Compared to many other developing countries, there has not been much investment in infrastructure, with the country still suffering from patchy electricity, internet and telecommunication services as well as dealing with an archaic financial system which slows the flows of capital, making it overall a difficult country to interact and do business with.
At the same time the country continues to suffer from its international reputation of being an ‘unsafe’ state, both to visit and do business with due to repeated negative media attention every time an attack happens, as well as its continued battle with radicalism in the north scaring many international investors away.
All of this has meant that a country that has a huge potential has been held back, running slowly in first gear. Yet we believe the country is full of opportunities that have the potential to be unlocked over the coming years. The fundamentals of the country are not hugely dissimilar than those of India 15 years ago, counting a very large, young, dynamic & entrepreneurial workforce still at much lower wages. The ingenuity and hunger of its people, their desire to grow and achieve combined with their command of the English language and focus on computer science has created a hugely untapped workforce.
At the same time, on the international landscape, more and more services are being developed over the internet meaning that the quality of the work and labor force is becoming more and more important than the country it came from. Low interest rates have meant that international investors have struggled to deploy capital to get returns and are sitting on larger piles of cash than ever before. Finally China has committed to making a big bet on Pakistan with its economic corridor, attempting to partner with Pakistan to deal with its ever increasing trade.
As we go into 2018, we believe Pakistan should start trying to unite and agree to start looking outside of its borders. The international business community is clamoring for access to high quality talent and services, and the international investment community is struggling to get safe and reliable returns.
If consensus can be developed within the country on where internal resources should be directed and the support needed from the international community, the country has the opportunity to start catching up to India and become a much stronger and influential country.
Surprisingly Pakistan has not changed as much as I would have expected/hoped it would have since my first visit. Comparing with how far India and China have sprung forward over the past 10 years, I would say whilst Pakistan has improved slightly, by and large there hasn’t been as much progress relative to other countries. The one area where a lot of progress seems to have been made is around the development of its workforce from an IT perspective. There seems to be a healthy number of very competent technology savvy individuals. This has translated into a burgeoning ‘start-up’ scene.
On the positive side, I would also like to mention and commend the work ethic, ambition and integrity of Pakistanis which have definitely surprised me. For many developing nations, the population is relatively stagnant, but I would say people in Pakistan are hungry for opportunities. On the flipside, Pakistan is not acting in much unity as a whole, trying to make big bounds forward which are actually holding the country back. Everyone seems to just be worrying about their own, instead of realizing their full potential.
Additionally, I recently signed a partnership agreement with a Pakistani company. For me, the experience of working with professionals in Pakistan has been very favorable overall, I must admit. The team we invested in has a great business model, that we believe has the potential to scale, and it is being set up in very similar ways that an American or European company would. Whilst the company is doing well, we have a lot more work to do to get it beyond Pakistani borders.
Moreover, technological advancement in Pakistan is rapid and I would agree that it is one of the biggest steps Pakistan has taken over the past 10 years. That being said, technology just by itself is not valuable. Its business & real world applications are what give technology value. Two areas I believe the country is missing out on are: 1. How to overall provide services (from a technological standpoint), not just technological but also related to the international economy, and 2. How to make sure the problems being solved are not just local Pakistani problems (a lot of people in the US as much as Pakistan), think the problems they see apply to everyone.
One more thing that should be mentioned in this regard is CPEC since it is the new buzzword in the country. I think CPEC has the potential to make a huge impact on the country. But right now all the talk I have heard is around helping the Chinese with what they need to get done. Will that create revenue and improve the economy? Yes. Is it going to be the huge boost that everyone is talking about? Not necessarily. It is a huge win for China, because it makes China even more competitive on the international stage. The real question Pakistan needs to look at and think of, is how can they leverage CPEC in order to propel itself forward (what businesses, deals, trades, etc. can be done whilst CPEC is in place), rather than just getting a short term revenue inflow, but 99% of the long term economics accruing to China.
Conclusively, I would want to urge other US businessmen to go to Pakistan and spend real time for themselves so they can have a real understanding of how to do business in a country booming with opportunities. Begin by ensuring that you have a good international partner who can help you on the ground. Pakistan is definitely an untapped market in terms of international investments, yet a very unique country at the same time.
Stirling Cox is the managing director of the U.S. offices of AlphaSights. The information services company assists a global client base, including private equity firms, asset managers, strategy consultancies and corporate executives.
