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Investment Climate report: FO says section on judiciary ‘incorrect and misleading’

  • US State Dept's Investment Climate report on Pakistan had said country's judiciary is influenced by the government and other stakeholders
27 Jul 2021

The Ministry of Foreign Affairs has called a section on Pakistan's judicial system, appearing in the US State Department’s '2021 Investment Climate Statements: Pakistan' as "factually incorrect and misleading", adding that it takes exception to the gratuitous and unwarranted comments made in the report.

Responding to media queries regarding the US State Department report, which analysed Pakistan's investment situation, ease of doing business among other factors, Foreign Office Spokesperson Zahid Hafeez Chaudhri said that we take strong exception to the gratuitous and unwarranted comments made in the report on Pakistan’s judicial system.

Published annually, the report analyzes the investment climates of more than 170 countries and economies that are current or potential markets for US companies. 

Changing FDI dynamics (1)

It also covers topics including openness to investment, legal and regulatory systems, protection of real and intellectual property rights, financial sector, state-owned enterprises, responsible business conduct, and corruption.

The latest report, released last week, stated hat Pakistan’s judiciary is susceptible to political influence. “Pakistan’s judiciary is influenced by the government and other stakeholders. The lower judiciary is influenced by the executive branch and is seen as lacking competence and fairness. It currently faces a significant backlog of unresolved cases,” the report said.

It further stated that theoretically, Pakistan’s judicial system functions independently of the executive branch, but “the reality is different".

“As a result, there are doubts concerning the competence, fairness, and reliability of Pakistan’s judicial system.”

However, in a press release issued on Tuesday, the Foreign Office (FO) said that the judiciary in Pakistan is independent and the courts are functioning as per the constitution and laws of the country.

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“The allegations to the contrary are firmly denied as factually incorrect and misleading,” it noted.

The FO statement further noted that as a vibrant democracy, the government of Pakistan firmly believes in the separation of powers between the Executive, Legislative and Judicial branches of the state.

“There is no question of any coercion or pressure on Pakistan’s judiciary. The baseless assertions made in the report are contradicted by innumerable decisions by Pakistani courts at all levels that meet the highest standards of judicial independence,” added the press release.

It further noted that mutually beneficial cooperation in the areas of the economy, trade, and investment with the international community including the US is one of the key priorities of the government of Pakistan.

“We will continue to take steps to optimally realize Pakistan’s geo-economic potential,” the statement noted.

However, the State Department’s report acknowledged the progress made and reforms undertaken by Pakistan in improving its business and investment climate. "To support its Investment Policy, Pakistan also has implemented sectoral policies designed to provide additional incentives to investors in those specific sectors," the report noted.

Changing FDI dynamics (II)

It further noted that Pakistan utilizes the World Bank’s “Doing Business” criteria to guide its efforts to improve Pakistan’s business climate. "The government has simplified pre-registration and registration facilities and automated land records to simplify property registration, eased requirements for obtaining construction permits and utilities, introduced online/electronic tax payments, and facilitated cross-border trade by expanding electronic submissions and processing of trade documents," the report said.

"Starting a business in Pakistan normally involves five procedures and takes at least 16.5 days – as compared to an average of 7.1 procedures and 14.5 days for the group of countries comprising the World Bank’s South Asia cohort.

"Pakistan ranked 72 out of 190 countries in the Doing Business 2020 report’s “Starting a Business” category. Pakistan ranked 28 out of 190 for protecting minority investors," the report added.

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Mentioning Pakistan's investment, the US report said that Pakistan does not promote nor incentivize outward investment.

"Pakistan does not explicitly restrict domestic investors from investing abroad. However, cumbersome and time-consuming approval processes, involving multiple entities such as the SBP, SECP, and the Ministries of Finance, Economic Affairs, and Foreign Affairs, generally discourage outward investors.

"Despite the cumbersome processes, larger Pakistani corporations have made investments in the United States in recent years."


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