KARACHI: Muhammad Azfar Ahsan former Minister for Investment and Chairman Board of Investment (BoI) has proposed a comprehensive and enduring charter for business for sustained growth and investment in the country.
Commenting on the current economic situation of the country, he said over the past 24 years, political instability in Pakistan has significantly influenced Foreign Direct Investment (FDI) as this era has experienced various economic policy failures. Therefore, there is an urgent need for a comprehensive and enduring charter for business for the next 20 years, he added.
“To foster a more conducive environment for investment, we must focus on political stability, policy credibility, and honoring contracts and to achieve these goals a comprehensive charter for business with the sanctity of a constitution is imperative for sustained growth and investment,” Azfar suggested.
He said this charter must have the stamp of the parliament and the National Security Council and needs to be above any political change or bias. This planning must be foolproof, including the will and vision of all the stakeholders, covering “investment climate” with future projections and margin for disruption.
During the past 25 year of governments and caretakers from FY1999 to FY2024, Pakistan has attracted a total net FDI of approximately $48 billion, with an average net $2 billion FDI per year. The average FDI is typically 3 percent of the country’s GDP.
He said FDI during the period under review showed that the caretaker government of 2023-24 received $863 million FDI, while the Pakistan Democratic Movement (PDM) attracted $1.55 billion, averaging $1.55 billion per annum.
Pakistan Tehreek-e-Insaf (PTI) government secured $7.7 billion, with an average of $1.93 billion per annum. Similarly, the Pakistan Muslim League-Nawaz (PML-N) tenure saw a total FDI of $10.3 billion, averaging $2.1 billion per annum, and the Pakistan Peoples’ Party (PPP) attracted $9.8 billion, with an average of $1.96 billion per annum.
Pervez Musharraf’s tenure recorded the total FDI at $18.9 billion, averaging $1.89 billion per annum. In the current fiscal year, the total FDI stands at $1.56 billion significantly lower than the historical average, underscoring the detrimental impact of political instability on investment inflows.
He said that in a country with a population of 248 million and a GDP of $376 billion, the total FDI for the current fiscal year amounted to $1.56 billion.
“This stark decrease clearly underscores how political instability can detrimentally affect foreign investments and needs a comprehensive plan to attract more foreign investment in the country,” Azfar said.
Foreign investors want political stability and continuation of economic and investment policies to invest in ant country. We can bring more foreign investment with a “Chartered of Business” through proper legislation to restore the foreign investors’ confidence, he added.
“Facilitating the existing both local and foreign investors in Pakistan is of utmost importance and without satisfying the existing investors, all efforts to attract FDI will remain futile,” he maintained.
Copyright Business Recorder, 2024
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