“Focus on R&D integral for FDI”
Dr. Erfa Iqbal, a Harvard graduate and an Eisenhower fellow, has been civil servant for over two decades. She has previously served as the Commercial Counsellor at Embassy of Pakistan, Beijing and as Economic Counsellor at Embassy of Pakistan, Germany essentially to promote bilateral economic ties engaging both, trade and investment. She has also served as the Additional Principal Staff Officer to the Prime Minister of Pakistan between 2008 to 2011 to manage and coordinate the Prime Minister’s development program for Southern Punjab. The Development Package included provisions for infrastructural, educational and societal development; it also included a Village Product Specialisation Initiative that focused on women empowerment projects. BR Research recently interviewed her regarding Punjab Board of Investment and Trade’s participation in Dubai Expo 2020.
`Following are the edited excerpts:`
BR Research: What do you believe is PBIT’s primary role?
Erfa Iqbal: I have been working on economic development and trade development projects for many years. But those were more at a macro level. PBIT has a more focused and narrowed-down approach where we handle provincial economic development projects including those related to business and investment, which fall in the purview of PBIT. The organization is the face of the Punjab Government for any economic development and its engagement with investors, as well as for showcasing the province at different economic forums across the globe.
BRR: Given how FDI has continuously been decreasing for the past few years, how is the investment landscape in Punjab, and how are you facilitating the investment climate in the province?
EI: In addition to what I have already mentioned, PBIT is also the secretariat of the Special Economic Zone Authority (SEZA), Punjab. SEZs are governed by federal rules and regulations under the Federal Board of Investment. However, at the provincial level, all the activities are coordinated and monitored by the respective SEZ authorities and the secretariat of authorities in all the provinces.
In the case of Punjab, the promotion agencies (IPAs) and PBIT are the secretariats of SEZA, headed by the Chief Minister of Punjab. We have 7 SEZs right now, which are run by the government, with two government-owned developers: Punjab Industrial Estate Development Company (PICNIC) and Faisalabad Industrial Estate Development Company (FITNIC). In all the provinces, they have identified one SEZ per province to be included in CPEC. In addition to these 7 SEZs, we also have 3 SEZs in the private sector in Punjab because that is also allowed. We have 10 SEZs in total, and there are 4 to 6 more SEZs in the pipeline; we will be assisting them to get their SEZ status.
In SEZs, certain incentives are given under the federal rules and regulations, including a 10-year income tax holiday, duty-free import of capital goods, and clear land which they can purchase from the developers. Meanwhile, we are trying to tackle the implementation level gaps and problems.
BRR: NOC condition has been removed for investors by the Punjab Government. Where is this being implemented? Is this only Punjab specific, or is it also happening at the federal level?
EI: The initiative started off at the federal level. The Prime Minister of Pakistan started talking about a zero NOC regime, but I can comment on Punjab. In Punjab, the Chief Minister immediately took notice that there should not be any delay in investment or any problem faced by the investors due to delayed procedures or getting various NOCs as investors keep on shuttling from one department to another. The framework that Punjab has come out with is that the investors should come and immediately start implementing their projects, whereas the NOC part will be taken care of by the government. I would actually call it the 'delayed NOC regime' because NOCs are required.
Secondly, Punjab is also working on Ease of Doing Business (EODB) and PRMI. These are the two initiatives where provincial governments are working in collaboration with the federal government. Pakistan performed very well on EODB. There are 10 to 11 indicators according to which the index is computed: Pakistan jumped 28 positions which is very encouraging. The second-generation reform of EODB is the Pakistan Regulatory Modernisation Initiative (PRMI). Again, it was started off by the federal government. It includes mapping existing rules, regulations, acts, ordinances, NOCs, etc., and analysing which ones have become obsolete over time or cause obstacles for business communities. After conducting this analysis, findings are shared with the private sector to get their input. Finally, the decision is made regarding how many of these can be weeded out, need simplification, or need further modification, etc.
With the help of Punjab Information Technology Board (PITB), Punjab has designed a business model that every department is populating after completing the mapping of their relevant laws and regulations.
BRR: With respect to Expo 2020, what is your agenda; what is the target for PBIT, and what kind of response do you expect post- Expo 2020?
EI: Connecting Expo 2020 with our EODB and PRMI initiatives, our slogan here is PunjabEase. "PunjabEase Going Global" is a very significant and well-thought title. It reflects two frames: EODB and its feature dimensions, and the concept of going global. We have 2 primary target groups: firstly, the business enterprises in Pakistan, and secondly, the diaspora in the UAE, as they are the ones who always come to rescue Pakistan in times of need. We need to engage the diaspora to ask them for financial help, showing them an opportunity and encouraging them to conduct their businesses in Pakistan.
This is a different kind of outreach approach that Punjab is now following for the Dubai Expo. I reached out to multiple people here, including the Pakistan Association of Dubai, Pakistan Business Council, Dubai chambers, our own educational institutions, etc. The approach is different; this time, we tell them how much FDI they can bring to Pakistan, how much business they can shift to Pakistan, and what kind of support we can extend to them. This is a very important target group for the Dubai Expo.
Regarding our own enterprises, we are asking different categories, including those who want to introduce their own brands. Because till now, Pakistani brands, apart from a few, are not really well recognised across the globe. We are also looking at export-oriented enterprises- be it their own brand or be they the suppliers of other brands. Some businesses are looking for investment opportunities; there are businesses that want investors to come and invest in their business in Pakistan in the form of joint ventures. We are trying to present these different categories of business in Punjab to the international market. For that, we have lined up a number of activities.
We are also focusing on start-ups a lot because Pakistan has a demographic youth bulge. It is our responsibility to convert this youth into an asset rather than a liability. We are also trying to organise a start-up moot in the third week of November. Out of our 30 days, we are giving them slots over a period of 15 days to showcase their products and projects at Pakistan Pavilion. We have planned a series of seminars and panel discussions; we are reaching out to a few venues within Expo outside the Pakistan Pavilion, to target the international community. Two of these are organised by the Bank of Punjab and one organised by the tourism department.
We are also trying to duck trail our relevant stakeholders. For example, these days, the theme is urban development. From Punjab, RUDA and CBD are here; they are trying to attend these Expo-led events and network with the relevant stakeholders. We have the support of CM Punjab, who will be visiting Dubai during the Punjab period of Expo, which is the whole month of November. He will be visiting the Pakistan Pavilion and a few other pavilions of our friendly countries. He will connect with the international community, businesses, and minister-level dignitaries from other countries to showcase Punjab.
On the cultural side, in the Pakistan Pavilion, we have a small courtyard in front of the pavilion where we exhibit our cultural performances nearly every day. These cultural performances are from each region of Punjab; they are doing jhoomar, kitli, gidda, etc. We are also engaging with other countries to have joint cultural activities. I would also like to take this opportunity to share that 16 departments from the Punjab Government are coming to Dubai and showcasing their projects, activities, seminars, and panel discussions. We have also contacted the chambers in Punjab, and some of those chambers are also organising their activities like seminars at Pakistan Pavilion. When the CM Punjab visits, there will be a big business delegation accompanying him.
BRR: What, in your view, are the main challenges that Pakistan faces in general in attracting FDI, despite improvement in security and EODB. And where do you see it going forward?
EI: The macro-level issues are bureaucratic, political, economic and security-related with an additional burden now of the challenges posed by COVID-19. There had been a political and economic impact on CPEC. Some of the early harvest projects are still under process, but we have implemented most of them successfully, such as power and road projects. SEZs are still giving mixed results.
There is now the second phase of CPEC which has already been launched. The canvas is broader. There are other areas like the social sector, agriculture, IT, etc., added to CPEC. Initially, we had five joint working groups. The projects are discussed in JCC, led by the Ministry of Planning (MoP). The counterpart from China is NDRC. Later on, CPEC Authority was established but under MoP. Each joint working group holds meetings, discusses projects, and gives recommendations that ultimately culminate into the agenda of JCC. Now we have nine working groups reflecting the expansion of the scope of CPEC.
Initially, we had 20+ SEZs identified by the Government of Pakistan and the provincial government, but the list was narrowed down because we could not give good results. Now there are nine priority SEZs under CPEC- one in each province, AZK, GB, and Islamabad Capital Territory. Now the progress is much better.
Our issues include the capacity; we have a huge human capacity gap- be it the planning level, middle level, or labour level. We need to improve that or else it becomes a challenge to undertake international projects and attract FDI. We lack on the Research and Development (R&D) side- that’s a gap that exists everywhere in Pakistan. We need to focus on improving R&D. We need to identify problems (under process) and then take corrective measures. The new initiative that we are proposing is based on addressing the gaps identified in our system.