The PTI-led Khyber Pakhtunkhwa (KP) government has been making efforts towards bringing around a change in the economic, social, cultural and political affairs of this volatile province of Pakistan. It strives for good governance in managing the state of affairs. KP government introducing reforms in education, healthcare, police and in other sectors of state governance. It is reported that success has been achieved through these reforms.
One of the areas of special focus of the KP government was to attract foreign direct investment (FDI) and local investment to the province to spur the much-needed economic growth. It worked on improving the perception of the province, tried to woo prospective investors by offering incentives to them. But, tragically, despite the steps taken by the KP government and the positive indicators, neither foreign nor local investment is coming to the province. The government initiated several measures to create an environment conductive to foreign and local investment in the province, but it has yet to attract major investors.
KP appears extremely keen to attract investments to the province and is seen to be taking measures to bring around a change in the mindset and on ground. It is reported that investment friendliness in KP has improved as it rose to 45 percent over the last two years. In Punjab it remained 44 percent and in Balochistan 32 percent. The ratio of investment friendliness was just 20 percent in Sindh over the period.
An Economic Zones Development and Management Company (EZMDC) has been established and is headed by private investors to ensure better management. The 11 industrial estates have already been handed over to the EZMDC. The provincial government has promulgated the Public Private Partnership Act, allowing the private sector to invest in the public sector institutions and run their management.
Overall there has been improvements in tax collections which was quantified as 48 percent and utility bills collection at 55 percent The management of employment has been effective in KP as the Technical Education and Vocational Training Authority (TEVTA) was established and Rs 1.2 billion was disbursed under the Khud Kifalat microfinance scheme.
The Youth Challenge Fund to foster entrepreneurship operation was also launched in KP. An amount of Rs 120 million is being utilised on stipends for the unemployed youth.
There has been a visible reduction in terror incidents. Two investment road shows have already been organised. The first one was in Karachi and the second in Dubai early last year. At the Dubai event, 12 Letters of Interest for investment of $1.2 billion were received from foreign investors for potential projects, including a $200 million oil refinery in Kohat.
However, none of the investment offers could materialise over the last two years. KP offers investment potentials in tourism, energy, mines and minerals, agriculture and livestock, transport and housing. Energy sector is being pitched as the most important area for both the local and foreign investments. Khyber Pakhtunkhwa is blessed with immense Hydro Power Potential (HPP) due to its geography, natural bounty of a number of main upstream rivers, including Indus, Panikora, Kunhar, Chitral and Swat. Most of the hydel projects of Pakistan including Tarbela Dam (the largest earth-filled dam in the world) and Warsak Dam are located in Khyber Pakhtunkhwa. Not only do all these abundant natural gifts and the landscape of the area address the challenges to harness the immense Hydropower Potential existing in Khyber Pakhtunkhwa for the benefit of mankind, they also provide never ending advantage to Run of River for storage of water and construction of low head hydel and mini/micro hydel projects from which cost effective and clean electricity can be generated for consumption in the Province. If the Hydropower Potential is optimally exploited, not only the current energy crisis could be averted but surplus power will also be available. Pakistan has hydro potential of about 60,000MW of which only 6556MW has been tapped. At present, KP has an installed 3849MW hydel capacity, although the province has an aggregate power potential of nearly 30,000MW. But the progress in utilising these resources is sluggish due to lack of investors' interest.
Foreign donors are also supporting investments in KP and more significantly in FATA. Project Management Units of the Government of Khyber Pakhtunkhwa (KP) and Federally Administered Tribal Areas (FATA) Secretariat along with the Multi Donor Trust Fund (MDTF) administered by the World Bank organised an investment road show in KP.
The theme of the event was 'Exploring the Investment-Friendly Environment in KPK & FATA' under the Economic Revitalisation of KP and FATA (ERKF) Project. The road show provided the attendees an unprecedented opportunity to interact with leading corporations that have invested and are operating in the region and gain from their insights and experience.
The Chinese are also showing interest in KP. A 35-member Chinese delegation of leading companies visited Peshawar lately to have first-hand investment prospects information regarding the China Pakistan Economic Corridor projects in Khyber Pakhtunkhwa. The investors mainly showed interest in business prospects related to trade, steel structure, infrastructure, industrial park, establishment of training institutes etc. Unique projects under discussion were aluminium manufacturing plants and optimisation of the existing agricultural products in KP.
KP is concerned about its share in the CPEC and has demanded that the federal government should merge KP's hydel power projects in the $46 billion China Pakistan Economic Corridor (CPEC) project. "We demand that these power projects be made part of CPEC. If the federal government can include imported coal-based power projects in CPEC, then why can't KP's natural and cost-effective hydel projects be included too. We do not need money for these projects, but if they are included in CPEC, they will be completed on time," according to KP government.
KP has a potential to invoke investments but somehow it's not happening. There are gaps which need to be identified and plugged. KP needs to restructure its board of investment and outreach to investors. There is a need for a dedicated outreach to investors than a generalised one.
(The writer is former President, Overseas Investors Chamber of Commerce & Industry)