Commendably for it, the government has adopted a proactive approach to increase Foreign Direct Investment (FDI) which, despite its best efforts, remains far below the expected level. At its last accounting in 2004, it stood at a dismal $1 billion plus whereas the government has set itself an ambitious target of $27 billion to be achieved over the next five years.
Hence an end-September meeting, jointly chaired by President General Pervez Musharraf and Prime Minister Shaukat Aziz, decided to launch the 'President's Investment Initiative' with the express objective of simplifying the procedures and formalities for investors. Less about two weeks later, a report appearing in this paper day reveals that the government is about to set up an Investors Data Bank (IDB) so as to provide potential investors with an exact picture and basic data of different sectors of the economy.
As our report notes, under the prevalent system, investors have to face a cumbersome procedure of getting No Objection Certificates from various federal and provincial governments for the stetting up of industries or even to undertake development related projects.
The procedure is both time consuming and corruption prone, and can be an extremely frustrating experience not only for foreign investors unfamiliar with the ways of our bureaucracy but also local entrepreneurs. Hence one of the IDB tasks would be to ensure that the concerned authorities complete the paperwork on top priority basis.
The idea, of course, is to simplify procedural formalities and remove irritants that impede foreign investments. Towards that end, a Facilitation Board is also to be established by the end of this year. Its main responsibility, as its very name suggests, would be to provide better facilities to investors.
To further ensure that it performs its function properly, the Board is to have equal representation from both the government and the private sector. These new measures should help mitigate the irritants that are responsible for the poor investor response.
It may be recalled that last month's high level meeting had noted with concern that feasibility report projections concerning a number of mega projects had failed to materialise simply because the investors found it impossible to complete the required formalities. The government has correctly surmised that it must do more to attract investments.
It needs to give people relevant information such as identifying possible projects, where to locate them, and also what such projects might entail in terms of procedural requirements, availability and costs of necessary utilities. Availability of such information, of course, can ease things for investors, who, as our report mentions, at present have to face complicated and lengthy procedures to get basic information about different sectors in order to choose a project.
Equally important, when carefully organised and presented, such information can nudge investors in the direction of sectors that are a priority for the government like tourism, hotels, infrastructure projects and automobile industry. The proposed Investor Data Bank, therefore, is a belated but an essential step in the right direction.