i ECONOMY

Low labour cost makes Pakistan attractive investment destinationBreaking

November 07, 2023

Pakistan has the potential to draw substantial investments in several industries where labour costs are significantly lower than those of its regional peers to gain competitiveness and turn them into potential export-oriented sectors, said Dr Liaqat Ali Shah, Executive Director and Head of Policy Division at the CPEC Centre of Excellence. Talking to WealthPK, he said, “Pakistan has emerged as an intriguing investment destination for both local and international investors with 60% of the labour force under the age of 40. One of the key factors driving this interest is the low labour costs in Pakistan.” “Pakistan has a comparative advantage in some labour-intensive products that might be encouraged to become export engines. Footwear, clothes, video and radio equipment, trunks and cases, cotton yarn, iron, agro-processing industries, dyeing and colouring materials, the printing industry, and glass and glassware are just a few of the subsectors that might help boost exports in the future,” he stated.

He said that Pakistan, which has signed a free trade agreement with China, has been seizing this opportunity by attracting Chinese companies to Special Economic Zones (SEZs). Also, local business houses are launching joint ventures with Chinese firms, he added. He stated that SEZs in Pakistan offered the best possible fiscal incentives to investors, including skilled and inexpensive labour, easy availability of raw materials, competitive energy tariffs, and low freight costs. Meanwhile, Dr Ghulam Samad, a senior trade economist, told WealthPK that labour of developed countries was ten times more productive than developing countries because it had more opportunities and technological innovations to enhance their skills and productivity.

“Pakistan can leverage its natural endowments and low-cost human resources to attract Chinese industries to relocate to our country because relocating light manufacturing from China can be used as an opportunity to kickstart industrialisation and structural transformation in Pakistan.” “As there are many challenges for Pakistan to accelerate industrial growth, it requires continuous efforts towards human development. Pakistan should invest in its human capital to meet the evolving needs of industries,” he suggested.

Credit: Independent News Pakistan (INP)