Essentials for foreign investments

Every investment carries risk, for which rule of law is essentially required. Agreements must be honoured and respected. In case of disagreements a fool-proof resolution mechanism should be available and followed.

No business can afford conflict followed by extended litigation. Unfortunately, the hassles of doing business in the land of the pure are endless.

Unless major restructuring is carried out, investments will not come. The Business Recorder of December 14, 2024, carried the following heading: ‘ Entities asked to address issues facing investors ‘. I am sure several lists have been prepared to attract investments but to no avail.

In the United States exit interviews are held with employees who quit their jobs or businesses that decide to shut down or relocate. Reasons are then discussed for possible mitigation. There is a continuous cycle to introduce improvements and amendments to attract new employees/investments.

MoUs are just the starting point. Agreements then follow. I remember the words of my late father Nazir Ahmed Malik the entrepreneur, “Agreements should be carefully drawn to avoid conflicts but must have effective clauses to resolve them “. Once signed and agreed there should be complete compliance.

In the decade of the nineties, IPPs (Independent Power Producers) were being established in the country. Waiver of taxes was granted to the investors. HUBCO (Hub Power Company) was one of the earlier start-ups.

The CEO of the company shared his experience upon arrival. First encounter was with the customs authorities who demanded gratification of Rs 50,000. The letter issued by President Farooq Ahmed Khan Leghari was overlooked; “Call the President to get plant released”. The funds had to be arranged. Then came the Octrio post that demanded Rs 5000. President’s letter was not effective. Money had to be arranged.

The CEO was furious as they were relying on the Presidential Waiver, which did not work when needed. Perhaps the Customs Inspector on duty considered himself to be omnipotent reporting directly to Her Imperial Majesty located in the Buckingham Palace in London the capital city of the British Commonwealth of nations.

Every country has an entrepreneurial environment, which can be classified as: Positive, Neutral and Negative. Countries like Japan, South Korea, and China facilitate businesses, in the USA its hands-off approach with minimal interference, unfortunately in the land of the pure it is gruesome. Perhaps the first decade after independence was glorious (1947 to 1958), a period of honest hard work and growth. Everyone was putting in their best. It was an era of free enterprise. Money had to be earned and then spent.

The role of the state was minimal. Coming from a business family we lived through the ups and downs, can claim to be direct affectees of the patronage-based business model that was implemented forcibly.

The message was loud or clear; join the party or leave. Pakistan fell into the debt trap. Easy money opened the flood-gates of corruption. My old man struggled till his health gave way.

The family business principles were honest hard work and interest- free finances. Corruption in any form was unacceptable. It was an uphill battle for a straight person to survive in a tilted system. He did not give up, went down fighting. When I took over from where he had left, there were twenty court cases. I decided to wrap up most of them, had to fight two as they were property related.

To attract any kind of investment local or foreign, Pakistan must define its entrepreneurial environment. Directives are not enough. The over thirty vulture-like inspectors and their fangs must be trimmed to protect inventors. If not possible, at least the state has to play a neutral role. The negativity of the system must be removed for businesses to flourish.

The government must support or get out of the way as they are required in the world’s largest business-centric country. Donald Trump, the President-elect, has been a very successful businessman.

Four times he had to declare bankruptcy but bounced back again each time. He did not give up on his dreams. He made history by capturing the White House after losing it in the year 2000. Those who dream grow and prosper if the environment is conducive. Entrepreneurs drive economies and provide employment. They must be appreciated and nurtured, not hounded. To generate wealth through honest hard work is not a crime as is perceived in the land of the pure where businessmen are shady characters.

During my stints in the government, it took me a while to convince my colleagues that honesty is an essential ingredient for success in business and long-term sustainability of the enterprise as such they should be treated with respect. Timing is important is business. Courts must provide expeditious justice. Instead of ‘Constitutional Courts ‘ we need ‘ Business Courts’ for quick disposal of business-related cases. My old man left twenty court cases undecided. I remember the words of his lawyer; “You can at best get leverage from the courts, cases have to be settled out of court “. I took his advice my father did not.

Rule of law is an essential ingredient to attract investments. A lot of homework needs to be done. All is not well in the land of the pure to attract businesses.

Copyright Business Recorder, 2024