GIVEN the haste with which the government is trying to roll out a legal infrastructure for the military-backed Special Investment Facilitation Council to “facilitate the promised investments” from Saudi Arabia, Qatar and the UAE, we may soon witness the arrival of Arab investors. The cabinet’s approval of changes to the Investment Board Ordinance weeks before its tenure ends is likely to clear the way for an early creation of the SIFC’s structure, working procedures and cooperation mechanisms with different federal ministries and provinces. The council is being formed to attract Gulf investments in agriculture, IT, mining and defence production. The main goal of this ‘whole-of-the-government’ initiative is to ease the concerns of Gulf investors on policy continuity, as well as provide a one-window solution to them. These two factors are often blamed for hampering FDI inflows. The council’s formation will also help Gulf investors circumvent bureaucratic hurdles and cumbersome rules, while the military’s buy-in in the initiative indicates that political changes or instability won’t result in the discontinuation of or disruption in policies. Besides eyeing direct Gulf investment, Pakistan also hopes to sell public-sector assets and state-owned business to the Arab investors, and is in the process of transferring assets worth over Rs2.3tr to the recently formed Pakistan Sovereign Wealth Fund for privatising or leasing those enterprises. A Karachi port terminal has already been leased to the Emiratis.
As much as this SFIC initiative is needed, its purpose appears to be limited to facilitating Gulf investment in Pakistan. The government needs to expand the scope of this project to woo investors from other places too. The removal of restrictions on repatriation of profits by foreign investors, which plunged by 80pc to $331m in the last fiscal year, could be the starting point to give confidence to existing foreign investors that their problems are also being resolved on a priority basis. This is already resulting in further decline in the small amount of FDI we have been able to attract as Pakistan isn’t seen as an attractive FDI destination except by investors who are promised exorbitant and guaranteed returns as we have seen in power projects under CPEC. The expansion of ‘facilitation policies’ is necessary not only to attract investors from other countries but also to create competition for Gulf companies.
Published in Dawn, July 28th, 2023
