Interview with Dr Miftah Ismail — Minister of State/Chairman, Board of Investment
Dr Miftah Ismail is currently working as a Minister of State/Special Assistant to the Prime Minister/Chairman Board of Investment, Pakistan. He is also a Chairman of the Sui Southern Gas Company. He did his Doctorate in Public Finance and Political Economy from the Wharton School, University of Pennsylvania and also from the President of Karachi American School. He is also a member of the Advisory Committee of the Institute of Business Administration.
Dr Miftah Ismail is currently working as a Minister of State/Special Assistant to the Prime Minister/Chairman Board of Investment, Pakistan. He is also a Chairman of the Sui Southern Gas Company.
He did his Doctorate in Public Finance and Political Economy from the Wharton School, University of Pennsylvania and also from the President of Karachi American School. He is also a member of the Advisory Committee of the Institute of Business Administration.
PAGE: TELL ME SOMETHING ABOUT THE EFFORTS FOR THE PROMOTION OF FDI, PLEASE:
DR MIFTAH ISMAIL: To facilitate and restore the confidence of investors, the Government of Pakistan has initiated a broader and multidimensional reforms process to improve the investment climate in Pakistan. The investment regime of Pakistan is liberal and investors-friendly which contains the competitive incentives across the board.
The main objectives of Investment Policy in vogue are to reduce the cost and processes of doing business, provide ease of doing business with creation of industrial clusters as Special Economic Zones (SEZs) and to develop partnership with private sector. Almost all sectors are open for investment, equal treatment is granted to local and foreign investors, foreign equity upto 100 percent is allowed with no minimum requirement and foreign investors are allowed to repatriate their capital and dividends/ profits. The policy also offers lucrative fiscal incentives for import of capital equipment and machinery.
PAGE: HOW WOULD YOU COMMENT ON THE FDI FROM GCC COUNTRIES?
DR MIFTAH ISMAIL: During FY 2007-08, FDI was at peak level US$ 5,410 million and GCC countries have share of 15% (US$ 849 million) of which US$ 589 million received from UAE in telecom sector while US$ 140 million from Oman, US$36 million from Kuwait and US$30 million from Bahrain respectively.
Later on, FDI inflows from GCC countries moved down till 2016 owing to global reasons as world economic crisis, decreasing oil prices and declining trend of FDI outflows from developed countries. FDI is increasing in Pakistan.
Over the period of nine years (2008-16) amount of FDI received US$ 19.6 billion of which 8.7 percent (US$1.7 billion) received from GCC and major share by UAE (US$ 1.6 million). During same period, Bahrain (US$ 29 million) and Kuwait (US$ 185.1 million) while Saudi Arabia have disinvestment US$ 331 million before 2007-08 it was major chunk of investment in the country.
Financial business is lucrative sector for GCC countries. Kuwait made investment also in oil & gas and UAE in telecom sectors.
PAGE: SHOULD PAKISTAN SIGN FREE TRADE AGREEMENTS WITH KUWAIT, BAHRAIN, SAUDI ARABIA, QATAR, UAE AND OMAN?
DR MIFTAH ISMAIL: FTAs are signed to encourage bilateral trade and reduce or eliminate trade barriers such as tariffs and quotas. FTAs may lead to the creation of new markets for businesses and trade, facilitate the production of high-quality goods, improve entrepreneurship and create employment and enhance economic growth.
We are always open for negotiations on FTAs with these countries.
PAGE: YOUR VIEWS ON IMPORTS FROM GCC COUNTRIES:
DR MIFTAH ISMAIL: Pakistan’s major imports from GCC countries are oil, petroleum and petroleum products, lubricants and chemicals and also importing RLNG from Qatar to cater its demand. Pakistan has shortage of oil and gas reservoirs and is the market of 200 million people and industrial sector is growing with steady path thus Pakistan is meeting its demand from GCC countries.
The structure of imports is also narrowly based in few products from a few countries during last two years. The share of petroleum came down from 35 percent to 19 percent because of a fall in oil prices.
PAGE: WHAT SHOULD PAKISTAN EXPORT TO GCC COUNTRIES WHICH MAY HELP US IN PROMOTING TRADE?
DR MIFTAH ISMAIL: GCC countries mainly import manufactured goods, machinery & equipment, vehicles & transport equipment, chemicals, construction material, textile & clothing, food & food stuff. Their major trading partners are China, US, UK, Japan, Germany, France, Korea, India etc.
Pakistan may focus on these items where we have comparative and competitive advantage like textile items, readymade garments, carpets (mats & rugs), leather & leather products, footwear, surgical items, pharma products, engineering goods, wood & furniture items, gem & jewellery, handicrafts, cement, fish & fish products, food items and processed & canned food items.
Moreover, we should also diversify and expand our exports base to cater for other items which GCC is importing from other parts of the world.
PAGE: GIVE YOUR VIEWS ON EFFORTS OF GOVERNMENT FOR FACILITATION OFFERED TO GCC COUNTRIES TO ATTRACT FDI?
DR MIFTAH ISMAIL: The main focus of the Government of Pakistan is to create enabling environment for all countries particularly from GCC. In this backdrop, both federal and provincial countries are striving for the ease of doing business in the country.
Pakistan can only become competitive viz-a-viz regional peers in case we have convenience for all investors apart from granting concessions. Main initiatives of BOI are Special Economic Zones (SEZs) and Ease of Doing Business. Details are as under:
SPECIAL ECONOMIC ZONES:
Government gives the great importance to GCC being Muslim countries and also is keen to attract investment in different sectors. Special Economic Zones Act was promulgated in 2012. Country specific SEZs can be established in the country.
Government has so far notified 7 SEZs namely: Bin Qasim SEZ, Karachi (mixed industry), Korangi Creek SEZ, Karachi (mixed industry), Khairpur SEZ, Khairpur District (agriculture), Hattar Industrial Estate, KP (mixed industry), Quaid-e-Azam Apparel Park, Sheikhupura (textile industry), M3 Industrial City, Faisalabad (textile & engineering industry), Value Addition City, Faisalabad (textile & engineering industry).
Following are the incentives of SEZ:
– One-time exemption from customs duties & taxes on plant and machinery imported in the country would be available to zone developers and zone enterprises.
– Exemption from all taxes on income for a period of five years to zone developers and zone enterprises. However, enterprises commencing commercial production by 30th June, 2020 in the SEZs will be eligible for Income Tax exemption for the next ten years.
Besides above,41 potential sites in all provinces identified as SEZs from Khunjrab to Gwadar alongside the CPEC and each economic zone will target specific products and services, based on the availability of local raw material, workforce and other such factors.
EASE OF DOING BUSINESS:
To further create enabling business and investment environment in the country especially for GCC countries, government has initiated reforms to simplify the administrative procedures and reduce the cost/ time for investment facilitation. In this regard, the virtual ‘One Stop Shop’ is being established to facilitate the registration of foreign investors. This will improve the business indicators like starting a business, dealing with construction permits, trading across borders, paying taxes, and enforcing contracts.