New Investment Policy Framework: $5.5bn gross FDI yearly target set

WASIM IQBAL

ISLAMABD: The draft of five-year Investment Policy 2013 envisages a target of gross Foreign Direct Investment (FDI) of $5.5 billion per annum.

A copy of Investment Policy obtained by Business Recorder shows that the federal government was anticipating a progressive increase in net FDI inflows of $2 billion in the first year and an increase of about 25 percent in subsequent years to $2.5 billion in 2014, $2.75 billion in 2015, $3.25 in 2016 and $4 billion in 2017.

“Assuring an average annual GDP growth of 5 percent, the FDI stock would account for 20 percent of GDP, which is close to the current global average,” the Investment Policy maintains.

The new Investment Policy aims at addressing and adjusting economic priorities in the face of challenging global scenario of economic slowdown coupled with domestic difficulties including power shortages and continued pressure on the economy because of the fallout of the war on terror. The policy also endeavours to address the changed economic realities, besides achieving the target to be given in National Policy Document, Vision 2030.

The Policy has been designed to provide a comprehensive framework for creating conducive business environment for the attraction of FDI. For implementation of the Policy, FDI Strategy for Pakistan 2013-17 was also formulated.

The basic principles of the policy include reducing the cost of doing business in Pakistan, reducing the process of doing business and ease of doing business with creation of industrial clusters and special Economic Zones. Linkage of trade industrial and monetary policies for greater convergence is also an important aspect of the policy.

To facilitate market entry of Small and Medium Sized Enterprises (SMEs) steps are proposed to reduce the cost of doing business.

The draft proposes removal of State Bank of Pakistan and SECP equity caps on banking and non-banking financial institutes.

The FDI has undertaken an incremental process aimed at reducing cost of doing business. Investment opportunities and information vital to start business in Pakistan and online visa registration has been proposed.

The BOI is suggesting movement towards one-window operations. The aim is to offer instructive policy parametres for removing unnecessary regulations and minimising the cost to business by necessary regulations. The proposal to create Special Economic Zones (SEZs) is a step towards this direction.

The Policy states that introduction of industrial clusters with promulgation of SEZ Act 2012, would enable BOI to establish forward and backward linkage in the market with supply chain availability.

Linkage of macro- and micro-economic policies will bring all stake holders including line ministries, provincial governments, regulators and other relevant departments on the same page for greater convergence on important nation public policy agenda.

The policy seeks to remove obstacles and impediments for foreign and domestic investment while instituting supporting programs that can put Pakistan’s investment environment on a more level ground with its international competitors.

The new Growth Framework, launched by the Planning Commission, focuses on four areas that intersect closely with the Investment Policy. These are: productivity, better governance, competitive market and innovation and entrepreneurship.

The policy paper claims that it has been prepared in consultation with all relevant ministries, and agencies at the federal and provincial levels. Input from the private sector was also taken to make the document more comprehensive.