Pakistan today provides an ideal
environment for investment by multinationals and other foreign companies and organizations.
The investment friendly climate in terms
of government regulations--there are no restrictions on remitting back the
profits- is drawing them in droves. Facilities for maintaining foreign currency
accounts concessions have also been allowed to foreign firms in respect of
rules for borrowing, etc. A large number of multinationals have been operating
in the country for many years.
USA leads the way
The multinationals have invested
extensively in Pakistan. USA leads with $190 mn, followed by UK $122 mn. Other
countries that have brought in investment are in order of FDI: Netherlands, UAE, Switzerland, Singapore, Hong
Kong. China surprisingly appears down the list after these states at number 8,
with Japan following.
The Germanic firm Siemens is perhaps
the oldest in the industrial field in Pakistan, having set up in 1932, while
ICI is the second. Unilever (formerly Lever Brothers, Imperial Tobacco, Shell
and Burma Oil came soon after Independence in 1947. Many European, Korean and
Arab companies such as Orascom are active in construction, communications and
other fields. Japanese like Toyota, Suzuki, Nissan, Honda are mainly in the
automotive industry.
Agriculture as a base
Pakistan's industry is mainly
agro-based. Exxon (now Engro in the country) came first in this field in 1960,
establishing the urea factory. Hercules of USA were next to arrive, soon big
names in the agriculture field Massey Ferguson, Fiat and Belarus established
joint ventures. In the infrastructure development as well, the French firm
Sogea was involved in the construction of Karachi airport terminal.
Financial institutions such as banks
always play a very key role in the development. Presently foreign banks are functioning
in the country and have taken the lead in developing the services sector as
well as mobilizing deposits and promoting credit card culture. Over 33 per cent
of the trade handled by the MNCs was through the foreign banks. The foreign
banks facilitated the flow of foreign currency. The burgeoning Islamic banking
trend was started off not by any local bank but by Standard Chartered. Islamic
options are a viable way for banks and DFIs to circumvent the concerns of
people about interest and its usage.
Multinationals and government
Many complaints
are leveled against the presence of MNCs .However multinational corporations in
the pharma and health sector are subject to the Ministry of Health. MNCs also
are watched over by the regulatory bodies such as the Securities and Exchange
Commission of Pakistan. Many MNCs that compete against local companies in key
sectors are restricted from competing in a fair way as the state favors the
local company- companies facing off against PSO are not allowed to open as big
stations. Other stipulations such as the requirement of having an
infrastructure over 60,000 sq ft to be considered as an MNC are also
criticized.
Multinationals and the stock market
These multinational companies are
operating in different sectors like pharmaceuticals, fertilizers, food
products, including milk and tea and engineering, consumer products, polyester fiber,
chemicals etc. They lead the stock market in the same way as they dominate the
economy. Out of the total companies on the list of Karachi Stock Exchange, over
50 companies are multinationals. The leading companies include Shell, Unilever
Pakistan, PnG etc.
