Ihave been working in Pakistan for five years and have had the honour of participating in the Pakistan Pavilion at the World Economic Forum (WEF) in Davos for the past three years. One thing you notice immediately upon arriving in Pakistan is that there is a large gap between the perception one obtains in the Western world and reality on the ground in Pakistan.
Pakistan is a country of enormous potential. The China-Pakistan Economic Corridor (CPEC) makes Pakistan the gateway and conduit for business and commerce to Central Asia and Western China. This is a vast, largely untapped, market now connected via modern infrastructure running the length of Pakistan. CPEC provides worldwide access to growing markets and enormous natural resources. However, more importantly it opens huge possibilities for Pakistan’s most valuable and important resource — its people. In terms of size and scope, Pakistan has a very large pool of talent and human resource potential waiting to be tapped. There is a great windfall for multinational companies who take advantage of Pakistan’s impressive talent pool, hardworking people, and CPEC infrastructure.
Speaker after speaker at the Pakistan Pavilion referred to Pakistan’s impressive pool of talent and declared “Pakistan is open for business.” Unfortunately, this “build it and they will come” perspective is the attitude of countries throughout the developing world. While Pakistan may have a large and diverse talent pool, it needs to differentiate itself from its competitors in order to attract international partners. International corporations are not just looking for talent; they are looking for reliable, safe, and professional business environments to invest in. This is a particular challenge for Pakistan where perceived risk of doing business is much exaggerated from the actual level of risk of doing business in the country. Pakistanis cannot dismiss this. To succeed it is critical to manage the perceived risks of potential business partners while competently managing the actual risk to business. This also means that Pakistani companies must sell their country and their business sector along with marketing their individual companies for Pakistan’s share of the international business pie to grow.
In order to achieve its potential and differentiate itself from its competitors in the developing world, Pakistan needs to develop support infrastructure for its human capital. The challenge is significant because the bar to overcome is the perceived risk of doing business in the country. But by investing in developing governance, compliance, and risk management skills throughout its business community, Pakistan has the potential to repeat the transformation of countries like Singapore, Israel, South Korea, and Finland. These countries used their human resources to become modern, affluent societies built on knowledge-based industries. Pakistan has the advantage of developing its knowledge-based industries, while also pursuing manufacturing opportunities using its affordable labour force. But this will only happen if international businesses feel comfortable in doing business in Pakistan. This means Pakistani companies need to proactively demonstrate they can manage the perceived and actual risk of international partners.
In order to attract international investors and business, Pakistan needs to tackle the concerns of the international business community head-on. Perhaps even more important than access to talent, international businesses want to be sure any local business partner has world-class governance, compliance, and risk management procedures in place. Potential partners want to be certain that legal, regulatory, contractual, labour, safety, environmental obligations can be met, as well as assurance that quality, continuity of operations, security, and brand/reputation protection measures are exemplary. In other words, in addition to talent, international organisations are looking for a comprehensive and holistic approach to managing all the risks their organisation perceives. Given the perception of risk in Pakistan, this means to succeed Pakistani companies need to proactively address potential partners’ perception of risk by preemptively approaching potential partners with a risk management plan addressing the potential partners’ concerns.
Pakistani companies also need to realise that they must sell their country, not just their individual businesses. At this early stage of attracting foreign business, success breeds success, while a lack of professionalism will reflect poorly on doing business in Pakistan in general. There is the need to target industry sectors with the greatest potential for foreign investment and create mechanisms to enhance professionalism across the sector, as well as promote fellow Pakistani companies. This means avoiding bad-mouthing competitors, while highlighting that your company has something special to offer. Joint marketing by professional societies of what Pakistan has to offer, while enhancing business management and communications skills will encourage foreign investments and partnerships.
There is also a need to enhance the image of Pakistan as a competitor in knowledge-based industries. One approach that has proven successful time and again is the establishment of technology transfer offices at universities and research institutes, including incubator programmes. The secret to attracting foreign attention is for universities and research institutes to jointly market their offerings to show that the country as a whole has a critical mass of investment opportunities. Jointly marketing this critical mass at international conferences and online forums produces an image of Pakistan having a critical mass of opportunities to encourage a second look at Pakistan rather than smaller developing countries.
In a world of globalisation and decentralised supply chains, any country can become a player. The countries that succeed will be the countries that can demonstrate not only that they have large talent pools, but that they have a critical mass of business opportunities and that they can also proactively address the risk management concerns of potential partners. Pakistan has the ingredients to become an international player and transform the future of its large pool of talented young people. The time has come to promote less of the physical infrastructure CPEC has created and emphasise the business and risk management acuity of its business sector. Working together, Pakistanis can encourage international businesses to give the country a second look by demonstrating its businesses have world-class governance, compliance, and risk management practices capable of protecting their partners’ interests.
Published in The Express Tribune, February 8th, 2020.