Download Speech by H.E. Prime Minister Nawaz Sharif At the World Economic

Speech by
H.E. Prime Minister Nawaz Sharif
At the World Economic Forum’s Annual Meeting
(18 January 2017)
Excellencies, Distinguished Business Leaders, Ladies & Gentlemen,
I am grateful to the Abraaj Group and Mr. Arif Naqvi for hosting tonight’s event and
providing me and my colleagues an opportunity to meet with such a distinguished
group of corporate and business leaders. Coming to the World Economic Forum is a
great opportunity to meet global thinkers, policy makers and business leaders who
shape the future of the people.
The past year has been particularly tumulchuous for virtually the entire globe. Even
established democracies and economic power houses have gone through political
upheavals and economic meltdowns. These developments cannot be ascribed merely
to momentary swings in public opinion generally described as populist movements.
The malaise goes deeper and the causes require a more dispassionate analysis. We
have to ask ourselves today why the voters in the United States favour dismantling the
North American Free Trade agreement (NAFTA)? Why Brexit may have reflected
concerns about the impact of increasing migration? Why well established leaders in
Europe are facing the anger of their voters? The governments’ attitude to the problems
confronting the less privileged may also have contributed to this phenomenon. All this
has to find a place in deliberations at the World Economic Forum this year to provide
some guidance to the world leaders.
Ladies & Gentlemen,
Pakistan is located in a strategic region of the world, which has seen turmoil in recent
decades. Events of global relevance have left deep scars in our part of the world which
remained mired in conflicts bringing misery and suffering. Without peace and
stability, development remains an elusive dream. Therefore, I strongly believe that we
need collaboration and cooperation to meet the challenges confronting us. Without
inclusion and partnerships, we cannot make any headway. This is the approach I
believe we need to take at global, regional and national levels in order to not only
solve our problems but also to create an environment in which the world economy can
rejuvenate and revive.
In 2013, when our government came into office, the economy faced severe energy
shortages, inflationary pressures, exchange rate volatility and a precarious security
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environment. Today, our government has managed to stabilize the economy, despite
unfavourable global economic conditions. We first set out to improve the macroeconomic 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,
At the same time, we launched the most successful counter terrorism operation
anywhere in the world. In a period of two years from mid of 2014, we dismantled
entirely the network of terrorists, and destroyed their hideouts in border regions. The
fact that we lost large number of our valiant soldiers and brave citizens in this battle is
only a testament of our national resolve to root out terrorism in all its forms and
manifestations. Let me assure you that today’s Pakistan is an inclusive, tolerant and
forward looking society. Pakistan is as safe as any other place in the world.
Our government realises that only focussing on growth is not enough. It is imperative
to sustain the growth momentum while pursuing a high growth trajectory. This can’t
be done without ensuring the distribution of growth benefits across the society. Our
Government has launched a series of pro-poor initiatives in health, education and
social protection. With a universally recognized database of the most disadvantaged in
our country, we are targeting our programmes to the poorest of the poor.
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.
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Our government realises the fact that nations rise when they ascribe to a shared vision
of their people for prosperity and development. I am glad to share that we were able to
identify common aspirations of the Pakistani nation in the form of Pakistan’s Vision
2025. It serves as a comprehensive strategy for achieving sustainable growth. It 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.
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.
In the energy sector, liberal and transparent policy is in place for investors.
Government provides necessary support infrastructure with water, power-evacuation
and access to locations of generation projects. Apart from thermal power, Pakistan
also carries huge hydro-power potential of almost 100,000 MWs. Basic investment in
land acquisition and social overhead capital for some of these projects has already
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been made and an early start, cutting down on period of non-productive investment,
has been made possible.
Pakistan’s telecommunications industry holds tremendous potential for growth,
investment and development. Pakistan has just passed through the first phase of
telecom revolution. Emerging technologies coupled with transparent and liberal
licensing policy provides a good launching pad for more investments in this sector.
Pakistan possesses huge potential to become a manufacturing and exporting hub of the
auto industry for renowned original equipment manufacturers (OEMs) of the world.
Local automobile companies and the auto-part vendors have attained excellence in
some fields and are at par with the global standards. There is room for further
development for vendors to scale up their production with the cutting edge technology
and emerging trends in the international automobile market.
Distinguished Guests,
Pakistan is the fourth largest milk producing country in the world with significant
potential for setting up processing units for local consumption and exports. Pakistan
also has the 3rd largest livestock population and our meat demand is growing at 6%
per annum. The recent decision of Dutch leaders in this sector to invest 460 million
US $ in a local food and dairy processing industry is a testament of our potential.
We have eliminated minimum initial capital investment requirements for all sectors.
There is no minimum requirement for the amount of foreign equity, investment or
upper limit on the share of foreign equity allowed except in the airline, banking,
agriculture and media sectors. Foreign investors in the services sector may retain 100
percent equity. Foreign companies are allowed to repatriate 100 percent profits.
In the social and infrastructure sectors, 100 percent foreign ownership is allowed. The
raw materials, plants, and machinery for agricultural and agro-based industries can be
imported without Customs Duty. There is no restriction on payment of royalty and
technical fee. The tourism, housing, construction, and information technology sectors
have been granted “industry status,” which makes them eligible for lower tax and
utility rates. Similarly, tourism services such as airlines, hotels, resorts and road
transportation provide unique business avenues to investors.
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 2017and is touching new heights. Recently, 40 percent strategic shares of
Pakistan Stock Exchange (PSX) were sold to a Chinese consortium. This divestment
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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.
Distinguished Guests,
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 Jinping. 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. In
a recent survey by American Business Council of Pakistan, 78% of US investors plan
to invest in Pakistan while 83% showed optimism about long term economic
landscape of the country. FDI in Pakistan grew by 328% in December on a month on
month comparison basis. The momentum is likely to sustain and even better as
economic growth unleashes new opportunities.
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Distinguished guests,
We are facing challenges, whether living in developed or developing countries. It is in
forum such as WEF at Davos that we need to think and think hard. We must prevent
globalization from being trashed because of rising surge of negative publicity and
shrill slogans of nationalism and protectionism. We in the 21st century cannot abandon
our commitment and attachment to the core principle of representative democracy and
a market economy. We must strive to empower the largest number of our citizens by
honouring our pledges to make a difference, however small in their lives. This is what
we are doing in Pakistan. We are working to ensure the rule of law in the country
while making the democratic institutions stronger and more relevant in all aspects of
governance.
Ladies and Gentlemen,
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.
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