How SIFC can deliver?

Shakeel Ahmad Ramay

05 August 2024

Published in: The News

Pakistan established Special Investment Facilitation Council (SIFC) to fast-track and actualise investment. The Council took on the job and created dedicated chapters for Gulf countries, investors and CPEC to capitalise on the available opportunities. Now, many regions and countries are willing to build economic linkages with Pakistan.

Pakistan’s geographical location and geo-economic importance make Pakistan an attractive destination. Successful completion of first phase of CPEC has further enhanced the significance of Pakistani market. After the completion of Gwadar Port and Free Zone, Central Asian States are actively exploring options for joining the CPEC.

Moreover, Gulf countries are keen to build partnerships for food security, agriculture and other sectors. Pakistan’s market size and locality, which are quite significant, have also attracted the ASEAN region to invest in Pakistan.

Despite all the hype, efforts and available opportunities, SIFC could not deliver according to the planned goals or objectives. Now, despite the huge potential and interest of countries, the question is why Pakistan could not actualise investment opportunities.

There are many reasons, like ease of doing business, tax structure, changing policies, etc. However, capacity, lack of chain of command and elite abuse are the most important reasons that hampered the efforts to attract investment in Pakistan. The argument can be verified by the fact that despite recent improvements in ease of doing business, Pakistan could not attract investment. Therefore, the country needs to understand the relevance and importance of these challenges and come up with solutions.

Capacity is a very serious issue challenging the overall performance of State and its institutions. The gravity of the challenge can be understood from Prime Minister Shahbaz Sharif’s recent statement. He has stated some countries and investors are interested in investing in Pakistan. But, country’s inability to present a bankable feasibility study has been a significant obstacle in attracting these potential investors. That means SIFC has not been able to deliver a bankable feasibility since its creation. Why? SIFC did not have the capacity and, more importantly, focus on capacity development according to the need of time.

Unfortunately, instead of fixing the problem, the State has shifted its responsibility for policy formulation and execution plans to the donors. There is a trend to hire consultants for every job. The worst part of the story is for recruiting consultants, State institutions need consultants to lead the recruitment process. They do not give weightage to indigenous wisdom and university professors. Moreover, the nexus of on-service and retired government servants has further complicated the problem, and emerged as a major facilitator of donor—and consultant-driven governance.

The elite have fractured the country’s whole system. Their attitude, behaviour and practice have created multifaceted problems. They make policies that suit them, help them exploit national resources. The most prominent examples on this front are the Power Policy 1994 and the Privatisation Policy. The Power Policy has systematically shaken the national economic and social fabric. It led to de-industrialisation, worse inflation and a financial crisis in Pakistan.

The chain of command in Pakistan has been significantly weakened over time. The 18th Amendment has further exacerbated its status. No one is ready to talk about the most important element of power devolution, the local government. The absence of local government shows the elite are only interested in a weak system with a loss of chain of command. They exploit the system in their favour.

The potential investors ask if security situation in Pakistan is good, why the top-notch bureaucrats and other high officials prefer to stay outside the country after retirement. Owing to these factors, the investment process stops with signing of MoUs. Therefore, if Pakistan wants the SIFC to deliver, it will have to take some wise steps to tackle the real issues and answer the investors’ questions.

To tackle the capacity issue, the SIFC must build itself according to international standards of investment agencies. Immediate steps should be taken to fill the SIFC with professionals. By professionals, we do not mean consultants or personnel imported from other countries. Universities and institutions in Pakistan have many talented and dedicated people. They have the potential to turn around the fate of the country. Maybe they are not good at English, but excellent at their work. They only need the opportunity to show their talent and perform.

A strong chain of command is needed. For that purpose, SIFC must be given the authority to make and implement decisions. The investors must be entertained at one point, and do not have to run after government and departments at different levels.

The people concerned must understand that run-of-the-mill statements or rhetoric cannot satisfy foreign investors. They also need to show and ensure the system is fair. Build confidence of foreign investors that Pakistan is a secure and fair country. Otherwise, investment process will stop with signing of MoUs.