Good Morning,
Thank you so much, Mr. Runde, for hosting this event and centering our conversation on the prospects for Pakistan’s economic development. I recall in 2015, you contributed a seminal piece in Forbes arguing that Pakistan had the potential to be a global turnaround story; and advised U.S. policymakers and business leaders to look at Pakistan beyond the security lens. You identified planning and action around trade and investment, education, and broader economic progress. You had recommended that the United States ought to be Pakistan’s preferred partner. You were right then and your counsel is sound today.
Over the past two years, Pakistan and the US have consciously fostered congruence in their relations and we would continue to build on this new threshold. Pakistan, I assure you, will have a bright future, despite our present challenges.
Pakistan is the 24th largest economy measured by purchasing power parity (PPP). It is the fifth most populous country, with a population of 240 million, 64% of whom are below the age of 30, 60% of them of working age, and 42% in the middle class according to the United Nations Development Programme. We are bilingual; and we have 190 million mobile telephone and 130 million broadband subscribers. The nation is tech savvy and the economy is digitizing fast.
Our priorities are to create wealth, enhance the quantity and quality of human capital, upgrade manufacturing, modernize agriculture, switch to export-led growth, prepare for climate change, eradicate poverty, make our products competitive, and brand Pakistan as an economic and trade hub. Pakistan is no island; no country is. Pakistan, in fact, sits at the heart of the economic ecosystem of West Asia extending from Central Asia to the Middle East to North Africa. We invite our friends to leverage our unique economic geography.
As I speak, structural economic reforms are underway. We have decided to turn a series of recent crises – the pandemic, the floods, and post-Ukraine supply chain disruptions– into an opportunity to implement a broad range of economic and human development reforms.
The World Bank’s proposed Reforms for a Brighter Future initiative – Time to Decide, released in December last year, would neatly fit into this paradigm. The Brighter Future reforms are pathways for: 1) rapid growth in human capital; 2) sustainability in public finances; 3) competitive and outward-oriented private sector; 4) realizing Pakistan’s agri-food potential; 5) energy sector sustainability; and 6) strengthening institutions for effective reform implementation.
To accomplish economic reforms, we have national consensus to streamline and eliminate non-targeted subsidies, expand tax base, trim non-performing state-owned enterprises, pare back market distortions and increase government’s support for the marginalized segments of society. All these reforms are designed to address fiscal and external deficits and rev up our growth engines.
Pakistan has a hospitable foreign direct investment (FDI) regime; and we seek investment in infrastructure development, energy, agribusiness, industry, and ICT. Despite a demanding macroeconomic environment in the past two years, foreign businesses did not scale back. Instead, we saw new capital investment from Canada, the Gulf region and China.
The United States is a big investor in Pakistan where 80 American enterprises, most of them Fortune 500, are profitably running their businesses. These include food products, pharmaceuticals and healthcare, agriculture, and financial services.
The US private sector is also investing in ICT and alternate energy; and, in the near future, its share in solar and wind power generation will grow.
The US is the largest single-country export destination for Pakistan; and last year, we had a trade surplus of $6 billion in our favor. In February 2023, Pakistan and the US successfully held the ninth ministerial meeting under the U.S.–Pakistan Trade and Investment Framework Agreement (TIFA), after a gap of 7 years.
Pakistan’s strong diaspora in the US, estimated at 1 million, builds bridges between Pakistan and the US and is becoming leader in channeling US investments to Pakistan. Besides, in the last fiscal year, our US-based diaspora’s investments were $ 3 billion, the same as in the previous year.
To answer your question as to what are the most promising sectors, I will start with the tech sector which has witnessed a brisk pace in the past four years. A small $ 10 million venture capital funding has soared to $ 4 billion. E-commerce earned $ 6 billion last year. Tech startups covering fintech, healthtech, ed-tech, retail, real estate and transportation are transforming Pakistan’s economic landscape.
This is just the beginning. New technologies – AI, robotics, blockchain, synthetic biology, you name it – are being taught in our colleges and universities and assimilated by industry.
Venture capital firms from the US, Europe, the Gulf, China and South East Asia are financing these startups because they see Pakistan as the next digital hub, which even now has 30,000 IT firms; and 75,000 IT graduates are joining work force every year. We are training additional 200,000 IT experts to meet the growing market demand. We may well surprise you soon with trained semiconductor experts.
Other areas of direct interest to American investors would be energy, agriculture and critical minerals. And these four areas have been prioritized by the newly constituted Special Investment Facilitation Council (SFIC) for fast-track foreign investment. Pakistan is sitting on a treasure trove of minerals. We have some of the largest reserves of copper, gold, lithium, rare earth elements, magnesium and cobalt. We invite investors to help extract these minerals and process them for industrial use along the value chains. Pakistan qualifies to become the member of the Minerals Security Partnership (MSP). The SFIC, as one-stop shop, will guarantee speedy approvals, project development and implementation. A raft of incentives is being offered to investors.
To improve the investment climate, we have taken measures to strengthen enforcement of intellectual property rights, streamline dispute settlement, ensure protection of foreign investment, give equitable dispensation in taxes to foreign investors, and provide tax exemptions.
What do we want from the United States in the next 10 to 20 years? More investment in Pakistan and through Pakistan to the West Asian hemisphere. To achieve this goal, USAID, DFC, Exim Bank and the Trade Development Authority can play a catalytic role. Restoration of the General System of Preferences by Congress will open doors for Pakistani products.
We are conscious that political stability and economic growth are symbiotic. Pakistan is the fifth largest democracy in the world. Pakistan’s political stability will be delivered by its people and political parties. They will build an equilibrium that safeguards the supreme interests of Pakistan.
Pakistan is key to South Asia’s security. Right now, the US is preoccupied with or constrained by its strategic priorities in our neighborhood, Europe and the Middle East. This limits its attention to Pakistan. Both sides ought to work to enhance the space for Pakistan-US cooperation Our relations are a common good. It is in the strategic interest of both the US and Pakistan to remain productively engaged.
The USG has cast off the Indo-centric approach towards Pakistan, yet South Asia’s security needs to be prioritized in its own right, not as a subset of the Indo-Pacific Strategy. India and Pakistan, two nuclear powers, should reestablish communication channels for confidence building and strategic restraint. The issue of Jammu and Kashmir cannot be erased by realpolitik. For durable regional peace and stability, it must be resolved through bilateral, trilateral or multilateral statesmanship in accordance with international law.
Pakistan should be a meeting point, not a battleground for the United States and China. Both countries are most welcome to invest in Pakistan in the areas of their respective competencies and competitiveness.
We await American decisions on the restoration for Pakistan of military sales and military financing and supply of critical equipment to keep the strategic balance and fight the raging threat of terrorism. A recent UN Analytical Support and Sanctions Monitoring Report has established that Al Qaeda has been training Tehrik-i-Taliban Pakistan in eight camps in Afghanistan to support their cross-border attacks in Pakistan. ISIS-K and TTP attacks are a potent threat to Pakistan, the US and its allies. We must have a coordinated strategy to eliminate it.
I convey my gratitude to a majority of U.S. think tanks and experts who have advocated for stronger US-Pakistan relations steered by diplomacy and focused on continuity of security cooperation, regional stabilization and people-to-people exchanges. Also thank you, Mr. Runde, and thank you CSIS.
Pakistan and the United States, in the current phase, are developing a new steady rhythm for their relations, not buffeted by the cyclical patterns of highs and lows. In the past two years, we have made progress in creating a template for vigorous cooperation. We held more than a dozen high level dialogues last year and this year we are preparing for higher level political, economic, trade, counter-terrorism and defense dialogues. Wait for the results!
The future of Pakistan-United States is bright!
I thank you.
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