Muhammad Azfar Ahsan is a prominent figure with a distinguished background, having served as Pakistan’s former Minister of State and Chairman of the Board of Investment. His experience includes roles on the boards of several commercial and nonprofit organizations.

Azfar is recognized as one of the most influential connectors in Pakistan’s corporate and business circles. He is apolitical and a strong advocate for improving the investment climate in the country. With extensive connections among the leadership of several countries, Azfar is currently working with the governments of the Kingdom of Saudi Arabia, Kazakhstan, and Uzbekistan.

In the field of journalism, Azfar frequently contributes to prominent publications such as Business Recorder, Daily Dawn, The News, Arab News, and other regional newspapers and leading digital platforms. His insightful writings cover pivotal aspects of Pakistan’s economy, investment landscape, business dynamics, and Islamic banking.

Azfar is the Founder & CEO of Nutshell Group, a prominent business consulting organization in Pakistan. Additionally, he founded the Corporate Pakistan Group and serves as President of the Marketing Association of Pakistan, reflecting his deep involvement in the country’s corporate sector.

Following are the edited excerpts of a recent conversation BR Research had with him that primarily focused on the investment climate in the country and the opportunity and prospects of Saudi investment:

BR Research: There has been a lot of hype around Saudi investment prospects lately. We see delegations coming in these days. Not just recently, an inclination toward Saudi investment has been witnessed in the past too. Given your experience as the Chairman Board of Investment, how would you define the ’Saudi“ opportunity, and what should be the roadmap for the efforts to materialize?

Muhammad Azfar Ahsan: It’s important to understand the larger picture before we delve into how feasible this opportunity is for Pakistan. Over the last six years, Riyadh has emerged as the most happening place in the world as far as business and economy are concerned. And the ongoing development in Saudi Arabia has been strategically planned.

Secondly, the official size of Saudi Arabia’s Public Investment Fund is currently around $1 trillion and is slated to be over $2 trillion as per their Vision 2030.

Third, we must understand that Saudi Arabia will no longer depend solely on oil revenues; it is aiming to be the powerhouse for every sector, for which it is making investments and packaged deals across various countries. Investments by Saudi Arabia are being made via three modes: the Public Investment Fund, 24 public sector organizations that previously came under NCPP that was later merged into the investment ministry, and the 40-plus family business houses.

Fourth, the country is hosting the 2030 Expo and 2034 World Cup, inaugurated 4 Special Economic Zones last year, and attracting investment in the country by giving major tax and non-tax incentives to the investors. The country is not only inducting top talent from the world as a result but is also producing top talent from its investment in education over the last decade.

This is how serious Saudi Arabia is about its growth and development. For Pakistan to benefit and exploit the Saudi opportunity, we need talent and competencies that match Saudi Arabia of today. We must analyze the feasibility of the projects that are being committed. We have not been able to execute and prepare most of the projects over the years. For this, we need to engage people from the private sector on market salaries in all related ministries and institutes. We do have facilitation modes like the recently set up SIFC, but we need to hire talent and agencies that can execute projects towards completion.

I would like to add here that what I am saying is not just lip service. It is possible and under discussion, and I have been involved with all related institutes and stakeholders. I was recently told that over the last four years and in the coming two months, Uzbekistan, which has a population of 35 million, is finalizing projects worth $21 billion with Saudi Arabia. These are organic investments – not including funds from the PIF. If a country as small as Uzbekistan is attracting $21 billion from the KSA, imagine the potential of investment for a country with a population of 250 million.

We need to research Saudi Arabia diligently because they are serious about doing business.

BRR: What in your view are then the biggest hurdles for investment in Pakistan?

MAA: The biggest issue for the investment landscape of Pakistan is that there has never been an investment strategy and a long-term plan by all the successive governments in the country. Everything is managed on an ad–hoc basis – which is also the case for attracting foreign investment.

As a nation, we are always in a firefighting mode. Even today, there is no investment plan or strategy devised for FDI by the authorities. We are juggling between delegations coming in on a four-day notice where there is no preparation and research by those receiving them. The Saudis are very serious about their investment strategy in Pakistan; it is the rising trust deficit between the two countries and our competencies and approach that stop the investments from materializing. They’ve had very serious and meaningful meetings with the current government in the last few months showing their intent to finalize the investment package. But these deals will only materialize when we finalize them from our end. Like Uzbekistan, Pakistan should look for Saudi investment in different sectors where there might be good returns in some and average in others. Once you finalize 5-6 G2G projects, you can set the environment for G2B and B2B investment projects.

As I mentioned before, we need to invest in relevant talent at market salaries if we want to deal with China, Saudi Arabia, or any other country for that matter.

I believe that Pakistan can fetch a few billion dollars in sustainable FDI from Saudi Arabia annually without exaggeration. The moment that happens, Qatar and UAE will follow. This requires significant changes in the policy. If the authorities put only 25 percent of the effort they put in to adhere to the IMF conditions by streamlining the process, normalizing operations, and increasing incentives for certain countries, billions of dollars could start pouring in.

Among other measures where the government has set up SIFC, it is crucial to revive the Board of Investment (BOI) if you want to attract sustainable long-term FDI. Setting up a new body every three years or so and making the existing institutes redundant can never help the investment landscape or any sector for that matter. Both SIFC and BOI should be empowered to do their respective jobs. SIFC’s muscle should be used to remove roadblocks, red tape, and bureaucratic hurdles. However, it is equally important to empower and capacitate a civilian institute to play its role as an investment promotion agency for sustainable investment.

We are the world’s fifth-largest country by population. We need a long-term strategy to address our issues. And we need continuity in policies. Ironically, the Saudi Crown Prince has had to deal with 4 Prime Ministers of Pakistan in only 6 years. All efforts and strategies will only work if we have political stability. We must put our political house in order without which all efforts are futile.

We tend to put all our eggs in one basket. Back in the day, it was all about China. Today the hype is around Saudi Arabia. We need to look at other countries too. I see that we have lost focus on some key countries. When I was in BOI, I picked the top 6 countries as focus areas that were all treated equally important in strategy and investment promotion. We need to pick top countries as focus areas again, and we need to allocate adequate resources to these missions from a fund set aside for these top countries. We need to fund capacity building in embassies and high commissions.

Finally, the facilitation of local investors and existing foreign investors is critical to attract new FDI. No amount of planning and strategizing can help attract sustainable, long-term investment if the existing local and foreign investors are not happy.

BRR: What in your view should be the role of SIFC in all this? Why did we have to set up SIFC to take up BOI’s role?

MAA: I believe that the concept of SIFC is great. When I was the Chairman of BOI, I used to work on the same concept where I engaged all stakeholders like the bureaucracy, military, and local and foreign private sector.

But if you think that you can achieve everything with SIFC, you are mistaken. SIFC can do great work in facilitation and removing hurdles. But you need a civilian institute like BOI to get things going. BOI needs to be revamped and restructured and stand in parallel with the SIFC to address the country’s investment landscape challenges. SIFC alone cannot do this as it’s not an institute but a council. While the facilitation role by removing hurdles could have been hosted under a separate window within BOI, the involvement of the newly formed SIFC should be restricted to using the muscle to remove red tape, bureaucratic hurdles, and roadblocks. I would re-emphasize that we must revive existing institutes like BOI, Privatization Commission, etc.

BRR: You discussed incentives and assurances to specific foreign investors for long-term foreign direct investment. Do you not believe that these kinds of guarantees will bite you back? This has happened with the CPEC projects, where we jumped right in with power plants all at once, giving the Chinese government assurances and insurance without thinking through what was practical and what wasn’t. Due to capacity charges and the prioritization of generating above transmission and distribution deregulation, the cost of energy has become unsustainable as of 2024. Do you not believe that in the next five years, we will be in a similar situation again with promises and sweeteners to the Saudis?

MAA: I agree with you completely. I would like to elaborate on what I said. We should not agree to conditions and offer guarantees that become unaffordable for us in the medium- to long term. I would like to reiterate what I said earlier. We need to research, investigate, and understand all investment projects - and for that matter Saudi Arabia in today’s world. Planning and strategy play a crucial role. Many of the CPEC projects happened without careful planning – in other words, on an ad–hoc basis. We might have the capability, but we lack the capacity to undertake such planning, and as I mentioned earlier, we need to bring in talent and experts at market salaries to address capacity issues. In the case of Saudi Arabia, we need to understand how Saudis are investing in other countries. As for incentives, the package should overall be beneficial to us but should also be attractive enough for investors to come in. Incentives should address the trust deficit and lead toward the finalization of the projects.

We must decide where we want to be over the next 25 years as a state.

BRR: Do you see any projects finalizing in the next few months?

MAA: I see a couple of G2G projects being finalized over the next few months. Reko Diq project is also likely to be finalized where Barrick Gold is seeking funds, and Saudi Arabia will likely acquire a minority stake in the project.

You might see development around the refinery project by the Saudis in Gwadar. Despite the current situation of the refining sector, I see this as an opportunity for $10-12 billion investment in the refinery project to jump-start industrialization and push Gwadar’s development many notches up. In my view, it is one of Saudi Arabia’s strategic projects. But you won’t see any private or B2B projects coming through.