Monday February 26, 2024

Transforming SIFC: Embracing a project-driven approach for success

SIFC, rather than adopting a broad, general strategy, must identify specific billion-dollar projects, billion-dollar opportunities

November 29, 2023
Caretaker Prime Minister Anwaar-ul-Haq Kaka while chairing a meeting in Islamabad. — APP/File
 Caretaker Prime Minister Anwaar-ul-Haq Kaka while chairing a meeting in Islamabad. — APP/File

ISLAMABAD: The government of Pakistan launched the Special Investment Facilitation Council (SIFC) with the objective of attracting investments and catalyzing economic growth. SIFC’s primary focus lies in attracting investments from GCC countries, particularly in strategic sectors like Defense Production, Agriculture, Minerals, IT, and Energy. This forward-thinking initiative holds the promise of reshaping Pakistan’s economic trajectory, unlocking its immense potential, and fostering sustainable development.

SIFC, rather than adopting a broad, general strategy, must identify specific billion-dollar projects and billion-dollar opportunities. A generalized approach is unlikely to yield positive results. SIFC needs to embrace a project-driven methodology, prioritizing and executing targeted projects. A project-driven approach requires a clear understanding of the economic landscape, regulatory frameworks, and market dynamics. Here are six potential mega projects that the government of Pakistan could offer to foreign investors:

Copper mines: Pakistan occupies a distinctive position as a holder of a vital resource powering contemporary industries: copper. The demand for copper has surged in recent years, propelled by technological advancements, renewable energy projects, and the worldwide transition to electric vehicles. Copper plays a vital role in an array of cutting-edge technologies, including solar panels, electric vehicles, wind turbines, robotics, 5G, drone technology, biodegradable batteries, cryogenics, energy-efficient technologies, geothermal energy, quantum computing, and energy transmission systems. Notably, Pakistan holds the seventh position worldwide in copper reserves, positioning itself as a noteworthy player in the ongoing evolution of this industry.

Agricultural modernization: SIFC must identify specific projects at modernizing agriculture. Specific projects in AI-driven irrigation. Specific projects in wireless sensor networks. SIFC must be prepared to present initial viability studies, defining project scope, objectives, timelines and resource requirements. SIFC must identify potential risks and mitigation strategies.

Thar coal power projects: Pakistan has significant coal reserves in the Thar region. Investments in coal-based power projects, including mining and power generation, could be of interest to foreign investors. SIFC must arm itself with viability reports of specific projects, an estimate of capital costs, operating costs, and potential revenue streams.

Information technology parks: Given the global growth of the IT sector, investing in technology parks and IT infrastructure development in Pakistan’s major cities could be a strategic move for foreign investors. SIFC must create initial project specifications, technical designs and operational plans. SIFC must develop prototypes or mock-ups.

Renewable energy projects: Pakistan has been focusing on increasing its renewable energy capacity. Wind and solar energy projects offer opportunities for foreign investors. SIFC must come up with specific projects along with initial assessment of viability and potential success of these projects. SIFC must present initial technical, economic and legal evaluations of these specific projects to potential investors.

Mass transit systems: Urbanization and population growth have increased the demand for efficient mass transit systems in major cities. Foreign investors could participate in the development of metro and bus rapid transit systems. The Abu Dhabi Investment Authority ($853 billion), the Saudi Public Investment Fund ($776 billion), and the Qatar Investment Authority ($461 billion) are actively seeking investment opportunities. The financial resources are available, the SIFC would have to identify and propose specific ‘investable projects’; a broad, generalized strategy will not suffice. It is crucial for SIFC to distinguish between mere ‘geo-political rents’ and ‘investable projects’; projects that offer a potential for returns, where investors expect to receive more money back than their initial investment. In conclusion, SIFC’s success hinges on a project-driven approach to foreign investment.

Embracing this approach is paramount, as it aligns national goals with investor interests, paving the way for sustainable progress and shared prosperity. Through a project-driven approach, the SIFC can streamline its efforts, allocate resources efficiently, and demonstrate a commitment to tangible results.