Foreign companies boost investments in Pakistan as situation improves

In a meeting with Pakistani Prime Minister Imran Khan in January, the company’s executives expressed confidence in the increased security across Pakistan.

June 30, 2019 03:20
4 minute read.
A man stands next to a Pepsi advertisement while using an umbrella in the rain, in Rawalpindi

A man stands next to a Pepsi advertisement while using an umbrella in the rain, in Rawalpindi. (photo credit: FAISAL MAHMOOD/REUTERS)

 [Islamabad] As law and order improves in Pakistan, US-based companies have started to pledge increased investments of millions of dollars in the South Asian country.

Officials from Pakistan’s Ministry of Finance confirmed to The Media Line that talks were underway with the management of US-based companies Cargill, Coca Cola and PepsiCo. All three already have a presence in Pakistan, which has the world’s sixth largest population, with 204.5 million people. 

Privately owned food and agriculture giant Cargill announced earlier this year it was planning to expand its operations across Pakistan over the coming three to five years in the agriculture sector, including dairy, edible oil and animal feed.

In a meeting with Pakistani Prime Minister Imran Khan in January, the company’s executives expressed confidence in the increased security across Pakistan.

Pakistani officials believe Cargill investments will support the country’s overall economic development and contribute to local employment.

Mohammad Irfan, a public relations officer for the Ministry of Commerce, Textile and Industries, told The Media Line it was eager to cooperate with the US-based companies investing in Pakistan.

Abdul Razak Dawood, an adviser to the prime minister on commerce, textiles, industry and production, told The Media Line that Pakistan was “leaving no stone unturned” to improve the country’s business environment.

“The business-friendly vision of the government is expected to make Pakistan an irresistible destination for investors,” he told The Media Line. 
Cargill has been doing business in the country for more than 30 years. 

“We have received a very positive response from the Pakistani government and we value their support as we expand our presence here, helping industries, farmers and communities succeed,” Imran Nasrullah, Cargill Pakistan’s CEO, told The Media Line. 

Dawood confirmed to The Media Line that PepsiCo and Coca Cola had informed the government that they would consider investing a further $1.2 billion in the coming years. 

Over the last five years, PepsiCo has invested $800 million to expand its infrastructure base and diversifying its products in Pakistan, while Coca-Cola has invested $500 million in an expansion drive for its six bottling plants. 

Analysts believe Pakistan has become a hot market due to its fast-growing population, with 100 million people below the age of 30. 

“It is a country with a young and growing population, an ideal market for companies like PepsiCo and Coca Cola,” said Ishrat Bhati, an Islamabad-based analyst on food security. “It is this youth bulge which is attracting global companies in Pakistan along with the increasing affluence of the middle class.”

Improved law and order in Pakistan is said to be one of the greatest factors behind the decision by US companies to investment more in Pakistan. In recent years, there has been a steep drop in militant attacks, which had been a major deterrent. 

A report by the Islamabad-based Center for Research and Security Studies (CRSS) found that monthly terrorist-related fatalities in 2018 were significantly lower – 45 percent less – than those in 2017, except for July 2018, when an Islamic State suicide bomber killed at least 159 people and injured 200 in the northwestern city of Mastung during an election rally.

According to the report, there were 1,131 terrorist-related fatalities in 2018 compared to 2,333 in 2017. It suggested that terror attacks had gradually dropped since 2014 when the Pakistan military launched “Operation Zarb-e-Azb” to counter militancy across the country. 

Beijing’s investment in the multi-billion-dollar China Pakistan Economic Corridor has also helped growth in Pakistan.

According to a World Bank index ranking countries according to the ease of doing business, Pakistan moved up 11 places last year to number 136, largely thanks to reforms carried out to help create jobs, attract investment and make a more competitive economy. The previous year, it was ranked 147th among the 190 nations surveyed.

According to the World Bank’s annual flagship report “Ease of Doing Business 2019,” Pakistan showed some progress on the availability of electricity and the ease of securing construction permits, getting credit, paying taxes and trading across borders.

Apart from US-based companies, the Netherlands-based All Power Solution company has been in talks with Pakistani officials to set up a steel plant in Karachi with an equity investment of $4 million.

All Power Solution is a big name in the business of power plant management, and the Netherlands is the leading exporter of machinery, electrical machinery and mineral fuels to Pakistan.

“The Netherlands company has shown interest in investing in Pakistan. The proposal is at a preliminary stage, hence there are no further details,” a Pakistani official told The Media Line.

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