VZCZCXRO9390
RR RUEHLH RUEHPW
DE RUEHIL #1536/01 1020314
ZNR UUUUU ZZH
R 110314Z APR 08
FM AMEMBASSY ISLAMABAD
TO RUEHC/SECSTATE WASHDC 6461
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC
RUEHRC/USDA FAS WASHDC 4178
RUEHNE/AMEMBASSY NEW DELHI 3114
RUEHLO/AMEMBASSY LONDON 7688
RUEHML/AMEMBASSY MANILA 2964
RUEHKP/AMCONSUL KARACHI 9542
RUEHLH/AMCONSUL LAHORE 5288
RUEHPW/AMCONSUL PESHAWAR 4016

UNCLAS SECTION 01 OF 02 ISLAMABAD 001536 
 
SIPDIS 
 
SENSITIVE 
 
SIPDIS 
 
E.O.  12958:  N/A 
TAGS: EFIN ECON PGOV PREL PK
SUBJECT: DEPUTY SECRETARY NEGROPONTE'S MEETING WITH THE AMERICAN 
BUSINESS COUNCIL 
 
 
¶1. (SBU) SUMMARY:  Deputy Secretary Negroponte and 
Assistant Secretary Boucher met with the elected Executive Board of 
the American Business Council (ABC) in Karachi on March 27. 
Representatives from U.S. companies were optimistic about Pakistan's 
investment climate but expressed concerns over the impact of the 
energy crisis on the manufacturing sectors, the need for consistency 
in economic policies with the newly installed federal government, 
the lack of qualified or skilled workers graduating from the 
Pakistani educational system, the lack of patent protection afforded 
pharmaceutical products, and the overall law and order situation 
impacting the "already negative" international perceptions of 
Pakistan. END SUMMARY. 
 
¶2. (SBU) Deputy Secretary Negroponte and Assistant Secretary Boucher 
met with the elected Executive Board of the American Business 
Council (ABC) in Karachi on March 27.  Representatives from 
Colgate-Palmolive, Lakson Tobacco, JP Morgan, Dell, ACE Insurance, 
Abbott Laboratories, Wyeth Laboratories, Gillette, Gerry's 
International, Pfizer, and IBM  attended. 
 
¶3. (SBU) The free flowing discussion covered a range of issues of 
critical importance to American investors in Pakistan.  Noting that 
on average thirty-seven percent of all foreign direct investment 
into Pakistan over the last 17 years has been from the United 
States, ABC members expressed continued optimism overall about the 
investment climate.  ABC members noted that, despite the political 
problems and the riots after the Bhutto assassination, 2007 was the 
most profitable year for American companies in Pakistan.  The ABC 
cited examples of planned expansions such as IBM which is doubling 
activities in Pakistan, Procter and Gamble which is bullish with 
plans to set up two new plants to supply the domestic market and 
their own power plant, and Abbott Laboratories which  has its second 
largest plant in the world outside of Karachi. 
 
¶4. (SBU) The ABC noted that the economic policies of the Musharraf 
regime had been very successful and the new government would need to 
continue with these reforms.  They expressed hope that there would 
be consistency of economic policies without the "yo-yoing of the 
past."   The ABC also explained that Pakistan needs to move forward 
with second generation economic reforms such as reducing the 
dependency on subsidies for fuel and food, expanding the tax base, 
restarting privatization efforts, and continuing to increase the 
overall transparency.  While noting that the overall law and order 
situation obviously impacts any plans for expansion, the ABC stated 
that the continued negative media coverage which increases the 
"already negative international perceptions of Pakistan" is a bigger 
threat to their business. 
 
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Energy 
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¶5. (SBU) Noting that there had been an eight hour blackout the 
previous night, the ABC reps collectively stated that "dealing with 
the energy problems needs to be the number one priority of the new 
government."  In response to the Deputy Secretary's question about 
how the energy crisis is affecting manufacturing, ABC members noted 
that most large scale manufacturing plants in Pakistan have their 
own power generation source, but the bulk of industry relies upon a 
combination of state supplied power and self generation.  Typically 
this self-generated power was used solely as back-up power but due 
to the rising diesel prices and the excessively long blackouts, the 
basic supplies of raw materials and manufactured inputs have been 
impacted.  Local producers simply cannot meet orders and provide the 
needed quantities, resulting in increased imports for ABC members to 
ensure that stocks are on hand to meet basic supplies of essential 
inputs. 
 
--------------------------------- 
Intellectual Property Rights (IPR) 
---------------------------------- 
 
¶6. (SBU) Turning to IPR, the group noted the inability of the 
government to pass data protection legislation for pharmaceutical 
patent protection.  Expressing frustration at both the length of 
time and the cumbersome process, the ABC asked that we "not let 
Pakistan off the hook in the 301 process."  Representatives noted 
that Pakistan is not meeting its minimum obligations under Treaty 
Related Intellectual Property in Services (TRIPS) and that local 
companies are bringing in the generic versions of most drugs before 
a company can apply for a legitimate patent. 
 
ISLAMABAD 00001536  002 OF 002 
 
 
 
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Education 
--------- 
 
¶7. (SBU) In response to the Deputy Secretary's question about how 
the U.S. could best help Pakistan, the ABC ranked education second 
after energy, in terms of the most needed policy changes.  All ABC 
members noted that they were unable to find qualified employees, 
despite the high unemployment rate in Pakistan.  They cited the lack 
of qualified or skilled workers graduating from the Pakistani 
educational system and expressed hope that the U.S. could assist in 
improving the skilled workforce. 
 
-------------------- 
Continued Engagement 
-------------------- 
 
¶8. (SBU) ABC members also raised restarting negotiations for the 
Bilateral Investment Treaty and implementation of the Reconstruction 
Opportunity Zones as critical to expanding the bilateral 
relationship. They noted that the U.S. will have a key role to play 
in the economic policies because neither the Pakistan Muslim 
League-Nawaz (PML-N) nor the Pakistan People's Party(PPP) has 
developed a detailed economic policy and "have been out of the 
country for too long to know what the actual economic polices are in 
practice."  The Deputy Secretary noted that the U.S. shares with the 
ABC a "common interest in seeing stability and prosperity in 
Pakistan which will further economic development." 
 
¶9. (SBU) Pakistani representatives of American business interests 
who attended the meeting were: Mr. Tasleemuddin Ahmed 
Batlay,Director of Colgate-Palmolive; Mr. Arshad Rahim Khan, 
Managing Director and Chief Executive of Wyeth (pharmaceuticals); 
Mr. Humayun Bashir, Country General Manager of IBM;  Mr. Asif Jooma, 
Managing Director of Abbott Laboratories;  Mr. Saad Amanullah Khan, 
Chief Executive Officer of Gillette; Ms. Zehra Naqvi, Chief 
Executive of ACE Insurance; Mr. Akram Wali Mohammad, Managing 
Director of Gerry's International (air cargo and ground-handling 
services company) ; and Mr. Reza-ur-Rahim, Senior Country Officer 
and Head of Investment Banking in Pakistan for JP Morgan. 
 
¶10. (U) This cable has been cleared with the Deputy Secretary's 
staff. 
 
PATTERSON