DesPardes + PKonweb

“Trillion Dollar” Net Worth Of Pakistani Expats

According to my estimate, the combined net worth of Pakistani expats in the West runs several hundred billion dollars over and above the guess-estimated figure of some Pakistanis’ hidden assets abroad.

IRSHAD SALIM — Some 9.5 million Pakistanis are abroad in two different broad categories: Pakistanis mostly in the Middle East (NICOP card holders), and those who switched citizenship and hold dual nationality (Pakistani Diaspora holding POC cards).

Almost 99 percent of Pakistanis working in the GCC are NICOP holders and according to my best estimate do not need an amnesty to send their assets home– they regularly remit most of their disposal income with no tax on their income in the host country and no tax to their families in Pakistan. It’s quite possible that some of them moved to the region and shifted their “residency, wealth and assets” and are maintaining the status quo.

$20 billion one-time expected value (EV) from hidden assets as fee, versus $657 billion EV of expats in the West. Their combined known net worth remains untapped.

As for dual nationals, they are mostly concentrated in North America, UK and EU countries. Yes, in my opinion, some of them could benefit from the amnesty if they wanted to, on the assumption that they may be culpable of money-laundering, or having acquired ill-gotten wealth by earning beyond their known means—under Pakistani laws. However, being dual nationals, they may not opt and could continue to keep their assets abroad unless the long arm of the “country-of-origin laws” proved beyond any reasonable doubt that these individuals were indeed involved in money-laundering, tax evasion, etc. back home– but that would be a long-haul exercise with diminishing returns.

“A” has the potential to become Pakistan’s Fort Knox.

The brighter side between the two categories is that their; (A) total disposal incomes, net worth, credit worthiness and proven track record of eagerness to remit or invest in home country (B) far exceed the total amount of undeclared monies and hidden assets of Pakistanis known to exist.

But the jury is still out there.

Meanwhile, “A” is known and verifiable– may be risky to incentivize the sender and monetize the receipts, but the risk can be quantified and therefore can be mitigated. In case of “B”, the amount remains unverifiable and subject to many encumbrances even if verified– its quantum remains elusive to-date, and therefore subject to uncertainty on both. Hence, it cannot be quantified, and therefore cannot be mitigated.

As a start, let these expats buy from the government, properties in foreign exchange. It’s a win-win. They also want actual and official transactions to reflect value of their investments.

Metaphorically put: A is a behemoth of low hanging fruits visible and reachable for the country’s economic managers. B is a cloud, a rainbow with pots of gold at its end to chase, and being considered a gigantic cherry tree which would however require fleets of cherry-pickers and aerial plucking after special glasses are worn to discern the trees’ and its fruits’ visibility.

According to my estimate, the combined net worth figure of Pakistani expats in the West runs several hundred billion dollars over and above the guess-estimated figure of some Pakistanis’ hidden assets abroad.

“A” has the potential to become Pakistan’s Fort Knox.

The available resource albeit stranded asset has not been tapped and monetized institutionally.

I figure the number among 9 million OPs minus OPs in the Middle East (who regularly send their disposal income through remittances) to be close to 4.5 million, and mostly based in the Western Hemisphere. Their combined potential (conservative) which Pakistan can harness is in the range of anywhere between $1.125 trillion to $1.5 trillion (not counting their regular yearly remittances)– and untapped for decades.

At 50/50 percent probability, the expected value (EV) of their available investment potential is in the range of $563 billion to $750 billion ($657 billion median). Most importantly, the scenario is predictable, and therefore the outcome can be positively managed to create a sustainable model for both sides (expats in the West and the country of origin).

As compared, the amnesty-based fee which the government at best may be able to collect is theoretically as follows: $800 billion (elusive and maximum figure) x one-time 5% = $40 billion. Using a 50/50 percent probability, its expected value (EV) is $20 billion. From firefighting standpoint, the effort is of course worthwhile, however do look at the above. It’s an assured-supply-assured demand low hanging fruit, hitherto not recognized. Therefore, the available resource albeit stranded asset has not been tapped and monetized institutionally. We have the brains to do it. Better late than never.

As a start, let these expats buy from the government properties in foreign exchange. It’s a win-win. They also want actual and official transactions to reflect value of their investments.

(The author is a business consultant, analyst, and Editor-in-Chief of PKonweb and DesPardes– presently based in Islamabad)

A version of his article appeared in Al-Bilad Daily English online April 2018.

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