Bright prospects for foreign investment
Present government is earnestly
trying to restore the confidence of foreign investors
From Shamim Ahmed RIzvi, Islamabad
Mar 05 - 11, 2001
Persistent efforts of the present government, personal efforts of the
Chief Executive in particular, spread over the past one year, has certainly improved the
prospects of foreign investment in Pakistan.
During the last few months trade and business delegations from various
countries visited Pakistan and Gen. Musharraf met almost all of them and missed no
opportunity to explain to them the numerous measures his government had taken to protect
the interests of foreign investors in Pakistan while, at the same time, identifying the
different sectors of economy which offered lucrative business opportunities. Besides, he
himself visited a number of countries both, in east and west and always made it point to
meet their business and investors communities. The nearly 40 months long HUBCO-WAPDA row
which had marred the foreign investment climate in Pakistan was resolved in Dec. last
through personal efforts of the Chief Executive. This proved to be an eminently welcome
development and certainly paved the way to restart the inflow of foreign investment in
The month of Feb. proved to be a month of significant development from
this point of view. Delegations of businessmen and potential investors from many countries
such as Japan, China, Malaysia, Indonesia, Saudi Arabia, Romania, visited Pakistan and
showed keen interest to invest in different sectors of Pakistan's economy.
Addressing the representatives of the pharmaceutical industry at an
international conference held in Lahore last month the Board of Investment (BoI) Chairman,
Waseem Haqqi, outlined the policies of the present government aimed at improving the
industrial climate in so far as fixed capital investment is concerned. The policy,
according to him, is based on the principle of deregulation, fiscal incentives, liberal
remittance of profits and capital, debt servicing, payments of royalties, technical fee
etc. He emphasised the need for promoting investment in sophisticated, high-tech and
export oriented industries while almost the entire economic activity in other fields,
encompassing agriculture, services, infrastructure social sectors etc. have been thrown
open for foreign investment with identical fiscal incentives and other facilities,
including loan financing from local banks.
Haqqi also disclosed that import of plant and machinery for new
industries would be allowed duty free in case such machinery was not manufactured in
Pakistan. He also informed the audience that first year tax relief in the form of
accelerated depreciation allowance was also available to priority industries, besides the
availability of similar relief to existing industries undertaking balancing, modernisation
and expansion in production facilities.
Establishment of Pak Japan Business Forum in Karachi was the most
significant event of the month. While speaking at the launching ceremony Japan's
Ambassador Sadaski Humata rightly pointed out that the event certainly marked a major
development in the economic relationship between the two countries. This should become all
the more evident from the primary aim of the forum, as the ambassador elucidated, is to
enhance mutual trust, understanding and friendly relations between the businessmen of
Pakistan and Japan.
Speaking on the occasion, the Pakistan Minister for Commerce, Mr.
Razzak Dawood said Pakistan and Japan are working together in many fields including
bilateral trade, despite differences on signing of the Comprehensive Treaty for Banning
(nuclear) Tests (CTBT) by Pakistan, he said, his government considers private sector the
engine of growth and has assigned it a pivotal role in the development of the economy. We
are restructuring the economy, and through it is a painful process but in the end it will
provide immense pleasure, the minister revealed.
In a landmark development Saudi Arabia signed an accord with Pakistan
focusing on boosting cooperation in trade and industry through joint ventures and
investment in Pakistan. The accord was signed after 2 day high level sixth session of
Pak-Saudi joint ministerial conference at Riyadh. During the visit, Federal Finance
Minister met a number of business magnets of Kingdom in Riyadh and Jeddah. In Jeddah, he
met Saudi Chamber of Commerce officials and leading Saudi businessmen. The Pakistan
Mission in Riyadh and the Consulate in Jeddah, arranged separate one to one meeting
between the Pakistan businessmen and their Saudi counterparts.
On his return to Pakistan, the president Federation of Pakistan
Chambers of Commerce and Industry Malik Iftekhar who was included in the Pakistani
delegation told newsmen that Saudi investors and leading business magnates have shown
interest in setting up cooperative ventures and investments in several industrial sectors
in Pakistan. These includes cement, chemical fertilizers, industrial fibre, paper
products, chemicals and petrochemicals, electronics, agroindustries, ship building,
petroleum and gas sectors.
He said that many new areas for collaboration in scientific, technical
and cultural fields had also been identified. He said it has been decided to re-invigorate
the role of Saudi-Pakistani Business Council, which would be an excellent forum for
mutually beneficial interaction between the private sectors of both countries. The two
countries had also agreed to review an agreement on promotion and protection of investment
which would improve import/export procedures.
Malik Iftikhar said that in view of the privatization policy, both
sides would benefit from each others experience, particularly in the privatization of
energy, communication and electricity projects. Besides the areas mentioned by his Saudi
counterpart, Pakistan would also facilitate training of Saudi personnel in Railways as
well as Telecommunication, especially mobile and postal sectors, he added. Co-operation in
the field of agriculture would encompass research, quarantines, technology and visits of
experts on desertification, desalination and livestock management.
It is really commendable that the present government is earnestly
trying to restore the confidence of foreign investors and has adopted a positive approach
for improving investment climate. Fiscal and other concessions have been liberally given
by the government with a view to making the investment climate in Pakistan more attractive
for direct investment in industry, agriculture and services sectors by both domestic and
foreign investors. The liberalisation of incentives reflected the government's
understandable anxiety over the continued lull in direct investment by both domestic and
foreign entrepreneurs. Therefore, the new policy measures are aimed at overcoming the
prevailing stagnation. This is indeed a welcome move but it is yet to be seen whether the
investment interest having remained on the sidelines for the past three years would at all
show a positive response to the latest package of incentives.