“Nothing sells like a real (investment) transaction,” the new BOI chief told BR Research in an interview last week (to be published later this week). And nothing is needed more than a large investment transaction, given that FDI is down significantly in 1QFY19 and the country could really use some non-debt creating forex inflows.

But with economy soon to undergo IMF-prescribed demand compression and with political stability regularly interrupted, it’s hard to see how mega FDI investment can materialize to generate some economic tailwind during the government’s first couple of years in office.

Early in the PTI government, the investment interest came from two sources. One is the Gulf region, from where the Saudis and the Emirates made the rounds showing interest in hydrocarbon refining. But a follow-up hasn’t happened on those two visits, which were initially deemed serious by relevant quarters here. Meanwhile, the Saudis reportedly agreed to offer a $6 billion credit package, which is yet to be operationalised three weeks later.

The second source is China, to which the PTI government sent mixed signals in its early months. In the wake of the PM’s China visit, a review of prior agreements looks firmly off the table. It is China which sets the tone after all. Waxing lyrical, now the Khan government seems to have finally found its balancing act on CPEC, after initial grumblings by a few cabinet members on aspects of the China-sponsored projects.

Talking to informed sources, one is getting the sense that the next phase of CPEC – which is dubbed as ‘Industrial Cooperation’ and which will involve Special Economic Zones – may see greater cooperation between the two countries. Still, the need is for the Pakistani side to engage competent professionals to do the needed homework this time. It is imperative not only to negotiate better with the Chinese side this time but also to learn from their experiences in using the SEZs to boost export-oriented industrialization.

Languishing at around one percent of GDP, the FDI inflows are paltry, given the low savings rate in this economy and the need to create a million+ jobs every year. It looks like China will continue to remain the only reliable source of foreign investment in the country. But regardless of the scale and pace of new Chinese investments, the government must start introducing reforms across the wider economy so that exports in priority sectors can take off once the tough incubation period is over in a couple of years.