EDITORIAL: It says a lot about a country’s investment climate when the government itself admits that businesses are deterred because they must first fulfil requirements of three tiers of government – federal, provincial and local – and then obtain numerous NOCs (no-objection certificates), which “envisage cumbersome processing through manual application procedures often seeking redundant, extensive and irrelevant information”.
If that’s not bad enough, there’s also the endless corruption at every stage, especially when requests to operate new businesses must pass through the bureaucratic machinery; which has become the very definition of delay and inefficiency. And, of course, the fact these and other irritants simply disappear if the right kind of phone calls come from the right kind of corridors of power.
That is why the new Zero Time To Start (ZTTS) policy, drafted by the Board of Investment (BOI) in consultation with the World Bank to promote investment, will have to accomplish a lot more than just cutting down regulatory obstacles that foreign investors have been complaining about for years.
Granted, reducing unnecessary processes will save time and make investors take us more seriously, but the draft will still have to identify and quantify investment opportunities lost to corruption.
And also how they plan to address the old practice of one administration reversing policies of previous administrations, leaving foreign investors that commit serious money out in the cold and sending a very negative message about Pakistan as an investment destination?
There’s a reason, after all, that private investment in Pakistan still languishes at around 11 percent of GDP, compared to 29.1 percent in India and 35.2 percent in China. That, in turn, also explains the extraordinary pressure on reserves since it is private investment that triggers innovation, expansion, and employment, which ultimately stimulates production and exports.
And when you fail to take the first step in a chain that results in increased tax and export revenue, and instead build a mountain of debt to finance deficits, it’s only a matter of time before you’re flirting with sovereign default itself.
Pakistan has been on this slippery slope for a very long time. Yet the only time in recent memory when there was a serious push from the very top to invite foreign governments and businesses to invest here was when General Musharraf’s military dispensation ruled the country. Unfortunately, the security situation caused by TTP’s (Tehreek-e-Taliban Pakistan’s) mini war, political instability and the so-called lawyers’ movement combined to nip any attempt to project the country’s soft power image in the bud.
And no civilian administration, the fountainhead of representative democracy that we all cherish, has taken such things too seriously before or since.
The ZTTS initiative might be the country’s last real chance to woo foreign investors. But even with the new policy in place you can be sure that no serious investor would come near a place with so much political and economic toxicity and uncertainty.
That makes it the job of the political elite to first get its act together and stop the needless collision that is costing the country and the people so dearly. For, unless there is political calm, there will be no economic stability. And there’s no question of anybody bringing money here when there’s no guarantee that the country wouldn’t default in the next couple of quarters.
The post-pandemic recovery and signs of recession in the West are causing a reorientation of global investment trends, no doubt, but there’s not a lot of time to take advantage of this window. And when the headlines coming out of Pakistan only speak of rating downgrades, institutional crises and helpless people, merely floating a failed policy once again will not do the job.
Copyright Business Recorder, 2023
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