Pakistan has been in the news recently, "but the media is not talking about infrastructure investment opportunities in Pakistan," notes Aijaz Ahmad, CEO of the Infrastructure Project Development Facility (IPDF) of the government of Pakistan. He believes the headlines about Pakistan's political issues are obscuring an underlying, more sustainable economic reform effort.

The IPDF was launched in November 2006 to fill gaps in long-term infrastructure financing needs not met by the private sector, in assets that will eventually be privatised. The IPDF has now invested in 21 projects and identified another 23, including municipal services, urban transportation and logistics. Its portfolio is valued at $4.1 billion.

Ahmad welcomed foreign investment into Pakistan's infrastructure sector at the Macquarie Asian Infrastructure Conference held earlier this week in Singapore.

He notes Pakistan has the seventh largest population in the world, with half of it under the age of 25. "We have huge infrastructure needs," he says, noting the government needs to spend 7.5% of its GDP each year on various projects.

Despite the country's current political turmoil, its economy has performed well and its credit ratings have remained stable. The stock market has been a star this year, the exchange rate is stable and foreign reserves have increased at a rapid clip. Moreover, the past decade has seen extensive reforms in the form of tax and tariff reductions, corporate governance measures and privatisation - with 65 assets worth $6.7 billion divested.

Foreign investment has continued to rise in Pakistan, with $8.4 billion of inflows in 2007 to date, including in telecoms, ports, oil & gas, and power. But the government needs this to essentially quintuple in scale. To that end it has recently promulgated a new policy framework to foster public-private partnerships (PPPs) in infrastructure development, and standardised contract provisions, says Ahmad.

It has also written guidelines to provide funding to projects to ensure their commercial viability for private investors. These can come in the form of subsidies to the general population rather than bailouts for an inefficient utility, in order to reward performance. It can also take the form of newly established funds such as IPDF, meant to fill the gaps in projects that makes them commercially attractive to private players. The government is still hammering out policy regarding risk management, Ahmad says.

Currently the government wants to use PPPs in five water reservoirs it has identified as needing to be built, costing $20 billion; upgrades to ports and ship berths in Karachi and Gwadar; 60 power generation projects totalling $14.1 billion; and urban wastewater management projects.

The government is confident in its story to private investors and the political consensus behind this, and plans to host an infrastructure conference in Pakistan in the first half of 2008, after the coming presidential and then parliamentary elections, Ahmad says.