Posted by: Administrator | 29 September, 2006

President address to Indonesian Business Community

25 April 2005, Indonesia

Bismillah-hir-Rehman-nir-Raheem:

Mr. President, the ambassador, Excellencies this is indeed my proud privilege to get this opportunity tonight to address such an elite gathering of impressive cooperate leaders, Businessmen, traders and investors. I am extremely great full to the ambassador for hosting this dinner and allowing this opportunity to exchange views and express my views on the issue of economic, commercial and trade relationships.

People of Pakistan joint the freedom struggle on the side of their Indonesian brothers fight for independence there 800 and all from the area which now belongs to Pakistan that was the warmth and the association of the people of Pakistan with Indonesia and subsequently in 65 war of which I was also a part, I was a very young officer, I know when president Sukarno gave a totally blank cheque to Pakistan and all that the armed forces of Pakistan required to support the war effort this cannot be forgotten by the people of Pakistan that is the closeness of relations between our two countries therefore it is extremely important that we cement these relations again through economic relationships which I may say now coming to economic relations are not at the level that the political relationships exist so therefore I need to talk of how to enhance these economic relations and when I talk of economic relations I placed them in three categories.

One is enhancement of trade the other is going to joint ventures or investment so theses three areas which I would like to keep speak on, the scope within these three areas where we can enhance our relations. Ladies and gentlemen, let me say that Pakistan today is following the policy of liberalization, deregulation and privatization very strongly. We have created an investor friendly environment in Pakistan and I will elaborate on this later. I also believe that the basic ingredients for the promotion of business are two for healthy business activity.

One is a vibrant stable economy of the country as far as Pakistan is concerned or shall I put it this way as far as Indonesia is concerned one sees the vibrancy on your roads and in Jakarta where ever gone in this short time. One sees that you are moving forward, one sees development in your country and it gives us immense pleasure that that is happening in Indonesia. As far as Pakistan is concerned I would say that our economy which was unstable during the decade of 90s with what ever we went through we were at a stage where may be we were going to be a defaulted state but we have come a long way in the last five to six years.

The economy of Pakistan is extremely stable and it is on the rise. All the macro economic indicators of Pakistan are Positive each one of them. You take any factor it is positive so therefore I can safely say that we have stabilize the economy and the economy is on the rise. When we talk of macro economic indicators we have a very strong foreign reserve base which is equal to about 11 months of imports which is considered to be exceptionally good our GDP is rising. It rose 6.4 [%] Per cent last year and we are certain to cross 7 [%] per cent this year and we are reasonably certain to sustain this process and cross 8 [%] per cent in the coming years this no mean achievement from where we started. We have reduces our debts and when we reduce our debts our debt service liability has reduced. The liability which was almost 64% of our budget come down to around 30 [%] per cent of our budget that much more money is available for development we did all this through controlling the fiscal deficit which is under 4 [%] per cent and also converting the balance of payment which was in deficit in the past was about 4 to 5 billion dollars per annum is now in a surplus of about 2 billion dollars so this is a total sea change in the economic complexion of Pakistan. Therefore ladies and gentlemen our exports have grown over these last 4 to 5 years by about 80 [%] per cent our revenue collection has grown. We have expanded the base and grown in last 4 to 5 years again about 80 to 90 [%] per cent so all these factors have enhanced our credit rating internationally. It has enhanced substantially. Our exchange rate is stable we keep the inflation under control in single figure it was around 4 [%] per cent but unfortunately because of the oil rise and because of the inherent fallout of rapid development and rapid growth in Pakistan this time inflation will go up but it will certainly go into single figures so this is the positive outcome and because of the confidence that the world is seeing in Pakistan’s economy. There is tremendous amount of foreign direct investment coming into Pakistan so as far as the economy is concerned in the prerequisite business environment is met in Pakistan.

The other area which I 2 would like to briefly talk of the second ingredient towards healthy economic activity is the stable law and order. Law and order was bad because of all the fallout of whatever happening on our western borders in Afghanistan right from 1979 when soviets invaded Afghanistan and the whole world specially the western world joined hands to encourage Muslims Mujahideens form all over the Muslim world to converge into Afghanistan through Pakistan. We were in the lead role. We did all that and we fought against the soviets with the west encouraged by the west obviously it has fallouts. For ten long years this was happening arming equipping financing mujahideen’s activity against the soviets so much so that not only fighters from all over the Muslim world came including your part of the world but also people from Maddrassa in our country in the border areas were trained and equipped encouraged to go and fight the soviets so this had a fallout and together with this the freedom struggle of Kashmir stated on our eastern borders. We have our emotional, sentimental associations and attachments with the people of Kashmir. It had direct fallout on Pakistan then in 1989 when the Soviets withdrew every one left the area because geo-strategically the people were looking as the attitudes were Euro-centric. It was more to do with east west conflict Warsaw pact, NATO and the Berlin Wall so they all left us high and dry they left Pakistan alone to fend for the vacuum alone with 4 million refugees from Afghanistan in our territory and intervene warfare, warlordism in Afghanistan which then led on the emergence of Talibans, warfare continued then the incident of 9/11 and then the operations in Afghanistan. Imagine the turmoil of all this on Pakistan. This is what we have to fend with when I came on the scene in 1999 and compounded that our economy was almost going to be defaulted. We met this challenge and may I proudly say that today the law and order situations is good because we confronted the situation we strategies. We confronted all the terrorists Al-Qaeda or call it by any name; any foreigner in Pakistan using our soil to carry out terrorist attacks in Pakistan or out side was to be dealt with force. We did that boldly, we got about 700 from our cities, we occupied all their sanctuaries in the mountains at the cost of casualties to our own soldiers. I am proud of the fact that I am proud to be a leader of armed forces who suffered casualties but saved Pakistan. Therefore now today terrorists in Pakistan like Al-Qaeda is on the run we have broken their back, we occupied their sanctuaries in the mountains and in military terms we have broken their horizontal and vertical linkages therefore they seized to exist as a homogeneous force. So

Ladies and Gentlemen on the law and order situation may I very proudly say that we are still facing problems but over ten months there haven’t been terrorists attack In Pakistan this I the value and success of law and order in Pakistan and whatever irritants we see now they are more related to sectarian extremism which we are trying to tackle in a different manner but as far as the law and order from business point of view is concerned it I absolutely stable and good. Having given these two prerequisites of good business I would also like to say that I am very happy that the private sector is here. It is basically the private sector which is the driving engine for any development for any economic activity, public sector and government can only facilitate so therefore while Pakistan and Indonesia at the government level. When I met your president we have decided we need to institutionalize the arrangement of brining the private sector in contact through a joint business council. It is a private sector which needs to come and interact with each other so that business commercial activities are promoted.

I am very sure that in the coming years we will go forward, we will try to bring private sector in contact with each other so that area of commonality can be identified and we can move forward. Let me now come straight to trade between Indonesia and Pakistan is at a level of to be exact four hundred and two million out of which only 20 [%] per cent is exported from Pakistan to Indonesia therefore the trade balance is very much is in favour of Indonesia. This level of trade is low and there is imbalance which needs to be corrected we need to enhance this. I have seen that there are many areas of commonality in the past we use to import palm oil not from Indonesia but we are intend to enhance trade with Indonesia we diversified and today we import a lot of Palm oil from Indonesia. I know that as far as Indonesia in concerned it imports several items from Pakistan to quote a few which I noted textiles, rice, leather and leather products, chemicals fruits and vegetables.

I always make an habit when ever I go to any country to ask my commerce minister who is sitting right hear and the export promotion 3 bureau to give me on one page what that country imports at what level, what we export of those items to that country and I know with out any figures that there is lot that you import in these areas which you import also from us but this import from Pakistan certainly be enhanced manifolds so this is the area I would seek your indulgence in Indonesia to increase the imports from Pakistan other than that we too identify there are more areas which can certainly be identified and there are I know that where you are interested in trading and you are trading with others part of the world that we can trade with each other in further enhancing this level of hundred million dollars of trade between our selves.

 The second area is joint venture or investment I would like to talk of this. First of all as a lay man of economics there are two elements that any investor looks for when he wants to invest or enter into joint venture with any body in any country first element is the security of his capital.

Is the investment secure, let me assure you ladies and gentlemen there 6 to 700 foreign companies in Pakistan today. Over these last 57 years of our existence not one has ever been harmed we had a decade in 70 of nationalization one of the foreign firms was nationalized or touched. Another example in 1994 we had fourteen independent power producers which came into Pakistan these were thermal based power producing units. The arrangements that was arrived at 1994 was extremely negative to the country but for what ever reasons I don’t know, but In ‘99 we realized that there were very negative and we where in very bad state of economy but we met the commitments of the previous governments irrespective of whether they are fair or not and we carry on meeting those commitments even now so therefore let me assure you the security of your capital and there are legal arrangements to cover and ensure more security is there.

The second element that any investor would look at is profitability nobody invest money unless there is a return. Again let me assure this gathering I have into the profitability of all the foreign investors, foreign firms in Pakistan and my finding was very amazing most of them have made profits between 20 and 50 [%] per cent all of them have profits in double figures we don’t grudge that as long as win-win for both Pakistan and the investor so therefore the profitability margins are very high in Pakistan. What does Pakistan offer to an investor I would like highlight few areas which may be known to you but I still want to underline them first of all please don’t treat Pakistan as a stand alone country this is very important I don’t think any one sees this till I focus on it.

Pakistan purely geographically is placed in an area which is the centre of the gulf central Asia and Afghanistan western region of China which is developing very rapidly the Sinkyank region and South Asia. These regions if you see cannot interact with each other unless Pakistan is involved none of them can interact with each other. If today India wants gas they can from Turkmenistan, they can get from Iran; they can get it from Qatar they cannot get it unless Pakistan is on board because all of them will go through Pakistan. Central Asia is land locked it is going and looking for access to the world, they will only have access if Pakistan let them go through to the sea and through our ports. China is developing any import or export from the Sinkyank region, if this takes that over land China to the Eastern coast the distance will be four times that if they were to go through Pakistan and go through our new Gwadar port. We are normalizing with India we have signed a SAFTA (South Asia Free Trade Agreement) so this is the significance of Pakistan. Please see Pakistan as a hub.

When we talk of joint ventures and investment, Pakistan is the 6th largest producer of the world but we do not produce any dairy product there is tremendous scope here and we are trying our best to bring about a white revolution in Pakistan. The government is trying to facilitate the dairy products. We have may be the best fruits in the world and we have excellent vegetables but there is no food processing and I know that Indonesia is good at food processing so therefore tremendous amount of joint venture policies in this area of agro based industry specially food and food processing and dairy products. Other areas I would like to talk of oil and gas exploration and mineral and mining, I know that Indonesia is doing very well here and there is tremendous scope in this and we can benefit from your experience here.

Other than this there are fisheries, housing and construction, small and medium enterprises, power hydroelectricity, coal, alternate energy sources like Gas and pharmaceuticals. I don’t want to go in the details but all theses areas have tremendous scope and each one of them is on the rise. May I pinpoint another two areas which I thought Indonesia point of view. Indonesia exports lot of edible oil and we buy it from you. I wonder whether edible oil refinery could be open in Pakistan by any investor from here. That will go a long way to provision to this whole area that I spoke of not only the Pakistan not only the Pakistani market. I know that Indonesia is rehabilitating its sugar industry, so this is an area I know that our heavy mechanical complex and state engineering corporation which produces plants and machinery 4 this is an area where we can collaborate on machinery and plants at the much cheaper cost. Commercial activity also involved defence products. We are the biggest purchaser of the arms and ammunition and we purchased it from the developed world. When we out under sanctions one of the silver lining for the indigenous productions. We have succeeded in major break through in indigenous productions and major equipments. Let me tell you that when we go for the break through the quality of that equipment is as good as and better than all the products and the rate is one fifth to tenth of the total cost. Unfortunately we are found of spending our money unnecessarily and they are charging us ten times. We are paying this because we do not trust in ourselves. The worst thing is that the market in the Muslim world is easiest. But we go to the West market and we give this market to them. I think we need to understand where we stand. If we collaborate and we do good to our own economy by purchasing and doing things at tenth of the cost because they are charging money for technology. So this is the value of the technology. So lets good to each other and there is big scope in it.

Pakistan is privatizing in a big way in over the last four years. We have privatized over two billion dollars majors of them are tanks and Karachi Electric Supply Corporation (KESC). We are in the process privatizing of very big corporation that is PTCL, PSO, OGDC and PPL. These are mega projects and are getting a lot of interest all over the world. I would conclude by saying I am here in this conference and the purpose of this conference is south-Asia interaction and cooperation on evolving methods dealing with North on guarding our own interest.

The main focused area is economy, commerce and trade with the North. Therefore we are in the hands of North and in the monopoly of north. This conference is meant for generating more trade, economy and commercial within the South Asia. We both belong to developing world. We both need to assist each other for our mutual benefits. There are tremendous areas in which we can do that if we have the will if we have the desire and with the political relationships that we had always enjoyed there ought to be will and desire. Let me assure you Pakistan has the will and desire to enhance relationships with Indonesia.

Thank you very much.

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