A memorandum of understanding (MoU) was signed between China’s Hong Kong-listed chemicals-maker, Lumena Resources Corp, and the KASB Group of Pakistan.
This is a great sign of initiative considering the fact that foreign investors have stopped even visiting Pakistan for security reasons. Under the deal, an industrial park is to be set up for Chinese companies to explore areas of mutual interest for joint ventures in the South Asian country.
Pakistan economy has registered only 2 % growth in the last fiscal year due to the rising violence in the country. At present many foreign firms are reluctant to invest in the country and many others are trying to quit their operations in the country.
In spite of these adversities, Beijing considers its friendship with Islamabad even more important in the current context of growing US influence in the region, and China maintains a large economic presence.
Lumena, the world’s second largest producer of the nardite, a mineral used in making paper and glass, operates mines in China’s Sichuan province.
Lumena’s founder, Suolang Duoji, visited the Board of Investment (BOI) in Islamabad last week and discussed with Tariq Iqbal Puri, (Secretary BOI) about the investment opportunities available in Pakistan for Chinese businessmen in both the public and private sectors.
Pakistan allows 100% foreign equity in the major sectors and full repatriation of profits and dividends in all the sectors.in order to attract overseas companies willing to brave the security risk, Special economic zones (SEZs) are also being set up with attractive incentive packages.
Lumena’s Pakistani partner, KASB, established by Khadim Ali Shah Bukhari in 1958, is seeking to diversify from its core of providing financial services such as investment banking, research and asset management. Its other interests include investments in technology, food and dairy, oil and gas exploration and production.
It is worth mentioning that Suolang’s visit to Pakistan comes in the wake of a trip to China by Pakistani Prime Minister Yousuf Raza Gilani in October. At that time several Chinese companies had showed interest in undertaking alternative-energy projects to help overcome Pakistan’s dire shortage of power. Simultaneously Pakistan’s Alternative Energy Board had signed MoUs with China’s Wuxi Suntech Power, China Electric Equipment Group and the Solar Energy Research Institute for cooperation in alternative-energy projects.
Gilani had also used his visit to propose to Levin Zhou, president of China International Capital Corp, the creation of a joint Pakistan-China holding company aimed at facilitating financing for Chinese companies intending to invest in Pakistan.
The Chinese have previously indicated plans to invest US$200 million in an industrial estate in Faisalabad, which will eventually extend to more than 1,800 hectares.
More than 60 Chinese companies are at present involved in 122 projects in Pakistan.
Continued Chinese interest is welcome in Pakistan as worsening security drives away the likes of London-based Tullow Oil Plc and Budapest-based Millennium Oil Limited (MOL), Hungary’s largest oil refiner. These companies have been unable to continue their operations in North-West Frontier Province amid rising violence there. MOL had started gas production from its Manzalai field in the province after an initial $500 million investment.
Foreign direct investment fell 53.2% in the four months through October. In an effort to bolster the economy, which the International Monetary Fund predicts will grow only 2% this year compared with the 3.3% government target, Islamabad is even appealing to Pakistan’s eight million expatriates to do more to help.