Pakistan's Ambassadors to U.S. Business

The head of the American Business Council says his Pakistani members are well-placed to help lead the effort to lure foreign investment

Pakistan has achieved an unprecedented level of economic stability over the last few years. Its stock market is making record gains (see BW Online, 4/10/03, "And the World's Top Market Is...Pakistan?"), and a push to privatization by the central government is paying off. Foreign money, most of which used to come into the country via hawala, the informal money-transfer system that bypasses banks, now makes its way through Pakistan's legitimate financial institutions.

Next on Islamabad's agenda: attracting more foreign investment from major corporations. President Pervez Musharraf has taken a keen interest in generating more foreign direct investment (FDI) and has given newly appointed Privatization Minister Dr. Abdul Hafeez Shaikh the job of developing a strategy.

The U.S. is bound to be one of the focal points of whatever plan Shaikh comes up with. From July, 2002, to February, 2003, FDI from U.S. companies amounted to $162.5 million, or 25% of the total, second only to Britain's $197 million. The goal is to attract $1 billion in total investment in 2003 and $1.5 billion next year.

Arshad Nasar, president of the American Business Council in Pakistan, has a unique perspective on what can be done to lure U.S. businesses. In addition to his duties at the ABC, Nasar is the managing director of Caltex Pakistan, an oil-distribution company that's part of ChevronTexaco (CVX ). Nasar recently spoke with BusinessWeek Contributing Correspondent Naween A. Mangi about the ABC and how its work complements the government's efforts. Edited excerpts of their conversation follow.

Q: What's the focus of your group in Pakistan?


ABC, which was set up in 1984, is the largest single-country chamber of commerce operating in Pakistan. We have 57 members, the majority of which are [part of] Fortune 500 companies, from all sectors of the [U.S.] economy: energy and petroleum to textiles, pharmaceuticals, consumer goods, and banks. In all, the companies have invested billions in Pakistan and employ some 20,000 people. Only two of the CEOs are Americans, and the rest are all Pakistanis.

Our real focus stems from the belief that regardless of how many delegations the [Pakistani] government sends out to induce investment, how many road shows we go on, and how many dinners we host, at the end of the day it's foreign investment that attracts foreign investment.

If your present investors are happy and growing, they're the government's best ambassadors for attracting new investment, because any investor worth his salt would like to know what kind of treatment he'll get.

Q: Does the Pakistan government share this perspective?


The people at the top do -- the Cabinet members and others. But the people at the lower echelons of the government don't, and they're the ones who have to get their facts right.

If a government functionary goes abroad and promotes Pakistan, that's fine, and I'm not saying they shouldn't. But if we [at the ABC] do it, it carries much more weight because I'm not paid to do it, and the functionary is. The government must use these [unofficial business ambassadors] more than they have.

Q: How confident are current ABC members?


The Musharraf government brought confidence because we saw a continuity of policies and stability. Now I'm not saying either of those milestones have been achieved yet, but confidence has been instilled. [If a bomb] goes off in a church, and Christians [are being killed] in Karachi, that totally negates [what we're all working for].

Q: How well are ABC companies doing in Pakistan?


This economy offers tremendous opportunities. A population of 140 million is a huge market, and this economy has tremendous resilience, despite everything. Most CEOs [of ABC member companies] reported their best growth year in 2002. And of course if the market was bad, they would have left.

Q: What's the message they're sending out?


The message is that whatever the issues are, this market has quality. There's demand, and there's opportunity for growth. But the message is also...let's see which way things settle.

Q: Is the message being bought by companies back in the U.S.?


Investors are waiting and watching to see what's going to happen with political stability and law and order.

Q: What do companies need to see happen before they come in?


The economic indicators are strong and nicely perceived. Those companies need the guarantee and assurance that their investment is valued, that they can participate in growth, that they won't face bureaucratic hassles.

[Also, they need to know] there will be safety and security, and that the infrastructure expected from a developing country will be provided. This isn't asking for the ideal –- it's just expecting what's normal.

Q: If these conditions are provided, what's the potential size of the investment that could come in from the U.S.?


It's hard to predict but it could be doubled within the shortest possible time.

Q: There has been a global campaign on the Internet by antiwar activists to boycott American brands. And here in Pakistan, the religious parties have repeatedly called for Pakistanis to boycott American companies and their products as a protest against the war in Iraq. Has that affected the business of ABC companies?


I hope good sense prevails and I hope this doesn't persist and take an ugly turn. People need to realize that if they don't buy American products here, profits will fall, and the companies will be forced to lay off employees. Those employees are Pakistani. So those companies aren't hurt -- you're hurt by this.

And it's the wrong signal for encouraging investment. I imagine this campaign could be quite effective in the Middle East.... Here there's a possibility that consumer-goods companies could be affected slightly, but there has been no major dent.

Edited by Patricia O'Connell