LAHORE: A bilateral investment treaty between India and Pakistan should be finalized to fully facilitate two-way flow of foreign direct investment, said Rahul Bajaj, former president of the Confederation of Indian Industry and Chairman Bajaj Auto Ltd on Tuesday.
Addressing a session on 'Mutual stakes: Looking beyond trade, towards investment,' organized as part of the 2nd Aman Ki Asha Indo-Pak Economic Conference, Bajaj said people of both the countries faces similar dilemma.
"We should find ways and means to bring prosperity and hope to our people," he said, adding the process of growth and investment should be inclusive. There are talks of protectionism and adverse effects to various industries on both sides of border but one should find a middle way not the muddle way, he added.
Bajaj said that both governments have a role in facilitating business in order to create an investment-friendly environment. Both Pakistan and India do not figure in the list of top 100 countries in the ease to do business ranking released by the World Bank, he observed.
There are minorities on either side of border that wanted to stop process of trade and investment between the two countries, he said, adding, however, the business community of India wants cooperation with Pakistan in trade and investment arenas. "We warmly welcome Pakistani businesspersons and their investment in India."
Some circles in India had opposed liberalising trade with rest of the world several years back, he said, adding the initial effect on local companies were negative and several of them had to close down business. However, Bajaj said, they have benefited tremendously in the last couple of decades.
Trade and investment go hand in hand in today's global investment scenario, he said and adding India being the 2nd largest and Pakistan the 6th largest populated country assume immense trade and investment potential as both of them share a long border.
While dispelling the impression that greater opening of investment vistas for India would be against the interest of Pakistan, Bajaj said comparatively Pakistan was more open to China and rest of the world but there was no negative impact on its own manufacturing sector. How Indian industry would demolish Pakistan if investment potential is explored, he questioned.
Besides withdrawal of ban on investment in both countries, Bajaj said, a change in the mindset on both sides of border is also important. He recalled that Pakistan had lifted restrictions on investment but no Indian was able to invest in the country. He said India was a large market and Pakistanis have great opportunities to set up manufacturing base there besides exporting their products. He said business community of India would ask the government to take two steps for normalisation of trade and investment relations in response to any step taken by Pakistan in this direction.
Bajaj expressed the hope that trade ties between the two countries would improve further with phasing out of negative list by Pakistan and further facilitation of trade through land route. In this direction, he said, functioning of integrated check post at border would also help a lot in strengthening trade relations. Initiation of direct flight among various cities of both countries and opening on bank branches would also lead to facilitating investment between two countries.
He said bilateral investment treaty between the two countries should also be finalised to fully facilitate foreign direct investment in both the countries. He reiterated that the Confederation of Indian Industry would continue to play its role in fostering trade and investment ties between the two nations.
He termed speech of Imran Khan, Chairman Pakistan Tehreek-e-Insaf at an earlier session as music to his ears. He also tagged him as his friend from Pakistan.
Joseph Massey, Managing Director Multi Commodity, in his keynote address said time was real essence as knowing recipe was not sufficient for deriving desirable results but it is the timely move that ensured reaping of its real dividend.
In 2003, India took a decision to set up market for commodity business, he said and added that over a million people worked now in this industry. He termed a developed financial sector as a basic factor for ultimate development of any country. He added that a single step of liberalizing markets have drastically changed the scenario in India. He said an integrated network of markets in SAARC countries would help a lot in yielding maximum benefit of the region's potential. He said linking of capital and financial markets of both countries especially would give a boost to economic activities.
Muneer Kamal, Chairman of the Karachi Stock Exchange (KSE), said no country has ever developed without a robust capital market. He said foreign direct investment reached $7-10 billion during 2003-07 which means the country has necessary investment potential. He said investment will come with political stability. Pakistan, he added, is an open economy which is a prerequisite for economic growth. He said the KSE and the Bombay Stock Exchange (BSE) are signing a memorandum of understanding which would enable KSE to be listed at the BSE.
"We are not afraid of trade with India as we have weathered competition from cheap Chinese products in the last 13 years," he added.
Zakir Hussain, President Habib Bank Limited, said all emerging economies in recent years have developed with FDI flows. He said investment follows trade and once trade starts, investment cannot wait. He said FDI is vital for Pakistan as the country's saving rate is very low, adding, however, investment in Pakistan need to be meaningful and in sectors where it is urgently required. He said energy is one such sector where investment in coal-based plants of 1000 megawatt or above is needed.
"Pakistan currently does not have borrowing capacity," he said, adding Indian entrepreneurs can pitch in joint ventures or as solo investment. Zakir said every major emerging power had a multiplier effect in the region. It would be interesting to see when the Indian economic growth impacts other countries of the region positively, he concluded.
Sunil Advani from India said during his stay in Pakistan he saw apprehensions among some Pakistani entrepreneurs about the impact of trade with India on their businesses. He said Indian entrepreneurs were similarly worried when India opened up its trade, adding that the time has proved how wrong they were. He asked the governments of both countries to remove hurdles for free trade and leave it to private sector to deliver.
Ali Raza Siddiqui of the JS Group said free and fair trade would result in surge in investment. He said India should remove barriers to cement exports from Pakistan. He said after permission to trade in capital markets across the border Indian and Pakistani businessmen could invest in each other's companies. He said Pakistan and India are natural trade partners as there are no cultural barriers between the people of both countries.
Jagdesh of Maruti India said India can invest in infrastructure projects in Pakistan, adding major manufacturing projects tend to benefit from establishment of downstream industries on both sides of border.
Mohammad Ali, Chairman Securities Exchange Commission of Pakistan, said investment should be given higher level of priority as it would have major impact on both the economies. He said Pakistan needs investment in infrastructure and Indians can benefit from this opportunity. He said in trade the industry of the importing company come under threat. In case of investment, he added, it is a win-win situation.
He said regulatory environment in both the countries is almost the same. "The only difference is that India has done it 20 years back what we are doing now."
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