In a rare display of foresight, Pakistan's High Commissioner to Canada Tariq Azim Khan has invited Canadian companies to benefit from the investment opportunities in Pakistan emerging from economic boom and the demographic dividend, this newspaper reported yesterday. But is that wooing going to work?
Meeting the President of Manitoba Chamber of Commerce, Azim noted that trade between Pakistan and Canadas Manitoba province has almost doubled during the last two years. This column is not privy to province-wise trade numbers, but the official figures reported by the State Bank of Pakistan show that Pakistan-Canada trade relationship hardly exists. Bilateral trade has averaged less than a percent of Pakistans total trade between FY04 and FY16.
Similar is the situation when it comes to portfolio investments, which doesnt require as big a commitment as FDI. However, according to SBP data, portfolio investment flows from Canada between FY11 and FY16 totalled about $13 million as against $1.1 billion from all over the world.
The FDI relationship is even worse. Central bank data show that there was net FDI outflow of $10 million to Canada from Pakistan between FY02 and FY16 a period during which net FDI inflows in Pakistan from all over the world totalled $32 billion. During this period, the biggest annual net FDI inflow from Canada to Pakistan was $13 million in 2008. Thats nothing to write home about as well.
But at least on this account, Pakistan is not alone. Canadas outward FDI investors are simply not focussed on Asia. According to last available bilateral statistics available at Unctad, Canadas OFDI stock was mostly concentrated in American continents, followed by Europe and Australia. Asia and Africa doesnt feature well in its $700 billion plus global OFDI.
In this context, Azims sales pitch to the Canadians may not necessarily bear fruits, especially considering that most of Canadas global OFDI is concentrated in mines, oil & gas exploration, and banking & other financial sectors. Investment in Pakistans mining has left investors burnt (remember Reko Diq); oil & gas sector is a difficult sell due to law and order issues, and low oil price era; whereas banking is saturated sector for the time being.
Among the few possibilities that exist is a China-Canada collaboration in Pakistans mining sectors or mining machineries. Also considering that gems and precious metals are about 3 percent of Canadas total imports, Canadians may also find it fruitful to invest in Pakistans gem sector.
With Pakistan struggling to boost exports, Azim should also consider improving Pakistan-Canada trade ties, especially to tap the potential of Pakistans Halal meat, gems, and textile exports to Canada. Canada is one of the top fifteen economies, and is poised for further growth as some of the leading firms in the United States ponder over moving their head quarters to Canada. Given the kind of Pakistani diaspora Canada has, surely there is much potential to boost bilateral economic ties.
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