World Bank’s MIGA Promotes Foreign Direct Investment in Pakistan

World Bank’s MIGA Promotes Foreign Direct Investment in Pakistan

(Urdu)

KARACHI, November 11, 2006—Foreign investors interested in opening up businesses in Pakistan can offset potential noncommercial risks to their in-vestments with help from the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group. That was the key message of a business roundtable held today in Karachi.

The event, hosted by the Institute of Bankers, drew representatives from about 10 leading banks and financial institutions. Kicking off the event were Arif Elahi, Director General, Board of Investment, Government of Pakistan; Azhar Iqbal Kureshi, Advisor to the Governor on Development Finance; State Bank of Pakistan; and Muhammed Saleem Umer, Chief Executive of In-stitute of Bankers, Pakistan (IBP).  

Inaugurating the roundtable discussion, Mr. Kureshi stressed the importance of foreign direct investment for the economic development of Pakistan and the importance of MIGA in providing guarantee for such investments, par-ticularly in large infrastructure projects.

IBP’s Muhammed Saleem Umer welcomed MIGA’s initiative to share with Pakistani bankers how the agency’s political risk instruments can play an important role in securing foreign direct investment in developing countries, including Pakistan.

Foreign direct investors can play a critical role in reducing poverty—by building roads, providing clean water and electricity, and above all, provid-ing jobs. But foreign direct investment into developing countries is often in-hibited by concerns about political risks. The government in Pakistan cannot shoulder the burden—financially or technically—of addressing the country’s development needs alone. The private sector can help economies grow and avert the need for governments to use funds better spent on acute social needs.

Speaking at the event, MIGA’s Chief Counsel, Srilal Perera, and Investment Officer, Hal Bosher discussed how MIGA gives private investors the confi-dence and comfort they need to make sustainable investments in developing countries by providing political risk insurance; technical assistance; and dispute mediation services.

“MIGA is committed to promoting socially, economically, and environmen-tally sustainable projects,” said Perera. “A MIGA-supported project is al-ready helping to develop a more efficient telecommunications infrastructure in Pakistan,” he said. “MIGA has provided Orascom Telecom Holding S.A.E. of Egypt a guarantee for $79 million to cover its $88 million equity invest-ment in Pakistan Mobile Communications Limited.”

Perera also highlighted the improved financial terms encouraged by MIGA’s coverage, including better access to project finance, lower borrowing costs, and longer loan tenors.

MIGA can also help Pakistani entrepreneurs minimize risk while investing in other developing countries. Investment Officer Hal Bosher spoke about op-portunities for Pakistani investors in Afghanistan. In the past one year, MIGA has supported three projects in Afghanistan, including a pharmaceu-tical manufacturing plant, a microfinance project, and a cotton ginning pro-ject. All three projects were underwritten under the agency’s Small Invest-ment Program.

“We at MIGA are able to cater to the different risk preferences and unique needs of both large, complex transactions and small investments,” said Bosher. “Our Small Investment Program is tailored to provide political risk insurance for equity, shareholder loans, technical assistance and manage-ment contracts, franchising and licensing agreements, and other investments of less than $5 million.”

At the same time MIGA’s ability to provide innovative solutions that serve  clients’ individual needs has enabled many difficult deal structures—public-private partnerships, projects involving sub-sovereign risk, the securitization of mortgages—to go through, benefiting both investors and developing countries.

The event was followed by one-on-one meetings between Pakistani bankers, private sector leaders and representatives of MIGA.

For information:
Angie Gentile, agentile@worldbank.org, 202.473.3509
Farah Hussain, fhussain@worldbank.org, 202.473.2540