A bill to promote the strengthening of the private sector in Pakistan.

Summary: Pakistani-American Enterprise Fund Act - Authorizes the President to designate a private, nonprofit organization based in Pakistan (the Pakistani-American Enterprise Fund) to receive funds and support to promote and strengthen the private sector in Pakistan.

States that the grant agreement between the United States Agency for International Development (USAID) and the Fund shall require the Fund to: (1) liquidate its assets and dissolve not later than December 31, 2020, unless USAID determines after congressional consultation that the Fund should be extended; and (2) prevent funds from being used for money laundering and terrorist financing.

Requires: (1) an annual Fund report to Congress; and (2) a Government Accountability Office (GAO) report to Congress every three years regarding Fund activities.

Urges the Fund's Board of Directors to adopt the best practices and procedures used by Enterprise Funds, including those for which funding has been made available pursuant to the Support for East European Democracy (SEED) Act of 1989.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Pakistani-American Enterprise Fund 
Act''.

SEC. 2. FINDINGS.

    Congress makes the following findings:
            (1) Pakistan currently enjoys a strong private sector and 
        entrepreneurial spirit. The country is working to consolidate 
        macroeconomic stability and initiate structural reforms with 
        support from the International Monetary Fund's (IMF) Stand-By 
        Agreement. A more stable economy in Pakistan will help support 
        Pakistan's robust private sector. Enterprise Funds established 
        in partnership with United States partners like Poland, 
        Hungary, Albania, Russia, and other European countries have 
        proven beneficial to their economies. Creating a similar fund 
        in close partnership with the people of Pakistan could help 
        sustain and expand their reform efforts as well as empower 
        entrepreneurs in Pakistan with the resources required to create 
        desperately needed employment opportunities.
            (2) A 2009 assessment released by the IMF noted, ``Economic 
        growth in Pakistan is starting to recover; large-scale 
        manufacturing output has started to increase, the improvement 
        in the global economy has helped manufacturing exports, and the 
        private sector credit growth has picked up somewhat as 
        businesses rebuild their working capital. Looking ahead, a 
        resumption of higher growth is needed to raise living standards 
        and will require improvements in the business climate to 
        stimulate higher investment by local and foreign investors.''
            (3) Pakistan has seen a dramatic fall in foreign direct 
        investment (FDI) in recent years. According to Pakistan's Board 
        of Investment (BOI), foreign direct investment dropped by 40.7 
        percent from the July 2008-June 2009 time period to the July 
        2009-June 2010 time period. Pakistan secured $5,139,600,000 in 
        FDI in 2006-2007 and $5,152,800,000 in 2007-2008, but the 
        amount dropped to $2,205,000,000 in 2009-2010.
            (4) According to the Asian Development Bank's 2008 report 
        on Pakistan's private sector, Pakistan's private sector is by 
        far the biggest contributor to GDP and is the biggest employer 
        in the country. According to Pakistan's Small and Medium Sized 
        Development Authority (SMEDA), small and medium sized 
        enterprises (SMEs) constitute nearly 90 percent of all 
        enterprises in Pakistan, employ 80 percent of the non-
        agricultural labor force, and constitute an approximately 40 
        percent share of annual GDP. Pakistan's SMEs are particularly 
        constrained by lack of access to financial and other resources. 
        Accelerating the growth of existing SMEs and providing 
        innovative entrepreneurs with resources to set up new ventures 
        has the potential to significantly contribute to stability 
        through job creation and support overall economic success in 
        Pakistan.
            (5) The shortage of risk capital in Pakistan stems from the 
        effects of the global economic crisis but has been greatly 
        exacerbated by both political and security challenges plaguing 
        the country. Establishing an enterprise fund could help 
        reinforce financial institutions within the country, provide 
        debt and equity investment for commercially viable SMEs, 
        provide debt and equity investment in private sector entities 
        and initiatives in the energy sector, and make the investment 
        environment more attractive to domestic and international 
        investors.
            (6) Creation of an enterprise fund could promote the growth 
        of the private sector in Pakistan while simultaneously 
        incentivize companies to operate within the formal economy. 
        Estimates by the IMF and World Bank suggest that the informal 
        or underground economy in Pakistan far exceeds the fiscal 
        activity government institutions are able to systematically 
        measure. Any company or business supported by the enterprise 
        fund would be required to operate within specific legal and 
        accounting standards and comply with applicable tax codes. In a 
        country with extremely low levels of tax collection--less than 
        2 percent of the population is believed to pay personal taxes--
        leadership by the private sector could set an invaluable 
        example within the country.
            (7) To help foster and support the fledgling private sector 
        after the fall of the Berlin Wall, Congress, through enactment 
        of the Support for East European Democracy (SEED) Act of 1989 
        (22 U.S.C. 5401 et seq.) and the FREEDOM Support Act (22 U.S.C. 
        5801 et seq.), authorized nearly $1,200,000,000 for the United 
        States Agency for International Development (USAID) to 
        establish 10 new investment funds, collectively known as the 
        ``Enterprise Funds'', throughout Central and Eastern Europe and 
        the former Soviet Union. These funds channeled funding into 
        over 500 enterprises in 19 countries, leveraged an additional 
        $5,000,000,000 in private investment capital from outside the 
        United States Government, provided substantial development 
        capital where supply was limited, created or sustained over 
        260,000 jobs through investment and development activities, 
        funded $74,000,000 in technical assistance to strengthen the 
        private sector, and is expected to recoup 137 percent of the 
        original USAID funding.

SEC. 3. PURPOSES.

    The purposes of this Act are--
            (1) to promote the private sector in Pakistan, while 
        considering the development impact of investments and 
        profitability of those investments, particularly in small- and 
        medium-sized enterprises, the energy and electricity sector, 
        and joint ventures with participants from the United States and 
        Pakistan;
            (2) to promote policies and practices conducive to 
        strengthening the private sector in Pakistan through measures 
        including loans, microloans, equity investments, insurance, 
        guarantees, grants, feasibility studies, technical assistance, 
        training for businesses receiving investment capital, and other 
        measures;
            (3) to promote good corporate governance and transparency 
        in Pakistan, foster competition, catalyze productivity 
        improvements in existing businesses, and strengthen local 
        capital markets;
            (4) to promote security through job creation in the private 
        sector in Pakistan and to further the creation of a middle 
        class in Pakistan; and
            (5) to promote private sector adherence to tax codes in 
        Pakistan and, where appropriate, foster improvements in the tax 
        code and regulatory environment in Pakistan in order to support 
        economic development.

SEC. 4. PAKISTANI-AMERICAN ENTERPRISE FUND.

    (a) Designation.--The President is authorized to designate a 
private, nonprofit organization based in Pakistan (to be known as the 
``Pakistani-American Enterprise Fund'') to receive funds and support 
made available under this Act after determining that such organization 
has been established for the purposes specified in section 3. The 
President should make such designation only after consultation with the 
leadership of each House of Congress.
    (b) Board of Directors.--
            (1) Appointment.--The Pakistani-American Enterprise Fund 
        shall be governed by a Board of Directors, which shall be 
        comprised of 4 private citizens of the United States and 3 
        private citizens of Pakistan, appointed by the President of the 
        United States in consultation with the Government of Pakistan.
            (2) Qualifications.--Members of the Board of Directors 
        shall be selected from among people who have had successful 
        business careers and demonstrated experience and expertise in 
        international and particularly emerging markets, such as 
        private equity or venture capital investment, banking, finance, 
        strategic business consulting, or entrepreneurial business 
        creation, and backgrounds in priority business sectors of the 
        Fund, such as the energy sector.
            (3) Additional usaid non-voting board member.--The 
        President shall appoint one official or employee of USAID as an 
        additional non-voting member of the Board.
            (4) Additional non-government non-voting board members.--
                    (A) Authority to appoint.--Upon the recommendation 
                of the Board of Directors, the President may appoint up 
                to 2 additional non-voting members to the Board in 
                addition to the members specified in paragraphs (1) and 
                (3), of which not more than one may be a non-citizen of 
                the United States.
                    (B) NGO community.--One of the additional non-
                voting Board members shall represent the 
                nongovernmental organization community, with 
                significant prior experience in development and an 
                understanding of development policy priorities for 
                Pakistan.
                    (C) Technical expertise.--One of the additional 
                non-voting Board members shall have extensive 
                demonstrated industry, sector, or technical experience 
                and expertise in a priority investment sector for the 
                Fund.
    (c) Grants.--
            (1) In general.--The President may use funds appropriated 
        pursuant to section 102 of the Enhanced Partnership with 
        Pakistan Act of 2009 (22 U.S.C. 8412) to carry out the purposes 
        specified in section 3 through the Pakistani-American 
        Enterprise Fund and to cover administrative expenses of the 
        Fund.
            (2) Eligible programs and projects.--Grants awarded under 
        this section may only be used for programs and projects that 
        support the purposes set forth in section 3.
            (3) Compliance requirements.--
                    (A) In general.--Grants may not be awarded to the 
                Pakistani-American Enterprise Fund under this section 
                unless the Fund agrees to comply with the requirements 
                under this section.
                    (B) Grant agreement.--The grant agreement between 
                the United States Agency for International Development 
                and the Pakistani-American Enterprise Fund shall state 
                that the Fund shall liquidate its assets and dissolve 
                not later than December 31, 2020, unless the 
                Administrator of the United States Agency for 
                International Development determines, after 
                consultation with the appropriate congressional 
                committees, that the Fund should be extended.
                    (C) Prevention of money laundering and terrorist 
                financing.--The grant agreement between the United 
                States Agency for International Development and the 
                Pakistani-American Enterprise Fund shall state that the 
                Fund shall comply with procedures specified by the 
                Secretary of State to ensure that grant funds are not 
                provided by the Fund to or through any individual, 
                private or government entity, or educational 
                institution that advocates, plans, sponsors, engages 
                in, or has engaged in, money laundering or terrorist 
                activity or, with respect to a private entity or 
                educational institution, that has as a principal 
                officer of the entity's governing board or governing 
                board of trustees any individual that has been 
                determined to be involved in or advocating money 
                laundering or terrorist activity or determined to be a 
                member of a designated foreign terrorist organization.
                    (D) Disposition of assets.--The assets of the 
                Pakistani-American Enterprise Fund at the time the Fund 
                is dissolved shall be returned to the General Fund of 
                the United States Treasury and used to reduce the debt 
                of the United States, unless otherwise specified by the 
                appropriate congressional committees.
    (d) Notification.--
            (1) In general.--Not later than 15 days before designating 
        an organization to operate as the Pakistani-American Enterprise 
        Fund pursuant to subsection (a), the President shall provide 
        the information described in paragraph (2) to the Chairman and 
        Ranking Member of the appropriate congressional committees.
            (2) Information.--The information described in this 
        paragraph is--
                    (A) the identity of the organization to be 
                designated to operate as the Pakistani-American 
                Enterprise Fund pursuant to subsection (a);
                    (B) the names and qualifications of the individuals 
                who will comprise the initial Board of Directors; and
                    (C) the procedures referred to in subsection 
                (c)(3)(C) that will apply to the Pakistani-American 
                Enterprise Fund for purposes of curtailing money-
                laundering and terrorist financing activities.
    (e) Public Disclosure.--Not later than one year after the entry 
into force of the initial grant agreement under this section, and 
annually thereafter, the Fund shall prepare and make available to the 
public on an Internet website administered by the Fund a report on the 
Fund's activities during the previous year, including--
            (1) a description of each investment or project supported 
        by the Fund, including each type of assistance provided in 
        accordance with section 3(2);
            (2) the amounts invested by the Fund in each company or 
        project;
            (3) the amounts of additional private investments made in 
        each company or project; and
            (4) the amounts of any profits or losses realized by the 
        Fund in connection with each such company or project.

SEC. 5. REPORTS.

    (a) Administrative Expenses.--Not later than one year after the 
date of the enactment of this Act, and annually thereafter until the 
Fund is dissolved, the Fund shall submit to the appropriate 
congressional committees a report detailing the administrative expenses 
of the Fund.
    (b) GAO Report.--Not later than 3 years after the date of the 
enactment of this Act, and every 3 years thereafter until the Fund is 
dissolved, the Comptroller General of the United States shall submit to 
the appropriate congressional committees a report assessing the 
activities of the Fund in achieving the stated goals of promoting 
private sector investment and employment in Pakistan and identifying 
those institutional or regulatory constraints that inhibit a more 
effective application of Fund resources.

SEC. 6. OPERATION PROVISIONS.

    (a) Applicable Provisions.--Subsections (d)(5), (g), (h), (i), (k), 
(l), (m), (n), (o), and (p) of section 201 of the Support for East 
European Democracy (SEED) Act of 1989 (22 U.S.C. 5421) shall apply with 
respect to the Pakistani-American Enterprise Fund in the same manner as 
such provisions apply to Enterprise Funds designated pursuant to 
subsection (d) of such section.
    (b) Reinvestment.--Returns on investments of the Pakistani-American 
Enterprise Fund and other payments to the Fund may be reinvested in 
projects carried out by the Fund without further appropriation by 
Congress.

SEC. 7. BEST PRACTICES AND PROCEDURES.

    To the maximum extent practicable, the Board of Directors of the 
Pakistani-American Enterprise Fund should adopt the best practices and 
procedures used by Enterprise Funds, including those for which funding 
has been made available pursuant to section 201 of the Support for East 
European Democracy (SEED) Act of 1989 (22 U.S.C. 5421).

SEC. 8. EXPERIENCE OF OTHER ENTERPRISE FUNDS.

    In implementing this Act, the President shall ensure that the 
Articles of Incorporation of the Pakistani-American Enterprise Fund 
(including provisions specifying the responsibilities of the Board of 
Directors of the Fund), the terms of United States Government grant 
agreements with the Fund, and United States Government oversight of the 
Fund are, to the maximum extent practicable, consistent with the 
Articles of Incorporation of, the terms of grant agreements with, and 
the oversight of the Enterprise Funds established pursuant to section 
201 of the Support for East European Democracy (SEED) Act of 1989 (22 
U.S.C. 5421) and comparable provisions of law.

SEC. 9. APPROPRIATE CONGRESSIONAL COMMITTEES DEFINED.

    In this Act, the term ``appropriate congressional committees'' 
means--
            (1) the Committee on Foreign Relations of the Senate;
            (2) the Committee on Appropriations of the Senate;
            (3) the Committee on Foreign Affairs of the House of 
        Representatives; and
            (4) the Committee on Appropriations of the House of 
        Representatives.