Competitive-ness Support Fund (CSF) chief executive officer (CEO) Arthur Bayhan has said Pakistan is taking steps to create 'business viable regulatory framework', besides promoting competitiveness and innovation.
The CSF was formed by the government of Pakistan and the United States Agency for International Development (USAID) to increase competitiveness of Pak economy, increase productivity and reinforce economic growth.
In an exclusive interview with Business Recorder on Monday, he said it was important for competitiveness to develop instruments for business viable regulatory environment such as anti-monopoly laws.
However, it was up to the country to adopt OECD (Organisation for Economic Co-operation and Development) model or follow the US laws, he added.
"To the best of my knowledge, the government is closely working with the World Bank to revise competition laws, making it acceptable to stakeholders," he added.
He stressed for removing hurdles in implementation of Intellectual Property Rights (IPRs), besides overhauling insolvency laws to restore the investors' confidence.
Replying a question, he said the level or volume of foreign direct investment (FDI) in Pakistan was very small. Although the government and President General Pervez Musharraf himself were working very hard to attract foreign investment.
He was of the view one of the biggest problems in the region including Pakistan was to restore the confidence of foreign investors, adding foreign investors look at judicial system, whose transparency and independence was necessary for dispute resolution.
"In general, investors are not confident whether decisions taken by courts are independent," he said, adding lengthy court proceedings also increase the cost of investment.
Arthur further said there was a need to explore possibilities for setting up a regional arbitration centre for settlement of investment disputes. He said there were possibilities to refer settlement of investment disputes rather than to go to Washington-based International Centre for Settlements of Investment Disputes (ICSID) or the International Chambers of Commerce (ICC) in Paris.
However, he said in general most of the investors do not know procedures to approach the ICSID and even if they approach it, it would be expensive and increase investment cost substantially.
It would be important to explore the possibility for such a centre in Pakistan as other countries like India, Afghanistan, Bangladesh, Sri Lanka and Thailand could also benefit from this centre.
He said the centre would not be a parallel court; rather it would minimise the workload of the country's judiciary.
"Some initiatives are being taken to set up this kind of centre in Dubai, but I think taking into account the potential and geographical location, it would be wise to establish the regional centre in Pakistan," he maintained.
He said there should be three phases of dispute settlement, ie, conciliation, mediation and arbitration. The government was following a substantial reform programme for the market economy. It has already managed to achieve 7.8 percent growth during 2004-05 and now expecting 6.7 percent, which is a remarkable achievement.
However, the government has to invest in innovation and competitiveness, which is the key for a long-term sustainable economic growth.
To attract foreign investment there should be viable regulatory framework rather than low wages, tax holidays and free trade zones for investors.
"I would say one of the main strengths of Pakistan is that it is geographically placed in a region that has a huge domestic market with about 85 percent of the world consumers," Arthur, who is also vice-president of The Competitive Institute (TCI) for Asia Pacific region, a Barcelona-based institution, said.
The TCI is a world-wide network of experts on competitiveness and cluster practitioners, which lays down methodology for economic growth.
He said a three-day regional conference on competitiveness is scheduled to be held from May 14-16 in Islamabad, which is co-sponsored by the USAID and the government of Pakistan to work out an strategy for removing obstacles in achieving sustainable economic development in the region. Competitiveness experts from all Asia and Pacific countries will be participating in the conference.
Prime Minister Shaukat Aziz will inaugurate the conference whereas former prime minister of Finland Esco Ahlo and former prime minister or Ireland Albert Reynolds would participate in the conference, besides economists from across the globe.
The conference would highlight best practices on competitiveness from China, India, Thailand and other countries.
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