On his return from South Korea and Japan, Minister of State and Chairman Board of Investment, Saleem H. Mandviwalla, tells Business Recorder's Islamabad staff reporters Wasim Iqbal, Zaheer Abbasi and Aisha Sadaf that South Korean companies are expected to invest $500 million in Pakistan. He also tells the panel Social Economic Zone Act will be introduced soon for the protection of foreign investor.
According to him, the reason behind a decline in Foreign Direct Investment (FDI) is suspension of the privatisation process during the last two years.
The following are excerpts from the interview:
Business Recorder: FDI has been declining for the last two years. Why?
Saleem Mandviwalla: The deteriorating law and order situation. Moreover, there were no proceeds from privatisation of any state-owned enterprise. During the last seven years, surge in FDI was due to PTCL's privatisation.
BR: What is your strategy to attract FDI?
SM: We are trying to shift our emphasis from trying to attract FDI from traditional to Asian countries. In this context, South Korea has offered to negotiate a Free Trade Agreement (FTA) with us. South Korean companies have also indicated an interest in investing $500 million in Pakistan. Japanese companies in the auto, agriculture and livestock have also shown interest in investing in Pakistan. We are also likely to sign a trade agreement with Kuwait. For the first time ever, on the invitation of Russian President Dmitry Medvedev, a Pakistani delegation, led by President Asif Ali Zardari, will explore opportunities for joint ventures with Russian state-owned companies.
BR: When would one-window operation facility become effective?
SM: Board of Investment (BoI) is making an effort to introduce one window operation in the country with the objective of facilitating foreign investors. I believe this would lead to a quantum jump in FDI inflow. In addition, Social Economic Zone Act, which is now under discussion in the Senate, when passed by Parliament would provide protection to prospective foreign investors. This is the first legislation sponsored by BoI since its inception.
BR: Is BoI an effective body operating within the Prime Minister's Secretariat?
SM: Steps are underway to make BoI an autonomous body; we have finalised the draft and a notification in this regard will be issued soon. As soon as BoI becomes autonomous we would be one step further in establishing a one-window operation.
BR: Has there been any development in finalising BIT with the US?
SM: BIT with the US will be signed on the basis of equality, for which the templates are being changed. The present draft agreement is one-sided and is no longer acceptable to Pakistan. The agreement is currently being redrafted.
BR: Had there been any positive response form Saudi Arabia during the PM's visit last year?
SM: We had taken a 100-member delegation of Pakistani businessmen to Saudi Arabia where we arranged a conference focused on exploring investment opportunities in various sectors of Pakistan particularly agriculture, oil and gas and steel sector. However, we have not received any positive response from Saudi Arabia. I personally feel the timing of the visit was wrong.
BR: You recently visited South Korea and Japan. Any developments on the FDI front?
SM: The visit provided me with an opportunity to generate funds for flood victims. I was able to collect $1 million from Japanese private companies and $ 1.5 million from private Korean companies and their employees. I handed over a letter of special thanks from Prime Minister Yousuf Raza Gilani to the Japanese Foreign Minister for their timely assistance to our flood affected people.
BR: Is the government renegotiating APPIs with Australia and Egypt? If so why?
SM: Agreements on Promotion and Protection of Investments (APPIs) with Australia and Egypt are currently being reviewed. The objective is to modernise APPIs in line with our evolving needs.