Foreign investment reached its highest level of $ 3.9 b: PM

ISLAMABAD: Foreign investment touched its highest level of $ 3.9 billion in our history and it will reach the level of over $ 6 billion by the end of this year, said Prime Minister Shaukat Aziz.

He expressed these views in his address at the inaugural session of –Pakistan Development Forum 2007 here on Wednesday.

Dr Ahmed Mohammed Ali, President Islamic Development Bank, Mr Liqun Jin, Vice President, Asian Development Bank, Mr Praful C. Patel, Vice President South Asia, World Bank, Dr Salman Shah, Advisor on Finance, Economic Affairs, Revenue & Statistics,Ms Hina Rabbani Khar, Minister of State for Economic Affairs and Statistics, Federal Ministers and Ministers of State also attended the forum.

Prime Minister said that last year the rate of investment was 20% - the highest ever in last 12 years. Foreign investment touched its highest level of $ 3.9 billion in our history and by the end of this year it will reach the level of over $ 6 billion by the end of the year. Goldman

Sachs in a recent study has included Pakistan in the Next-11, a group of eleven countries with a high growth potential, he added.

He said that the fruits of economic growth are reaching all segments of society and all regions of the country. The unemployment rate has come down from 8.3% in 2001-02 to 6.2% during 2005-06.

About 5 million new jobs were added during 2003-06. Sustained economic growth has led to the emergence of a growing middle class and a significant reduction in poverty. The number of people below the poverty line has declined from 34.5% in 2001 to 23.9% in 2005 – in urban areas from 22.7% to 14.9% and in rural areas from 39.3% to 28.1%. In absolute terms, 13 million people have been lifted out of poverty, out of which 10.5 million belong to the rural areas.

The rural landscape of Pakistan is changing profoundly as a result of rising income levels. Improvements in crop productivity – driven by government interventions to ensure balanced supply of fertilizer, efficient and equitable distribution of water, and increased credit availability – are augmenting agricultural incomes and benefiting all sections of the rural population.

Similarly, in the livestock sector, there has been a significant improvement in terms of number of animals and productivity. According to the Livestock Census 2006, which will be released soon, the number of cattle registered an annual increase of 4.5%. Major initiatives to boost meat and milk production are under way, which will open avenues of additional income for the rural population.

He said that we recognize the importance of social mobilization as a vehicle of community-driven development. For this purpose, Rural Support Programmes have been set up at the national, provincial and regional levels.

Community Organizations have been set up in 2663 Union Councils, covering about 1.5 million households. Our government is committed to fostering a framework of grassroots institutions to bring more households in the organized fold through the process of social mobilization.

We are also fully conscious of the importance of micro-credit as a means of creating income generating avenues for the poor, particularly women. Our government has established strong foundations of micro-credit in the formal sector along with extending support to civil society institutions.

A separate regulatory framework for micro-credit has been provided through a new law. As a result, during the last five years, four specialized micro-finance banks have been established at district level. The Pakistan Poverty Alleviation Fund has been working since 1999 as wholesale organization for credit disbursement. One million clients have been reached by December 2006 and it is targeted to increase the coverage to three million by 2010.

All these initiatives are raising income levels in the rural areas. Market surveys indicate a significant increase in the sale of consumer goods in the rural areas, which has a direct bearing on the quality of life of the people. We have become the fastest growing mobile phone market after China – with tele-density rising from 3% to over 35%.

Similarly motorbike sales are registering record levels in the rural areas. Rising incomes and new opportunities unleashed by economic growth are bringing a silent revolution in every nook and corner of the country.

Let me take this opportunity to express our gratitude and appreciation for the continued support from our development partners for rehabilitation and reconstruction activities in earthquake-affected areas. Out of $ 5.6 billion committed by the donors, an amount of $ 2.9 billion has been disbursed so far. Despite difficult terrain and logistical problems, reconstruction work in all 12 sectors is going on at good speed.

All essential services have been made functional. Out of 600,000 houses affected, work on 250,000 is in progress. 1500 educational and 150 health facilities will be completed during the current financial year. It is gratifying that the donor community has appreciated the progress and quality of work, which is based on the policy of building back better and providing improved service delivery.

We have come a long way but still we have a long way to go. Significant progress has been achieved in all sectors of economy and governance, but new challenges are also emerging together with new opportunities. We believe in nimble and proactive governance and want to fully leverage our strengths and advantages.

The single most important element of our development strategy is education. Our government has made record investment in education. We believe that this will change the destiny of our nation. It is due to the efforts of the recent government that literacy graph has been reached from 45 percent to 54 percent in 2006.

In order to meet the shortage of skilled manpower in our rapidly growing economy, we are implementing a comprehensive programme of technical and vocational education aimed at maximum utilization of existing facilities as well as creating new ones.

One of the biggest challenges facing mankind today is to build a world where the goals of environmental conservation and economic development do not conflict with each other, but exist in perfect harmony and accord. Population growth, increasing urbanization, global warming, and natural disasters pose grave threats to environmental sustainability. Our government is paying a lot of attention towards environmental issues. Our National Environment Policy 2005 is geared towards protecting, conserving and restoring the environment.

The Medium-Term Development Framework 2005-2010 also focuses on sustainable environmental development as a vehicle for economic growth. Mega projects for improving access to clean drinking water, namely ’Clean Drinking Water Initiative’ and ’Clean Drinking Water for All’ are being implemented. Similarly a mega project with a cost of over $ I billion for lining water courses to improve agricultural productivity through efficient irrigation management is in progress.

Pakistan also has the advantage of a unique location at the cross-roads of South Asia, Central Asia and the Middle East. We are developing a network of infrastructure to leverage our location as a bridge-head for multiple corridors of regional cooperation involving energy, trade and transportation sectors.

We are according the highest priority to infrastructure development and improving the logistics chain. That in fact is a critical requirement for improving business competitiveness and productivity. The strategic concept of National Trade Corridor – involving huge investment and public-private partnership - is being implemented. The project aims at upgrading and expanding our rail, road, air and port network as well as streamlining processes to save time and hassle.

This will reduce by half the travel time of commercial vehicles from Karachi to Peshawar as well as decrease operational cost and accidents rate. A number of mega projects are also in progress to ensure energy, water and food security.

Apart from human capital and strategic location, our third main strength is the quality of our reforms. One thing that we are most proud of in Pakistan is our reform agenda. We recognize that in a highly competitive and inter-dependent global environment of today, the fundamental challenge facing countries like Pakistan is to adjust to the realities of the new global order and to measure up to the rapid pace of change in the world around, he said.

We in Pakistan are determined to ride the tide of globalization and turn this challenge into an opportunity. It gives me a great sense of pride and satisfaction that Pakistan is ahead of many countries in implementing economic reform and improving governance as well as very well positioned to make the best of the available opportunities.

Sustaining growth and ensuring that its benefits reach all segments of society remains a major challenge. In order to sustain growth and give our economy a competitive edge, we are vigorously implementing our agenda of second-generation reforms. The main objective of these reforms is to enhance productivity and competitiveness of our economy. Our reform agenda has three prongs, which are mutually reinforcing and predicated to achieving good governance and institutional strengthening.

One, we are committed to a market-based economy. To this end we have been deregulating markets as well as improving supervision and regulation of markets to ensure greater competition.

Two, we are also committed to developing policies and regulatory mechanisms that are aligned to global norms and also supportive of efficient markets. We have, therefore, adopted measures for better tax and tariff policy including better tax administration. Our Fiscal Responsibility and Debt Limitation Act of 2005 puts a check on fiscal policy slippages by future governments. And I might add that this policy is recommended by research at the frontiers of economics.

Three, we want to build better governance through institutional strengthening of the public sector. While privatization gets government out of the areas it should not be in, we also have to build a more capable and transparent government. As part of the drive to strengthen institutions, our government has already launched initiatives to modernize several of the key agencies of government. This will of course be done by deepening decentralization, developing greater transparency, utilizing the latest technology and relying on a high degree of professional and technocratic management.

We are highly appreciative of the important role that our development partners have played in helping us to achieve our development objectives. Your support has helped our country in building infrastructure, improving the quality of life of our people and moving forward as an anchor of peace and stability in the region. We have formulated short, medium, and long term plans through a consultative process.

While we welcome the inputs and advice of our development partners, we believe that development strategies and programmes must reflect the wishes and aspirations of the people to build consensus and ownership. That in our view is a key element of the success of any development effort, he added.