2019 to be tough for Pakistan but significant investments expected: CIO Tundra Fonder

January 2, 2019 (MLN): The Minister of State and Chairman Board of Investment (BOI) Mr. Haroon Sharif told a Saudi newspaper that Pakistan will be signing agreements worth more than $30 billion, with investors from Saudi Arabia, the UAE, Germany, Malaysia, and Korea in January.

As the statement made its way from one ear to the next, it created a stir in domestic markets. In an inquisitorial tweet, Tundra Fonder a Swedish asset manager specializing in frontier markets, drew further attention to the matter, terming these potential investment plans as a possible way to bring “Pakistan back on the investor map.”

In a digital interview with Mettis Link News, Mr. Shamoon Tariq head of Karachi office, Tundra Fonder and Vice Chief Investment Officer (CIO) shared his belief that 2019 should be a tough year for Pakistan’s economy, as it adjusts to higher exchange rate, high interest rates and new tariffs. “With cost of business going up, we should see contraction in economic growth and GDP should be posting growth in the vicinity of 3-4%,

Commenting on the aforementioned potential investments, he said that, “Given the investment opportunities in underpenetrated sectors and perceived better and trustworthy governance of the current regime, I am positive that investments will flow into the country from different geographies.”

Terming the move as a good first step, he added that since modalities and terms are yet to be decided, it makes the timing unpredictable. “Secondly, the investment period, as shared by the government, is next three years, I expect only Memorandum of Understanding (MoUs) and Letter of Intent (LoIs) will be signed in January 2019,” he said.

Answering whether the said inflow would be sufficient to sustain Pakistan’s economy, Mr. Shamoon Tariq said that Pakistan needs huge investments in its infrastructure and to create new industries. “We need to see the continuity of such investments rather than a one-off. In short to medium term it’s a good amount to kick-off the economy, if materialized. Pakistan has seen very dismal FDI in last decade so relatively this should be taken positively by other investors to follow suit.”

Furthermore, throwing light on the long term effects of these investments, he said that since “Pakistan is about to enter the second phase of CPEC, it has to upgrade its Refining and Energy infrastructure to meet demand and also to yield efficiencies through new technologies. Real Estate investments should not just help Pakistan overcoming housing shortage but also help other sectors of the economy to grow, such as Cements, Steel, Tiles etc.

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