The Ministry of Finance (MoF) has reportedly recommended to the government that the State Bank of Pakistan (SBP) should not be asked for submission of details of those resident Pakistani firms on quarterly basis, which are being allowed to invest abroad up to five million dollars, official sources told Business Recorder on Monday.
The Economic Co-ordination Committee (ECC) of the Cabinet, which is scheduled to meet on Tuesday with Finance Minister Shaukat Tarin in the chair, will consider the proposal jointly tailored by the Finance Ministry and the SBP. Giving details, the sources said the Cabinet, in its meeting on May 16, 2001, approved the proposal of the Finance Ministry to allow equity-based investment abroad by resident Pakistanis with a view to further liberalising the economy and to deregulate control over foreign exchange.
Subsequently, the Economic Co-ordination Committee (ECC) in 2002 decided that the SBP should approve proposals up to five million dollars each and that the proposals valued at more than five million dollars each be submitted to the ECC for approval.
The ECC further decided that the SBP submit a summary statement on quarterly basis to the ECC regarding cases approved by them valued up to five million dollars. The SBP has submitted for information of the ECC a summary statement of investment proposals approved by them for the third quarter of 2008-09 fiscal year- from January 1, 2009 to March 31, 2009. The SBP granted permission to seven cases of investment abroad, involving a total remittance of 10,972,877 dollars.
"The Finance Ministry has observed that submission of quarterly statement to the ECC may not be serving any purpose," the sources added. The Ministry has proposed to the ECC to discontinue the current practice of submitting summaries in future. However, the prevailing practice of approving the proposals valued at more than five million dollars by the ECC would remain operative.
In January, State Bank of Pakistan Governor Saleem Raza briefed the ECC about the procedure for resident Pakistani companies being allowed for investment outside Pakistan. When a summary of the SBP on equity-based investment by the private companies in fourth quarter of 2008-09 came under discussion, some of the ECC members reportedly termed the approved cases as " flight of capital," the sources said. The SBP has allowed eight private sector companies for equity based investment abroad in fourth quarter of 2008-09 in accordance with approved policy of the Federal government.
The sources said the SBP granted permission to Zafa Pharmaceutical Laboratories (Pvt) Limited (ZPL), Jaffer Brothers (Pvt) Limited, Fauji Foundation, Azgard Nine Limited, Wavetech (Pvt) Limited, BP Pakistan Exploration and Production Inc, Roche Pakistan Limited and Deutsche Bank AG, Pakistan. The total amount remitted was 48,595,939 dollars.
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