Pakistan's political unrest may delay, but not deter Canada's rapidly expanding trade with the South Asian nation, Canadian business leaders say.
Trade between Canada and Pakistan is continuing, even in the shadow of the recent assassination of opposition leader Benazir Bhutto and a six-week state of emergency declared by President Purvez Musharraf this past November.
Yet Pakistani-Canadians with ties to their homeland continue to open doors for Canadian companies across the Pacific and, at the same time, create more demand here for products and services from Pakistan.
"I'm not saying Pakistan is a perfect country and nothing happens," says Andy Merchant, president of the Toronto-based Canada-Pakistan Business Council. "Yes, things do happen. But if you're on a business mission, your suppliers or your customers will take care of you."
Bhutto's death in a suicide bomb and gun attack on Dec. 27 has cast Pakistan into a deep political crisis, raising western fears that the nuclear-armed nation will ultimately lose its struggle to control increasingly hostile Islamic militants.
Many observers have questioned whether Musharraf, a former general now serving as a civilian president, is sincere about his plans to establish a democratic government.
Questions also remain about his handling of the Bhutto assassination and whether or not his agents were perhaps even behind her death, charges that his government has rejected.
Foreign Affairs and International Trade Canada is continuing to advise against all travel to Pakistan. "Canadians who choose to travel to Pakistan despite this warning should evaluate carefully the implications for their security and safety," the government warns on its website.
But Merchant, who emigrated to Canada in 1959, believes commerce will continue to thrive in Pakistan. He points to rapid increases in cellphone purchases, automobile manufacturing and foreign-currency reserves as signs that Pakistan's middle class is becoming more affluent and able to afford higher-priced items.
Canadian companies have an important role to play as Pakistan tries to meet rising demand for information technology, oil and gas, hydroelectric power, new homes and other products and services, he adds.
SNC-Lavalin, Bombardier, Borealis Infrastructure and CAE are among major companies that have set up shop in Pakistan or gone on federal trade missions there.
Fund managers agree Bhutto's assassination is unlikely to derail fund flows into neighbouring India and other emerging markets in Asia.
Mark Mobius of Templeton Asset Management says after the initial shock and panic, the economy in Pakistan will move ahead. Sebastien Barbe, a senior economist at investment bank Calyon, predicts Pakistan's economy will grow by 5.5 per cent next year.
Pakistan's own stock market, up about 47 per cent this year, was closed for three days in a bid to limit fallout from Bhutto's murder.
Jean-Michel Laurin, vice-president of global business policy for the Canadian Manufacturers and Exporters Association (CME), says small to medium-sized companies have fuelled most of the rapid trade growth in Pakistan.
He says many Canadian firms shy away from doing business in Pakistan because it is a riskier market. But large firms such as Bombardier and CAE, which can benefit from large military contracts, have no concerns because they operate globally and are willing to go anywhere.
Citing Statistics Canada figures, Laurin says Canadian exports to Pakistan have increased almost fourfold since 2001. Last year, Canadian firms shipped $397 million worth of goods, compared to a modest $73 million in 2001.
Between 2002-03, Canadian exports to Pakistan more than tripled from $85 million to $302 million.
"Our exports have increased quite dramatically - I've never seen something like that," says Laurin.
Oilseed liquids, such as canola and sunflower oils, accounted for a $198-million increase in exports to Pakistan last year, while dried peas and beets ranked second and iron and steel placed third. Pumps and compressors, petrochemicals, and computer equipment have also headed over the Pacific, while Canadian companies have also developed pulp mills and coal mines in Pakistan.
Canada's main imports from Pakistan are textiles, knitted and woven clothing and mineral-based fuels. Laurin says smaller companies usually land deals because of industry associations that seek new export markets.
Companies that are concerned about the risk of dealing with Pakistan at this turbulent point can obtain insurance through Economic Development Canada and other organizations, Laurin adds.
Carey Healey, president and CEO of Coquitlam, B.C.-based Infosat Communications Inc., predicts Canadian companies doing business in Pakistan are unlikely to increase their investments there until the turmoil subsides. But Healey has no qualms about continuing Infosat's relationship with its Pakistani partner, Comstar.ISA Ltd.
"Sometimes, the events on the news will dominate people's thoughts," says Healey. "But there's 165 million people in Pakistan who, for the most part, are just going about their day-to-day business."
Infosat, which supplies satellite equipment and services, has invested about $1 million in Comstar after helping it win a US$2.2-million contract from the Punjab state government.
Infosat supplied a satellite hub and engineering services as part of the contract that will see Comstar provide network links and closed-circuit TV services for Pakistani police stations and other organizations in remote locations. The two companies aim to provide satellite and network services to Pakistani banks as they install more automated-teller machines around the country.
Doing business in Pakistan appealed to Infosat, because many executives in that country have trained in Canada or the U.S. and English is widely spoken.
"India is the glamour country by comparison and Pakistan has been forgotten about over there, which is actually why we went to Pakistan and not India," says Healey. "In India, it's very competitive. There are tons of companies doing this. If you go over to Pakistan, people are falling all over themselves to be your partner. It's because they're just craving the ability to take on some of this new technology and new products."
Comstar president Sami Bajwa is a McGill University MBA graduate who lived in Canada for two decades.
Healey says he felt little fear for his safety while travelling to Islamabad, Karachi and Lahore in 2006.
But his view has since changed. About two months after he came home, a suicide bomber struck the hotel where his group stayed. Pakistani lawyers have also protested outside the same venue.
"I'm not going back for a visit anytime soon," says Healey.
Jim Karygiannis, Liberal MP for Scarborough-Agincourt, has visited Pakistan several times on parliamentary and personal business. He has called on Ottawa to develop a regional trade strategy for the entire South Asian peninsula, which has a population of 1.5 billion people.
Karygiannis is also pressing for the Canadian government to support an international inquiry into Bhutto's death, to fast-track immigration applications and to extend any Pakistani visitor visas until it is safe for travellers to return home. "Any other action would be unconscionable," he said in a statement.
Some U.S. financial experts say the assassination is likely to further complicate business relations between the United States and Pakistan.
"The real question right now is whether the supply chain will remain intact. Right now, we don't know," said George Friedman, chief executive of global intelligence firm Stratfor. "The key variable is the cohesiveness of the Pakistani army."
U.S. trade with Pakistan has risen sharply in recent years as manufacturers shifted more and more jobs to low-cost countries.
Dan Markey, a senior fellow at the Council on Foreign Relations, said the Pakistani stock exchange in Karachi will likely feel the first effects of any financial fallout from the attack.
"I think you're going to see the market tumble," Markey said. But, he added, most foreign investors understand that putting money into Pakistani stocks entails political risk. "The money may come back."
- with files from The Canadian Press (Monte Stewart can be reached at monte@businessedge.ca)
