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Its most unfortunate that all those who have been in power for the longest time in the country’s history have been unable to spur growth in foreign investment. The decline in investment was significantly felt when the dollars coming in 2000s stopped. Even the devolution of powers under the 18thAmendment, the consequent Special Economic Zone Act almost a decade ago, and then the CPEC in 2015-16 (that also promised to conceptualize SEZs) remained insufficient for foreign investment in the country and could not take FDI to levels that could address the economic challenges that the country faced. Though CPEC did increase FDI in the country from China and in the power sector mostly, the lack of diversification, lost focus on other areas and sources for investment and the failure of CPEC for moving onto the second phase with SEZ and technology transfer eventually resulted in weakening flows from China. All this while, the structural challenges remain unaddressed where the ease of doing business, taxation, regulatory hurdles and policies continue to shove investors away.

The recent attempt at reviving the economy and addressing the foreign investment challenges amid the ongoing political, security and economic crisis has been the establishment of the Special Investment Facilitation Council (SIFC) to overcome the bureaucratic hurdles and red tape to facilitate and facilitate the foreign investment. In all honestly, the SIFC formed in June 2023 has not been able to move the needle. FDI in 4MFY24 stood at $524 million and no vivid improvement in the country’s FDI has been witnessed.

In a recent analysis by PRIME, the think tank highlights that the ability of SIFC in boosting FDI must be reviewed. In its October edition titled, “A quarterly report with special section on Special Investment Facilitation Council (SIFC)”, the think tank has put forward a few lacunas that raise questions on SIFC’s efficacy. For one, it rightly points out that the SIFC ignores the structural challenges the country faces and is the rehashed version of BOI that has failed to promote Pakistan as a destination conducive for investment and bringing in FDI. Moreover, structural challenges like taxation, excessive government regulations, bureaucratic hurdles, and governance remain unaddressed completely. Frequent changes in policies like administrative controls, exchange rate, tariffs, and taxes continue to create uncertainty in the economic environment.

The report also points to the short-term approach of SIFC and its exclusion of the local business community hindering efficient policy formulation but also failing to address the policy and regulatory barriers. And finally, it is also noted that the establishment of SIFC goes against restoring the trust in political government as the involvement of the military in economic decision-making that the governments have completely ignored the institutional reforms.

Comments

200 characters
shafaat shafi Nov 27, 2023 07:33am
Corruption, money
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Cool boy Nov 27, 2023 10:18am
Another DHA.... But no money is coming in dollars
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KU Nov 27, 2023 11:12am
The FDI and SIFC fairy tale continues with dramatic twists and surprises while existing and established industry and agriculture sectors' revival are being ignored, is this stupid or what?
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Tariq Ikram (SI) Nov 27, 2023 12:03pm
Firstly. Any efforts for actual dollars to flow in of FDI is not instantaneous. Gestation period is minimum 3 years from agreement to invest. Second the total size of all such efforts within 5 to 8 years is ? Say maaax USD 10Bn total? Third compare with what Fx can be earned from exports within 5 to 8 years... I say USD 100 Bn Workd bank says USD 88 Bn. Let's agree with 25% less than even USD 88Bn. So Thirdly should we not have equivalent SIFC for exports to maximise bang for the buck??? There are only 24 hrs in a day, you can use these to chase USD 10Bn or USD 100Bn. Choice is yours!!!
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Aam Aadmi Nov 28, 2023 07:08pm
There was no need to create SIFC when BOI was already there. Moreover SIFC's composition is highly objectionable and it's idea cannot be sold to the international community. The world is not used to such abnormalities. It is our misfortune that we do not see beyond our nose. The sooner we come out of our cocoon, the better. Our self-obsession will only create more problems for us. I am sure we are not going to learn. All signs point to this reality.
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