"The Rock Aornos From Huzara" by James Abbott
Last month, the SECP created something of a ripple in the financial circles of Pakistan with its announcement that it intends opening a "capital market business hub" in Abbottabad. The statement went on to pontificate with an air of deep wisdom about the unimaginable prosperity this step would bring for the good people of Khyber Pakhtunkhwa (KP).
From the perspective of the residents of KP, it is touching to see the good-natured attempt to introduce the people here to the intricate but profitable world of high finance. But from a professional point-of-view, it is painfully obvious that the SECP has forgotten the first rule of business: location, location, location. The idea of a capital market platform in KP is an excellent one, it is just that Abbottabad is (presently) a poor location choice.
What Is A "Capital Market"?
According to Investopedia (www.investopedia.com), "Capital Markets" is defined as follows:
"Markets for buying & selling equity & debt instruments. Capital markets channel savings & investment between suppliers of capital such as retail investors & institutional investors, & users of capital like businesses, government & individuals. Capital markets are vital to the functioning of an economy, since capital is a critical component for generating economic output. Capital markets include primary markets, where new stock & bond issues are sold to investors, & secondary markets, which trade existing securities."
The Top 3 Capital Market Business Hubs Of Pakistan
Whenever Pakistani financial centers are mentioned, 3 cities come to mind: Karachi, Lahore & Islamabad (in descending order of importance). The reason these 3 cities became the default choices in the country is because each has something unique to offer.
Karachi is a vast port city that has been in the process of developing into a financial center ever since the concept of international maritime trade came to the Indian Subcontinent. Lahore has a centuries-long tradition of being a cultural & educational capital going back to before the Mughals; it has the additional advantage as the first market for goods that have just crossed the India-Pakistan border. Islamabad, as the Federal Capital, is the first point at which an entrepreneur could hope to garner the attention of the international investor community.
What Does Abbottabad Have To Offer?
While there are occasional references to its significance as a hill station in Pakistan's tourism industry, Abbottabad is basically a military town. It is the regimental center of the Frontier Force Regiment, the Baloch Regiment & the Pakistan Army Medical Corps; in addition, some of its most well-known educational institutions are the Pakistan Military Academy, Army Burn Hall College, Army Public College, Abbottabad Public School & Pakistan International Public School & College - all of which are run by serving or retired Pakistan Army officers.
Army officers are not trained to fit easily into the financial world; army training promotes a regimented pattern of management; unexpected developments or unique methods of working are viewed as hostile acts - & resolved with a bullet, a missile or a directed energy weapon. But the investment field routinely proves most profitable to the party who is willing to be the most flexible & creative. Perhaps this is the reason that the majority of Army officers tend to become lawyers or small-scale realtors after retirement; & even if some of the current crop were thinking of spreading their wings, the Army opinion of gentlemen like Gen. (r) Afzal Muzaffar makes it inescapably obvious that the Army top brass frown upon forays into the capital market.
Other than the afore-mentioned educational institutions, there are only 4 others that are worth mentioning: Ayub Medical College, Frontier Medical College, COMSATS University Of Science & Technology & the University Of Engineering & Technology. These institutions (as their names imply) aren't likely to produce professionals with even the foggiest idea of the cut-throat world of competitive finance.
Peshawar, On The Other Hand...
Peshawar is the capital of KP, which means that when it comes to doing business in the Province, an investor's first stop will be the Provincial Capital. Peshawar is the biggest city in KP & the fifth-biggest city in Pakistan; it is the economic hub for the Federally Administered Tribal Areas (FATA) & has Sister City ties with Urumqi (China), Makassar (Indonesia) & Sana'a (Yemen); in addition, Peshawar markets are the preferred destination for a variety of imports from Afghanistan. In effect, Peshawar is the perfect location for both the local investor & the foreign one.
At the moment, the best option for the first capital market platform in KP is Peshawar. But that doesn't mean others can't be launched as knowledge & opportunities spread. Abbottabad or any other city could become a good option in a couple of years. It is already quite clear to most financial analysts that the China Pakistan Economic Corridor (CPEC) is going to dramatically change the economic landscape of Pakistan, especially the economically-underdeveloped provinces of KP & Balochistan. But until the Corridor is up & running, it would be better to make a small but sensible step in Peshawar, than to crash & burn in Abbottabad.
As British philosopher Julian Baggini puts it:
"The optimist underestimates how difficult it is to achieve real change, believing that anything is possible & it's possible now. Only by confronting head-on the reality that all progress is going to be obstructed by vested interests & corrupted by human venality can we create realistic programs that actually have a chance of success."
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