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Terrific prospects of FDI into Pakistan

The news that Pakistan is among the ‘Top 20 Improvers in Doing Business 2020’ dominated the headlines over the preceding week bringing revitalization to the hitherto sagging economy. It would transpire over the period of a couple of years from now that how much beneficiary the economy of Pakistan would become in the wake of this status bestowed upon Pakistan by World Bank. It would be stunning to see Pakistan among the foremost foreign direct investment (FDI) attracting countries such as China, Hong Kong, India, Indonesia, Vietnam, Malaysia etc. China is at the pinnacle of inward FDI making it to around $136 billion whereas the emerging Vietnam attracts $14 billion which may be replicated by the policy makers to ensure Pakistan hefty FDI to address its long-standing escalating unemployment and dwindling exports.

Vietnam attracts FDI promoting its stable politics, open society, strongly improved infrastructure, high and stable economic growth, competitive production cost, abundant human resource, potential market, global economic integration and strategic location. Vietnam receives FDI in manufacturing and processing industry, real estate business, production and distribution of electricity, gas and water, lodging and restaurant, construction, wholesale, retail, repairing services for automobile, motorcycle and other motor vehicles, mining, logistic and warehouse, education and training, arts, entertainment etc. The foremost magnetic destinations of the foreign investors are Singapore, Switzerland, Germany, Canada, the United Kingdom, France, China, Japan, and Australia besides a deluge of other countries, which are deemed lucrative by the investors. Pakistan seems to be making its way to the countries which are on the radar of the investors.

Hard work pays off. The Board of Investment (BoI) with the espousal of the provincial governments particularly Sindh and Punjab launched the ‘100 Days – Sprint-III’ to ‘Doing Business Reforms Plan’ a year ago, to be precise, to ensure facilitation in doing business. The endeavors have paid off. Hats off to those whose brainchild has worked out to underpin the economy in short and long term. Pakistan’s current ranking of 136 out of 190 on the Ease of Doing Business Index would certainly revitalize the economy provided that the policy makers are on their toes not to squander any opportunity making its way to Pakistan. World Bank’s rating would by all means make a difference, however, the economic managers must not forget that ‘one swallow does not make a summer.’

 

Pakistan’s every economic sector holds massive potential for the foreign investors. The economic sectors such farming, fishing, forestry, mining, manufacturing, energy production, construction, communications, transportation and banking may be quite fascinating in terms of the bottom line. Services sector of Pakistan leads in the GDP composition having the weightage of around 60% whereas the manufacturing sector’s share is modest 19%. Flagging exports are attributable to the shrinking share of the manufacturing in Pakistan. Agriculture has always been the mainstay in the economic growth substantiating other sectors.

Global food insecurity in the not-too-distant future has compelled investors to invest in the agriculture sector. Pakistan must capitalize on this opportunity which has so far been squandered. China-Pakistan-Economic-Corridor (CPEC) is an opportunity in disguise for Pakistan in terms of being one of the foremost recipients of the foreign direct investment. There is a prevalent assumption in Pakistan that to employee its burgeoning youth population, Pakistan must quadruple its current ratio of foreign direct investment which would enable the literate youths of Pakistan to utilize their prowess for the betterment of the economy. Automation is the solution to all ills. Technology is the tool which Pakistan may promote to ensure itself a place among the foremost recipients of the FDI. There is no denying the fact that foreign direct investment (FDI) is a driver of real economic growth. The top ten economies of the world have benefitted from the monumental inflows of FDI underpinning the stable economic growth.

FDI inflows into the developing economies are over $700 billion of which major chunk is consumed by the Asian countries. Pakistan seems set to capitalize on this terrific opportunity.

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