From Shamim Ahmed Rizvi,
July 05 - 11,1999
Despite Pakistan's most attractive investment policy in the region and
hectic efforts being made by the Board of Investment, flow of foreign investment is not
picking up. But, it has unfortunately declined.
Both the components of foreign investment, direct and portfolio
(indirect), dropped by 40 to 90 per cent during the fiscal year 1998-99 as compared to the
previous year. Ten-month figures (July 1998 to April 1999), released by the State Bank of
Pakistan, suggest that total foreign investment nose-dived to $ 334 million as compared to
$ 760 million of the corresponding period last year. This, analysts said, has reflected
lack of investors' confidence and sluggish economic trend. Also, it showed that foreign
investors' role in the country's stock market has been almost non-existent. The foreign
direct investment (FDI) and portfolio investment are the two components of total private
foreign investment. Decline in FDI has directly affected country's revenue collection and
foreign trade where overall imports declined by over 11.2 per cent in the first 10 months
as compared to the same period last year with exports declining by 12 per cent.
Commenting on the situation, the UNIDO representative in Pakistan, in a
recent press briefing, observed that Pakistan with its present 'most attractive'
investment policy should normally attract 2.5 to 3 billion dollars foreign investment
annually. But several flaws and lapses in the overall political and investment climate
discouraged the investors.
Law and order situation, in his view, was the number one problem which
not only raised doubts about smooth operations of foreign-sponsored projects but also
scared the investors regarding their personal safety in Pakistan. Recalling the killing of
some US nationals in Karachi a few years back, he said, that incident ultimately led to
the abandonment of the ambitious "Intechmart programme" which was sponsored by
UNIDO to promote foreign investment along with transfer of technology in a number of
He further mentioned the inconsistencies in the government's economic
policies which hindered as sustained presence of foreign private investment in Pakistan
and referred to the government's dispute with the IPPs besides the sudden decision to
freeze the foreign currency accounts. These incidents, according to him, added to the
worsening of climate for foreign investors in this country. The UNIDO chief in Pakistan,
referring to the favourable investment climate prevailing in China, India and South Korea,
stressed that the government in Pakistan should take note of the healthy atmosphere in
these countries and initiate necessary steps to restore investors' confidence.
The US ambassador to Pakistan, in a recent meeting with the
representatives of Lahore Chamber of Commerce and Industry observed that the IPPs issue,
strife with pharmaceutical companies, followed by oil and gas problem, are turning
investment climate in Pakistan from bad to worse. He said these issues had caused a severe
setback to the flow of foreign investment in the country. US envoy also pointed out the
law and order situation in Karachi and sectarian killings in other provinces as the major
hurdles in attracting foreign investment. The US ambassador urged the business community
to put pressure on the government to quickly expedite IPPs, pharmaceutical, oil and gas
issues for free-flowing foreign business in the country.
However, authorities in the Board of Investment (BOI) claim that their
recently concluded investment moots across the Middle East, East Asia and Turkey have done
a lot to restore the investors' confidence. This campaign is still continues and similar
moots are scheduled for Africa, Europe and the United States. They hoped that their
efforts would materialize soon and fiscal year 1999-2000 will be a positive year for
Pakistan in terms of foreign investments.
The BOI Chief, Humayun Akhtar Khan, at a news conference, explained in
detail what his department has been doing to attract foreign investment. He said that BOI
initiated a programme of investment promotion and marketing by holding Investment
Conference in Kuwait on April 27-28, 1999 in pursuance of mutuality of interest expressed
by the governments of Pakistan and Kuwait during joint ministerial meeting which was
organized to elevate economic relations between the two countries. On the occasion of the
visit of Prime Minister Nawaz Sharif to Singapore, an Investment Conference was organized
by the Board of Investment on May 4, 1999 in collaboration with the Trade Development
Board of Singapore. The conference, chaired by the Prime Minister, had a gathering of over
250 participants. The area of interest for investment indicated by the potential investors
during the conference and meetings with major companies include software development,
ports development and establishment of industrial zones in Pakistan. During the Prime
Minister's visit to Brunei, the leadership and the relevant government authorities were
apprised of the economic revival in Pakistan and the opportunities of investment which are
offered by the liberalized investment policies under a de-regulated and congenial
environment for trade and investment.
Thereafter the BOI chairman joined the official delegation for
participation in the Investment Conferences organized by the Board in collaboration with
Chamber of Commerce and Industry, in Gulf, Middle Eastern countries and Turkey which were
held according to the following schedule:
Muscat: 15-16 May,1999
Dammam: 17-18 May,1999
Riyadh: 19-20 May,1999
Jeddah: 22-23 May,1999
Dubai: 24-25 May,1999
Abu Dhabi: 26-27 May,1999
Istanbul: 31 May -1 June,1999
Ankara (Bilateral meetings) 2nd June,1999
Private sector delegation, represented by the chief executives/ heads
of some major companies in Pakistan, attended the Conference in the countries of their
interest. The Pakistan Investment Conferences focused on creating awareness of improvement
in macro-economic indicators and positive signs of economic revival as a result of
reformatory measures taken by the government and drew attention of the potential investors
to the lucrative investment opportunities in various sectors of the economy and
privatization programme under the de-regulated, liberalized investment and trade regime in
The Investment Conferences and one-to-one meetings with the potential
investors, which were followed after each Conference, focused on promoting investment and
joint ventures in Pakistan in the following priority sectors :
i) Oil and Gas, Petro Chemical and chemical.
ii) Banking and financial institutions.
iii) Value-added and export oriented industries.
vi) Agriculture and agro-food industry including; fisheries fish
v) Business centre/commercial complex.
vii) Infrastructure including ports, airports. highways and railways.
ix) Hydel/coal-based power projects.
x) Retailing/departmental stores.
xii) Services sector
As a result of these meetings some of the companies expressed interest
to visit Pakistan to further pursue the prospects of investment in specific projects in
The BOI Chief was confident that as a result of these measures there
has been a positive change in the investment climate and many projects in the above
sectors would materialize in the fiscal year 1999-2000 "in which 1.5 to 2 billion
dollar foreign investment in Pakistan is expected.