THE Overseas Investors Chamber of Commerce and Industry (OICCI), a representative body of multinationals, has called for building a ‘Digital Pakistan’ to increase ease of doing business, enhance transparency and improve government- to -government and state-to-citizen services through e-governance.
Apparently, the high cost of doing business has been a major cause for Pakistan receiving a very low level of Foreign Direct Investment (FDI) — around one per cent of GDP — against the norm of three per cent in regional countries. The total FDI inflows in FY18 were just equal to OICCI members’ reinvestment of $2.7 billion recorded for 2017.
Dwelling on the ‘immense opportunities to transform Pakistan into Digital Pakistan’ , OICCI President Irfan Wahab Khan told a press conference in Islamabad that it would also help document the economy, widen the tax net and broaden the revenue base. It is the high cost of doing business that drives investors into the informal sector.
It is time to accord the highest priority to forging Digital Pakistan to build a globally competitive economy
The World Bank Doing Business Report 2018 placed Pakistan at 147 out of 190 countries for the year 2017; while the PTI-led government plans to catapult the country into the top 100 economies on the ranking in a period of five years.
The party’s reforms agenda includes transforming public administration into e-governance institutions to improve turnaround time and timelines for provision of basic amenities/facilities for investment.
But the issue of -e-governance does not feature on the government’s 100-day priority agenda despite the much needed capital and financial inflows to step up foreign investment in officially ‘prioritised’ manufacturing sector that is required to ease pressure on the external sector. During July-August, FDI inflows have plummeted by 40pc — that includes a drop of 34pc in Chinese investment — as compared to the same period of the last fiscal year.
On the other the hand, IT is now playing a more positive role in exports. For the first time IT exports are reported to have crossed the $1bn mark during the last fiscal year, up from a previous level of around $400 million.
In a letter written recently to federal finance minister, CEO Pakistan Business Council Ehsan Malik said Pakistan can likely save $5bn which is lost in under-invoicing or mis-pricing every year by signing electronic trade data sharing agreements with trading partners.
Meanwhile the government is still involved in consultations for setting up a Business Advisory Council to act as a liaison between policy makers and the business community; and to quote Finance Minister Asad Umar to ‘make Pakistan a regional hub for investment’.
Policy makers have moved fast to set up the Economic Advisory Council (EAC), an exclusive ‘club’ of technocrats. But critics argue that the EAC is not enough. They say the setup comprising professionals does not ‘represent the stakeholders’ cross-section’ and that stakeholders, grappling with on-ground realities, can provide the relevant input necessary for formulating and implementing innovative policies.
As economics, a critical branch of social science, has not developed very creatively with the changing times, it has lost some of its relevance in a rapidly transforming environment.
Without further wasting time the government should introduce measures to boost business confidence through promised policy announcements in such matters as debt management, taxation, reforms and measures to boost foreign direct investment, say the OICCI officials.
The government has moved forward by naming Mr Haroon Sharif, a recognised expert on economic policy and economic diplomacy, as chairman of the Board of Investment.
The CEO of a local company who represents multinationals in Pakistan says that there is a renewed interest of foreign investors as they look forward to a clean top administration, free of corruption, supported by a good team of professionals.
“In Pakistan the financial returns are better than many countries; we have a growing economy with a fast expanding consumer market.” The current business sentiments are an opportunity the government needs to promptly capitalise on.
After meeting the Prime Minister’s Advisor for Commerce, Textiles, Industries and Investment Abdul Razak Dawood, OICCI President Irfan Wahab reiterated the business community’s demand for a level playing field
for all investors, without discrimination, so that they may participate in the CPEC programme more equitably.
Perhaps responding, the Federal Minister for Planning and Development Makhdoom Khusro Bakhtiar told journalists in Islamabad a decision to create a business council has been taken. The Council will have a greater input in taking CPEC to a higher trajectory particularly through industrialisation and development of the maritime sector.
The government seems to be banking too much on administrative measures to get back the wealth ‘stashed’, in well crafted global financial centres.
The objective can best be achieved by increasing the ease of doing business to encourage investment in incentivised priority areas that would turn an import- oriented economy into an export-led one. Often forgotten is the fact that a substantial part of the dollar holdings, temporarily held abroad, is used for financing under-invoiced imports.
It is time to accord the highest priority to forging Digital Pakistan to build a globally competitive economy.
Published in Dawn, The Business and Finance Weekly, September 24th, 2018