Invest Pakistan
Demonstrators wave flags during a protest march for government reform led by Pakistani preacher Tahir-ul-Qadri, in Islamabad, Pakistan, Jan. 14, 2013. Qadri, who has recently returned to Pakistan after living in Canada, has taken the country by storm in recent weeks in a campaign against government corruption that has gripped the news media and jolted the traditional political mainstream. (Diego Ibarra Sanchez/The New York Times)
06 June 2024
Published in: The Nation
It has been a year since the government established the Special Investment Facilitation Council (SIFC) to attract foreign direct investment (FDI). Despite this initiative, our achievements have been limited to commitments from friendly nations. The idea of Investment Promotion Agencies (IPAs) like SIFC is not new globally; countries such as Malaysia, Vietnam, India, and Brazil have effectively leveraged such agencies to attract FDI. However, our current approach appears narrow, primarily fixated on securing dollar inflows while overlooking the broader benefits foreign investment can offer, including innovative technology, managerial expertise, skill enhancement, and increased industry competition, all of which can enhance domestic productivity.
To maximize the impact of SIFC, a strategic shift targeting competitive sectors of the economy is essential. While Pakistan has significant industrial groups, many operate in sectors characterized by rent-seeking behavior, such as sugar, fertilizer, and electricity generation, where government protectionism prevails. Redirecting efforts to attract FDI into export-oriented industries could alleviate the country’s balance of payment challenges.
Moreover, while SIFC benefits from relatively autonomous decision-making supported by top-level civil and military backing, the establishment of a robust and inclusive board, encompassing private sector representation, is imperative to incorporate diverse investor perspectives. Therefore, SIFC should form an independent board comprising representatives from both the private and public sectors. Furthermore, key promotional personnel should possess substantial private sector experience, underpinned by ample and sustainable financial resources to effectively promote Pakistan as an investment destination.
Lastly, the development of a robust legal framework is key to fostering investor confidence. We need to establish commercial laws based on international standards, enforced through special courts to ensure swift and reliable legal proceedings. This will not only enhance the credibility of the economic environment but also ensure that legal proceedings are predictable and transparent, which are essential for building confidence among international investors.
