PAKISTAN: NO MORE ON INVESTORS' RADAR

SHAMIM RIZVI
(feedback@pgeconomist.com)

Nov 28 - Dec 4, 2011

Foreign investment inflows, which started falling since the end of fiscal year 2007-8 or the time when the incumbent government came into power, are still at low ebb with no sign of improvement in near future.

Pakistan, which was considered as a heaven by the foreign investors till the fiscal year 2005-6, is no more on the foreign investor's radar.

After touching the peak of $5.4 billion in 2007-8, the inflow started falling and came down to about one billion dollar in 2010-11.

The situation has further deteriorated in the current fiscal because of unsatisfactory law and order and security conditions, inconsistent economic policies, energy crises and above all massive corruption.

The general impression that Pakistan is no more on the radar of foreign investors was confirmed by the proceedings of meetings of the Commonwealth Business Forum (CBF) recently held in Perth in which neither the Pakistani delegation could make out a good case for their country nor the potential investors showed any interest to find out the prospects.

The CBF provided Pakistan with a rare opportunity to showcase itself as a trade and investment destination on such a big platform, where more than 1400 business and government leaders from 54 countries participated in sessions which continued for three days.

The failure in presentation exposed the ineptness and lack of will of our government and its institutions in pushing the country's economic agenda.

The country-session on Pakistan proved a shocking eye-opener as there was a clear lack of interest in finding the economic and business investment opportunities, which the country wanted to offer. The session was attended by less than 50 persons out of about 1400 delegates. Out of these 50 attendants, about half were Pakistanis. Only a handful of foreign delegates, some of them from neighboring India and a few from Africa attended the session minutes before the Pakistan session delegates in hundreds representing dozens of countries had come out from the same hall. This amply signifies the lack of interest amongst the foreign investors and business people in Pakistan, which is now seen as the forgotten story, though the country was amongst the best performing economies of Asia.

Pakistanís reputation as the hub of global extremism and terrorism, its inconsistent economic policies, poor governance and rampant corruption, all have contributed to keeping foreign investment away from Pakistan.

The problem is compounded by the fact that there appears no drive and no vision among the economic managers to change the perception about Pakistan for the better.

The CBF proved one of this missed opportunities in which the government officials including those affiliated with Pakistanís embassy in Australia hardly made any efforts to push and market this session about their country.

All was left to CBF organizers who could provide the platform and announce the event, but expecting them to lure participants to the hall was perhaps too much to ask for.

Given the effective role foreign direct investment (FDI) can play in the acceleration of economic growth, the developing countries have been making efforts to improve their policy environment to attract it. Countries lagging behind in attracting FDI are ones that face macroeconomic instability, perused inconsistent policies and showed in different attitude towards foreign investors.

In January last, the incumbent government took two economic decisions, which according to experts, further shattered the investor's confidence. The first was the government's forced reversal of Karachi Electricity Supply Company (KESC) management retrenchment of 4460 non-core workforce to cut down their administrative expenses. This was nothing but a brute interference in the affairs of a private company.

The second decision of the government, which shook the confidence of the foreign investors especially in the automobile sector, was the permission to give relaxation to imports of second hand cars.