‘FDI from US plunges manifold over last decade’

LAHORE: Businessmen on Saturday urged the government to revisit economic policies and their enforcement mechanism amid shrinking foreign director investment into Pakistan from major world economies.

“From the year 2008-09 to 2016-17, investment from USA, UK, UAE, Japan, Hong Kong, Switzerland and Germany dropped heavily,” Khawaja Khawar Rashid, acting president of Lahore Chamber of Commerce and Industry (LCCI) said in a statement.

“Investment from USA fell from $869.9 million dollars to 71.1 million during the period. Likewise UK’s investment came down from $263.4 million to $68.9 million, UAE from $178.1 million to $55.8 million, Japan from $74.3 million to $45.2 million, Hong Kong from $156.1 million to $25 million, Switzerland from $227.3 to $58 million during this period.”

Vice President Zeshan Khalil of LCCI said the decline in foreign direct investment has actually revealed weakness in policies and system which must be rectified “otherwise situation would further be aggravated”.

“It is a matter of concern that not only foreign investors are making their ways to the other countries of this region but the local investors are also losing their trust because of various issues,” Khalil added.

The LCCI office bearers said Pakistan’s foreign missions abroad would have to play a key role to attract foreign investors who should be informed that Pakistan has lucrative opportunities for investment in various sectors of economy including textile, energy, agriculture, tourism, health, education and other sectors.

There are 48 countries, which have signed bilateral investment agreements with Pakistan, but their share in total investments in Pakistan is negligible. Board of Investment has to target these countries for marketing the investment potential of Pakistan, they said.

The officials said special economic zone Act was promulgated in September 2012. Among the fiscal benefits to foreign investors, one time exemption from custom duties and taxes for all capital goods promised in the Act were expected to turn around the economic activities but “it did not happen that way”.

Similarly, under Investment Policy 2013, there is an equal treatment to local as well as foreign investment and the foreign equity up to 100% is allowed, “but these steps did not either produce healthy results”. “The investment to GDP ratio of Pakistan is around 16 percent whereas for a developing country, it should be around 30 percent,” they wrote in the statement.

The countries which are investing in Pakistan have been the same since long. They include USA, China, Luxembourg, UAE and UK.

LCCI officials said new investors from other countries should also be encouraged to consider Pakistan for investments.

There are a number of reasons of low level of foreign direct investment, including political instability, policy adhocism, high cost of doing business, poor law and order situation and corruption.

“Favourable business climate for the foreign investors is the need of the hour for which BOI (Board of Investment) must take measures on war footing basis,” they added.