President Zardari's visit to South Korea has culminated in the signing of six Memoranda of Understand (MoUs) including modernisation of Pakistan Railways, construction of LNG terminal and enhanced co-operation in the banking sector. Pakistan's need for assistance, both financial and technical, in the development of these sub-sectors is patently evident and therefore the MoUs must be lauded. Unfortunately, though MoUs are non-binding agreements and given the number of signed MoUs that have failed to achieve their objectives, it is not clear whether these six MoUs would suffer the same fate.
One major impediment towards their implementation remains lack of domestic resources to fund these projects and hence until and unless the Korean government offers some form of financial assistance, these MoUs are unlikely to see the light of day. It is relevant to note that Korean companies like Lotte, Samsung, Daewoo and Samboo have experienced some issues with Pakistani officialdom including significant delays in payment for work completed. Some of these issues remain unresolved and one would hope that the Pakistani high-level delegation led by President Zardari on a three-day visit to South Korea will ease legitimate concerns of these companies. The speedy resolution of all past irritants would, no doubt, act as a critical factor in the Korean companies' decision to take the President on his offer to set up a Special Economic Zone (SEZ) for Korean investors along the coast and to assist the investors in every manner possible.
It is relevant to note that not meeting contractual obligations with multinational companies is increasingly being cited as the major reason behind Pakistan's failure to successfully get an upgrade to a full dialogue partner status with the trade bloc ASEAN as enjoyed by China, Japan, South Korea, India and Australia. Singapore reportedly objected to the upgrade based on the Singapore Port Authority's ending of its association with Gwadar Port development project. It maybe recalled that India joined ASEAN as a sectoral partner in 1992, the same time as Pakistan, but was granted the status of a full dialogue partner in 1995.
While the removal of irritants would play a major role in attracting South Korean investment to Pakistan yet this alone may not be a sufficient lure. Pakistan today faces a number of challenges that include law and order problems with foreign embassies advising their nationals not to visit large parts of the country including the resource-rich Balochistan, and an ongoing energy shortage that is only partly premised on a generational shortfall and more on power sector governance as revealed by the failure to eliminate the intractable inter-circular debt. In effect, the government would have to focus all its energies on removal of these two major impediments to foreign investment that the country has faced for a decade.
Pakistan has been accused by US intelligence agency, CIA, of providing nuclear assistance to North Korea and purchasing missiles from them. These charges have yet to be laid to rest and may well explain why no South Korean head of government has visited Pakistan. Be that as it may, the visit of President Zardari to South Korea must be seen in the context of a genuine desire to increase bilateral relations. At present, trade between the two countries is around 1.1 billion dollars which can easily be trebled, both sides agree.