Haroon Shariff’s decision to resign from the Board of Investment (BoI) is not good news; nor is the news of Younus Dagha’s departure from his position as secretary finance, which comes just weeks after the finance minister himself was replaced.
If all these gentlemen were not delivering on their jobs, then the question is right back at the selection team. If a corporate board consistently fails to hire a decent CEO and other C-level staff, then board members also ought to do a lot of introspection while shareholders need to reconsider their nominations at the board. PM Khan therefore would do well to inform his voters why exactly he has failed to put together a team that can deliver.
Going back to the BoI, so far we have only heard one side of the story; Haroon’s story. Told on electronic media that story goes like this: about $30-35 billion worth of foreign direct investments are “in the pipeline” but his office cannot convert them into reality because other institutions that ought to play a pivotal role in that conversion are not playing their due role. Hence, the resignation.
The claim that $30-35 billion of FDI is in the pipeline sounds exaggerated considering that it took ten years (from April 2009 to April 2019) for Pakistan to attract gross FDI inflow of about $30 billion. But the rest of his story is very much believable, especially in the absence of any clear and effective communication by his bosses.
The office of chairman BoI shares problems very similar to those faced by the commerce minister. Like trade numbers, annual FDI flows hide both the country’s efficiencies and inefficiencies of umpteen ministries and departments (spread across federal and provincial governments) that have hardly anything to do with commerce ministry and the BoI. This warrants some bold steps. (See BR Research’s Why aren’t foreign investors betting on Pakistan? May 22, 2019)
The BoI has to be given powers, and importance from the highest office so it can drive changes across those various those ministries and departments that are to fix sector-specific issues and other general issues (such as training and licenses). This can be done be making an effective use of BoI’s policy board, which is chaired by the PM, and of which the OICCI is one of the key members. That policy board has not formally met since 2013. Need one say more!
Second, the strengthening of the Council of Common Interests and the Ministry of Inter-provincial Coordination cannot be overemphasized - not only for the sake of a stronger federation but also for smooth federal and provincial coordination aimed at growth and development of economic sectors that lie within provincial domain. For instance, there is little the BoI can do to attract tons of FDI in dairy industry if minimum pasteurization law is not implemented by the provinces and if DMG officials continue to control the price of loose milk, while provincial food authorities fail to check on quality of loose milk.
The unfortunate part is that neither the sitting government nor its predecessors realize its importance. There is too much focus on the ease of doing business rankings, and corruption. But there is no focus on the completion of the unfinished agenda of 18th amendment where legal and institutional mechanisms for all the devolved subjects were required to be completely devised by December 2015. That is the most crucial item missing from the public and academic discourse on Pakistan’s economy.
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