Mnc Policy in Pakistan

Topics: Corporation, Pakistan, Multinational corporation Pages: 8 (2410 words) Published: November 8, 2012
History of MNC in Pakistan:

Multinational Corporations have a long history in Pakistan. The first foreign investment in what is now Pakistan was by the Steel Brothers in 1913 in Morgah, Rawalpindi. This is known as Attock Oil. The Germanic firm Siemens had set up in 1932. ICI invested in Khewra in 1935. Unilever (formerly Lever Brothers), Imperial Tobacco, Shell and Burma Oil, banks came soon after Independence in 1947. From 1947, Pakistan was a fertile ground for investment by MNCs. Companies did well and word got around. The American and European MNCs were lining up to invest in Pakistan. In fact, the Dulles Brothers of USA (Froster at the State Department and Andrew at the CIA) issued a memo to the Fortune 500 companies that in addition to South Korea and West Germany, Pakistan was the preferred investment destination for American companies.

MNC’s in Pakistan:
A large number of multinationals have been operating in the country for many years.The multinationals have invested extensively in Pakistan. USA leads with $190 mn, followed by UK $122 mn. Other countries that have brought in investment are in order of FDI: Netherlands, UAE, Switzerland, Singapore, Hong Kong. China surprisingly appears down the list after these states at number 8, with Japan following. Many European, Korean and Arab companies such as Orascom are active in construction, communications and other fields. Japanese like Toyota, Suzuki, Nissan, and Honda are mainly in the automotive industry. Five major sectors have been earmarked for investment including ‘corporate farming’, agriculture, infrastructure, skill development, minerals and alternative energy such as coal, hydel, wind and solar energy production. Attraction for MNC’s in Pakistan:

1.Geo-strategic location:
Located in the heart of Asia, Pakistan is the gateway to the energy rich Central Asian States, the financially liquid Gulf States and the economically advanced Far Eastern tigers. This strategic advantage alone makes Pakistan a marketplace teeming with possibilities. 2.High consumer demand:

Pakistan is a growing economy with a population of 187 million as of 2011. There is a strong middle class of 30 million people. This represents almost 16% of Pakistan. Whereas there are 36 million plus people (about 65%) which are in the age bracket between 20-25 years. Such kind of a growing population statistics represents a positive indicator for the requirement of an improved life style. Represented by the influx of these young professionals as the potential consumers in the Pakistani Market. Such a towering figure of consumer who has ever increasing demand will not be catered by the local industry alone. This is where the growth of the Multinational companies in Pakistan comes from. These better educated and better aware individual demand for commodities to improve their standard of living. Such an environment becomes favorable for the MNCs in Pakistan. Recently it was reported that big companies such as Unilever and Nestle with a sizeable investment in Pakistan are hoping the country will be a source of growing profits. Figures suggest that Nestlé Pakistan boosted sales by 29% in 2011. This is in line with the Swiss brand owner has a target of deriving 45% of total revenues from the emerging world by 2020. Unilever Pakistan also enjoyed sales growth of 15% over the period of January to June 2011. Globally, the company has set a goal of increasing sales 100% by 2020, with most of the growth coming from outside the USA and Europe.

3.Cheap Labor:
One of the biggest attractions for these Multinational Corporations in Pakistan is the availability of cheap labor. Since Pakistan serves as one of the top 3 countries which have cheap labor, but Quality wise it is better than the rest of the countries in the region (such as India, Bangladesh and Sri Lanka even). Since the financial crisis has brought about a great change in the educational environment of the western countries as well,...
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