Pakistan’s economic security is crucial, as it relies on economic sovereignty and independence. The country is currently facing high inflation, a plummeting thrift, and a struggling industrial sector. Pakistan’s external debt has risen, and its currency is trading at its lowest against the US dollar. International financial institutions are imposing tough conditions for loan facilities, compromising national sovereignty. Unprecedented growth of cartels controls food and petroleum prices, causing successive governments to become hostages. Pakistan ranks 34th in the Asia-Pacific region, with a low economic score and external debt. The country’s economic freedom score is 48.8, indicating a need for immediate measures to prevent economic default. Despite Pakistan’s potential and advantageous location, there has been little foreign direct investment in the country due to factors such as political unpredictability, security concerns, inadequate infrastructure, onerous administrative procedures, lack of transparency, ineffective government operations, and frequent changes in economic policies, tax laws, and investment laws.
The Government of Pakistan unveiled a strategy for economic restoration in June 2023 to focus on harnessing the country’s untapped potential in key sectors. In addition to soliciting international investment, especially from GCC states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE), the plan is focused on indigenous development and uses local resources, with Pakistan Army to oversee the project.
This plan’s fundamental component is the encouragement of export-focused foreign direct investment (FDI), which will fully utilise the available potential in vital industries like energy, defence, agriculture, livestock, minerals and mining, and information technology. Using an indigenous development paradigm, where local resources are fully utilised for economic recovery while concurrently luring investment from friendly countries, is the strategy for the entire endeavour. The economic revival model would function through a mechanism of collaboration between the centre and provinces for prompt decision-making and removing any obstacle or barrier in the way of investment and business promotion, all in the name of ‘one government’ and ‘collective government’ respectively. The project will show to be larger than CPEC if carried out in letter and spirit. A ‘Special Investment Facilitation Council’ (SIFC) has been formed in order to simplify the processes for implementing the strategy.
The SIFC is working on a comprehensive plan to revive Pakistan’s economy by reducing non-developmental expenditure, limiting government luxuries, and utilizing indigenous national resources.
The SIFC is working on a comprehensive plan to revive Pakistan’s economy by reducing non-developmental expenditure, limiting government luxuries, and utilizing indigenous national resources. Its aim is to boost Pakistan’s economic revival plan by expanding investment, achieving macro-economic stability, and reclaiming the nationhood status. This will be achieved through an empowered organization and a ‘whole of government approach’.
The SIFC has been established under the Board of Investment Ordinance 2001, with the aim of acting as a single point of contact for investment facilitation and creating an enabling policy environment to draw both domestic and foreign investment to Pakistan. The mandate of SIFC include concentration on investment and privatisation in defence, agriculture, minerals, information technology, telecommunications and energy.
The SIFC would act as a ‘single window’ for multi-domain collaboration in important fields. Its mandate also include preparation of a long-term strategy for growth, development, and investment in key industries, to raise awareness on Pakistan’s untapped potential in key disciplines, to explore new avenues for expanding collaboration in relevant areas, to increase the ease of doing business by implementing and overcoming systemic stumbling blocks and maximising horizontal-vertical coordination at the federal and provincial levels with the support of Pakistan Army.
The Executive Committee of the SIFC has expanded its scope beyond facilitating foreign investment through swift decision-making. The forum now includes performance reviews, dispute resolution between investors and government departments, allocation of gas to sectors, water supply schemes for major metropolitans, settlement of circular debt, performance of Foreign Diplomatic Missions and curbing oil smuggling.
The Special Investment Facilitation Council (SIFC) aims to create job opportunities for Pakistan’s unemployed youth, with 15-20 million direct and indirect jobs in the next five years. The plan will generate $70 billion in exports and $100 billion in Foreign Direct Investment (FDI) within three years and a nominal GDP of $1 trillion by fiscal year 2035. Pakistan Army will manage and coordinate the project until its success, gradually reducing its direct role.
Pakistan, with a young population and potential as a global technology destination, needs a supportive mechanism to attract businesses and unlock FDI capacity for technology. The Pakistan Investment Policy 2023 addresses global economic challenges and post-Covid-19 changes. Despite changes in sectors, supply chains, geopolitical situations, and investment climate reforms, the policy remains focused on attracting more investments, particularly in sectors generating value, jobs, and export earnings. SIFC aims to facilitate, incentivize, and encourage their establishment.
The Special Investment Facilitation Council (SIFC) is a crucial initiative for Pakistan’s economic and national security interests. It is also important to improve the justice and governance system, make efficient regulatory frameworks for ease of doing business, and remove the multitier bureaucratic system at federal and provincial levels in Pakistan. Without successful reforms and time limit implementation, it would be difficult to sustain long-term economic development in Pakistan. Moreover, addressing the challenges surrounding the impact of economics on stability and security can provide benefits such as understanding the causal economic forces, prioritizing development, improving governance, and allocating resources appropriately. The challenge lies in assessing the connection between published economic data and its impact on stability and security goals, which has been neglected in the past. This approach can help mitigate threats and improve governance in this context.
The writer is Ph.D in Political Science, and visiting faculty at QAU Islamabad. He can be reached at: [email protected] and twees at: t@zafarkhansafdar.