It is hard to imagine foreign direct investment gravitating towards a high-risk country like Pakistan if reputable foreign companies decide to pull out from here or initiate international arbitration proceedings for resolution of their commercial disputes.

The government is reportedly struggling to reach an out-of-court settlement with the Tethyan Copper Company Pakistan, a joint venture between Chile’s Antofagasta and Canada’s Barrick Gold Corporation.

After failing to acquire the lease from the Balochistan government to operate the Reko Diq copper and gold project, the company initiated international arbitration proceedings in 2011.

Informed officials told Dawn that in 2013, Prime Minister Nawaz Sharif directed the relevant officials to try harder to resolve the issue, as a negative ruling would hurt the image of the country for prospective foreign investors.

“I prefer not to name names, but some multi-million dollar projects by reputed global companies are under immense stress. It is disturbing, as I do not see the goodwill for the country materialising in terms of foreign investment if the government fails to address the genuine concerns of companies that are already here,” a key member of the government’s economic team told this scribe.

“I believe actions speak louder than claims. You may promise the moon, but when prospective investors see huge companies in a mess because of inconsistent policies, they will shy away,” said a federal minister

“Higher FDI inflows are necessary to fill in the capital deficit because of the low level national of savings and are also critical for addressing a big set of other gaps (in technology, skills, management, standards etc) that are constraining development,” commented an economist currently in the US.

“The PML-N government is well aware of the value of investment. At the Board of Investment, we are actively pursuing the target of bringing in new investors and facilitating companies that are looking at expansion,” Miftah Ismail, the BOI chairman, had told this scribe in an informal chat a few weeks back.

When reached over telephone in Islamabad, Ghulam Murtaza Jatoi, the federal minister for industries, did not pretend to be satisfied with the management of industrial affairs.

“You must understand the working of the bureaucracy. Many ministries are involved in each and every case. No matter how hard we try to resolve an issue related to a project, if the finance minister gives more weight to the input of some other ministry, we are not left with many options other than to keep on trying,” Jatoi said candidly.

He endorsed the view that the performance and perception of foreign companies about the country is decisive in building its image as a viable destination for FDI.

Another minister privy to the Economic Coordination Committee meetings blamed the weak performance of the ministry of industries for delay in the resolution of multiple issues being faced by businesses. “The industries secretary lacks confidence to convincingly present his case and the commitment to follow it through,” he commented.

Jatoi trashed the argument. “If he was referring to the Tuwairqi Steel case, I have repeatedly said that the finance ministry has shot down every summary that has been put up for a decision.”

Commenting on the value of investment conferences in attracting investors, another federal minister expressed reservations.

“I believe actions speak louder than claims. You may promise the moon, but when prospective investors see huge companies in a mess because of inconsistent policies, they will shy away,” he said. He was hinting at the recent two-day investment conference in Islamabad that failed to mobilise major overseas investors.

“I am tasked with privatisation and am busy with the divestment of 10pc equity of OGDCL. Yes, I am not particularly happy with the way foreign investors are, at times, made to run from pillar to post, as it makes my task more difficult,” said Muhammad Zubair, the privatisation minister, while referring to Al Tuwairqi Steel Mills, a joint venture of Saudi and South Korean investors.

As reported, the mill shut down soon after being tested for operating at 100pc capacity because the government declined to provide feedstock gas at an originally agreed upon price.

A current report suggests that the parent companies of the joint venture have again approached the government with fresh proposal to resolve the feedstock gas issue and kick start the unit.

According to details, the company has revised its offer for 7pc free-of-charge equity for the government to 15pc in the form of 126m preferred shares, along with a 10pc annual dividend and guaranteed buyback of shares at book value after 10 years.

“From all I know, Tuwairqi Steel, which had suspended production a year back, is on the verge of taking the ultimate decision to pull out. People also mention Byco as among a few other companies that are in trouble,” said another source in Islamabad.

“I view investment-promotion activities more as a circus if the economic team can’t spare a thought for frustrated investors who are pledging to bring in multi-million dollars in new investment,” commented a senior minister on the condition of anonymity.

Finance Minister Ishaq Dar was in Dubai for the IMF review meetings and officials in the finance ministry declined to comment on the issue.

“The government can cite as many reasons as it wants, but it would be difficult to dismiss the impression that it is acting at the behest of the powerful traders’ lobby, which sees the success of manufacturing as its loss,” said a market watcher.

Published in Dawn, Economic & Business, November 10th, 2014