November 15, 2001	Thursday	Shaba’an 28, 1422

ISLAMABAD, Nov 14: The Overseas Private Investment Corporation (OPIC) of the United States has agreed to bring in Pakistan major investment in the insurance and debt equity sectors, but in turn demanded blanket tax exemptions.

The US and Pakistan governments have in principle agreed to enter into ‘Investment Incentive Agreement’ (IIA) to boost American investment in the country, a high official in the commerce ministry told Dawn.

The draft agreement says that the OPIC will support investment in insurance, co-insurance, debt, equity and investment guarantees.

According to the draft agreement, available with Dawn, the US investment firm has demanded complete exemption from all kinds of taxes on all operations and activities to be undertaken by it in connection with any investment support.

It also says that all payments, whether of interest, principal, fees, dividends, premiums or the proceeds from the liquidation of assets, (subject in case of liquidation of assets in the winding up or dissolution of any company to the payment of taxes owed by that company) or of any other nature, that are made, received or guaranteed, whether imposed directly on the issuer or payable in the first instance by others, will also be exempted from taxes.

Further, the OPIC is also demanding all those maximum favours, concession, Pakistan has provided to any other country under the trade agreements with that country.

The draft says that the same treatment should be given to all those projects supported by OPIC even if they did not come under the purview of this agreement.

For resolving a dispute arising out of any project or activities for which investment support has been provided, the draft says, it would be resolved through negotiation by the two governments. In case, if the dispute was not resolved through negotiations, then such dispute will be submitted to an arbitrary tribunal for resolution.

Explaining the constitution of the tribunal, proposed agreement said that each government would appoint one arbitrator. These two arbitrators shall by agreement designate a president of the tribunal, who shall be a citizen of a third state and whose appointment shall be subject to acceptance by the two governments.

These arbitrators will be appointed within a period of three months, and the president within six months period, of the date of receipt of either government’s request for arbitration.

Moreover, decision of the tribunal shall be made by majority vote and shall be based on the applicable principles and rules of international law. Its decision shall be final and binding.

During the proceedings, each government shall bear the expense of its arbitrator and of its representation in the proceeding before the tribunal, whereas the expenses of the president and other costs of the arbitration shall be shared equally by the two governments, the draft reads.

This Agreement will replace and supersede the Investment Incentive Agreement signed between the two countries at Islamabad on November 18, 1997. And any matter relating to investment Support or otherwise pending under such agreement shall be treated or disposed of under the terms of this agreement.

The agreement is aimed at encouraging economic activities in Pakistan that would promote the development of the economic resources and productive capabilities of the country.