Daily Times

Chairman Pakistan Industrial and Traders Associations Front (PIAF) Mian Nauman Kabir expressing serious concern over the declining trend in foreign direct investment has said that FDI remained negative and posted a decline of 29 percent during the last fiscal year (FY21) despite some positive developments on the economic front.

Quoting the State Bank of Pakistan, he said that foreign investors invested $1.85 billion in Pakistan on account of FDI during FY21 compared to $2.50 billion in same period of FY20, down by $750 million. During the period under review, the country fetched FDI inflows amounted to $3 billion against the outflow of $1.16 million. A massive fall in the FDI has been attributed mainly to a major fall in the Chinese investment in CPEC projects, as net FDI from China was down by over 10 per cent to $758 million in FY21 compared to $847 million FDI in FY20.

Mian Nauman Kabir observed that despite significant improvements in the energy infrastructure and security condition, the government has failed to attract investment in the country. He said the drastic steps and political will can speed up the economic growth, which should be grown significantly and constantly for visible impact.

He said that it is good that the government is anticipating the GDP growth of 4% for the current fiscal year compared to projection of 3%, which is also possible, considering the low base effect of last year, achievement of comparatively higher growth in manufacturing and export sectors, bumper wheat crop in agriculture sector and current account balance in surplus, he said.

The PIAF Chairman urged the government to take practical and concrete steps for the implementation of business-friendly policies, saying the rising prices of electricity, gas and petroleum products were halting the wheel of economy. He added there was a need to freeze the prices of all inputs for at least two years so that the economy could get required start. He also suggested that the sales tax slab should be curtailed in order to cut cost of production.

Mian Nauman advocated the need for raising the country’s tax base so that tax-to-GDP ratio improves from current poor level. He urged the trade officers to explore opportunities to diversify exports of goods and services in their respective areas, asking them to meet the challenges faced by Pakistan in European markets. He also suggested the ministry to devise strategies for promotion of Pakistani products, calling upon trade officers to take advantage of opportunities offered by China-Pakistan Economic Corridor (CPEC).

PIAF vice chairman Javed Siddiqi expressed the hope that FDI would grow over the next one year in the wake of stability in the rupee-dollar parity and improvement in balance of payments position in this fiscal year, as Special Economic Zones, which were under the development phase, would also attract investment among export sectors in the country.

During 2014-2018, foreign investors mostly poured money into the sectors which did not pose a risk to their profit margins due to rupee depreciation such as the power sector. It is appreciable that Pakistan’s economy is now gradually gaining growth momentum, which should encourage foreign investors to invest in new projects, he added.