The government has introduced a new concept of public private partnership by providing investors up to 50 per cent of the capital required in joint ventures. This partnership covers both the domestic and foreign investors.

"This is basically to encourage those foreign investors who feel shy to invest in Pakistan due to any reason and that is why a decision has been taken by the Central Development Working Party (CDWP) to offer 50 per cent funding for viable development projects under a public private partnership programme", said Joint Chief Economist of the Planning Commission Asif Sheikh.

Mr Sheikh who is also the chief spokesman of the Planning Commission told Dawn that Pakistan's Industrial Development Corporation (PIDC) used to encourage private investments through various fiscal and non-fiscal incentives measures linked to the sale of units set up by it.

But this time the concept is different than that of PIDC with a view to provide guidance, encouragement and more importantly funding to help set up development projects. This 50 per cent funding, he clarified, could not be misused as it would be fixed. An investor has to arrange 50 per cent funding but one would be entitled to invest more if he wants to. The government has capped its funding at 50 per cent of the capital to be provided to any investor.

He did not believe that there would be any legal implication in executing this 50/50 public private partnership. Once a project is approved, a company will be set up under the government control over the board of the company. "The federal secretary industry will be on that board and there will be no scope left for any wrongdoing’. Mr Sheikh opined.

The CDWP had approved earlier this month a project on the basis of public private partnership for setting up of a Foundry Service Centre in Lahore to be jointly funded by the government and the Lahore Chamber of Commerce.

"There is a vast scope for such public private joint ventures, particularly for those who have any hesitation in investing their capital", he said adding that when the government would be investing its 50 per cent share, there will be no likelihood of any failure of the project for want of funds.

According to the decision of the CDWP, there will be a project-to- project joint ownership between the government and the investor.

The industrial house for managing the project will eventually be owned by the investor after paying off the government's share. The objective is to provide maximum cover and protection to investors who will also have the satisfaction of getting the necessary and timely infrastructure facilities like gas, electricity, water etc. for their projects.

The CDWP's new approach to encourage public private partnership is in line with Vision:2030 which seeks to industrialise the country.

Generally, senior government officials admit that Pakistan is still far behind in terms of attracting investment-- both local and foreign-- and that without changing the "business culture", it would be difficult to achieve the desired results.

It is also said that in the absence of a comprehensive industrial policy, one should not expect meaningful investment and that decades--old barriers will have to be removed to attract investment.

The question is, whether Pakistan could become a developed, industrialised and prosperous nation within one generation as is being proposed in the Vision: 2030 to be approved by the National Economic Council (NEC) on May 31 along with other broad budgetary proposals for the next financial year.

Within the constraints imposed by a limited physical resource base, Pakistan can reach the development levels which it needs and deserve, by developing knowledge inputs and human capital. A senior official believes that public private partnership as seen and approved by the CWDP could not become a greater success story for industrialisation without improving the old and decaying infrastructure. He said many local and foreign investors hesitate to invest in any sector precisely due to the infrastructure problems.

In this regard, he referred to Trade Facilitation and the National Trade Corridor which was a major initiative that has been launched to revamp the whole transport sector including posts & shipping, roads, railways, aviation and a framework to develop the internal and external trade.

When upgraded infrastructure is in place he said, it will certainly help attract sizable local and foreign investment in various development projects under public private partnership programme. The government believes that there are more chances for encouraging public private partnership for promoting small and medium enterprises (SMEs).

These SMEs are an integral part of the country's manufacturing supply chain in all sectors. There are major players in industrial supply chain, producing a wide variety of products such as sports goods, bed wear, towels, surgical goods and marble fire places, a large share of which is exported.

This new idea of private public partnership evolved by the CDWP will serve as a test case in projects initially approved by it.