Zafar Masud
I had composed the following exploration of Pakistan’s economy (and the role of Non-Resident Pakistanis therein, plus a brief review of viable investment avenues) as a speech that was delivered at the Banquet Dinner of the 45th Annual Convention of the American Physicians of Pakistani Descent of North America (APPNA) on 16th July 2022.
On behalf of myself and The Bank of Punjab, I am grateful to have had the opportunity to address the highly esteemed gathering of 2000-3000 Pakistani-origin American physicians in attendance at the Banquet Dinner.
Our presence at the APPNA Annual Convention was part of the greater North American Roshan Digital Account (RDA) Roadshow, intended to publicize the RDA proposition to potential clients in the North American region – and by extension, to offer gainful investment opportunities in Pakistan to Non-Resident Pakistanis seeking promising investment avenues or simply looking to give back to the motherland.
This initiative to stimulate foreign investment and remittance flows into Pakistan via direct outreach was very well-received at all stops. The speech at the event is as follows:
“I would like to begin by thanking the management of APPNA for hosting this most venerable annual convention, and affording the Bank of Punjab the opportunity to reach out to this august gathering of overseas Pakistanis.
At this year’s convention (which is APPNA’s 45th), the Bank of Punjab has set up an exhibition booth, to showcase our presence, our expertise, and our achievements in the Pakistani commercial banking space, as well as in the Roshan Digital Account domain.
Despite the fact that this effort marks the first time that BOP has expanded its outreach across the Atlantic to the Pakistani diaspora residing and working in the United States, it is just the beginning.
This initiative marks the starting point of our initiatives intended to stimulate foreign investment into Pakistan, by illuminating all the attractive and lucrative investment opportunities on offer for savvy investors, and for those NRP’s who yearn to give back, to contribute to the betterment of their motherland. In the days to follow, BOP will host Roshan Digital Account Roadshows in New York, Washington D.C., Houston, Chicago, and L.A. Thanks to the logistical support from the Pakistani Embassy in USA and our Advisor for Diaspora Pakistanis, Mr. Jalil Abbas Jilani.
It is extremely heartening to note that the Roshan Digital Account is already a resounding success story. Due, in no small part, to the consistent support shown by the Non-Resident Pakistani community.
RDA is currently standing at over 430,000 active accounts, opened by NRPs from over 120 countries, with funds received totaling over USD 4.8 Billion.
The State Bank of Pakistan, and the Pakistan Government, had designed this initiative to cater to the banking needs of overseas Pakistanis, in as complete and thorough a manner as possible.
Principally, the Roshan Digital Account is a means to bolster the flow of foreign investment in Pakistan. As is known by all who are present here, Remittances are a key lifeline of the Pakistani economy.
2022 found the Pakistani economy in dire straits. Not unlike numerous other comparable economies in today’s climate, our country is also going through hard times, due in part to exogenous factors, and in part to internal constraints.
Let us take a look at some of these factors. As you’re aware, the Russia Ukraine conflict has led to supply disruptions and has caused a sharp spike in commodity prices.
Global growth is expected to slump from 5.7% in 2021 to 2.9% in 2022, a sharp decrease from the 4.1% that was projected in January. As a cumulative effect of the pandemic, supply chain disruptions, and the war, the level of per capita income in developing economies this year will be around 5% below pre-pandemic trends.
In Pakistan, GDP growth outperformed expectations in 2022, posting 6% growth as compared to earlier forecast of 4.4%. This is primarily due to higher agriculture output, record exports and higher government spending.
Outlook for 2023 and 2024 has been revised lower due to monetary and fiscal tightening measures to reduce the unsustainable trade deficits. Inflation averaged higher at 12.2% compared to forecast of 9.5% due to the commodity super cycle. The Russia-Ukraine conflict has led to significant supply disruptions of energy and food commodities resulting in highest prices since 2011.
This has led to higher inflation in Pakistan in 2022 and is expected to lead to higher inflation in 2023. However, with the projected recession in large economies, the situation may change.
Fiscal deficit was recorded at PKR 3.7 trillion (7% of GDP) in 2022 on the new rebased GDP numbers.
Current Account Deficit is now projected at around USD 17 billion (4.8% of GDP) in 2022, compared to earlier forecast of USD 12 billion (3.5% of GDP). Higher than projected international commodity prices of oil, food and metals has led to a sharper increase in the import bill than earlier projected.
USD/PKR has depreciated much more sharply due to the higher than projected rise in import bill on the back of commodity super cycle and Russia-Ukraine conflict. The delays in securing IMF funding and funding from other multilateral and bilateral sources has led to sharp weakness in PKRs.
However, with the recent staff level agreement, the PKR is likely to strengthen as the FX flows associated with the IMF agreement begin to get in motion.
Hitherto, weaker PKR and higher commodity prices have led to higher than forecasted inflation numbers. The CPI number will fall once currency and import bill will settle at a reasonable level going-forth.
Pakistan is strategically located to become Asia’s premier trade, energy, and transportation corridor. It is also the gateway to the energy rich Central Asian countries, the financially liquid Gulf States, and the economically advanced Far East. Based on geo-strategic significance alone, Pakistan is a market that is full of possibilities.
Additionally, Pakistan has a burgeoning youthful population; more than 55% of our population is below the age of 20, which is highly conducive for long term sustainable economic growth.
Pakistan has a booming middle class, and a large portion of the workforce is proficient in English, and is hardworking and intelligent. Pakistan is also home to a large population of trained engineers, lawyers, bankers, and other professionals with considerable international experience.
Our consumer market is growing at a fast pace, evidenced by the sharply increasing tele-density and smartphone penetration. Pakistan’s investment policies prioritize the creation of a conducive business environment to attract FDI.
To facilitate the aforementioned FDI, Pakistan has an array of commercial banks positioned to cater to every segment.
As for BOP’s positioning in the Pakistani banking industry, and the club of RDA banks, BOP is amongst the top 10 commercial banks in Pakistan in terms of balance sheet size, and other key metrics.
In terms of Year-on-Year growth, BOP has been significantly outperforming its peer banks in all benchmarks of note, including profit growth, the recovery of non-performing loans, asset and deposit growth rates, Return on Equity, among others.
The Bank of Punjab is also a market leader in government initiatives, such as, low cost housing, agriculture financing, youth entrepreneurship, as well as initiatives aimed at public welfare.
BOP is proud to be offering the first and the only completely free RDA in the market, entailing zero client-side fees and third party charges.
The Bank of Punjab offers a premium banking solution for RDA, under the umbrella of our Priority Banking solution, called BOP Khaas.
This offering entails the full premium banking experience, applied across the entire RDA product suite.
And as a gesture of our appreciation, and of our recognition of the immense significance of overseas Pakistanis, we would also like to announce that all APPNA members who register for the RDA will be eligible for the BOP Khaas Priority Banking membership, by default.
The Bank of Punjab is also the only commercial RDA participating bank that has an initiative aimed exclusively towards public welfare and corporate social responsibility, in the form of BOP’s Sadqah-e-Jariyah initiative, wherein we have collaborations with leading philanthropic concerns in Pakistan, to enhance their capacity and the reach of their philanthropic endeavors.
The fact that the Roshan Digital Account also enjoys bipartisan political support, from both sides of the house, adds further credence to the viability, and centrality of RDA to our economic wellbeing.
Operating in addition to BOP’s RDA Product Suite, BOP ForeignSe is an in-house home remittance solution developed by the Bank of Punjab to provide its clients with fast, fully secure, and free home remittance transfers.
BOP’s wide network of over 640 branches covering 359 major cities across Pakistan ensures excellent coverage and customer support. This product has been effectively serving the needs of BOP’s customers since 2007.
We are here today, predominantly, in support of a national cause: to stimulate/increase foreign investment into Pakistan.
We aim to match willing NRP investors with the right investment avenues at the right time, such that the highest possible returns on investment may be realized. Given the audience we would like to highlight the following key sectors for investment:
Healthcare:
Opportunities in the healthcare sector include: medical universities, nursing schools, hospitals, primary and basic healthcare facilities, tertiary care facilities, clinical research facilities, and diagnostic centers.
Pharmaceuticals
Pakistan has a dynamic pharmaceutical industry with ~625 pharmaceutical companies, split into approximately 600 local and 25 multinational companies. The total sales of Pakistan’s pharmaceutical industry in 2021 was PKR 615 billion.
The pharmaceutical industry is fulfilling approximately 80% of the country’s demand, whereas the rest is being imported in finished form. Only a few companies are manufacturing Active Pharmaceutical Ingredients (“API”) in Pakistan, resulting in import of approximately 75-80% raw materials – representing a huge potential for investment in this sector.
Some of the key sector features of the Pharmaceutical industry in Pakistan include: multiple acquisitions witnessed in recent years, huge export potential, high gross & net margins, over 9000 marketed drugs with 395 drugs added in 2021, and improving diagnosis infrastructure.
Laboratories and Diagnostic Centers
Number of diagnostic laboratories have increased considerably after COVID-19 due to increasing requirement for laboratory tests; however, the market is still under-served as population and number of diseases rise.
Increasing trend of medical diagnosis through scientific medical tests has enhanced the requirement for capital investment in this sector. Further investment is required for development of state of the art labs with facilities including MRI, X-ray, CT Scan, PET Scan, Ultrasound, Radiology, Pathology and Bio-Chemistry testing.
Related investment opportunities in the real estate sector and their respective benefits are known to all of us here.
BOP is uniquely well equipped to facilitate the banking and investment needs of resident and overseas Pakistanis alike, through its Corporate and Investment Banking Group, offering Project finance and infrastructure advisory, as well as Equity and debt arrangement services.
To conclude, I would like to say that;
We consider our Non-Resident Pakistanis as one of our chief national assets. We hope to continue to serve Pakistan and its people, both at home and abroad, to the best of our abilities.
Please keep up your strong support.
Pakistan Zindabad.”
Zafar Masud
