The government of PM Shahbaz Sharif has released a new Pakistan Investment Policy 2023 that is driven principally by the desire to obtain investment from Gulf countries. However, while this may lead to some official investment from these countries friendly to Pakistan, private foreign investment even from these countries will not materialise unless Pakistan makes its system more investor friendly.
To help friendly GCC nations the prime minister has already formed a Special Investment Facilitation Council to overcome any obstacles in the way of any project. “The policy will focus on reducing the cost and facilitating the ease of doing business, streamlining business processes and promoting the convergence of trade, industrial and monetary policies. It offers numerous incentives to foreign investors, including elimination of the minimum equity requirement and permission to invest in all sectors, barring a few.”
However, as most investment analysts note, Foreign Direct Investment flows towards politically and economically stable economies that have strong foundations for future growth and can access broader markets. Factors that influence foreign investors’ decisions include tax rates, regulatory transparency, policy consistency, technological infrastructure and a secure environment. Unfortunately, Pakistan lags far behind even regional countries on these counts.
As an editorial in Dawn warned, “Pakistan stands at a critical juncture in its history: it can turn its economic crisis into an opportunity by quickly implementing governance and structural reforms to attract investment or suffer on account of inaction.”