All this shows that we are poor in marketing our image. The energy that our present government spends in foreign countries on proving the entire opposition corrupt could have been used to portray the soft image of Pakistan.

We need to engage with the global rating agencies that apply their criterion on certain issues differently for different countries. The bashing of opposition in foreign countries scared even those investors who were planning to enter Pakistan.

Besides Chinese, European investors consider Pakistan an important investment destination. Its young and large consuming population is on their radar. However, investment decisions are impacted by the very low rating given to Pakistan by the rating agencies. Reinsurance companies refuse to insure the investment because of bad ratings.

There are multiple problems including export guarantees that are impeding trade with Pakistan. It is basically the responsibility of the government to find a solution to this problem. One is surprised that the Punjab governor, who used his huge influence in Europe for obtaining GSP status for Pakistan has made no such efforts during his 30 months tenure as a federal government representative.

We need to engage influential overseas Pakistanis in this regard. The perception would improve through concerted efforts and lobbying by the government of Pakistan and its private sector.

We also miss many opportunities to improve our image. Pakistan for instance is the major supplier of quality soccer balls to the world. It is the most popular sport in the world. The least the government can do is to give 1,000 soccer balls of World Cup quality to 20 educational institutions of repute in each developed country. Some 50,000 footballs given as a gift will create a soft image of Pakistan.

When Pakistan was awarded the contract for supplying soccer balls in the world cup some 8 years back it was the German ambassador in Pakistan, who put the Made in Sialkot World Cup Soccer ball on the web.

He was surprised to see more than 100,000 hits on the web in a very short time. The Pakistani government never exploited this achievement and honour.

We have to portray minor positives about Pakistan on a regular basis to improve our image globally. Recent induction of three Pakistani celebrities in Forbes 30 has been reported in local media, but no efforts were made to introduce these celebrities to the outside world through official channels.

The issue of inefficient public sector enterprises is not taken kindly by the foreign investors. Huge corruption in state enterprises reflects the incompetence of the government.

Investors say that when a state cannot control its own enterprises, how it can facilitate foreign investors. Under-invoicing does not amuse investors that stay away from establishing industries of items that are grossly under-invoiced.

Smuggling similarly eats up the market of the tax paid products. Strict and effective actions against these malpractices would improve our ratings and confidence of the foreign investors.

Till then the only foreign investment that we can expect will be given on harsh terms, with investors demanding guaranteed rate of return, which is already in vogue in our country and taxed our economy heavily.