By Abdul Wajid Khan ISLAMABAD, Feb. 11 (INP-WealthPK): Pakistan needs to put in place appropriate policies and initiatives to involve its diaspora in the mainstream capital market and mobilise their income and wealth into productive investment vehicles in the form of innovative financing for beneficial projects in the country. The Asian Development Bank (ADB) in its latest report titled “Economic Corridor Development (ECD) in Pakistan: Concept, Framework, and Case Studies” said that the estimates of the annual combined wages of the Pakistani diaspora were around $52 billion, equating to around 20% of Pakistan’s gross domestic product (GDP) in 2015. Moreover, the investment potential of the Pakistani diaspora is estimated to be around $4 billion–$5 billion annually. Hence, diaspora financing holds great potential in supporting infrastructure, urban, and industrial development projects. However, involving the diaspora in providing capital investments for ECD will require the removal of obstacles and creating opportunities for them to engage in economic development. The report available with WealthPK said that the Pakistani diaspora is a significant contributor to the country’s socio-economic development. Between 2014 and 2018, remittances from Pakistan’s migrant workers have contributed, on average, 6.6% to GDP. This contribution has not only directly supported economic growth and helped reduce poverty, but also led to the accumulation of human capital among recipient Pakistani households. Overseas Pakistanis, especially in the US, the UK and the Middle East, are well-financed and highly educated. More significantly, total remittances have consistently surpassed the amounts of official development aid and foreign direct investment (FDI) into Pakistan during 1980-2018. The remittance inflows have also been much more stable than other flows, the report added. “Given the myriad of macro-economic and geo-political challenges that beset Pakistan, achieving a dramatic rise in FDI, at least in the short term, seems implausible. Nevertheless, the government should consistently strive to prepare the ground for attracting larger FDI flows in the medium and long terms and render the overall domestic environment more attractive to foreign investors. In addition to China, the UK, and the US, several countries have demonstrated interest in enhancing FDI in the country. Still, their investment decisions are often closely tied to geopolitical factors,” the report said. An ADB analysis indicates that Pakistan is facing an infrastructure financing gap of about 5% of GDP. Other countries in similar situations look to the remittances of their diaspora members to fill such gaps. Migrant-sending countries such as India, Israel, Sri Lanka, and Kenya have developed financial instruments to tap into the wealth of their respective diaspora, primarily by issuing diaspora bonds. The report added that Pakistan’s economy will continue to receive some FDI under the China–Pakistan Economic Corridor (CPEC). These inflows may well be expanded by rallying wider domestic socio-political support for CPEC projects and by removing procedural bottlenecks that delay their timely implementation. However, it added, Pakistan must seek ways to channel a proportion of its diaspora resources into a profitable investment vehicle to fund ECD-related projects. Evidence suggests that members of the Pakistani diaspora are willing to contribute more resources provided the conditions are conducive. A survey conducted by Pakistan Centre for Philanthropy among the Pakistani diaspora in the US found that a significant number of respondents (83%) feel that, given the right conditions, their own Pakistan-related giving could increase significantly. Nearly all (93%) feel that there is growth potential for the overall giving. Even more interestingly, half of the respondents believe that giving could be higher if they are able to trust that their contribution would be assigned to good use if they have better information, and if the government makes the process easier through efficient facilitation. The report suggested that to tap into the wealth of the Pakistani diaspora, Pakistan needs to improve the diaspora’s trust in institutions within the country and tackle the country’s persistent regulatory challenges. Given that significant constraints may be difficult to resolve within a short time, Pakistan could adopt a strategic approach such as bringing in a trustworthy mediator to circumvent the bottlenecks. This could facilitate the process of strengthening the development framework into one that engages the diaspora towards generating the much-needed human and financial capital to expand production capacity and subsequently open access to global markets and resources.