ISLAMABAD, April 10: Pakistan and the United States have decided in principle to shortly sign a bilateral "investment treaty" to greatly facilitate each others' investors.
Official sources told Dawn here on Saturday that the Board of Investment (BoI) had finalized various details with the help of the ministries of finance, commerce, industries and the law division to help sign a bilateral investment treaty between the two countries.
The treaty was to be signed between the two sides during Commerce Minister Humayun Akhtar Khan's visit to Washington that was scheduled to start on April 11. That has now been postponed due to some unknown reasons.
The minister is now expected to visit the United States in May to sign the treaty.
Earlier, Trade and Investment Framework Treaty (TIFA) was signed between Pakistan and the United States. "The main objective of the proposed investment treaty is to protect US investment from any danger or risk of being nationalized," a source said.
He added that the treaty would also greatly help the investors of both the countries in terms of having special incentives and concessions.
The BoI, the sources said, was also finalizing details about a general investment treaty to be signed with other countries.
"In fact, there will be some kind of a model treaty which could be signed with other countries," a source said, adding that in the first place such a treaty will be signed with Thailand, Laos, Cambodia and Brunei Darussalam during Prime Minister Zafarullah Jamali's visit to these countries, starting from April 30.
Before that an official delegation would also visit these four countries from April 26-27.
According to the World Bank, Pakistan must increase fixed investment rate from 14 per cent of GDP to 17 per cent by 2007, mainly by luring the private sector.
The implied high growth in investment over the next few years, the bank believes, would require further efforts to improve investment climate both for the domestic and foreign investors.
Better public resource management can assist the growth in private investment in several ways, by improving governance, especially law and order and access to justice, by promoting skills development, providing the needed infrastructure, and by strengthening bureaucracy and making public institutions more responsive to citizens.
Even through there is a clear need for a sharp expansion of both private investment and non-interest and non-defence public spending, it is the qualitative aspects of this expansion that will, in the final analysis, assure the productivity improvements vital for growth and poverty reduction.
"Higher growth and more positive social outcomes must come mainly from the expected improvements in the quality of effectiveness of public spending and a private sector that rises to the challenge of diversifying export and industrial structures," a new World Bank report about Pakistan notes.
