Pak-German Relations: History of Time-Tested Cooperation


Germany is Pakistan's fourth largest trading partner and biggest trading partner in the European Union.


Pakistan is located in one of the most important economic zones of the world. Being a strategic location, at the crossroads of China, the Middle East and Central Asia, with a Free Trade Agreement (FTA) with China and Sri Lanka and home to 177 million consumers, Pakistan offers matchless prospects for trade and investment to world community. Besides, Pakistan is traditionally regarded as gateway to Central Asia with ever-growing investment potential and business opportunities being a vast agro-based country with huge mineral and industrial potential.

Above all, Pakistan is full of talent and our industrious manpower has made significant headway in the world labour markets. Pakistani expatriates, as individuals have performed outstandingly in Europe, US and Middle East. Pakistan and Germany enjoy extremely close, warm and historical relations.

Germany is Pakistan's fourth largest trading partner and biggest trading partner in the European Union. Germany has been a reliable partner in trade, development, military, scientific and cultural cooperation. The collaboration between Germany and Pakistan dates back to the creation of Pakistan. Pakistan has the honour of being the first country with which the Federal Republic of Germany entered into bilateral investment treaty in 1959 and to commemorate the 50th anniversary of this treaty another bilateral Trade Investment Treaty was signed in December 2009 to redefine and upgrade their economic relationship in the 21st century. The new instrument is more investment friendly. It builds upon long-standing corporate relations and takes both countries into a new era of mutually beneficial collaboration. Presently, Germany is the eighth largest investor in Pakistan and several German multi-nationals are operating in Pakistan.

Germany is home to 53,668 Pakistani immigrants. It is the third largest country for higher education for the Pakistani students and Germany has been providing scholarships. There are at present 2,000 Pakistani scholars enrolled in German universities for higher studies. As one of the founding members of the Friends of Democratic Pakistan (FoDP), Germany has actively participated in the group's meetings. It pledged Euro 115 million at the Tokyo donors Conference (Euro 80 million provided under Bilateral Development Cooperation).

Germany has also extended active support to Pakistan's initiatives with the EU for providing greater market access to Pakistani exports to EU. German government and German people had contributed generously for flood affected people amounting close to $300 million that included $210 million from ordinary German people. Germany has significantly enhanced the Development Assistance from Euro 64 million in 2007-08 to Euro 145.4 million in 2009-10. This assistance is focused on four priority areas, namely, basic education, primary healthcare, renewable energy/energy efficiency and microfinance/poverty alleviation.

The two countries enjoy remarkable ties during last 64 years but since the last couple of years the relationship is not growing at the historical pace and it needs to rejuvenate the bilateral trade and investment relationship. There is ample space to expand and further strengthen the bilateral relations and cooperation in various fields including economy, education, defence, infrastructure and energy. Germany has expertise in the area of renewable energy and agriculture sector and it could extend cooperation in these two important areas. Pakistan is the third largest milk producing country and Germany can help Pakistan to preserve milk and milk products. Germany can help Pakistan by enhancing counter-terrorism capacity through provision of necessary equipment and training.
Germany has expertise in the area of renewable energy and agriculture sector and it could extend cooperation in these two important areas.
Pakistan and Germany share belief in market forces, private entrepreneurship and free enterprise. The private sector of our country is the pillar of our growth. The multinational companies (MNCs) experience in Pakistan has been a success in terms of their expansion and prosperity. More than 200 multinational companies are already working in the country, with laws guaranteeing full protection. German companies are also well established in Pakistan and their products and technology are highly valued and admired in Pakistan.

Pakistan has abundance of untapped natural resources, rapidly growing telecommunication and information technology industry, an improving transportation network; a well-established banking system with almost 20 per cent stake belonging to foreign banks and above all industrious and quality manpower. Pakistan has offered one of the most competitive packages of fiscal and monetary incentives in the world for investors with an investment climate, rated highly for its business friendliness. All sectors of our economy are open to business and anyone can start business without approval or sanction on hundred per cent equity ownership basis.

Foreign investment is given top priority and it remains fully protected by law. Their yield is one of the highest in the world. By widening the area of prosperity, and spreading the dividends of development through investing in Pakistan it can help catalyse societal change and increases security for all. This is also a win-win scenario for both countries. Pakistan is striving hard to attract investment in many sectors as falling investment-to-GDP ratio is the most critical element of concern. Pakistan has signed bilateral investment promotion and protection agreements with 47 countries of the world to boost investment in productive sectors of the economy to enhance job creation ability of the economy.

Moreover, Special Economic Zones (SEZs) are being established in Pakistan where investors enjoy additional facilities. Investor can freely remit royalty, technical and franchise fee, capital, profits and dividends and can enjoy high rates of return. The government is trying to build a better future, for Pakistan, for the region and the world and Pakistan badly needs partnership with time-tested friend like Germany. The investment treaty signed 50 years ago can rejuvenate and strengthen bilateral relations between two countries.


The writer is the finance minister.
Dr. Abdul Hafeez Shaikh

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