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ISLAMABAD: Finance Minister Mohammad Ishaq Dar has said that the country’s identity as an economy with a stable policy framework is missing because significant imbalances in macroeconomic framework are posing major threats to the economic stability.
“Our economy is facing a number of challenges and we are aware that unless we overcome these challenges the road to progress will not be smooth,” Dar said while speaking at the ‘US-Pakistan Business Opportunities Conference’ in Dubai on Tuesday.
“As soon as Pakistan Muslim League-Nawaz (PML-N) government translates its economic vision into reality, our identity will be firmly established in the eyes of the world. We will then have a predictable investment regime, and this definite character of the country will soon be a reality,” he announced.
He said that over the last three decades, the country had moved in the direction of creating an increasingly larger space for the private sector and establishing a regulatory framework for private investment in important sectors, like banking and finance, telecommunications, power, oil and gas and electronic media.
However, many cross-cutting sectors areas, like power transmission and distribution, gas transmission and distribution, airlines, railways, shipping, ports and highways remained firmly in government hands, he said.
As a result even those positive externalities which we should have experienced from previously created space, remained below expectations, Dar added.
He pointed out that the regulatory regimes in the country remained obstructive, cost of doing business was high and taxation policies and administration were not business-friendly.
Referring to government’s decision to end circular debt, Dar opined that this was one step to help raise confidence of investors and to resume process of investment in this critical sector.
He said the government was working to bring new power based on gas and coal and both resources would initially be imported.
These projects would result in significant business opportunities in Pakistan, he said while inviting investors attending the conference.
US Agency for International Development (USAID) Administrator Rajiv Shah announced to partner with Abraaj and JSPE to mobilise up to $150m in private equity investment for Pakistan.
The creation of two private equity funds was designed to invest in the country’s small and medium enterprise (SME) market, he said.
The country’s SMEs lack sufficient capital from investors to reach their potential as strong contributors to the national economy.
Pakistan Private Investment Initiative launched by the USAID represents the mobilisation of up to $150 million in capital from the agency and private sector partners.
The USAID would make an initial investment of up to $24 million in each of the two private equity funds for a total investment of up to $48 million.
Abraaj is an investment company operating in Asia, Middle East and North Africa, Turkey and Central Asia, Sub-Saharan Africa, and Latin America. JSPE is a financial services group in Pakistan that provides financial services in commercial banking, asset management, private equity, investment banking, securities brokerage, company research, insurance, Islamic banking and finance, and microfinance.
Commenting on the USAID move, Dar said foreign investment was the need of the hour and the initiative would play a useful role in reviving the flow of foreign investment in the country.
Enumerating benefits to be derived by the private sector, he stated the equity participation signalled a long-term commitment to Pakistani markets and hence unleashed durable energies for the success of the venture.