Pakistan is the sixth most populous nation on earth, with 170 million, predominantly young people – a figure that is expected to almost double by the year 2050. The growing middle class is boosting its domestic market and over the past decade the country has registered an average growth rate of around six per cent. So why has Pakistan not yet been acknowledged as one of the world’s key emerging economies, alongside the so-called ‘BRICs’ (Brazil, Russia, India and China)?

The Pakistani government argues that the problem is mainly one of perception. TV viewers in Britain frequently see pictures of the carnage inflicted by suicide bombers and of families left destitute by floods, so it is not surprising that their perception of Pakistan tends to be negative. ‘But Pakistan doesn’t feel like what people think,’ declared the British High Commissioner in Islamabad, Adam Thomson, at a seminar on doing business in Pakistan hosted by UK Trade and Investment (UKTI) at London’s Lancaster House in February. ‘The first two words that flash across people’s minds are “terrorism” and “corruption”. But I think of two other words: “opportunity” and “engagement”.’

The British government is certainly keen to engage more closely with Pakistan, as was made clear at the event. During his keynote speech, Lord Green, the coalition government’s Minister of State for Trade and Investment, set a challenge for the businessmen present to help double the volume of bilateral trade from its current level of around £1 billion. ‘Over 100 British companies are already working in Pakistan,’ he pointed out, ‘including many household names, from Barclays and HSBC to Mothercare and Costa Coffee.’ Lord Green likewise identified the Pakistani diaspora as having an important role to play in strengthening commercial ties: ‘Sixty years ago, there were maybe 10,000 people of Pakistani origin living in Britain; today there are over one million.’

Pakistan’s Minister of State and Chairman of the Board of Investment, Saleem Mandviwalla, stressed the huge advantages of his country’s geographical location. As a hub between the energy-rich but landlocked Central Asian republics, the financially liquid Gulf states and economically advanced East Asian ‘tigers’, Pakistan is in pole position. Improved relations with giant, neighbouring India have further enhanced the outlook.

While Mr Mandviwalla admitted that ‘there are travel advisories from some governments which sometimes deter people from investing in Pakistan’, he also pointed out that ‘Pakistan’s government has improved the investment climate by bringing in a series of reforms which make the prospect more attractive.’ Nowadays, foreign investors are treated on a par with locals and foreign companies can hold up to 100 per cent equity in Pakistan. Imported machinery is exempt from duty, as is the transfer of land for corporate agriculture. Foreign investors and companies can even repatriate up to 100 per cent of their capital profits and royalties, if they wish.

Energy is a sector being heavily promoted by the Pakistani government, as the country is rich in potential resources yet currently energy deficient. Half a dozen British companies, including BP, are already involved in the oil and gas sector, which attracts more foreign investment than any other. But as Mr Mandviwalla explained, Pakistan is similarly rich in coal deposits, while its rivers offer a huge potential for hydro-electricity – an asset now being exploited notably by the Hub Power Company (HUBCO), which has the largest market capitalisation of any private company in Pakistan. The government in Islamabad is conscious of the need to focus on other clean energy sources, including wind power.

Agriculture is responsible for almost a third of Pakistan’s GDP – for example, Pakistan is among the top five milk producers in the world – and is expected to grow by 30 per cent by 2015. According to UKTI, opportunities exist for British companies in capacity building, further research and the introduction of new technology in farming. But some of  Pakistan’s agricultural needs are more basic. ‘An unacceptably high percentage of food produced is wasted because of a lack of adequate storage and food processing,’ Minister Mandviwalla lamented.

There has been progress in developing Pakistan’s transport infrastructure in recent years, though much remains to be done. Roads need to be upgraded in some districts, and the government is pressing ahead with a high-speed rail link between Islamabad and Lahore. Public-private partnerships in the transport sector offer new opportunities for foreign businesses, the Minister believes.

Financial services are another sector in which British expertise could make a valuable contribution. Major reforms are going on at present, including the mutualisation and greater integration into the international financial system of the Karachi Stock Exchange. Moreover, only 14 per cent of Pakistani adults currently have a bank account, leaving a huge opening for retail banking, as several of Britain’s major high-street banks have realised. HSBC (which Lord Green used to chair) has been active in the corporate banking sector in Pakistan since 1984. British banks are also expanding their activities in offering a wide range of financial products.

Textiles are currently Pakistan’s biggest export earner. Opportunities exist, therefore, both in providing hi-tech specialist machinery to Pakistan’s textile factories, many of which manufacture top-quality products for Western clothing brands, and in sourcing new markets for their products.

Pakistan’s High Commissioner in London, Wajid Shamsul Hasan – once an advisor to the late former Prime Minister Benazir Bhutto, who was assassinated in 2007 – emphasised the determination of most of his compatriots to see their country grow and prosper. ‘The people of Pakistan have shown great courage and steadfastness over 30 years of conflict,’ he said. Mr Hasan’s British counterpart, Adam Thomson, identified Pakistan’s ‘increasingly educated professional class’ as an important driver of positive change in this respect.

Indeed, there are at least 10,000 Pakistani students in Britain each year, learning skills that can be used back home. Some of these students, no doubt, will one day prove crucial in cementing commercial ties between Pakistan and the UK. ‘Although Britain is the second largest investor in Pakistan, it is only Pakistan’s fourth most important trading partner,’ Mr Thomson noted. ‘There is obvious room for growth there, and Britain is also pushing for greater Pakistani access into the EU market.’

William Hague, the British Foreign Secretary, made a three-day visit to Pakistan last June, declaring on his return that he plans to continue a ‘long-term and close partnership’ with the government of Pakistan. He confirmed plans for Britain to give aid to Pakistan, notably to help build primary schools and to rehabilitate areas bordering Afghanistan that have been affected by conflict.

There was a break-out session at the UKTI event examining how British companies can capitalise on opportunities offered by aid programmes in Pakistan, including projects funded by multilateral sources such as UN agencies – for example, the reconstruction of areas damaged by last year’s devastating floods

‘Those floods caused a cosmetic fall in our economy,’ Mr Mandviwalla declared, ‘but I am confident GDP growth will bounce back in 2011. We are also looking at developing new sectors of the economy, including tourism. There are lovely unspoilt beaches in Baluchistan, for example, and Japanese mountaineers have already discovered the wonderful opportunities round Gilgit, in the north-east of Pakistan. But we need foreign investment to help bring the local infrastructure up to scratch, including improving roads and airports.’