As a Pakistani national, you will be well aware of the predicament that we come across at times. For example, with inflation and rising prices of different items of daily use. It all happens because of the strict conditions. The Pakistani government has to accept them from the International Monetary Fund. Some of you may question why it is so necessary to go to the IMF every year. Well, in simple words, we have to maintain our dollar reserves. Because we want to prevent Pakistani rupees from crashing in the open market alongside the gold reserves within the country. Let’s have a look at investment in Pakistan and the potential for local and overseas Pakistanis.
Rest assured as the government is working on all the contingency plans to make us come out of this crisis. One of some major examples is paving the way for local/foreign investors to find the ease of doing business in Pakistan. This would of course lead to an increase in GDP alongside reducing the fiscal deficit of the country. Many of you would be aware of the fact that various items are generally imported from other countries. As a result, Pakistan ends up losing huge sums of dollars. It has to pay for all such items that can be produced in our own country at subsidized rates. Furthermore, the country has to pay levies and taxes affiliated with all such items.
Investment Opportunities in Pakistan
The government ensures facilitating investors through strong policy making to invest in Pakistan. So that they ought to spend less for gaining good returns on investments. The investment policy involves complete repatriation of the capital, custom duty concessions. This is on the import of raw materials to build machinery and plants. Complete equity for ownership. The Board of Investment is administering one-window facility. This is to increase industrial cooperation. It ensures fast completion of nine planned economic zones. You are able to see the picture a lot better than before now. We hope you are able to understand it after reading these statistics.
The government of Pakistan has introduced revolutionary reforms in the traveling sector. All these steps welcome the international tourists to invest in Pakistan. Also, the successful launch of E-Visa has made it a lot easier for investors. Now various countries can visit, explore and identify the geostrategic position of Pakistan. Many countries gain access to warm waters through Pakistan. This factor has strengthened the relationship between Pakistan and China. It is now termed as China Pakistan Economic Corridor. There is a rapid transformation of relations between Pakistan and the neighboring countries.
Even if we have some transactional relations, recent development is changing the scenario. It is converting these linkages into a partnership based on mutual benefits. If you look back in time, recall the suicide blasts taking place in different cities and provinces after regular intervals. All these terrorist activities kept the tourists and investors away from the country. There have been various operations such as Rad ul Fasaad, Rah e Nijaat and Rah e Raast carried out by the Pakistani armed forces. It helps in overcoming the security challenges.
Moving onwards, the infrastructure is improving through collaborative projects of Pakistan and China. It includes the underground optical fiber network. It would enhance the interconnectivity of cities with the rest of the world. The construction of a new railway network is under development. It can provide many means of transportation and fast commuting. Pakistan tends to face an acute problem of water supply. This is due to the construction of dams by India on Pakistani rivers. It has been violating the Indus Water Treaty.
The construction of new dams in the northern areas are in progress. Alongside the installment of Desalination plants on Pakistani seashores would be the game changer. It can help in boosting the economy of the country and making it stand on its own.
The significance of Gwadar Port is great for Pakistan. Its neighboring countries giving access to Eurasia and the other continents. An estimated 60 billion US dollars are already being invested. These are for roads, power plants, oil and gas pipelines, real estate airports and sea port.
In case you consider China as the only investor collaborating under the Belt and Road Initiative, it is just the tip of the iceberg. Pakistan is strengthening its geostrategic ties with Saudi Arabia to diversify investment opportunities in the Arab world. Saudi Arabia on the other side will strengthen the economic model of Pakistan so that the investors are confident while investing on different projects. For this, Saudi Arabia will invest 20 billion dollars on large-scale infrastructure and private industrial sectors of Pakistan. About Saudi Pak partnership, Pakistan’s Board of Investment has received many proposals by countries. These include: Qatar, Malaysia and UAE. They are expressing their interest to collaborate in Pakistan. They take interest in Logistics, Light Engineering, Information Technology, Tourism, Textiles and Agro-based Foods and Industries.
Pakistan’s Board of Investment is moving ahead with its mission to include the country in the list of leading economies of the world known for the ease of doing business. For this, our ambassadors and high commissioners are striving hard to expand the interest of local as well as foreign investors and paving the way for these companies to sign MoUs with Pakistani Industry. Resultantly, your company registration process will not last for long with the introduced one window mechanism.
The contemporary ongoing investments would certainly encourage other foreign economies to collaborate and work on joint ventures leading to mutual benefits economic development. The United Kingdom remains at the top of the list of forthcoming investors looking forward to investing in Pakistan. At present, Pakistan and the UK are looking forward to strengthening their B2B relations by investment in agriculture, infrastructure, energy and telecom sectors. UK investors have a firm belief that their investments in these sectors would be rewarding in the upcoming years as Pakistan’s economy is gradually progressing with the passage of time. Let us look at the various investment opportunities which are available for the local and international investors in Pakistan.
If you are familiar with the investment mechanism in the stock market, commodity investment is not something completely unusual. The only difference is that it is managed under Pakistan Mercantile Exchange, abbreviated as PMEX. You deal with agricultural and mining products such as iron ore, grains like wheat and rice, sugar, basic resources and raw materials. Many firms deal under PMEX in addition to PSX. If you are aware of some known money exchange site, just get your extra rupees exchanged with some other currencies such as US dollar, Euro or Pound.
You can earn a profit by just keeping the foreign currency with you for a short period of time. Once the rupees depreciates and you wish to gain a profit over the spent amount, get your foreign currency exchanged with local rupees and see the profit that you have gained through this micro investment. Just keep in mind that investment in foreign currency is a lot tricky compared with stock exchange. The liquidity of the market can go in any direction and you have to be ready for any kind of financial gain and loss. It is always advised to consume a particular part of your savings that is not in daily usage so that your budget remains intact in all circumstances.
Many investors prefer to rely on Asset Management Companies to win profit over their deposited amount. The advantage of this mutual fund mechanism is that you just have to relax after depositing the required amount to your advisor who will fill in the required details from your side. The rest of the operations will are under AMC. The reason why it is your win-win situation is that a fixed profit, although lower than the other investment opportunities, is assured on a regular basis. You can take out the profit at any time of your convenience.
Many people opt for investing their savings through secure channels. One such forum is Pakistan Investment Bonds, debt securities issued by State Bank of Pakistan. The yield on these bonds is twice a year and the coupon rates are paid till maturity of these issued bonds. It is a good way of gaining competitive returns as these bonds are guaranteed by the Pakistani Government. If you plan to buy Pakistan Investment Bonds, these are available in tenors of three, five, ten and twenty years. You can either avail PIB through Primary Dealers and Scheduled Banks or the Stock Market known as the Secondary Channel. You can invest through the primary channel. This is by opening an Investment Portfolio Securities Account abbreviated as IPS.
Pakistan Stock Market has performed quite well in the previous few years despite limited investment vehicles available in the country. If you have enough savings, a particular percentage is worth investing in the stock market. All the companies list themselves alongside the worth of their shares in the stock market. You, as an investor, can see the performance of different companies based on the sales and buying transactions taking place in each market. As the company earns profit, your return on investment would also be high. But get ready for the opposite scenario as you can lose a good amount if the company goes at a loss. Thus, it is always wise to invest your extra savings in the stock market.
When you went to your nearest bank branch to open an account, recall your conversation with the representative asking to pick one of the given options. People generally opt for the current account to receive their salary or payments from the sales of their products. The amount remains either fixed or reduced with the annual maintenance and other service charges. Thus, you need to consider some smart solutions for investing your money deposited into the bank account. Current account will not do any good except receiving your monthly salary. But, you would be able to get some good gains and invest in Pakistan. A particular amount is also deducted as zakat from your savings. But you can make some profit from your deposited savings.
National Saving Schemes
In case an individual is looking for small to medium scale return of investment, National Saving Schemes were introduced on February 4, 1990. There are a variety of certificates from which you can opt for the one most workable for you based on your earnings and savings. Many people opt for the special savings certificate. The best part of these micro investments is the maturity period and the profit is payable semi-annually. Many families invest in Pakistan in their already purchased savings certificates whenever they reach the maturity period. You can also consider this option to keep saving for your children. You have no idea but there will be a huge sum of money if you keep saving it for five to ten years.
Real estate investment is on the rise with the ongoing development of different towns, smart cities, and housing schemes and societies. Recall your parents going through the property page of the daily newspaper to find a good investment opportunity. But nowadays the paradigm has shifted and you find the advertisement of every new project on the front page of e-paper, website, youtube videos, and tv ads. Most of the cities are expanding their radius to occupy and develop open fields and farms. The mall culture is also flourishing paving the way for investors to buy individual or shared spaces of commercial shops.
The outcome is quite straightforward. You get monthly rent from these commercial shops where you have invested your savings. Furthermore, you can always sell these shops once the price has gone up to buy two new shops from the worth of one. Thus, you need to be smart in your sale and purchase. You should keep a sharp eye on all the ongoing developments in different areas of your city. As an investor, you do not target a particular piece of land for the sake of building your own house for living. But, the value of this piece of land continues to increase with time.
Thus, you are gaining profit when you invest in Pakistan which would not be the case if you have kept the same money in your current account. Moving onwards, if you own a house in which you are generally residing on a single floor and using the space of the other floor as storage, be smart. You can start earning from that storage facility. Many families are looking for a house to rent. With some limited investment in the renovation of this floor, you can place the ad for rent. Many people would start contacting you immediately.
If you are still in doubt about whether to invest your savings or keep them locked in your current account, go through these ten reasons why you should invest your money especially in Pakistan.
As discussed at the outset, the circumstances have started to become better for the foreign investors to bring an influx of dollars in different projects with good returns. But, the competition is increasing. In other words, you still have time to start investing immediately to gain huge returns with the least investment.
Limited Constraints for Foreign Investments
Pakistan welcomes foreign investments by placing limited to no constraints on the individuals looking forward to spending their money on different projects. Most foreign investors have exemption from taxes and duties. Moving ahead, if they have to pay the tax, they get concessions over the required payment.
Foreign Direct Investment
Furthermore, foreign direct investment abbreviated as FDI is the best option in Pakistan as the government provides a friendly tax free environment for the foreign investors. Their rights lie with the Foreign Private Investment Act 1976 and the Protection of Economic Reforms Act 1992.
The government of Pakistan is actively working on improving the infrastructure and connectivity of different regions. The focal areas are funding the industrial and social projects, logistics, and public transport. China Pakistan Economic Corridor has paved the way for enhancing the public-private partnership. Thus, new avenues of investment are now opening for people to get good returns by becoming part of these ongoing development projects.
Fast-growing Retail Market
Pakistan is the fastest-growing retail market. The retail stores will grow by fifty percent by the end of this year. All this is the result of the security and comfort that foreign investors have started to find in Pakistan’s economy.
Emerging Middle Class
According to a rough estimate, the Pakistani middle class is over eighty million young talented individuals. They are growing even further. This emerging middle class is growing a lot faster compared to the middle class of other European countries. Most of these individuals are young qualified professionals and graduate. You can expect the avenues which would open with their smart ideas and innovations.
Largest Young Workforce
According to the UN Report 2017, Pakistan is the fifth largest country with a young population. 63% of the country’s population is between the age range of 15 to 30. So, the country has a strong and talented workforce. Thus, the country has huge potential for new avenues and projects to invest in Pakistan.
The population of Pakistan can reach three hundred million by 2050. The rate at which it is expanding will open new opportunities of business and trade with the neighboring countries. Thus, it will bring investment in Pakistan. The young workforce will also increase at the same rate.
Construction, agriculture, textile, and garments are the major industries that have raised the GDP of Pakistan in the past few years. Furthermore, Pakistan can witness a boost in the country’s economy in the upcoming few years being a member of the Next-11 countries with emerging economies.
Pakistan lies at the heart of the Muslim world. It signifies the geostrategic location of the country making it a channel for many countries to get access to warm waters. China realized the significance of investment in Pakistan making it part of the Belt and Road Initiative. Iran Pakistan Gas Pipeline stands as another game-changer to meet the demands of the country. Thus, Pakistan holds many venues for serious investors. The outcome would be two-way traffic providing benefits to the country as well as the local and foreign investors.