Malaysia is a great example of a dynamic progressive economy. From a primary producing economy Malaysia has rapidly transformed into an industrialized one, while keeping a keen eye on the international arena Malaysia is considered among one of the most open economies of the world. Pakistan and Malaysia have enjoyed great economic ties in the past. Several agreements on economic and technical cooperation have been signed between the two countries.
Despite the ongoing global recession and the political instability in Pakistan, Pakistan’s economy continues to prove itself as one of the most viable economies in the world and continues to attract foreign direct investments (FDI). Investor’s perspective about Pakistan is quickly changing and now they look at Pakistan for long term profitable investment opportunities. Malaysia is one such example. If we look at the table below it shows the low level of Malaysian FDI in Pakistan.
However, the Malaysian FDI improved greatly since 2005 as several agreements were signed between the two countries which have resulted to be very profitable for both.
- In 2006 Pakistan’s software Export Board and Multimedia Super Corridor Development Corporation signed an agreement to build IT parks in Pakistan
- Pakistan’s National Institute of Banking and Finance signed an agreement with Malaysia’s International Centre for Education in Islamic Finance to promote Islamic banking in Pakistan.
- Pakistan’s National Highway Authority signed an agreement with Malaysia’s Minconsult International to get financial and technical help in building roads in Pakistan.
- A Free Trade agreement was signed between the two countries in 2008.
Following all these agreement FDI by Malaysia has increased immensely. During the period of July 2006 to October 2010 Malaysia’s investments in Pakistan had crossed $855.7 million, making it a top investor in Pakistan. In 2011 Malaysia’s investment crossed the $1 billion mark. Some of the prominent Malaysian companies who have invested in Pakistan are Tenaga Nasional, (power sector) Telekom Malaysia, (IT sector) PETRONAS (oil and gas exploration) and the May Bank (banking sector). Pakistan’s first Halal certified abattoir was established by the collaboration of Malaysian investors. Malaysia has great experience in the fields of infrastructure and development. Malaysian investors in Pakistan are already working on 840 mw Suki Kinari, New Bong hydel and thermal projects in the power generation sector.
Malaysian investors have truly recognized the potential of Pakistani coal, hydel and wind power generation sectors. Now they want to further invest in this sector. With electricity shortages and the ever increasing demand of electricity in the country investors truly realize the great benefits they will gain from their investments. Pakistan also needs this sort of investment at this point as it has been unable to overcome its power crisis.