Former Minister of State & Chairman of the Board of Investment (BOI) Muhammad Azfar Ahsan, in a statement on Friday, said that the data released by the State Bank of Pakistan (SBP) on foreign investment, shows the abysmal condition of Pakistan’s economy.
Azfar referred to his many warnings regarding the distrust being built in foreign investors, and the dire repercussions that will come about consequently. His worst fears seem to have been realized.
According to the report, FDI is at $1.93 billion, down by 25%, the lowest in the last four years.
One year ago, I made a forecast regarding our Foreign Direct Investment (FDI), wherein I emphasized that our projected FDI for this year would range between $1.4 billion to 1.5 billion. Regrettably, my prediction came true in the wake of glaring faults in the planning for FDI.
Azfar elaborated that investors are frustrated by the policy hurdles in the process of repatriating profits to parent companies.
Foreign companies are allowed to repatriate only 20% or $1.5 billion only, which itself puts a ceiling on the intended investment.
He pointed out that in his tenor as Chairman BoI, he had first-hand experience of how foreign investors had the will to invest in Pakistan, especially Middle Eastern countries that were strongly inclined towards 8 sectors of the economy, one being agriculture.
China, he said, is keen to invest in CPEC projects. What we need to do is to ensure facilitation to materialize these almost-ready projects and open avenues for billions of dollars in investment.
The present government, in confirmation of the commitment to bring in FDI, has passed the Bill Promotion & Protection Act 2022. According to this bill, the government will provide maximum relief to foreign investors in taxation and other matters. This is a great step towards opening investment opportunities.
Azfar explained how a satisfied investor becomes the best ambassador for the countryās prospects and enables a multiplier effect of attracting other investors.
In my opinion, the real solution is the robust restructuring and empowerment of the Board of Investment, with a solution-oriented approach of creating a one-window mechanism for foreign investors, as they do in the Central Asian Republics, ASEAN, and the Middle East. It is time for the political government, bureaucracy, and military leadership to join hands and facilitate the existing investor as well as attract the foreign ones.
Talking of military collaboration, he highlighted that SIFC is a step in the right direction.
It is a concerted effort towards improving coordination between government organizations and moving the files faster.ā
Azfar reinforced how the privatization of Public Sector Enterprises needs to be prioritized as it will result in fast recovery as well as long-term benefits. Pakistan will not need to chase a few billion dollars and will instead have the capacity to generate so much more. Elite capture, he said, is a barrier and needs to be addressed in the interest of national growth. Organizations like PIA and Steel Mills should not be allowed to become drains of public money.
In his concluding remarks, he said,
I emphasize that Investors are still sitting at our doors. If we do not start working collaboratively and provide maximum facilitation, we will lose the opportunity because investment is like water; it flows in a direction that has an easy path.
