Foreign Direct InvestmentChallenges and Opportunities

The Pakistan Perspective

BySayyid Mansoob Hasan, FCMA

Human development has been constrained by either the

resources or effective utilization of the resources

The world where we live and prosper has never been out of

resources

Only we were unable to understand the resources and

lacked the knowledge as to how to utilize them effectively and

efficiently

We have been consuming resources and spending hem

mostly on fulfilling our desires instead of the needs

The resources were taken into “concentration” instead of

socializing them

Monopolies were created

Wars and conflicts were staged and nations were put into chaos

only to capture the resources

human beings were the “Commodities”

The era of modern age

awareness and consciousness became better

the norms of exploitation were also changed

The dynamics which control the world

EconomicsFinanceTrade

InvestmentGeo politics

Communication and media

Each and every mechanism was used to exploit the poor

Our immediate history

East India Company

1600: British East India Company 1602: Dutch East India Company 1616: Danish East India Company 1628: Portuguese East India Company 1664: French East India Company 1731: Swedish East India Company

From the History of Sub-Continent India-1

1600: British East India Company (No direct shareholding of the British Crown, only indirect control)1613-14: British East India Company sets up trading post at Surat1615-18: Mughals grant Britain right to trade and establish factories in exchange for English navy's protection of the Mughal Empire from the Portuguese sea power1764: British defeat the weak Mughal Emperor to

become rulers of Bengal, richest province of India

1773: British East India Company obtains monopoly on the production and sale of opium in Bengal1792: Britain's Cornwallis defeats Tipu Sahib, Sultan of Mysore and most powerful ruler in South India, main bulwark of resistance to British expansion in India1799: Sultan Tipu is killed in battle of Srirangapattinam1809: British strike a bargain with Ranjit Singh for exclusive areas of influence1843: British conquer the Sind region (present-day Pakistan)

From the History of China

1685: Kangxi became the first emperor to open limited trading with foreigners, which started with the Canton territory. He also imposed strict terms for trades such as requiring foreign traders to live in restricted areas, staying only for the trading seasons, banning firearms, and trading with silver only1699: The British East India Company made the first sea venture to China in 1699, and the region's trade with British merchants developed rapidly soon after1711: The company established its first trading post in Canton

By 1773: The British reached a landmark 1,000 chests of opium in Canton with ChinaBy 1799: Reached the consumption of 2,000 chests annually1839: The refusal by Qing Dynasty authorities to import opium resulted in the First Opium War between China and Britain during 1839-18421841: Hong Kong Island was occupied by British forces on 20 January 1841

1842: On 29 August 1842 the island was formally ceded in perpetuity to the United Kingdom under the Treaty of Nanking. The British established a crown colony with the founding of Victoria City the following year1856-60: The Second Opium War happened during 1856 and 1860, China was defeated again1898: The “Convention for the Extension of Hong Kong Territory also known as Second Convention of Beijing on July 1, 1898, which also includes New Kowloon, granting a 99 year Lease to Britain which was to end on June 30, 1997

Hong Kong after British Occupation

Hong Kong became the “Hub” of all illegal businesses globally and

a “Black Market” for many “Products”

CasinosDrugs

WeaponsMoney laundering

Smuggling of prohibited goods

The Coincidence?

1773: British East India Company obtains monopoly on the production and sale of opium in BengalBy 1773: The British reached a landmark 1,000 chests of opium in Canton with ChinaBy 1799: Reached the consumption of 2,000 chests annually

What is the most famous product of Afghanistan?

From the History of Sub-Continent India-2

The Sub-continent India remained in the rule of East India

Company until the First Indian Revolution of 1857 (Sepoy

Mutiny of 1857 for the British)

1857: The Crown took over the British East India Company and its three Armies1876: British Queen Victoria (1819-1901), head of Church of England, is proclaimed Empress of India (1876-1901)1895: The three Armies were merged into United India Army1906: Muslim League political party is formed in India1939: Mohammed Ali Jinnah calls for a separate Muslim state1940: The Pakistan Resolution1947: The Creation of Pakistan

The Hong Kong Handover

1984: On December 19, 1984 a declaration was signed by People’s Republic of China and the Kingdom of Britain. The declaration stated that China had decided to resume the exercise of sovereignty over Hong Kong (including Hong Kong Islands, Kowloon, and the New Territories) with effect from 1 July 1997 and the United Kingdom Government declared that it would restore Hong Kong to the People’s Republic of China with effect from 1 July 19971997: Honk Kong was handed over to China

Lessons from the History

All that happened in these two major parts of the world started

with two small steps or you may call Foreign Direct Investment

for trading by British East India Company

Setting up of a post atSurat, Sub-Continent India

in 1613-14

and

Setting up of a trading post in Canton, China in 1711

Now we can very well understand

The Foreign Direct Investment

Horizontal FDI

Vertical FDI

Platform FDI

Where do we stand in FDI?

SAARC Countriesby

values

SAARC Countriesby

global ranking

Foreign Direct Investment in Pakistan started rising after the

takeover of government by President Musharraf when Shaukat Aziz was the Finance Minister and

the FDI further escalated in the term of Mr. Shaukat Aziz as Prime

Minister during August 2004 to November 2007

It is interesting to note that

“In 2002, Aziz worked with U.S. administration to help advised

the United States to finance the war in Afghanistan”

“On April 2002, Aziz chaired a historical meeting on behalf of

Pakistan and United States, helped the G7 members to understand the

useful information how the illicit money is transferred was shared with the finance ministers of G7 members

and Pakistan on other side”

The War on Terror

It has changed the perspective of investments

and foreign direct investment

Vested interests have recently changed the geo-political

conditions of many countries especially

the Middle Eastern Arab states

The Source of Arab Spring is somewhere offshore

The investment flow is according to the political and geo-political

great game plan

IMF and World Bankand the Vested Interests

They are one and the same

Looking after their interests in one form or the other

Do you remember?

Mr. George Sorosand

East Asia Currency Crisis of 1997

Pakistan

The Challenges and Opportunities

With all the abundant and

all kinds of resources

Pakistan is nowhere in the Economic scene of the world

It can be one of the top developed

countries in the world

Its strategic advantage has become

the strategic disadvantage

Its ports

Its sea shore

Its natural resources

Its geographical position

Everything it can benefit from has been turned into

disadvantages

We have the potential to grow

To grow at a scale

and speed

not witnessed anywhere in the world

We need to

Change our paradigms

We need to look

At a broader scale

We need to

Rethink

Rethink in the best interest of the nation

Redo a lot of things

Review our policies

Review our own perspective

Review our own self

Redefine our own self

and our own image

We are blessed with all the best resources in the world

The people

and their minds

The land and the landscapes

Everything within and above the earth

Everything in the bottoms of the sea

and within the sea

The air

Everything provides us ever great opportunity to benefit

Economically

and

Socially

There is a great potential of investments

Infrastructure development

Housing

Energy

Healthcare

Education

Manufacturing

Mining

Agriculture

Our development can not only benefit our own country

Pakistan

It can also surely provide the support for the development of

other parts of the region

especially the neighbors

God bless Pakistan