PRESIDENT’S ADDRESS AT A LUNCH WITH BUSINESS EXECUTIVES IN DAVOS
27 Jan, 2008
Ladies and gentlemen responding to the invitation of the President we have with us business and industry leaders that is what makes this luncheon special. The President is accompanied by Governor State Bank, Foreign Secretary and the Foreign Minister of Pakistan who has passed to the tone to a caretaker into Pakistan to share his thoughts and visions with the participants of the luncheon today.
President Musharraf: Bismillah al Rahman al Raheem. Thank you very much for the introduction Masood Sahib, thank you very much for all of you ladies and gentlemen to be here at this lunch, thank you very much for giving me this opportunity to be able to speak to you on Pakistan specially focusing on the business opportunities or the investment climate in Pakistan. And how our economy has been doing? I know the turbulence that you see in Pakistan. You read newspapers. You are watching television of course. In spite of all that I have come here to sell Pakistan to you and show you our success story. Firstly because I know whatever I am going to be saying to be the fact that it is a country where investment and commercial or economic activities would be very fruitful. And also may I say to all this audience that when you trade, when you enhance your trade and come for investment in Pakistan you are contributing towards job creation. Therefore, you are contributing towards unemployment reduction and poverty alleviation. And therefore, you are contributing in the long term to the root cause of striking against terrorism and extremism. So I would like to say that please help us fight terrorism and extremism through increased trade and commercial activities and investment in Pakistan.
Now the obvious question I would like to attack right away right in the beginning why should you come to Pakistan under the present law and order situation that must be coming to every one’s mind. I would like to justify firstly that this militancy or law and order that you see is confined mainly vastly I would say to the tribal agencies of the frontier province of Pakistan. And within the tribal agencies, the seven tribal agencies, the two of them that is South and North Waziristan. If I was to give you the population of this affected area, of the entire frontier, of the entire tribal agencies all seven, is about two per cent and the south and North Waziristan from where the main problem is arising to be point three per cent of population of Pakistan. So I get disturbed in Pakistan when the media or any body in the world thinks that ninety-seven point seven per cent of Pakistan can be held hostage by point three per cent disturbers. The other issue that I would like to raise further elaborating that all the suicide bombs that you may be hearing and which disturbs every one, disturbs me also are targeting for a purpose because of certain actions that we have taken and successfully taken. They are targeting the government, the political leaders, me, Benazir Bhutto in an act of desperation I would say. So, we are going strongly against them. We have not seen a single foreign enterprise targeted by a suicide bomber or through any law and order action.
There are about seven hundred foreign firms today operating in Pakistan if not more I do not know none of them has ever been attacked. Each one of them is making good profit and progressing. So therefore, I would like to say that the law and order situation does not affect investment in Pakistan. So therefore, if you come into Pakistan for investment let me assure you that your investment will remain safe. On the political side people think that there is instability again. Let me assure you we are having our elections on 18th of February. Yes, indeed there was a degree of destabilization on the political side but the whole process is on rail now. I have been elected President by the assemblies for tenure of five years. The elections on 18th of February will put a Prime Minister in place whether it is which ever party he belongs to or through a coalition and according to the constitution of Pakistan the president has a role to play. The Prime Minister is the man who runs the government. He will run the government whoever it is. And I know that I will function reasonably well. I will function well with any one. So I do not see any political turbulence also because every one would be interested in moving Pakistan forward. So this is as far as law and order and political disturbance is concerned. Let me reduce the timing I will come now to the economic realities of Pakistan. In spite of all the turbulence ladies and gentleman that you may have seen or may have noticed which is not seen in the correct perspective by the foreign media and by many other people. It is not seen in the correct perspective. Let me tell you that Merrill Lynch today thinks that Pakistan economic growth will be six point eight per cent. And the economists forecast seven per cent growth. This is in spite of what ever is happening. All our growth indicators, if you take the industrial sector, the construction sector have in the past six months has gone by seventeen point two per cent. The service sector has grown by eight per cent, manufacturing eight point four per cent. Large scale manufacturing, nine per cent. This is the growth. And I am very glad that Barclay is here. They are entering in Pakistan. I am very glad China Mobile is here. They are entering Pakistan. 3
And I am very glad to say that he has said that already they have invested about eight hundred million dollars. And they are going to invest another eight hundred million dollars in the infrastructure of Pakistan. So these are the realities which get submerged.
Unfortunately in the media issues that are raised of destabilization, what destabilization in Pakistan. The government is active. There is a government in place. There is a strong military in place. There is an economic upsurge. The courts are functioning. The civil society is functioning. So where is the destabilization? Why is anyone trying to create this impression of destabilization of Pakistan? Every country has some problems or the other. And one deals with the problem and carries on, life carries on. And Pakistan carries on. On the economic side we have if I just give them very few micro economic indicators. Our GDP has grown by seven per cent over the last five years. The GDP itself has more than doubled in the last seven years. In fact it has risen by about one fifty per cent. The FDI (Foreign Direct Investment) has grown by three thousand per cent. Now this quite a ridiculous statement I am making but that is the reality. Then if you see the Stock Exchange of Pakistan. It has grown fourteen times. It again appears very ridiculous but it is the best performing stock exchange in the world. And in spite of all that you may have read in the papers and the perceptions being created our stock exchange remains un-ruffled. So what is the issue? It is the resilience of the economy.
It is the basic foundation of the economy that we have corrected and we are moving forward. The investment in the last six years has risen by fourteen per cent by the year in the last six months by fourteen per cent. So investment is coming in. But my grouses may be because of this misperception being created. We could have certainly gone much faster on the investment side, much higher on the investment side. So that is what brings me out of my country today. I visited European Union. I visited Paris, Brussels, Paris and now I am here and I am going to London. My aim and purpose is to tell the people. First of all the media interact with the media and tell them do not create perceptions of your own. Give ground realities after understanding ground realities in Pakistan. And then interact with the business community also to put these realities in their correct perspective.
Ladies and gentlemen we have been following the policy of deregulation, liberalization and privatization all along. And we have successfully done that. And that is the policy with which we keep going forward. Today as a result of our economic growth, growth of GDP and I did not mention the per capita growth. Per capita income has more than doubled. By the way it has grown by one hundred thirty per cent. As a result of which purchasing power of individual has increased. And because of which demand has increased. And the demand supply gap has increased. And therefore, profit has increased. I am very glad that we have the Unilever representative here. And I know that Unilever is making a very good profit. Why is it making very good profit? I was just talking and I know I spoke to the country head of Unilever it is because of the rural economy. There is money in the rural economy. And they are using their soap and their shampoos in the villages of Pakistan. Why has the mobile telephone? There has the mobile telephone gone up from a figure of five or six hundred thousand only four five years back we have crossed seventy-six million mobile telephones. And the tele-density has gone from two point nine per cent to over fifty per cent. This is our growth. How our motorcycles are being sold in Pakistan. And I have interacted with the motorcycle manufacturers. The sale has gone up from eighty thousand to about six, seven hundred thousand. Why people in villages are buying motorcycles? If today you talk to Pepsi boss of Pakistan and I have done that. He says he is very happy, laughing all the way. Pepsi sales have gone up. I think you are asking why the people in villages are having Pepsi now. So this is the economic upsurge and the increase in the demand in Pakistan. Therefore, the profitability has increased many folds. And I think it is even up to sixty per cent in some cases.
I would like to talk of Pakistan’s population which is one sixty million you know that. But beyond that I would like to say please do not see Pakistan as an individual stand alone country. See Pakistan’s strategic location which unfortunately we never exploited before. We are in the centre of Middle East Gulf on our west, central Asia Afghanistan in the north; they are all looking for coming down south. North-West, Western China in our north east. There is tremendous development going on about one hundred twenty billion dollars I believe that Chinese development going on in this western region. And South Asia, India to our east. Any interaction trade or energy interaction within these regions, ladies and gentlemen, is not possible without Pakistan. Therefore, please see Pakistan as a hub of this entire region. When we are talking of investing in Pakistan please see this all up.
And another thing that we are doing and that I would like to convoy for your interest and understanding. We saw our population and the work force in Pakistan. This work force in Pakistan it is calculated that we by 2050 we are going to be fourth largest work force in the world, after China, India and the United States. We have analyzed this work force and we are executing a strategy to enhancing the quality or qualitative development of this work force through producing engineers. We are getting engineering universities from Europe being established in Pakistan. And these universities are from France, Germany, Italy, Sweden, Austria, Netherlands and Japan and China, South Korea. These universities will produce the required engineers of a very high standard. We are getting their examination system, their syllabus, and their faculty also, their dean also. And the degrees to be issued by the universities as if a person has studied in that country. This is progressing very well. Each university will have technology parks, modern so we are going to make sure that our technicians are also trained very well. Then we have launched a very ambitious vocational training programme. For minor skills, courses of three to six months, for building and construction and other activities which are required for business activities in Pakistan. And this is going very well. We have even involved the army to do so. The corps has been told to establish vocational training centres. And hundreds of youths especially from the backward areas are studying in each one of these and getting trained on skills, skill development. So therefore, what I am trying to say is we are trying to improve the quality of our manpower, engineers, technicians and skills to meet the challenge of the growing population of Pakistan and to facilitate the investors who come into Pakistan to give you a cheap labour and qualified manpower. So this is our future.
Our success is, I have mentioned about motorcycles and by the way the visibility of our economic success is in two forms. Today if you see the roads our roads are blocked with cars. And we are into construction of overhead passes, flyovers, under passes every where because there is a boom. Car manufacture has gone up by about six hundred per cent, motorcycle manufacture similarly. If you go into other electronics, if you go into television and air conditioners all other elements, motorcycles and everything has gone up in production. Banking sector has been our special success while eighty-five per cent of the banks were in the public sector. Now eighty-five percent are in the private sector. Each one of them is doing very well.
Thanks to the deregulation, privatization and the control being exercised, very good control being exercised by the State Bank of Pakistan. And we have the Governor state bank sitting here. And she is the lady and where is she. Here is she …laughter… okay, okay. There she is. We the area to invest in I had just noted that is the last item that I would like to bring out is the power sector. We are short of power. I said the indicator of our economic growth. One is on the road, road being chocked. The other is power shortage electricity and gas. While in 2001 we did not require gas and we had a surplus of four thousand megawatts of electricity. We were thinking of exporting electricity to India. Today we could not take gas from Iran because we thought that unless India joins we do not need the gas in 2001. Today we are short of gas. Today we are short of electricity. This is the indicator of our economic growth. So, therefore power sector in all in the gas exploration and also developing. Gas, coal, alternate sources, nuclear and hydro all of them. We are looking into all of them and telecommunication and information technology, oil and gas exploration, food and food processing, dairy, and building and construction, services sector. These are the sectors all of them are doing their tremendous scope in each one of them. That is all that I had to say ladies and gentlemen. I would request all of you to come to Pakistan those who have not and I am very sure those have come already will make do good business in Pakistan and your business will succeed. And I hope you come to Pakistan and see for yourself what I have said. I think more than believing me come and see what has happened in Pakistan and the revolution that is going on. So thank you very much for your patient here, ladies and gentlemen. …….Clapping…….
Please carry on eating because I really skip lunch normally.
Questioner: Mr. President, I have good fortune to be here and listen and meet you. I have seen what happened in Pakistan. I am from City Bank and City Group; you know we have a long presence in Pakistan. My question is, you initiated, as you mentioned a tremendous performance in the economic sector in Pakistan. And you have very good people working as you mentioned some of them, you have Shaukat Aziz, who was Minister of Finance and the Prime Minister who worked on implementing your programme. I link my question here that will this economic reform efforts continued after the elections, with new government, you feel confident that all the progress you have mentioned in your speech today will continue? Thank you.
President Pervez Musharraf: Thank you very much. I feel very confident that it will continue because of certain institutional changes that we have brought about the biggest thing is that we have privatized that in a big way. In the past I would say the corruption ridden economy that we were having because of which the economy was not at all doing well. As a result mainly of nationalized banks not functioning and the political forces are not functioning. We have denationalized all the banks and also on the political side we have created an organization constitutionally as the National Security Council. But I think regularly we will meet and see the progress of Pakistan and correct course if at all one can facilitate through that. Other than that the media has been opened out. It is so opened that in spite of the fact that, in spite of any perception that I have curbed the media etc. etc. because I am being asked all these questions. We are the one who opened out the media. Today the media, the major part of the media is even criticizing me. If you see our television, if you see the talk shows, if you see the print media I feel that this is good. The government in the future will be under great scrutiny by the media itself. And then the people of Pakistan, I think, who over these fifty years had seen nothing but slow growth and stagnation and problems in the economy had got I think they had got de-moral, they had thought that may be Pakistan is not capable or did not have the inherent capacity to move forward. In these seven years they have seen that no, Pakistan has all the potentials and capability and the resources to do well. So any one now taking this down, I think, will not be acceptable to the people of Pakistan. Then we have also instituted other laws like for example 2
the minimum Fiscal Responsibility Law. Where you cannot take debts beyond a fixed ratio to the GDP ratio cannot go beyond sixty per cent constitutionally, it would be the violation of the constitution. So we were actually violating the macro economics of the country and no body was bothered. The fiscal deficit was being maintained at a very high level. We have controlled the fiscal deficit. So therefore, I think the basic parameters have been set right. It would be difficult for any government to take it down wards now. That is what I feel.
Questioner: Mr. President, first allow me to say congratulation for your courage and your vision being here at this moment. It is boldness and determination and the commitment also. I want to congratulate you. I may say just very briefly, I have come to Pakistan four times. I have seen the true story that you described. However the perception is still negative and it requires two things to be done. It is the responsibility of the people at this forum because the leaders of business from China, America, India and all around the world, from all parts of the world, from the Arab world, they have significant investment in Pakistan, recently and in the past. However I think there is a responsibility of Pakistan more than us. I think every body in this room is in the business. I think we have responsibility to engage with our politicians to invite support for Pakistan more than exist there because I think, stable and successful Pakistan is good not only for Pakistan but for world at large. We need to engage with our political leaders to do that. But in addition, it may be so, about the perception, I think Pakistan needs to brand itself as it is scoring out, the much sort of the professional brand, what is happening there. What I come to meet Mr President you know that well. We had terrorists’ miniatures that related to 80s and 90s, in a massive world and we have to work with that story behind it and deal with the media. Media is to report good story so Pakistan has to brand it.
President Pervez Musharraf: Yes, indeed my friend I totally agree with you. We just unfortunately that the media believes in showing the half empty part of the glass always. They do not want to show the half full part. May be that makes good stay. There is no doubt there are thousands things left to be done in Pakistan. A lot has to be done. We have, we are on an upsurge. We have to carry on going and further improving the socio economic sector, transforming transmitting those gains to the people of Pakistan improving their quality, improving their services to the people of Pakistan. That is where we are. But unfortunately it is the media where we have not succeeded. We have failed may be. And I would place the blame to quite an extent to our own media, our own people who are not projecting the positives, but only involved in projecting the negatives unfortunately. That is my dismay. Although I know a lot of people keep saying that I should not be talking against the media, and there are a lot of media people sitting around. But really here is a country where so much is happening and when I say whatever I said I am not saying this; I am not visiting or touring just to bluff around in the world. And tell you what is not happening in Pakistan and try to cheat around. I do not think one can do a bluff game that well because it is known all over.
Today in this globalize village of the world everyone knows what is happening in Pakistan. There is not one institution which has to give out what the success of the economic growth. It is seen by all the world organizations, financial institutions. There is a World Bank. There is Asian Development Bank, Islamic Development Bank and others; so many other institutions that look into the performance of a country. But it is unfortunate that again we are unable to show all this, and I seek it is always that people like you who understand and who had come and invested and who are making progress for them to give the story. Only yesterday I was being interviewed by financial Times by the way yesterday. And soon after the Times he asked that your investment is not, why investment should come in this law and order situation and your political situation. Right after that chairman of E and I right after that and he started as he sat down he started Mr. President I am and we are in Pakistan. And we are so happy and we are doing very well. And this I said hold on, hold on I intervened I said bring him back, bring this Financial Times bring him … laughter … and I got him back. I got him back. I said please sit down. I said can you please say whatever you have just now said and he said that. I said have you … you do not believe me, now do you believe him. Things are all right. And things are very good. They are making good profit. Investment is coming into Pakistan. That is the problem now. How do I deal with the financial Times who are saying? They have given a better article now. That is the success of my interaction because I think when I come out and interact the idea is I give I think today I got fourteen commitments by the way today. I do not know how many interviews I have already given and how many more I am giving. The idea is just this please understand realities of Pakistan. So this is what we are trying and we are trying hard to achieve it we seek indulgence from your people friends like you to project us more.… Clapping…..
Questioner: We have an investment programme of $1.73 b in progress right now. This I hope will give lot of spirit and confidence to the foreign investors.
President Pervez Musharraf: Thank you very much, thank you for correcting me. Yes, indeed today local investors are investing tremendously in Pakistan because there is a growing market in Pakistan. I hope you agree that obviously you would not be investing if there was no market in Pakistan. And people of Pakistan have so much money now. We have so much increased purchasing power. So that is what is happening and thank you very much. Right ladies and gentlemen, thank you very much for this patient hearing. It was a pleasure talking to you. Let us hope that we do better on the media side in the future. But let me assure you whatever I said, irrespective of what you may read in the media but I have said, is the fact. And I believe that and you believe that I have told you the truth. Thank you.