The caretaker government is expediting the work of the Special Investment Facilitation Council (SIFC) – set up during the previous regime in which the army played a key role – to attract foreign investment.
The SIFC is now seen as the solution to the economic crisis the country is facing from smuggling, dollar hoarding, and facilitating trade and investment. The interim prime minister held a two-day meeting of the SIFC apex committee focusing on efforts to improve business and investment climate in the country.
The SIFC was established with the objective of attracting foreign investments from Gulf countries and other friendly countries. The prime minister has set a highly ambitious target, saying the SIFC will attract $70 billion investment in five years. The government is also expecting that Saudi Arabia and the UAE will be the biggest investors in Pakistan.
The government has decided to unveil a new visa policy to facilitate businessmen and target increased investment. Foreign investors and visitors have complained that Pakistani visas are notoriously hard to receive. The government is aiming to address these concerns by issuing long-term visas. It needs to be seen if these measures could lead to an increase in trade and investment.
To seek investment, Pakistan will need to improve its relations with foreign countries. The caretaker foreign minister said Pakistan was pursuing ‘pro-active’ diplomacy and relations were improving with other countries including the United States, Europe, China, and Middle East countries. However, so far Western countries and those outside the GCC have not shown interest in the SIFC.
The presence of outdated procedures and bureaucratic hiccups are hampering the swift implementation of the SIFC’s objectives. Saudi Arabia raised concerns over hurdles in repatriating dividends by foreign investors. The State Bank is not allowing free outflow of the dollar, creating serious resentment among foreign investors. There is also no investment protection regime or dispute resolution mechanism. The government needs to ally these concerns so that investment benefits are known.
Pakistan has an uphill task as it is embroiled in a depreciating currency, stagnating exports, soaring imports, spiraling inflation, and exorbitant petroleum and electricity prices. This is where the government needs to think about whether the SIFC is the solution to reducing the economic crisis or the present situation is a hurdle to achieving the SIFC’s objectives.
