Pakistan Tehreek-e-Insaf (PTI) government envisages a progressive increase in net Foreign Direct Investment (FDI) to peak at $ 7.4 billion by 2022-23. The government has projected $ 4.6 billion net direct investment for 2019-20, $ 5.5 billion for 2020-21, $ 6.5 billion for 2021-22 and $ 7.41 billion for 2022-23.
According to Foreign Direct Investment Strategy prepared by the government for the next five years, power supply, infrastructure development and security situation which were considered main constraints for FDI in Pakistan have improved and are now giving positive signals to foreign investors. Supplementing foreign investment would have spillover effect on balance of trade and would also increase exports.
Pakistan recently signed seven memoranda of understanding (MoUs) valued at US$ 21 billion with Saudi Arabia with inflows in three phases: short-term (1-2 years) US$ 7 billion, mid-term (2-3 years) US$ 2 billion and long-term (3-5 years) US$ 12 billion. Areas of investment include two regasified-liquefied natural gas (RLNG) based power plants, power projects, renewable energy projects by ACWA Power, petrochemical projects, food and agriculture projects, Aramco oil refinery and mineral development.
Russia, sources added, plans to invest around US 14 billion in Pakistan's energy sector, including offshore gas pipe line, North South gas pipeline project and underground gas storage; Russia has also offered to invest $2 billion in Pakistan's water and power sector projects, including Mohmand Dam.
Investment of around $ 10 billion from UAE is also expected in renewable energy, mining, petrochemicals, real estate, agriculture, and setting up an oil refinery.
Sources stated that the government is taking initiatives to attract foreign direct investment in the country. Board of Investment (BoI) is in consultation with multilateral agencies, federal and provincial governments, and public and private sector stockholders for preparation of a new investment strategy to attract and facilitate investment in the country.
Special Economic Zones (SEZs) will be established throughout the country in order to facilitate FDI in potential/non-traditional exports like light engineering, information and communication technology, home textile, agriculture and food processing and pharmaceuticals, iron and steel, petrochemicals, mines and minerals. Sources added that the SEZs will be established by the private sector or public sector or on joint venture basis.
Investors from China, Saudi Arabia, Japan, Europe and other countries would be encouraged to set up/develop zones exclusively for entrepreneurs of their respective countries to accelerate investment from their countries. Both import substitution and export oriented industries will be established and facilitated in SEZs under China-Pakistan Economic Corridor (CPEC). Measures would be taken to encourage industries to meet global industrial standards in terms of chemical and efficient water use in the production processes.
The government will provide fiscal and non-fiscal incentives to potential sectors and will be ready to provide duty free access to industrial inputs and capital machinery. Board of Investment, Ministry of Industries and Production, and Ministry of Commerce in consultation with provincial governments, will introduce a comprehensive programme for industrial facilitation to produce exportable surpluses.
Sources maintained that 'One Stop Shop' mechanism would be developed for facilitation of local and foreign investors in consultation with federal and provincial governments.
The BoI in consultation with law and Justice Division and other stakeholders will also develop a new Draft Investment Treaty template, compatible with the latest best international practices. All future investment treaties would be negotiated on the basis of this framework, sources stated.
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