II 

Calendar No. 652 

111TH CONGRESS 

2D SESSION S. 3665 

[Report No. 111–353] 

To promote the strengthening of the private sector in Pakistan. 

IN THE SENATE OF THE UNITED STATES 

JULY 29, 2010 

Mr. LUGAR (for himself, Mr. KERRY, and Mrs. GILLIBRAND) introduced the 

following bill; which was read twice and referred to the Committee on 

Foreign Relations 

NOVEMBER 19, 2010 

Reported by Mr. KERRY, without amendment 

A BILL 

To promote the strengthening of the private sector in 

Pakistan. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Pakistani-American 

5 Enterprise Fund Act’’. 


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1 SEC. 2. FINDINGS. 

2 Congress makes the following findings: 

3 (1) Pakistan currently enjoys a strong private 

4 sector and entrepreneurial spirit. The country is 

5 working to consolidate macroeconomic stability and 

6 initiate structural reforms with support from the 

7 International Monetary Fund’s (IMF) Stand-By 

8 Agreement. A more stable economy in Pakistan will 

9 help support Pakistan’s robust private sector. Enter10 prise Funds established in partnership with United 

11 States partners like Poland, Hungary, Albania, Rus12 sia, and other European countries have proven bene13 ficial to their economies. Creating a similar fund in 

14 close partnership with the people of Pakistan could 

15 help sustain and expand their reform efforts as well 

16 as empower entrepreneurs in Pakistan with the re17 sources required to create desperately needed em18 ployment opportunities. 

19 (2) A 2009 assessment released by the IMF 

20 noted, ‘‘Economic growth in Pakistan is starting to 

21 recover; large-scale manufacturing output has start22 ed to increase, the improvement in the global econ23 omy has helped manufacturing exports, and the pri24 vate sector credit growth has picked up somewhat as 

25 businesses rebuild their working capital. Looking 

26 ahead, a resumption of higher growth is needed to 


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1 raise living standards and will require improvements 

2 in the business climate to stimulate higher invest3 ment by local and foreign investors.’’ 

4 (3) Pakistan has seen a dramatic fall in foreign 

5 direct investment (FDI) in recent years. According 

6 to Pakistan’s Board of Investment (BOI), foreign di7 rect investment dropped by 40.7 percent from the 

8 July 2008–June 2009 time period to the July 2009– 

9 June 2010 time period. Pakistan secured 

10 $5,139,600,000 in FDI in 2006–2007 and 

11 $5,152,800,000 in 2007–2008, but the amount 

12 dropped to $2,205,000,000 in 2009–2010. 

13 (4) According to the Asian Development Bank’s 

14 2008 report on Pakistan’s private sector, Pakistan’s 

15 private sector is by far the biggest contributor to 

16 GDP and is the biggest employer in the country. Ac17 cording to Pakistan’s Small and Medium Sized De18 velopment Authority (SMEDA), small and medium 

19 sized enterprises (SMEs) constitute nearly 90 per20 cent of all enterprises in Pakistan, employ 80 per21 cent of the non-agricultural labor force, and con22 stitute an approximately 40 percent share of annual 

23 GDP. Pakistan’s SMEs are particularly constrained 

24 by lack of access to financial and other resources. 

25 Accelerating the growth of existing SMEs and proVerDate Mar 15 2010 21:57 Nov 19, 2010 Jkt 099200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\S3665.RS S3665

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1 viding innovative entrepreneurs with resources to set 

2 up new ventures has the potential to significantly 

3 contribute to stability through job creation and sup4 port overall economic success in Pakistan. 

5 (5) The shortage of risk capital in Pakistan 

6 stems from the effects of the global economic crisis 

7 but has been greatly exacerbated by both political 

8 and security challenges plaguing the country. Estab9 lishing an enterprise fund could help reinforce finan10 cial institutions within the country, provide debt and 

11 equity investment for commercially viable SMEs, 

12 provide debt and equity investment in private sector 

13 entities and initiatives in the energy sector, and 

14 make the investment environment more attractive to 

15 domestic and international investors. 

16 (6) Creation of an enterprise fund could pro17 mote the growth of the private sector in Pakistan 

18 while simultaneously incentivize companies to oper19 ate within the formal economy. Estimates by the 

20 IMF and World Bank suggest that the informal or 

21 underground economy in Pakistan far exceeds the 

22 fiscal activity government institutions are able to 

23 systematically measure. Any company or business 

24 supported by the enterprise fund would be required 

25 to operate within specific legal and accounting 


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1 standards and comply with applicable tax codes. In 

2 a country with extremely low levels of tax collec3 tion—less than 2 percent of the population is be4 lieved to pay personal taxes—leadership by the pri5 vate sector could set an invaluable example within 

6 the country. 

7 (7) To help foster and support the fledgling pri8 vate sector after the fall of the Berlin Wall, Con9 gress, through enactment of the Support for East 

10 European Democracy (SEED) Act of 1989 (22 

11 U.S.C. 5401 et seq.) and the FREEDOM Support 

12 Act (22 U.S.C. 5801 et seq.), authorized nearly 

13 $1,200,000,000 for the United States Agency for 

14 International Development (USAID) to establish 10 

15 new investment funds, collectively known as the 

16 ‘‘Enterprise Funds’’, throughout Central and East17 ern Europe and the former Soviet Union. These 

18 funds channeled funding into over 500 enterprises in 

19 19 countries, leveraged an additional 

20 $5,000,000,000 in private investment capital from 

21 outside the United States Government, provided sub22 stantial development capital where supply was lim23 ited, created or sustained over 260,000 jobs through 

24 investment and development activities, funded 

25 $74,000,000 in technical assistance to strengthen 


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1 the private sector, and is expected to recoup 137 

2 percent of the original USAID funding. 

3 SEC. 3. PURPOSES. 

4 The purposes of this Act are— 

5 (1) to promote the private sector in Pakistan, 

6 while considering the development impact of invest7 ments and profitability of those investments, par8 ticularly in small- and medium-sized enterprises, the 

9 energy and electricity sector, and joint ventures with 

10 participants from the United States and Pakistan; 

11 (2) to promote policies and practices conducive 

12 to strengthening the private sector in Pakistan 

13 through measures including loans, microloans, equity 

14 investments, insurance, guarantees, grants, feasi15 bility studies, technical assistance, training for busi16 nesses receiving investment capital, and other meas17 ures; 

18 (3) to promote good corporate governance and 

19 transparency in Pakistan, foster competition, cata20 lyze productivity improvements in existing busi21 nesses, and strengthen local capital markets; 

22 (4) to promote security through job creation in 

23 the private sector in Pakistan and to further the cre24 ation of a middle class in Pakistan; and 


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1 (5) to promote private sector adherence to tax 

2 codes in Pakistan and, where appropriate, foster im3 provements in the tax code and regulatory environ4 ment in Pakistan in order to support economic de5 velopment. 

6 SEC. 4. PAKISTANI-AMERICAN ENTERPRISE FUND. 

7 (a) DESIGNATION.—The President is authorized to 

8 designate a private, nonprofit organization based in Paki9 stan (to be known as the ‘‘Pakistani-American Enterprise 

10 Fund’’) to receive funds and support made available under 

11 this Act after determining that such organization has been 

12 established for the purposes specified in section 3. The 

13 President should make such designation only after con14 sultation with the leadership of each House of Congress. 

15 (b) BOARD OF DIRECTORS.— 

16 (1) APPOINTMENT.—The Pakistani-American 

17 Enterprise Fund shall be governed by a Board of 

18 Directors, which shall be comprised of 4 private citi19 zens of the United States and 3 private citizens of 

20 Pakistan, appointed by the President of the United 

21 States in consultation with the Government of Paki22 stan. 

23 (2) QUALIFICATIONS.—Members of the Board 

24 of Directors shall be selected from among people 

25 who have had successful business careers and demVerDate Mar 15 2010 21:57 Nov 19, 2010 Jkt 099200 PO 00000 Frm 00007 Fmt 6652 Sfmt 6201 E:\BILLS\S3665.RS S3665

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1 onstrated experience and expertise in international 

2 and particularly emerging markets, such as private 

3 equity or venture capital investment, banking, fi4 nance, strategic business consulting, or entrepre5 neurial business creation, and backgrounds in pri6 ority business sectors of the Fund, such as the en7 ergy sector. 

8 (3) ADDITIONAL USAID NON-VOTING BOARD

9 MEMBER.—The President shall appoint one official 

10 or employee of USAID as an additional non-voting 

11 member of the Board. 

12 (4) ADDITIONAL NON-GOVERNMENT NON-VOT13 ING BOARD MEMBERS.— 

14 (A) AUTHORITY TO APPOINT.—Upon the 

15 recommendation of the Board of Directors, the 

16 President may appoint up to 2 additional non17 voting members to the Board in addition to the 

18 members specified in paragraphs (1) and (3), of 

19 which not more than one may be a non-citizen 

20 of the United States. 

21 (B) NGO COMMUNITY.—One of the addi22 tional non-voting Board members shall rep23 resent the nongovernmental organization com24 munity, with significant prior experience in deVerDate Mar 15 2010 21:57 Nov 19, 2010 Jkt 099200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S3665.RS S3665

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1 velopment and an understanding of develop2 ment policy priorities for Pakistan. 

3 (C) TECHNICAL EXPERTISE.—One of the 

4 additional non-voting Board members shall have 

5 extensive demonstrated industry, sector, or 

6 technical experience and expertise in a priority 

7 investment sector for the Fund. 

8 (c) GRANTS.— 

9 (1) IN GENERAL.—The President may use 

10 funds appropriated pursuant to section 102 of the 

11 Enhanced Partnership with Pakistan Act of 2009 

12 (22 U.S.C. 8412) to carry out the purposes specified 

13 in section 3 through the Pakistani-American Enter14 prise Fund and to cover administrative expenses of 

15 the Fund. 

16 (2) ELIGIBLE PROGRAMS AND PROJECTS.— 

17 Grants awarded under this section may only be used 

18 for programs and projects that support the purposes 

19 set forth in section 3. 

20 (3) COMPLIANCE REQUIREMENTS.— 

21 (A) IN GENERAL.—Grants may not be 

22 awarded to the Pakistani-American Enterprise 

23 Fund under this section unless the Fund agrees 

24 to comply with the requirements under this sec25 tion. 


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1 (B) GRANT AGREEMENT.—The grant 

2 agreement between the United States Agency 

3 for International Development and the Paki4 stani-American Enterprise Fund shall state 

5 that the Fund shall liquidate its assets and dis6 solve not later than December 31, 2020, unless 

7 the Administrator of the United States Agency 

8 for International Development determines, after 

9 consultation with the appropriate congressional 

10 committees, that the Fund should be extended. 

11 (C) PREVENTION OF MONEY LAUNDERING

12 AND TERRORIST FINANCING.—The grant agree13 ment between the United States Agency for 

14 International Development and the Pakistani15 American Enterprise Fund shall state that the 

16 Fund shall comply with procedures specified by 

17 the Secretary of State to ensure that grant 

18 funds are not provided by the Fund to or 

19 through any individual, private or government 

20 entity, or educational institution that advocates, 

21 plans, sponsors, engages in, or has engaged in, 

22 money laundering or terrorist activity or, with 

23 respect to a private entity or educational insti24 tution, that has as a principal officer of the en25 tity’s governing board or governing board of 


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1 trustees any individual that has been deter2 mined to be involved in or advocating money 

3 laundering or terrorist activity or determined to 

4 be a member of a designated foreign terrorist 

5 organization. 

6 (D) DISPOSITION OF ASSETS.—The assets 

7 of the Pakistani-American Enterprise Fund at 

8 the time the Fund is dissolved shall be returned 

9 to the General Fund of the United States 

10 Treasury and used to reduce the debt of the 

11 United States, unless otherwise specified by the 

12 appropriate congressional committees. 

13 (d) NOTIFICATION.— 

14 (1) IN GENERAL.—Not later than 15 days be15 fore designating an organization to operate as the 

16 Pakistani-American Enterprise Fund pursuant to 

17 subsection (a), the President shall provide the infor18 mation described in paragraph (2) to the Chairman 

19 and Ranking Member of the appropriate congres20 sional committees. 

21 (2) INFORMATION.—The information described 

22 in this paragraph is— 

23 (A) the identity of the organization to be 

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1 ican Enterprise Fund pursuant to subsection 

2 (a); 

3 (B) the names and qualifications of the in4 dividuals who will comprise the initial Board of 

5 Directors; and 

6 (C) the procedures referred to in sub7 section (c)(3)(C) that will apply to the Paki8 stani-American Enterprise Fund for purposes 

9 of curtailing money-laundering and terrorist fi10 nancing activities. 

11 (e) PUBLIC DISCLOSURE.—Not later than one year 

12 after the entry into force of the initial grant agreement 

13 under this section, and annually thereafter, the Fund shall 

14 prepare and make available to the public on an Internet 

15 website administered by the Fund a report on the Fund’s 

16 activities during the previous year, including— 

17 (1) a description of each investment or project 

18 supported by the Fund, including each type of as19 sistance provided in accordance with section 3(2); 

20 (2) the amounts invested by the Fund in each 

21 company or project; 

22 (3) the amounts of additional private invest23 ments made in each company or project; and 


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1 (4) the amounts of any profits or losses realized 

2 by the Fund in connection with each such company 

3 or project. 

4 SEC. 5. REPORTS. 

5 (a) ADMINISTRATIVE EXPENSES.—Not later than 

6 one year after the date of the enactment of this Act, and 

7 annually thereafter until the Fund is dissolved, the Fund 

8 shall submit to the appropriate congressional committees 

9 a report detailing the administrative expenses of the Fund. 

10 (b) GAO REPORT.—Not later than 3 years after the 

11 date of the enactment of this Act, and every 3 years there12 after until the Fund is dissolved, the Comptroller General 

13 of the United States shall submit to the appropriate con14 gressional committees a report assessing the activities of 

15 the Fund in achieving the stated goals of promoting pri16 vate sector investment and employment in Pakistan and 

17 identifying those institutional or regulatory constraints 

18 that inhibit a more effective application of Fund resources. 

19 SEC. 6. OPERATION PROVISIONS. 

20 (a) APPLICABLE PROVISIONS.—Subsections (d)(5), 

21 (g), (h), (i), (k), (l), (m), (n), (o), and (p) of section 201 

22 of the Support for East European Democracy (SEED) 

23 Act of 1989 (22 U.S.C. 5421) shall apply with respect 

24 to the Pakistani-American Enterprise Fund in the same 


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1 manner as such provisions apply to Enterprise Funds des2 ignated pursuant to subsection (d) of such section. 

3 (b) REINVESTMENT.—Returns on investments of the 

4 Pakistani-American Enterprise Fund and other payments 

5 to the Fund may be reinvested in projects carried out by 

6 the Fund without further appropriation by Congress. 

7 SEC. 7. BEST PRACTICES AND PROCEDURES. 

8 To the maximum extent practicable, the Board of Di9 rectors of the Pakistani-American Enterprise Fund should 

10 adopt the best practices and procedures used by Enter11 prise Funds, including those for which funding has been 

12 made available pursuant to section 201 of the Support for 

13 East European Democracy (SEED) Act of 1989 (22 

14 U.S.C. 5421). 

15 SEC. 8. EXPERIENCE OF OTHER ENTERPRISE FUNDS. 

16 In implementing this Act, the President shall ensure 

17 that the Articles of Incorporation of the Pakistani-Amer18 ican Enterprise Fund (including provisions specifying the 

19 responsibilities of the Board of Directors of the Fund), 

20 the terms of United States Government grant agreements 

21 with the Fund, and United States Government oversight 

22 of the Fund are, to the maximum extent practicable, con23 sistent with the Articles of Incorporation of, the terms of 

24 grant agreements with, and the oversight of the Enter25 prise Funds established pursuant to section 201 of the 


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1 Support for East European Democracy (SEED) Act of 

2 1989 (22 U.S.C. 5421) and comparable provisions of law. 

3 SEC. 9. APPROPRIATE CONGRESSIONAL COMMITTEES DE4 FINED. 

5 In this Act, the term ‘‘appropriate congressional com6 mittees’’ means— 

7 (1) the Committee on Foreign Relations of the 

8 Senate; 

9 (2) the Committee on Appropriations of the 

10 Senate; 

11 (3) the Committee on Foreign Affairs of the 

12 House of Representatives; and 

13 (4) the Committee on Appropriations of the 

14 House of Representatives. 


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Calendar No. 652 

111TH CONGRESS 

2D SESSION S. 3665 

[Report No. 111–353] 

A BILL 

To promote the strengthening of the private sector 

in Pakistan. 

NOVEMBER 19, 2010 

Reported without amendment 


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