Daily Times

Foreign Direct Investment (FDI) is a pivotal ingredient of every conceivable growth model in this modern era, a corollary to global interdependence and connectivity. The developing countries that are faced with financial constraints and lack of infrastructure necessary for nudging the process of economic development invariably look up to the multinational companies and foreign governments to invest in the construction of new infrastructure projects and other economic domains. Even developed countries try to attract FDI to sustain and bolster their development efforts.

FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, helps create a more competitive business environment and enhances enterprise development. All of these contribute to higher economic growth, which is the most potent tool for alleviating poverty in developing countries. Moreover, beyond the strictly economic benefits, FDI may help in improving environmental and social conditions in the host country by, for example, transferring “cleaner” technologies and leading to more socially responsible corporate policies. While FDI accrues foregoing benefits to the recipient country it also acts as a means for multinational companies and countries to expand their footprints into the international markets. So it is a win-win situation for both the recipient countries as well as for those who invest in them.

It is estimated that FDI accounts for nearly $2 trillion in cash flows around the world with the US and China leading in inflow statistics. The best example of FDI in the world today is the Chinese initiative of One Belt One Road which involves a commitment by China to substantial FDI in a range of infrastructure ventures throughout Asia, Africa and even parts of Europe.CPEC is a flagship project of this global initiative of the Chinese government. Similar initiatives are also undertaken by other nations and international bodies including Japan, the USA and European Union.

Pakistan has not handed over control of any asset to foreigners

Given the prevailing situation in Pakistan and the perilous state of the economy, the only option— apart from focusing on enhancing exports– is to attract FDI. So keeping in view the potential of the FDI in transforming the economic profile of the country and putting it on the path of sustained economic growth the government has taken a pragmatic, visionary and necessity-driven step by establishing Special Investment Facilitation Council (SIFC).

The establishment of SIFC encompasses a whole-of-the-government approach in which the Army has also been made a partner in the process of decision making about attracting direct foreign investment and also at the supervisory level of the implementation of those decisions and policies. The SIFC has been mandated to bring in $100 billion in FDI within three years and enhance the GDP up to $1 trillion by the fiscal year 2035. It will focus on obtaining investments in Agriculture, Livestock, Mines and minerals, IT, defence production and energy from China, UAE, Turkey, Bahrain and the Kingdom of Saudi Arabia. The council aims to provide one window arrangement for the potential investors setting aside the bureaucratic snags with a view to expedite the process and formalities involved in facilitating FDI. It is perhaps pertinent to mention that the countries mentioned above and many multinationals based in those countries have expressed keen interest and willingness to invest in the identified sectors to enhance international connectivity and stimulate economic growth through the inflow of the latest technologies. To some the objectives of the SIFC may sound too ambitious but the truth is that the expectations are based on credible realities and the commitments given by these countries.

The FDI from these countries would complement the benefits of CPEC that provide connectivity with the central Asian countries and have the potential of turning Pakistan into a hub of regional economic activity owing to its geo-strategic location. The benefits of this connectivity have already started flowing with the arrival of trucks carrying the first consignment of LPG from Russia to Pakistan through Torkham recently. This cargo was first sent to Uzbekistan through rail and later it was transported to Pakistan using trucks. However, notwithstanding the promise that the envisaged FDI holds for transforming the economic landscape of Pakistan and the role that SIFC is likely to play in making it a reality, there is no dearth of detractors of this gigantic economic initiative who are trying to create misgivings about it and the role of the Army in this regard.

They contend that the Army would become a stakeholder in the process and demand further shares in the accrued benefits. This indeed is a preposterous suggestion. The Army as an institution and part of the government has always been at the forefront to assist the latter in overcoming adverse circumstances and dealing with other daunting challenges without ever demanding anything in return. The role that the Army leadership has played in winching the country out of the economic quagmire that it was stuck into by facilitating the deal with IMF and financial assistance from China and Gulf countries is a ranting testimony of the self-less services that it has rendered for the country.

As far as my knowledge goes and confirmed by the relevant quarters, the Army utilised its won resources while performing rescue and relief operations during the recent floods. Perhaps it would be appropriate to reinforce this argument bytelling the people and those who are creating misgivings about the role of the Army and its intent that it had deposited $ 2 billion in the government exchequer which was given to it by the Qatari government as a payment for proving security during the FIFA World Cup.

It is important to note that the companies and countries making investments in other countries demand security, stability and continuity besides the protection of infrastructures, assets and personnel involved in the projects based on their investments. The involvement of the Army in the SIFC initiative provides and promises that the likely investors have full faith in its ability. The Army has already created a special division to provide security to the Chinese personnel working on CPEC projects and to protect project sites. Some critics are also trying to disseminate misinformation to the masses by contending that Pakistan had sold three major airports to foreigners and 100% of the Pakistani banking and Telecommunication sectors. The reality is that Pakistan has not handed over control of any of these assets to foreigners and continues to maintain ownership and oversight of them. It has only entered into a joint venture with other countries.

In the case of banking and telecommunication sectors also, the assertion is made without ascertaining the logic and reality that all that has been done is to attract foreign investors in the country while enforcing a strong regulatory mechanism to oversee them, which in the case of Banks is the State Bank of Pakistan and in the case of telecommunication is the Pakistan Telecommunication Authority. It is indeed regrettable to see some vested interests trying to denigrate the significance of the SIFC initiative and creating misgivings about the Army and its defining role in this mega-economic initiative without bothering to ascertain the facts. It is indeed very irresponsible behaviour that descends into the realm of an anti-state act. They need to do serious rethinking about their propensity to indulge in such indiscretions.

The writer is a former diplomat and freelance columnist.