There is a dire need for a big rethink for the State of Pakistan to attract sustainable foreign direct investment (FDI) and facilitate investors. The essential ingredients for an enabling investment climate are a competent team, political will, collaboration amongst stakeholders, long-term strategy, and a continuation of policies. Sadly, all five are missing.
Pakistan, with its geo-political significance, young population, and immense potential in terms of resources, has not followed the economic trajectory initially laid out by its planners.
Despite recurring issues, the Pakistan of the 1960s had a lot going in the right direction. Since then, there have been wrong turns, one too many, derailing the process, and now it seems to have reached a deafening pause. Dr Ishrat Husain, author, economist, and former Governor of State Bank of Pakistan, recently stated; “Pakistan’s concerns are not problems per se, but outcomes of poor decisions.”
Having served as the Minister of State, and Chairman, Board of Investment (BOI), I have had the good fortune to get first-hand insight into the ‘How’ of things, and if I were to select one word that is a good answer to Pakistan’s current economic quagmire, it would be the rich, strong and meaningful term of ‘collaboration.’
I have been advocating, in my talks, articles, and interviews, the much-required collaborative structure that can enable political governments, bureaucracy, and the military, to work together for translating the vision of Pakistan into a firm action.
Silos, as I understand, do no good in our environment and structure. Pakistan, for the longest time, has missed out on opportunities for the lack of a long-term investment plan and collaboration, and does so even today, by overlooking the rich avenues that the developing economy of the Middle East (ME) has to offer.
The recent example of the swiftly changing landscape of the Middle East, where regional disputes have been made subservient to economic interests, is a brilliant case study. The boom in ME dynamics is vibrant, and China, India, and other regional economies are benefitting from this surge by pursuing strong bilateral relationships via investments and joint ventures. Pakistan, however, predominantly focuses on the loan/aid mindset.
Though successive governments have acknowledged the potential of the ME’s investment in Pakistan, the lack of a long-term policy framework and ready investment projects leave us bereft of any advantage. During my tenure as Chairman BoI (Board of Investment), I worked extensively with the Investment Minister and government officials of the Kingdom of Saudi Arabia.
Their keen interest in eight significant investment sectors in Pakistan was almost tangible. Similarly, the UAE and Qatar also await ready projects for investments. I have repeatedly highlighted that Pakistan can comfortably gain a few billion dollars from each of these countries annually, and set forth on the path to progress with immediate effect, but I find it hard to pinpoint whether it is incompetence or lack of political will that keeps us stationary.
Talking of political will to streamline processes, we will need political stability to begin with. For us, it is almost like a chapter in the textbook that says Continued on the next page, but then you find the next page torn. Pakistan has the potential to be the investment hub in multiple sectors of the economy, yet the turbulence and turnover of political regimes leave chaos in their wake.
Lack of continuity in leadership roles is death to progress. During the last ten years, as many as eight Federal Finance Secretaries, twelve Chairmen FBR (Federal Board of Revenue), and eight Chairmen BoI have come and gone. The BoI has been working without a Board of Directors for the last three and a half years.
In fact, I had painstakingly selected the most credible Board of Directors, approved by the Prime Minister, but could not have the notification issued. To compound the productivity concerns, BoI, since May 2022, has been working without a chairman, severely impacting its productivity and consistency of work.
This lack of continuity also gives way to insecurity and incompetence at the government level, turning a country’s potential to dust. This also damages the branding of Pakistan nationally and internationally by creating mistrust. I have always found overseas communities of competitive economies to be strong patriots, but unfortunately do not see the same for Pakistani expatriates. The defiant and reckless national attitude is a cause for worry.
Coming back to FDI, counseling, facilitation, and handholding of the investor must be a priority. We may plan to bring in more FDI, but unless our existing investor is not our ambassador, it will not work.
The existing investors need to be our spokespersons and that will happen when they have the desired facilitation for business expansion and growth. The recent hike in policy rate is one example of alerting the investor to recurring feasibility issues. This is certainly not pushing us in the right direction.
(To be continued on Wednesday)
Copyright Business Recorder, 2023