Distinguished Business Leaders, Ladies & Gentlemen
I am grateful to the Resource Group and Mr. Zia Chishti for providing me and my colleagues an opportunity to meet with such a distinguished group of corporate and business leaders from around the world.
I understand that your current visit is aimed at exploring both the prospects of business as well as visiting some of the most beautiful areas in the world, located in the North of Pakistan. I myself have always cherished my time in those areas and I am sure that your visit will also be most rewarding in all aspects.
Ladies & Gentlemen!
In 2013, when our government came into office, the economy faced severe energy shortages, inflationary pressures, exchange rate volatility and a precarious security environment. Today, our government has managed to stabilize the economy, despite unfavourable global economic conditions. We first set out to improve the macro-economic outlook and sustained our efforts in spite of strong challenges. As a result, economic conditions in Pakistan are improving continuously. From a 3% GDP growth before 2013, it is projected to achieve 5.5% GDP growth during the current year.
In the last 3½ years, we initiated much needed reforms that aimed at sustainable economic growth and development. We recognised the importance of laying economic foundations that foster skills and capabilities, entrepreneurship, technology, energy, modern infrastructure and a thriving investment climate. Our reforms were multifaceted as we reduced bank interest rates, eliminated tax exemptions to provide a level playing field, strengthened tax administration, rationalized un-targeted energy subsidies, and widened social safety nets. These steps reinforced macroeconomic policies which resulted in lower budget deficit, increased foreign exchange reserves, and lower spending on energy subsidies. This year we are set to cross the 5% GDP growth threshold.
Ladies and Gentlemen!
We are cognizant of the need for a comprehensive and contemporary policy framework that supports macroeconomic stability. We are well aware that international investors need stable markets backed by clear and consistent policies. We are committed to maintaining an enabling policy framework to attract foreign direct investment.
Our vision 2025 maps Pakistan to join the top 25 economies in the world leading to Upper Middle Income country status by 2025. The economy is targeted to grow over 8% between 2018 and 2025 while maintaining a single digit inflation. PricewaterhouseCoopers have placed Pakistan at 20 in its projected list of 32 Most powerful economies of the world in 2030.
As a result of sustained commitment to reform, key economic indicators have improved since our government was elected in 2013. Over the past 3 years, we managed to bring down the fiscal deficit from 8.6% to 4.2%, increase Tax to GDP ratio from 9.8% to 12.4 % and investment to GDP ratio from 14.9% to 15.2%. We have contained inflation which touched 1.6% in October 2015 and has remained well under 3% since then. Prudent financial and fiscal management enabled the central bank to bring the policy rate to a multi-decade low. Industrial sector showed remarkable performance and registered a growth of 6.8 percent during 2015-16. It is poised to do even better this year and onwards.
The consumer market in Pakistan is growing at a very fast pace. The consumer demand of automobiles, housing and electronics is thriving and providing considerable returns to the corporate sector. The services industry particularly telecommunication, hospitality and online-retails are fast growing into attractive areas for investment. Pakistan is emerging as an expanding market for US and European products. With a fast growing middle class, increasing urbanization, growing popularity of international food products, and a rising number of international food chains, Pakistan is poised to become a major destination for international businesses.
Our government has devised a comprehensive plan to create investment friendly environment. We have liberalized investment policies to welcome foreign investments. We offer incentives to attract new capital inflows, including tax exemptions, tariff reductions, infrastructure, and investor facilitation services. Our Investment Policy (2013) focuses at reducing the cost of doing business in Pakistan, improve ease of doing business with creation of industrial clusters and Special Economic Zones to attract foreign direct investment. All this is protected by legislation.
Pakistan Stock Exchange has been created to lower fragmentation of the market and bring it at par with global markets. The bench mark index PSE100, crossed 49,000 in January 2017 and is touching new heights. Recently, 40 percent strategic shares of Pakistan Stock Exchange (PSX) were sold to a Chinese consortium. This divestment is the first such sale in a bourse in the regional markets and it also marks first venture of Chinese bourse outside China. The State Bank of Pakistan and Securities and Exchange Commission continue to improve regulatory environment and oversight of financial and capital markets.
Let me also draw your attention to Pakistan’s strategic location on Asia’s premier trade, energy and transport corridor. It is also the gateway to the energy rich Central Asian States, the financially liquid Gulf States and the economically advanced Far Eastern economies.
China Pakistan Economic Corridor (CPEC) is a key regional initiative for connectivity and shared prosperity of nations. It is in partnership with China, as part of One Belt One Road vision of President Xi Jin Ping. Pakistan, located at the intersection of three engines of growth in Asia, South Asia, China and central Asia is uniquely positioned to become a hub to connect a population of over 3 billion in these regions. Under CPEC, a portfolio of over 55 billion $ is already being implemented. Investment of more than 35 billion $ in the energy sector is being implemented. Apart from Energy, Road and Rail infrastructure, Industrial parks and economic zones and a state of the art Deep Sea Port at Gawadar gives CPEC the potential of changing the destiny of people in the region and beyond.
The corridor will substantially shorten transportation distances between Africa and Middle-East to Central and South Asian regions. CPEC would connect the port of Gwadar to Kashghar. It will not only connect Pakistan to China but also provide connectivity to Central Asia.
Ladies and Gentleman!
International economic agencies are upgrading ratings for the financial and economic stability of Pakistan. Standard & Poor (S&P) has upgraded its forecast of average annual GDP growth from 4.7% to 5%. World Bank forecasts a GDP growth of 5.2 % for 2016-17. S & P also expects Pakistan’s debt to fall below 60 percent of GDP by 2018. It has upgraded Pakistan’s long-term credit rating to B with a stable outlook.
Let me conclude by saying that Pakistan with its sixth largest population in the world, 80 million middle class, blessed with rich human and natural resources, strategically located, politically stable, offering attractive investment policies is a destination no global player can miss. Pakistan is set on track for sustainable growth. I invite you to take benefit from the economic revival of Pakistan and enjoy the first mover’s advantage. Pakistan is ready to do business with the world.
I thank you all.