Global consortium plans to pour billions into Pakistan

[CrazyZ]

Global consortium plans to pour billions into Pakistan
By Zafar Bhutta
Published: April 14, 2020
TWEET EMAIL

PHOTO: EXPRESS


ISLAMABAD: Pakistan may have another financing window that may be almost equal to, if not bigger than, the investment under the China-Pakistan Economic Corridor (CPEC) as the Global Investment Consortium (GIC) mulls over investing billions of dollars into the country.

The consortium is considering investing up to €50 billion on a public-private partnership basis in different megaprojects like Naya Pakistan Housing Scheme, Reko Diq copper and gold project and Diamer-Bhasha dam and power project at a time when economies around the world are struggling to combat the fallout from Covid-19.

GIC is a more than 200-member consortium comprising hedge funds and investors pouring capital on the basis of engineering, procurement and construction (EPC) and public-private partnership models in emerging markets for infrastructure development. It can raise around €30-50 billion in structured finance for development projects in Pakistan.

The consortium can finance not only major infrastructure projects but also social-sector schemes that are direly needed in these trying times, when most of the world is locked down due to the Covid-19 pandemic.

Talking to The Express Tribune, GIC Regional Associate Muhammad Irfan Ali said, “We have been pretty much successful in convincing hedge funds to consider, in principle, raising enormous funds to channel into government projects in Pakistan.”

He said the hedge funds they worked with, though duly regulated, were not typical ones as their associates worked on developing real sectors in emerging countries such as affordable housing, mining, hydroelectric power, pipelines, roads, railroads and so on. They also pump structured money into social development in areas of healthcare, education, ecology, tourism and access to information technology.

He revealed that although a proposal had not yet been discussed with Pakistan government, GIC “has now provided the green light, in principle, to do so”.

He pointed out that funds could be structured in a customised model comprising public-private partnership projects for developing government infrastructure at a pace never seen before in the country, and at a scale, which could be larger than CPEC, if done properly.

The funding, subject to analysis, can be for 25 years at an interest rate of 1.5% per annum or so, with options, as well as concessions, to convert debt into equity in order to mitigate debt burden of the country.

“The funding and investment can go up to €50 billion over several years,” he said, adding that innovation in structured finance was the key to success of the ambitious programme while taking cognisance of Pakistan’s particular set of economic, political, foreign policy and national security challenges.

“Whatever will be proposed to the government needs to be done with appropriate confidentiality as the regional and global requirement of large funds is very competitive and challenging, especially now with governments around the world trying to cope with the Covid-19 fallout,” he said.

It is somewhat akin to the US president proposing a $2-trillion package to refurbish the dilapidated US infrastructure as spending creates jobs and jump-starts economic activity.

However, the conundrum for Pakistan is the state of the economy, virtual junk rating of its debt, precarious situation of foreign currency reserves, uncertain political will and ongoing bailout packages.

https://tribune.com.pk/story/2197330/1-global-consortium-plans-pour-billions-pakistan-business/

 

[CrazyZ]

With all this global money printing. It won't be hard to secure mining interest in Reko Diq's gold deposits. Never heard of GIC but seeing as monetary quotes are in euros..its probably European, but not sure.

 

[SurvivoR]

It's based out of Singapore. This is what I found

https://www.gic.com.sg/about-gic/our-history/

 

[Pomegranate]

We have improved our defenses now is the time for the improvement of economy.

 

[Syed1.]

While I welcome this news with guarded scepticism on its veracity, the sectors of investment mentioned aren't exactly the kind we want large scale investment in. Housing and construction while they may be large sectors that employ quite a few, but ultimately they do not take your economy very far in terms of exports and foreign exchange earnings. If this same $50-60b investment was in manufacturing I would be over the moon.

 

[crankthatskunk]

While I welcome this news with guarded scepticism on its veracity, the sectors of investment mentioned aren't exactly the kind we want large scale investment in. Housing and construction while they may be large sectors that employ quite a few, but ultimately they do not take your economy very far in terms of exports and foreign exchange earnings. If this same $50-60b investment was in manufacturing I would be over the moon.

Once infrastructure is better, the other investment would come. The problem is that the previous governments for decades had no policies.
They didn't prepared the workforce for modern lines of work. Indians on the other hand produced millions upon millions trained in Computer related disciplines and in customer services, just to grab the global markets in IT.
Our rulers were interested how Hassan can become a millionaire at a young age.
So brother, to attract the type of investment you want, you need to have the workforce to do that type of work.
Otherwise how the foreigners would invest in the industries you not capable of managing and providing work force!!

 

[Samlee]

Well The Website Looks Pretty Legit

https://www.gic.com.sg/

But I'll Believe It When I See It

 

[BPL647388485993081005728]

If this is true, how much will this boost Pakistan's economy?

 

[CrazyZ]

Well The Website Looks Pretty Legit

https://www.gic.com.sg/

But I'll Believe It When I See It

Best to take a wait and see attitude.

I think all this global money printing is definitely gonna have ramifications for future investment flows. Nations (mostly Asian and GCC) that hold trillions of dollars of USA and other developed nations debt and currency are being taken advantage of with all this money printing. At least if Asian and GCC countries lend to Pakistan we can give Reko Diq gold and our higher growth potential as collateral. If they lend to developed nations with unlimited QE..they will be robbed by the printing press.

 

[CrazyZ]

While I welcome this news with guarded scepticism on its veracity, the sectors of investment mentioned aren't exactly the kind we want large scale investment in. Housing and construction while they may be large sectors that employ quite a few, but ultimately they do not take your economy very far in terms of exports and foreign exchange earnings. If this same $50-60b investment was in manufacturing I would be over the moon.

As stated in my post above....I think Asian and GCC investors will look to diversify their investments away from developed nations debt and currency because of the money printing. Buying hard assets....real estate, dams and gold mines in poorer countries may be seen as a less risky investment in countries with historically weak currencies and a vector diversify away from the west.

 

[FuturePAF]

We need investment that maximizes human development and moves our labor force up the value added chain so that products made can earn the most profit and employ as many people as possible.

having said that, almost any investment would be welcome (as long as we carefully read the terms and condition)

remeber investors want to earn as high a return on investment as possible. We should only allow them to earn a little more than they could in other markets, because the difference is what our country will be built upon.

modernizing agriculture, and training farm workers to do high yield high value agriculture will pay dividends if we can secure markets; which shouldn’t be hard as we have the gulf Arab countries and East Asia on our door step.

we should be careful not to force farmers to sell their land (especially because they know the land and will care for it best; especially if we do organic farming) but structure partnerships and co-operatives. Where the farmers work with multi-nationals to modernize the farms while retaining ownership.

If we go into overwhelming organic farming utilizing human capital and alternative techniques over pesticides, we can market our products as higher end to the lower price products of other countries, similar to what Israel does with its tomatoes for example.

We need to focus on markets like the gulf and China, where we can get these products to market before they go bad.

we can also focus on organic milk production, for baby formula for the Chinese and Gulf markets.

- - - - -
this is also the right time for Pakistan to go into oil refinery and derivative products like pharmaceuticals. If the situation in Afghanistan can stabilize to allow the TAPI pipeline; and we can secure a Qatar-Pakistan oil pipeline through Iranian EEZ waters, we can be a major oil storage point just outside of the strait of Hormuz for onward pipeline shipment to China and the world.

 

[CrazyZ]

We need investment that maximizes human development and moves our labor force up the value added chain so that products made can earn the most profit and employ as many people as possible.

having said that, almost any investment would be welcome (as long as we carefully read the terms and condition)

remeber investors want to earn as high a return on investment as possible. We should only allow them to earn a little more than they could in other markets, because the difference is what our country will be built upon.

modernizing agriculture, and training farm workers to do high yield high value agriculture will pay dividends if we can secure markets; which shouldn’t be hard as we have the gulf Arab countries and East Asia on our door step.

we should be careful not to force farmers to sell their land (especially because they know the land and will care for it best; especially if we do organic farming) but structure partnerships and co-operatives. Where the farmers work with multi-nationals to modernize the farms while retaining ownership.

this is also the right time for Pakistan to go into oil refinery and derivative products like pharmaceuticals. If the situation in Afghanistan can stabilize to allow the TAPI pipeline; and we can secure a Qatar-Pakistan oil pipeline through Iranian EEZ waters, we can be a major oil storage point just outside of the strait of Hormuz for onward pipeline shipment to China and the world.

You bring up a good point. Farmland is another hard asset that Asian or GCC investors may be interested in buying. We should allow but insure our interests are respected.

About the pipelines....at this point it may cheaper to ship using tankers from the GCC. Under water pipeline are not cheap.

 

[FuturePAF]

You bring up a good point. Farmland is another hard asset that Asian or GCC investors may be interested in buying. We should allow but insure our interests are respected.

About the pipelines....at this point it may cheaper to ship using tankers from the GCC. Under water pipeline are not cheap.

I agree with you on the tankers. If we reach a point where we have excess water and have replenished our aquifer, the. Exports via tankers would be the most cost effective.

On farmland, we should careful not to “sell” farmland beyond a pilot project, so that foreign companies enter into joint ventures with local farmer Co-operatives and both parties benefit for the long term.

A business model like Organic valley might work in Pakistan.
https://www.organicvalley.coop/why-organic-valley/sustainability/cooperative-model/

if Pakistan can invite multiple companies, then farmer co-operatives can have these companies compete to win contracts with farmers. This way multinationals will have to bring their best technology but still stay organic and keep their prices competitive. The farmer also learn the best techniques and can spin off their own companies with the years of technology and knowledge transfer.

The farmer owners have a long term interest in preventing the land from being eroded or the water from the aquifer being fully drained. (The government should set up monitoring to penalize damage to the soil and using up more of the aquifer then a set limit, to incentivize using best practices and stop the old wasteful ways)

although we have to find a way to do organic farming on an industrial scale

considering Europe and America and South America are possibly too far for organic produce to survive, Pakistan may have an advantage as it can get organic produce to market through the Karakoram Highway and on to Chinese rail cars faster

 

[nahtanbob]

Global consortium plans to pour billions into Pakistan
By Zafar Bhutta
Published: April 14, 2020
TWEET EMAIL

PHOTO: EXPRESS


ISLAMABAD: Pakistan may have another financing window that may be almost equal to, if not bigger than, the investment under the China-Pakistan Economic Corridor (CPEC) as the Global Investment Consortium (GIC) mulls over investing billions of dollars into the country.

The consortium is considering investing up to €50 billion on a public-private partnership basis in different megaprojects like Naya Pakistan Housing Scheme, Reko Diq copper and gold project and Diamer-Bhasha dam and power project at a time when economies around the world are struggling to combat the fallout from Covid-19.

GIC is a more than 200-member consortium comprising hedge funds and investors pouring capital on the basis of engineering, procurement and construction (EPC) and public-private partnership models in emerging markets for infrastructure development. It can raise around €30-50 billion in structured finance for development projects in Pakistan.

The consortium can finance not only major infrastructure projects but also social-sector schemes that are direly needed in these trying times, when most of the world is locked down due to the Covid-19 pandemic.

Talking to The Express Tribune, GIC Regional Associate Muhammad Irfan Ali said, “We have been pretty much successful in convincing hedge funds to consider, in principle, raising enormous funds to channel into government projects in Pakistan.”

He said the hedge funds they worked with, though duly regulated, were not typical ones as their associates worked on developing real sectors in emerging countries such as affordable housing, mining, hydroelectric power, pipelines, roads, railroads and so on. They also pump structured money into social development in areas of healthcare, education, ecology, tourism and access to information technology.

He revealed that although a proposal had not yet been discussed with Pakistan government, GIC “has now provided the green light, in principle, to do so”.

He pointed out that funds could be structured in a customised model comprising public-private partnership projects for developing government infrastructure at a pace never seen before in the country, and at a scale, which could be larger than CPEC, if done properly.

The funding, subject to analysis, can be for 25 years at an interest rate of 1.5% per annum or so, with options, as well as concessions, to convert debt into equity in order to mitigate debt burden of the country.

“The funding and investment can go up to €50 billion over several years,” he said, adding that innovation in structured finance was the key to success of the ambitious programme while taking cognisance of Pakistan’s particular set of economic, political, foreign policy and national security challenges.

“Whatever will be proposed to the government needs to be done with appropriate confidentiality as the regional and global requirement of large funds is very competitive and challenging, especially now with governments around the world trying to cope with the Covid-19 fallout,” he said.

It is somewhat akin to the US president proposing a $2-trillion package to refurbish the dilapidated US infrastructure as spending creates jobs and jump-starts economic activity.

However, the conundrum for Pakistan is the state of the economy, virtual junk rating of its debt, precarious situation of foreign currency reserves, uncertain political will and ongoing bailout packages.

https://tribune.com.pk/story/2197330/1-global-consortium-plans-pour-billions-pakistan-business/

What currency is this ?
€50 billion

Pakistani Rupees ??

 

[FuturePAF]

What currency is this ?
€50 billion

Pakistani Rupees ??

Looks to be the symbol for Euros.
At current exchange rate 1 Euro = $1.09

so 50 Billion Euros would be approx. $54-55 Billion