SIFC CONTINUES TO TAKE PAKISTAN’S ECONOMYON NEW HORIZON VENTURE

Hira Tahir

Over the past few decades, Pakistan has experienced a decrease in the proportion of
Foreign Direct Investment (FDI) compared to its GDP. But recently, Pakistan’s economic
landscape has undergone a remarkable transformation; largely attributed to the
establishment of the Special Investment Facilitation Council (SIFC). This initiative holds
immense significance, particularly in the realm of Foreign Direct Investment (FDI), as SIFC
effectively engages with various countries and entities to facilitate investment flows into the
country. The immediate objective is to attract $5 billion in foreign investment, with a
long-term goal of reaching $60 billion within five years and eventually achieving $100
billion.
This year, a dedicated plan was devised to boost FDI, leading to the signing of
bilateral trade and investment agreements with several countries, aiming to promote
mutual economic growth and cooperation. The Ministry of Finance disclosed that countries
such as Saudi Arabia, the UAE, and Qatar have expressed interest in investing in
Pakistan, and FDI is expected to see a substantial increase from January of the upcoming
year.
One significant development in this regard is the recent MoU’s worth multi-billion
dollars signed between Pakistan and UAE, opening doors for substantial investments in a
wide range of initiatives outlined by the Special Investment Facilitation Council (SIFC). These
MoUs encompass investment cooperation across diverse sectors, such as energy, port
operations, waste water treatment, food security, logistics, mining, aviation, and banking and
financial services. UAE’s largest raw and value-added mineral supplier and importer, National
Trust (NT), has also entered into a MoU with a Pakistani firm. The partnership involves a
significant investment of 30 million UAE Dirham and aims to export the processed
aluminum ore from Punjab to the Middle East.
In addition, Board of Investment (BoI) and the International Finance Corporation
(IFC), a World Bank-affiliate, have introduced an ambitious investment plan, to invest more
than $1.5 billion in Pakistan’s economy through both short-term and long-term investments.
Economic partnership between Pakistan and China has been reinforced through the signing
of 20 agreements and MoUs. These agreements span across sectors such as BRI
cooperation, infrastructure, mining, industry, green development, health, space cooperation,
digital economy, and agricultural product exports to China. Notably, the United Energy Group
of China and Pakistan Refinery Limited have pledged a substantial investment of $1.5
billion in the petroleum sector. Additionally, the long-awaited ML-I railway project has
been finalized, promoting greater connectivity and trade between the two nations.
As a result of the efforts of the SIFC, Kuwait also signed MoUs for investment of
$10 billion in seven projects in different Pakistani sectors. These projects include the
expansion of water reservoirs, mining facilities, protection and expansion of mangrove forests
for coastal areas, investment projects in the information technology sector and food security
projects. The economic dimension of this relationship is gradually becoming significant, with
the current level of Kuwaiti exports to Pakistan around $750 million and Pakistani exports to
Kuwait approximately $50 million. The two countries are working to further expand their mutual
trade, aiming to reach $1 billion annually within the next two to three years.
Moreover, government is anticipating finalizing a deal with Saudi Arabia by
December of this year for the sale of shares in the Reko Diq project, which is recognized
as one of the largest gold and copper mines in Balochistan. Several other initiatives are in
progress, with the outsourcing of Islamabad International Airport expected to take place
in the coming month and continuous efforts being made to privatize Pakistan
International Airlines (PIA), the national airline. It is anticipated that Arab companies will
invest in the management and operation of airports and seaports, further enhancing
infrastructure development. Additionally, consultations are underway with the International
Finance Corporation to explore the potential transfer of management control of power
distribution companies to the private sector. Notably, countries like France, Germany,
and Korea have already expressed their interest in entering administrative control
agreements related to power distribution companies (Discos). These strategic measures
collectively aim to stimulate economic growth, attract foreign investments, and bolster
Pakistan’s financial outlook.
Government has taken significant strides in resolving key issues related to foreign
direct investment in Pakistan. One such area of progress is ensuring the repatriation of dollars,
a common demand from foreign investment entities seeking legal protection. Bureaucratic red
tape has been addressed, and the establishment of the SIFC platform aims to expedite the
permission and investment process, with a target timeframe of 15 days. SIFC serves as a
“one-window operation,” providing a streamlined approach to address any concerns raised by
foreign investors and facilitate their investment endeavors in the country.