Japan has joined major bilateral donors and multilateral agencies to seek assurance and guarantee from the Pakistani government about the protection of its political and economic reforms, beyond October this year.

The Japanese government was believed to have sought an assurance from President General Pervez Musharraf that the future political government would not “undo” the new political and economic reforms. The bilateral and multilateral donors fear that the reversal of reform agenda of the present government may once again plunge Pakistan into chaos and uncertainty.

Concerned diplomats sitting in Islamabad confirm that the Musharraf administration had assured their respective governments that a legislation was ready which would protect all political and economic actions and decisions of the government. They were also told that a set of constitutional amendments was currently being vetted by the ministry of law to make sure that everything runs smooth after the new political government was in place.

The officials of the US Trade Development Authority (TDA), the US Overseas Private Investment Corporation (OPIC) and the US Export and Import Bank (EXIM), when recently visited Pakistan raised the issue of protection of reforms. Later six executive directors of the Asian Development Bank (ADB) were in Islamabad last week who also talked about the same issue with both the minister for finance and the President. They were assured that the government’s reform agenda was well thought out and was being implemented with a “strong conviction” and that those who were sitting in the GHQ, Rawalpindi, were monitoring everything to have political and economic agenda of the government fully implemented.

Earlier, the World Bank and the IMF officials were briefed by the senior officials of the ministry of finance and commerce and were taken to the President who assured them that he himself would be present for sometime as president, and therefore, there was no need to worry about anything. Now the issue had once again been raised by the Japanese government.

The statements of some political leaders were quoted including the former prime minister and the chairperson of Pakistan Peoples Party (PPP), Ms Benazir Bhutto, that they did not endorse the present government’s reform agenda and if they came into power, they would reverse it.

During his meeting with the Japanese businessmen and investors, the president has said in Tokyo that the political restructuring, good governance, poverty alleviation and the revival of the economy were his major goals to be accomplished at any cost.

However, concerned officials said that the president during his bilateral discussion with the Japanese prime minister also assured him that the new political system was the need of the hour whose “opposition would not be tolerated”.

He also said that the local government system had been put in place at grassroots level under a well thought-out devolution plan.

Since there was not considerable foreign investment, issues had also been raised by bilateral donors and multilateral agencies for smooth law and order situation, continuity in the policies and the removal of undue protection to public sector in the form of reduced tariffs, subsidies and other concessions.

Generally, it was said that since the World Trade Organization’s (WTO) new regime shall be effective from 2005, all concessions, tariff protections and concessions would automatically go. And on this behalf, the CBR had started withdrawing various Statuary Regulatory Orders (SROs) for specific industries.

The government was aiming to have $500 million foreign investment during the current financial year. It was also projecting that there would be $1.5-2 billion foreign investment in 2002-2003 and 2003-2004, respectively. Interestingly, the ministry of petroleum was separately claiming that the foreign investment worth about $1 billion (exactly $982 million) had been managed during the last two and half years.

The big question was whether there were mere signing of the memorandum of understandings (MoUs) or any hard investment had reached the country? The concerned official maintain that signing of the MoUs would soon be converted into hard agreements. The last MoU was signed between Pakistan and Iran for laying about 1500 kilometres of gas pipeline at a cost of $3 billion. The concerned Iranian minister was in Islamabad recently, who discussed the issue and got an MoU signed about the gas pipeline.

The biggest problem of the Musharraf government was that despite making lot of efforts and providing level-playing field, foreign investors were hesitant to come in this part of the world. Experts said that the government should come out with an open policy for providing tax concessions to foreign investors.

There were various industrial zones in which foreigners could make investment and get exemption on various taxes. Now the Board of Investment (BoI) had come out with a strange idea that any part of Pakistan,that attracts foreign investment would instantly be declared a ‘tax-free zone’.

There was a need for the government to adopt certain clear policies, specially about foreign investment in different sectors. The failure in providing one-window operation to the investors was also a matter of concern. The BoI officials concede that it is not possible to provide gas, electricity, telephone, water, infrastructure etc, to investorsin one go.

But they claim that whosoever comes to them for investment purposes, he would be promised all possible facilities for setting up a new project.

A number of issues which need clarification or improvement were expected to be taken up by the government at the time of the presentation of the new budget to further streamline the economic activities, specially the foreign investment. That has not been done so far.