Investment is an asset acquired or action taken to generate revenue like currency exchange, property, stocks, etc.
In the coming years, Pakistan will be the hub of business activities because of the massive developmental projects going on, for example, China-Pakistan Economic Corridor. Besides this, Pakistan’s warm water seaport remains active throughout the year, making trade possible.
Pakistan has many features which can make her a center of business activities; therefore, in this blog, we will discuss the best investments in Pakistan.
When we think of investments, we must know that there is always a risk factor associated with investments, which can reduce the value of assets rather than revenue generation. So, before discussing the best investments in Pakistan, we will understand the investment process.
Process of Investment:
The investment process includes a comprehensive analysis of the investment sector before taking action. It includes the following steps:
Research:
An in-depth analysis of assets is conducted to understand the worth of investment and potential losses.
Device capital spending strategy:
Before investing capital, an investor should plan how and where to spend money. It means that he should have enough money to pay regular expenses and must have a backup in the form of an emergency fund.
Recognize liquidity restriction of assets.
Liquidity restriction is when it becomes difficult for an investor to sell their assets for many reasons like high competition, fewer buyers, etc. So before investing, investors must understand the liquidity restriction of their assets.
Analyze tax implication:
Tax implication is the consequence of events or decisions on tax liability. Understanding it will help investors to make informed decisions that comply with tax laws.
Evaluate risk capacity:
Before investing, investors must evaluate the risk attached to the investment. Risk assessment is important because sometimes, investments result in a loss rather than revenue generation.
Consult an advisor:
- To make the best possible decision, investors should consult an advisor to assist them in the whole process.
- Now we understand how investors can make an optimized investment decision, we will move on to the types of best investments in Pakistan.
Types of Best Investments In Pakistan
Real estate:
An investment in real property to generate revenue rather than a primary residential purpose like Zen apartments Nathia Gali. Real estate can be considered one of the best investments in Pakistan because of the following reason:
- Capital appreciation:
Capital appreciation means that investing in property leads to capital gain because the value of property increases with time.
- Rental revenue:
Rental revenue is the increase in a continuous stream of revenue by renting property for residential and commercial purposes.
Stock Exchange:
A stock exchange is a marketplace where people can buy and sell shares of companies. These shares represent ownership in a company, and they can be traded for cash. In the stock exchange, investments have a relatively higher risk capacity than other investments.
One of the best investments in Pakistan is in Pakistan Stock Exchange which was inaugurated on 11 January 2016, and PSX currently has 500 registered companies.
As we are now aware of PSX, we must know the investment process at the stock exchange.
Process of investment
To buy or sell shares on the PSX, you have to follow the below-mentioned steps:
- Open a brokerage account with a registered broker.
- Now you can place, buy and sell orders for company shares listed on the PSX.
Agricultural investment:
Pakistan is an agricultural country, and that sector plays a vital role in the country’s economy, accounting for 25% of the GDP and employing 40% of the workforce. With an increasing population, the demand for food has increased, which has raised investment potential in agriculture.
Investors can consider the following sectors as the best investments in the agricultural sector.
- Food and fiber crops
- Fishing
- Farming
- Horticulture
- Forestry
Here are some reasons why agricultural investment is considered the best investment in Pakistan.
- Suitable climate
- Highly growing population
- Government tax subsidies
- High return potential
Tourism
Pakistan has four seasons, lush green forests, the world’s highest mountain ranges, great deserts, a warm water sea, a much-diversified culture, unique flora, and fauna. All these features have made tourism one of the best investments in Pakistan.
Pakistan is an underdeveloped country which has high tourism potential. Infrastructure must be improved to take advantage of the features of Pakistan’s beauty mentioned above.
According to Statista, revenue in tourism is projected to reach US$ 3008 with an annual growth rate of 6.14%. The tourism sector in Pakistan offers a wide range of investment opportunities, including:
- Hotel and resort development
- Transportation and infrastructure development
- Tour operators and travel agencies
- Cultural and heritage tourism
- Adventure tourism
- Medical tourism
Small Business:
A small business is defined as an independently owned business. According to SMEDA, a firm with less than 250 employees and annual sales of up to two hundred fifty million rupees is considered a small business in Pakistan. Small businesses include restaurants, cafes, retail shops, and online businesses.
Small Businesses are considered as best investments in Pakistan because of the below-mentioned features:
- High growth potential
- Favorable market conditions
- Supportive government policies
Investments in Pakistan: Pros and Cons
Pros:
Geostrategic location:
Below mentioned geostrategic features have enhanced the importance of Pakistan concerning investments:
- Pakistan is located at the center of the transit route.
- Gateway to Central Asian energy-rich states
- Surrounded by landlocked countries that are dependent on Pakistan for a trade route
- Warm water sea ports which remain workable for trade throughout the year
- The initiation of high flagship projects like CPEC
Workforce:
- The estimated population of Pakistan in 2023 is 240,485,658. Most of the population belongs to the lower and lower middle class, in high need of employment. So, Pakistan has a massive workforce for businesses.
Above mentioned features of Pakistan have made it suitable for investment.
Cons:
Political situation:
- Political instability is one of the major causes of the economic downfall in Pakistan, leading to a high inflation rate, currency devaluation, poverty, and severe loss of businesses.
Lack of transparency:
- Corruption and lack of transparency have raised uncertainty and risk among investors.
Conclusion:
Pakistan has a lot to offer to its investors. The geostrategic position of Pakistan has made it important among superpowers, but the current political situation and economic downfall have caused many problems for investors.
Pakistan offers a high range of opportunities to businesses in the form of easy investment policies. Some of the best investments in Pakistan include real estate, tourism, small businesses, entrepreneurship, stock exchange, and agriculture.
Besides the pros and cons of investing in Pakistan, the success of businesses depends heavily on a comprehensive business research strategy. Thorough research before investing in any project can open many doors of success for investors.