ISLAMABAD, Aug 17: The government is likely to further liberalize its investment policy to attract a sizable local and foreign investment in the country.

Informed sources told Dawn on Wednesday that a special board meeting of the Board of Investment (BoI) would be held in the first week of next month under the chairmanship of Prime Minister Shaukat Aziz to consider various proposals for further liberalizing the investment policy.

A pre-board meeting has also been convened later this month to seek proposals of the private sector in order to significantly attract both local and foreign investment. The board is comprised of 25 members, including 12 members from the private sector.

The sources said that the government had been advised to cut power and gas tariff for industrial consumers so that essential investment could be managed like other developing countries.

The cost of doing business, sources said, was still very high that needed to be looked into seriously and that it was expected to be taken up by the board’s meeting.

Pakistan attracted $1.5 billion foreign direct investment (FDI) in 2004-05, which also included 10 per cent payment ($250 million) made by Etisalat of the United Arab Emirates (UAE) on account of partial disinvestment of Pakistan Telecommunication Company Limited (PTCL). Etisalat was expected to make the remaining 90 per cent payment ($2.25 billion) in early September for which a consortium of banks has also been selected.

The sources said that the next year FDI target of $5 billion was most likely to be met by privatizing some of bigger state sector units. But they said the government needed to offer more concessions to attract FDI. At the same time, there is a need to remove irritants by providing timely infrastructure facilities to investors like in China and Dubai.

“We are failing to ensure one-window operations as far as instantly offering facilities like electricity, gas, water, land, etc., are concerned and this is a very serious issue and will come up for discussion at the board’s meeting,” a source said.

He said that political instability, law and order and administrative barriers were also hampering efforts to attract substantial foreign investment in the country. “Besides, the image problem is also causing low investment,” he added.

Another source said that the budget 2005-06 offered significant concessions for making investment. The services sector, he pointed out, had been opened for investment, while a number of concessions were also offered to the industrial sector.

He stressed that the services sector, which accounted for 52 per cent of GDP, should play a leading role in sustaining the current growth momentum going forward. This sector registered an impressive growth of 7.9

per cent in 2004-05 against an equally robust growth of six per cent last year. “And this is happening due to a maximum concession offered in the present investment policy,” the source said.

“But perhaps we still need to fine tune our investment policy, especially to address the issues concerning security and political stability,” he said.

Over 70 per cent FDI ($1.5 billion) attracted in 2004-05 had come into power, telecom, chemicals, pharmaceutical and fertilizer, oil and gas and banking and finance sectors.

Almost 70 per cent of FDI had come from the US, the UK, Switzerland, Japan, the UAE and the Netherlands. Significant improvement in the country’s overall macroeconomic environment, performance of Eurobond and Islamic bond (Sukuk) and upgradation of Pakistan’s credit rating have helped attract relatively large inflows of foreign direct investment.