. .

There are number of irritants and snags faced by the potential foreign investors in this country

From Shamim Ahmed Rizvi, Islamabad
Nov 06 - 12, 2000

The two-day investors conference was inaugurated by the Chief Executive Gen Pervez Musharraf, in Islamabad last week, provided an excellent opportunity to the government to explain to a large gathering, including over 50 leading foreign investors its new programme and policies to provide safety, security and a good monetary return to the investors in Pakistan.

Chairman Board of Investment (BOI) Waseem Haqqie told the participants that a number of steps had been taken to restore the confidence of the investors. He gave a detailed presentation in the conference, jointly organized by Jardine-Fleming and Chase Manhattan, on the new sectoral and investment policies offered by the government to restore the confidence of the investors.

The BOI Chief said a new export promotion strategy had been adopted with the promotion of investment in the small and medium sized enterprises (SMEs), restructuring of the Central Board of Revenue (CBR) and the launching of an ambitious privatization programme were some other measures taken to lure foreign investment. Pakistan was the first South Asian country to adopt policy of liberalization, deregulation and privatization as well as to develop capital markets in the country, the BOI chairman said.

Usman Aminuddin, Minister for Petroleum and Natural Resources, speaking on the occasion said that the present government has followed a policy of devolution, deregulation, privatization and liberalization in oil, gas and mineral sectors. The Minister said that it was estimated that an investment of about $ 5 billion was needed in the next few years in oil, gas and mineral sectors to put Pakistan's economy on robust foundation. He said, the Government of Pakistan seeks support and investment from domestic and foreign private sector to make best use of these business opportunities. "We are prepared to go an extra mile for meeting our policy goals", the minister assured the participants and potential investors who participated in the conference.

Usman said, the organisation of this conference is a demonstration of the importance to the development of the oil and gas sector in Pakistan. "I believe, that this is one sector which can greatly help accelerate the government's economic revival programme," he said.

The Finance Minister Shaukat Aziz, also discussed the salient features of the new policy measures which include effective efforts for the documentation of economic activity through tax surveys aiming at widening of the tax net. The State Bank Governor, Dr. Ishrat Hussain, stressed the need for restructuring of banking in Pakistan through privatisation of state-owned banks while the Chairman of Privatization Commission, Altaf Salim, was of the view that the process of privatization should be quickened so that private capital could be injected in the privatized enterprises.

The conference was, however, virtually over shadowed by the lingering WAPDA/HUBCO dispute when the Chief Executive, after a brief inaugural speech invited the participants to ask any question if they so wished. The representatives of the foreign companies, mostly those operating in Pakistan, reportedly raised the Hubco issue with the Chief Executive during the question-answer session. The Chief Executive sounded optimistic about a final settlement with Hubco at any time. He, however, expected that both the parties would demonstrate reciprocity in negotiations so that a settlement could be reached at an early date.

The Chief Executive promised full protection to foreign investors capital assets and said that they would be enjoying a level playing field to enjoy the same facilities as do local investors, in all respects including fiscal and monetary policies. He also highlighted in his speech the various policy initiatives of the government which aimed at promoting inflow of foreign private investment, rapid pace of economic development and alleviation of poverty through expansion in employment opportunities on a broad front of the economy.

The conference appeared to be a well-timed event to convince potential foreign investors of the wide ranging opportunities for business in this country. Moreover, notwithstanding the Hubco issue, Pakistan offers one of the best packages of concessions and facilities to foreign investors in this region. The existing policy of deregulation and least intervention from the government side provides for uninterrupted repatriation of profits and capital gains by foreign investors. At the same time, foreign investment is permissible in most fields of trade and industry without any restriction or limitations on ownership of an enterprise by foreigners. Pakistan with a population of 140 million offers a big market of consumers for all types of goods and services, while additionally the geographical location of the country makes it a gateway for marketing of goods in Central Asia and Gulf regions. Seen in this context, the foreign investors may enjoy ideal conditions for profitable operations of enterprises which may be established in Pakistan.

Besides Hubco, there are other irritants also which are impeding the flow of foreign investments in Pakistan. Some of them were highlighted by the participants at a seminar organised by Pak. German Business forum which was presided over by Minister for Commerce and Industry.

The participants at the seminar, representing foreign investors and multinational companies, pointed out a number of irritants and snags faced by the potential foreign investors in this country. The snags, they said, included absence of the much promised one window services by the Board of Investment (BOI), inconsistency in the official policies relating to foreign investment, restrictive visa rules for foreign investors, frequent changes in policy parameters through issuance of SROs, problems of investors with the CBR, increasing cost of production in industries, continued concern over the law and order situation in many parts of the country, etc.

While the minister admitted the need for necessary streamlining of official policies as pointed out by the local and foreign investors present at the seminar, the BOI Chairman, Waseem Haqqie agreed with the complaints and acknowledged that the one window operation at BOI was yet to be effectively put through and efforts were under way to overcome the difficulties through inter-provincial meetings. He further gave an assurance that the problem would be sorted out if need be by taking the matter to the Economic Co-ordination Committee as early as possible.