PAKISTAN: Tea Is Not Enough

"Horace Greeley said, 'Go West, young man.' I say to the investor who is young and vigorous in mind, 'Go East or West Pakistan, my friend. You will find a warm welcome and a rich reward.' "

With these words, Pakistan's vigorous young (45) Premier Mohammed Ali last week announced a new policy to lure U.S. money to his struggling young (7) country. To an audience of U.S. businessmen in Manhattan, Ali sounded a dramatic new note from Asia, whose newly independent governments, still resentful of colonialism's old wrongs and jealous of their new independence, have made things tough for Western investors. Most have heavily taxed foreign businesses, limited their profits, refused to let even those profits out of the country, and demanded majority control of companies built wholly by foreign money. Western investment was slowly being choked out at the very time that Asia most needed the strength of economic development to ward off Communism.

Fields of Jute. Mohammed Ali was candid. The 1947 partition which created the Moslem state of Pakistan left it an agricultural country. It had vast fields of jute but not a single mill to convert it to burlap. To balance the economy, Pakistan needed industries. Some, the government has built itself. But "the best method of industrialization is through the investment of private venture capital," said Ali. Voicing the creed of a convinced free enterpriser, he declared: "It was the adventurous risk capital of the 19th century that built the fortress of industrial strength the U.S. enjoys today. We in

Pakistan appreciate . . . that it is not enough to offer a warm welcome and a friendly cup of tea ... Incentives must be given to industrialists before they can be expected to undertake new ventures in a foreign and distant land."

His country, sixth most populous in the world, is prepared, said Ali, to offer these incentives:

¶ Investors will be allowed to take out their profits in their original currency. "Those who invest dollars quite naturally want to get dollars in return." ¶ The government will guarantee repatriation of foreign investments. "This includes capital investment, capital gains and reinvested profits." ¶ Foreign investors will be allowed to hold up to 60% (i.e., majority control) of the capital of a new industry. Only exception: public utilities. ¶ Tax concessions for new industries will be granted.

"Why are we doing this?" said Mohammed Ali. "A cynic might say that we aren't doing it for our health. Well, he would be wrong. That's exactly what we are doing it for."

"God Gave Us a Mind." U.S. officials, though pleased, sounded a note of caution. Pakistan is suffering from a lack of foreign exchange, has at the moment no dollars to remit any profits or repatriate any capital. Ali was taking the bold and worthwhile gamble that in five years or so, the influx of foreign capital and the benefits it brought would give Pakistan enough foreign exchange to make good on his pledge.