EDITORIAL: Shehbaz Sharif made a very valid point the other day about promotion of FDI (Foreign Direct Investment) inflows being the government’s top priority.
But since he was addressing a delegation of British businessmen who are generally known for their due diligence, and didn’t explain how the creeping insurgency or the unnecessary political deadlock that has triggered a full-blown judicial crisis would be handled, he didn’t really address their core concerns, did he?
Surely, a country that has suffered its fair share of terrorism, political crises and judicial intrigues ought to understand how such things deliver the kiss of death to smart money. In fact, we’ve been so long drowned in such self-created issues and so deprived of FDI that our economic/financial elite has forgotten that it is supposed to be an integral part of the current account.
Yet here we are, once again, struggling to control an insurgency that was sure to come and needlessly plunging the whole nation into political uncertainty that is shaking the very foundations of the state’s core institutions.
All this when the country is one bad quarter away from suspension of the IMF bailout programme and certain sovereign default.
Why, then, would the PM’s assurances suffice to lure FDI that can easily park itself in more promising, less volatile emerging and frontier markets? Especially since he might also have misled the British delegation with his claims about providing best practices through the one-window operation of the Special Investment Facilitation Council (SIFC)?
The one-window facility is an excellent idea, no doubt, but it’s been gathering dust on the back shelf for decades.
And while it is appreciated that the SIFC is giving it the place it deserves, the last time it appeared in the headlines didn’t exactly give the impression that it is up and running yet.
It is shocking that the government does not appreciate the urgency and fragility of the present moment. We’re only a month into the bailout programme, and already it is going off track, requiring a Rs500 billion mini-budget to meet the Fund’s revenue requirements with the full knowledge that this problem will present itself every month and every quarter unless the revenue stream is improved.
The attempt to privatise PIA (Pakistan International Airlines), another core IMF requirement, also only left more egg on the government’s face, raising very uncomfortable questions about the future of other SOEs (State-Owned Enterprises).
And now there’s this weak attempt to “promote FDI” when the government’s own policies are causing just the kind of political uncertainty that foreign investors keep their money well away from.
Clearly, the situation, especially the official response, calls for an immediate re-think and reset. Such times require complete unity among the political elite as well as top institutions of the state. Yet the government seems to be bending over backwards to do just the contrary.
All parties concerned should take a step back and reassess how close we are to complete capitulation, because default would usher in the kind of social/economic/security nightmare that would make today’s problems seem mild.
Such realisation and unity of purpose at the very top would go much further in attracting foreign investment than hollow lines read out of a script when everything is falling apart for everybody to see.
The cold calculus of international finance dictates that FDI will always need proof of the pudding before ordering a full meal. That’s why it is important to get our house in order before inviting others to invest in it.
This is textbook economic sense, not rocket science. Yet the government seems unaware of it.
Copyright Business Recorder, 2024
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