The government has set up a new high-powered body called Special Investment Facilitation Council to attract foreign investment. The SIFC is seen as a major initiative to revive the economy through massive foreign investment in various sectors. The underlying strategy is to encourage investors through better coordination among different government organizations under one umbrella.
The SIFC is a result of due diligence by the army chief who has met a large number of people from the business community in Karachi and in Lahore. He assured them of full support of his institution in bringing about a new investment and economic revolution in the country. The SIFC was created under the Board of Investment Ordinance 2001, with the prime minister in the leading role. Its main purpose is to act as a single point of contact for investment facilitation for both domestic and foreign investors.
It is our own fault that despite immense potential Pakistan has not been able to attract foreign investment. Political uncertainty, security issues, inadequate infrastructure, corruption, red tape and onerous tax laws are some of the factors hindering foreign investment. Sadly, very little organized efforts have been made in the past to remove the roadblocks to Pakistan’s economic progress. Valuable time passed as other countries in the region made themselves attractive destinations for foreign investors.
The SIFC has set very high targets which have been described by some analysts as too ambitious. The goal is to attract $100 billion in FDI within three years so as to achieve a nominal GDP of $1 trillion by fiscal year 2035. The SIFC envisions billions of dollars flowing into defence production, agriculture, mines and minerals, energy and the IT industry. According to media reports, it has been decided to offer 28 projects, including the construction of Diamer-Bhasha Dam and mining activities at Reko Diq in Balochistan’s Chagai area worth billions of dollars to Gulf countries for investment. The Apex Committee of the SIFC has already held three sessions and approved these projects in record time. Huge amounts totalling $25 billion each from Saudi Arabia and the UAE are expected in mining and minerals as well as the agriculture sector of the country. And a $10bn deposit of some sort has also been mentioned. It will be a miracle if the target of 50 billion dollars is achieved as the previous record in this regard has been dismal.
There can be no doubt about the commitment of those behind the idea of the SIFC and their desire to turn the national economy around. But the challenge is to translate the vision into reality. Many such initiatives were launched in the past but nothing came out of them. The Board of Investment and such other bodies failed to do their duty. So we have to be extra careful in going about actualizing the potential of the SIFC. In the main, the success of the SIFC would depend on its ability to remove the bureaucratic obstacles in the way of both domestic and foreign investment and offer one-window facilitation from the feasibility stage to the execution of projects.
Rule of law and a corruption-free government machinery is a pre-requisite for the success of the SIFC. We need to create a business friendly environment and guarantee the security and profitability of foreign investment. Sadly, in the international rule of law index, Pakistan fares badly. The same goes for the corruption index.
For the success of the SIFC, we need the services of highly skilled professionals and experienced experts in the fields of information technology, energy, mining, agriculture, economic intelligence and data analysis. To ensure that the SIFC achieves its objectives, a comprehensive road map should be developed outlining its duties, resource allocation, strategic targets and strict deadlines.
Transparency, combined with efficiency, will be the single most important factor in guaranteeing the success of the SIFC. Decision making should be above board, with no hints of corruption or favouritism at any level. To this end, open ended information sharing between various stakeholders and partners should be encouraged. No less important is the need to create a commercial dispute resolution and timely contract compliance mechanism as well as to simplify procedures.
All of the above measures will be of no avail without improving the country’s justice and governance system which leaves much to be desired. Our regulatory framework is full of holes and ridden with corruption. We must make doing business easy which is not the case now. All these issues need prompt attention of the SIFC if its investment goals are to be met. Otherwise, the SIFC will meet the same fate as similar initiatives in the past.