ISLAMABAD, Oct 18: The World Bank and the Asian Development Bank have urged the government to ensure fast growth in private sector investment to meet the major challenge of poverty.

Informed sources told Dawn here on Saturday that both the donors believed that despite significant improvement in economic indicators, the private sector investment is yet to take off fully.

They said that one of the most important issues confronting Pakistan’s economy today was the “slow growth in the private sector investment.”

The sources said the World Bank and the ADB had taken due note of roughly $3 billion investment made in the textile sector during the last few years. However, they do note that there is no significant investment in other sectors.

Both the donors are of the view that without considerable private sector investment, rising poverty cannot be checked and that the government needs to improve law and order situation to a satisfactory level and remove hurdles in the way of private sector investment.

In this regard it was said that the cost of doing business in Pakistan was still very high and the investors were not provided timely infrastructure facility like electricity, gas, telephone, water, etc. The most important infrastructure needed is that of roads and highways, as well as farm-to-market roads in rural areas where substantial agriculture produce goes waste due to inadequate road access to the markets.

The government, the sources said, was reminded by the donors that almost 90 per cent of jobs created in least developed countries are in the private sector and that almost 90 per cent of the people who escape poverty find jobs in the private sector.

The slow growth in private sector has been identified as a major challenge facing Pakistan’s economy. “Both the donors want us to remove institutional weaknesses and minimise the bureaucratic interventions and rent seeking to help increase the private sector investment in the country,” said a source.

Moreover, the World Bank and the ADB are of the view that in the presence of legal and regulatory constraints, the private sector is shy to come forward and make a significant investment. Due to law and order problem, they believe, substantial foreign investment is held back in other sectors as well.

The multilateral donors are of the view that despite the success of the government’s economic reform programme over the past four year, these successes are fragile. They have not brought about significant reduction in poverty. Pakistan was told to achieve higher growth by encouraging the private sector to make adequate investment. The sources said that while both the major donors appreciate the government’s reform programme, they do feel that the private sector in Pakistan is being neglected and is not offered proper facilities and incentives to invest in the country.