1.The current government has now been in power for over ten months. How do you see Pakistan evolving under the PTI government?
The PTI Government’s agenda became clear from day one when the Prime Minister emphasized on the Ease of Doing Business reforms in the country. This was followed by continuous message of Pakistan opening up to the world. The messages of Prime Minister were translated into actions by not only introducing a new and transparent visa regime but also a number of reform actions for building the confidence of the foreign investors. In the one year under our Government, the confidence building measures have resulted in renewed interest from foreign countries and investors, particularly the friendly countries
including Saudi Arabia, Qatar, UAE, Malaysia and Turkey among others. These renewed interests have also been supplemented with the development of infrastructure and energy
projects under CPEC.
It is also important to understand that with Pakistan’s focus on CPEC there was an
uncertainty among the investors regarding incentives and level-playing field. However, in
the last one year, we have been successful in convincing the investors that the incentives
structure is same for everyone, without any discrimination among local and foreign
investors or investors from specific countries. The CPEC projects, including the Special
Economic Zones (SEZs) are also open to the world for investment with same incentives.
We are stressing the investors to bring in managerial expertise and transfer of new technology to Pakistan for capacity building of our local population as well as for
sustainable impact on development.
2. Pakistan jumped 11 places in World Bank’s annual Doing Business Report 2019 and now ranks 136th. How can Pakistan improve further its ranking in the Doing Business Report?
Ease of Doing Business is on top of the agenda of PTI Government. We know that these reforms are critical in building the confidence of investors and also to support SMEs in Pakistan. This is being done with support from our development partners and in continuous consultation with the private sector.
A number of important reforms have been introduced last year and I hope that these efforts will yield excellent results this year in form of further improvement in Pakistan’s ranking, even better than last year’s. This is important for us as it gives the right message to the investors that Pakistan is serious on reforms and has the capacity to deliver more than what is expected.
We have already worked out a strategy for the next year, besides, a dedicated unit for Doing Business Reforms has also been setup in BoI on the directions of the Prime Minister to improve the overall business climate of the country as well to vigorously work on the reforms process in active consultation with the provinces.
3. The Board of Investment assists companies planning to invest in Pakistan or to expand their Pakistani operations. What are your objectives for the next 4 years?
The role of Board of Investment is to facilitate the investors, promote investment opportunities in Pakistan and take a lead role in the Government towards investment policy. Our Government is focusing on six priority sectors, which have the most potential for businessmen, including Automobiles, Food Processing, Value-Added Textiles,
Information Technology, Logistics and Tourism. Board of Investment is also an integral part of Industrial Development under CPEC and development of SEZs.
Our goal isto focus on these strategic areas as well asto get resultsfrom the countries where the Prime Minister has recently visited and these countries have shown renewed interest. BoI is actively pursuing the investment interests of these countries by coordinating with the relevant Ministries / Departments at the Federal and Provincial level.
We have set short, medium and long-term targets for ourselves which also include bilateral roadshows, proactively approaching the MNEs in the priority sectors and marketing the untapped potential of Pakistan.
4. Pakistan is looking to diversify its economy and produce value-added goods for exports. Which strategic sectors are in need of most development for investors?
There are six sectors which have the most potential for development in Pakistan and which can offer lucrative returns to the investors. These sectors have the potential to develop export oriented market as well as import substitution industry particularly the markets of Western China, Middle East and Central Asia, which now has an improved access because of infrastructure development under CPEC.
Pakistan being at the crossroads of one of the oldest civilizations as well as blessed with lush green valleys, highest peaks, deserts hence, tourism sector is also one of these strategic areas, which probably has the most potential in Pakistan. The statistics show that Pakistan saw an almost 500% increase in domestic tourism last year, while more than a million visitors from foreign countries came to Pakistan.
Currently, we do not have enough infrastructure to cater for the needs of these tourists. In addition to this, after the implementation of new Visa Policy of our Government, we are expecting the number to increase in the coming years.
5. Special Economic Zones are on the rise in Pakistan. What is the role of Special Economic Zones (SEZ) and what do they bring to Pakistan’s economy?
Globally there is a trend to adopt liberal policies for attracting FDI. Development of SEZs in Pakistan is a giant leap towards liberalization of investment regime in the country. SEZ Act, 2012 was promulgated in 2012 and amended in 2016 to make it more business friendly. The objective of the Act is to create efficient and competitive industrial clusters; meet global competitiveness challenges and access to new markets; reduce cost of doing business through attractive incentive package; attract the much needed FDI with technology and expertise; create skilled and trained human resource; mainstream the marginalized areas in the economic activities and provide one stop facility to investors.
The Act offers incentives to the developers as well as enterprises operating within the SEZs, including one-time exemption of duties on exports, tax exemptions and provision of utilities. With the right approach and policies in setting-up of SEZs and focus on the strategic sectors, SEZs will help Pakistan in overcoming the balance of payment issues by increasing the exports and decreasing the imports.
6. Pakistan is facing competition from neighborhood countries such as India, Bangladesh and South East Asian countries? What differentiates Pakistan from these countries? and how can it deal with the growing competition?
We have excellent success stories from the region and we can easily replicate them
and gain ground because of our competitive advantages.
Markets of Middle East, Western China and Central Asia have an easy access through Pakistan because of the developed infrastructure, stretching from North to South. In addition to this, as announced by our Government recently, we have overcome our energy deficit issues, which is pivotal for the industry. Pakistan has young, highly skilled and energetic work force, in IT, Engineering and other sectors, which is very lucrative for foreign investors. Our governance is constantly improving and we are adopting competitive policies as well. Considering all these factors, I have no doubt that Pakistan will definitely catch up with the neighboring countries in terms of economic growth and attracting FDI.
7. Since 2014, FDI has been on an upwards trend in Pakistan reaching $3.09 Billion in 2017-2018. What is being done to encourage FDI coming into Pakistan? Which foreign companies are currently in process of setting up activities in Pakistan?
FDI has been definitely on the rise in the recent years, almost 50% increase in FDI was observed in the ‘Manufacturing’ sector, which is a positive trend. With the Industrial Cooperation under CPEC phase, this trend is likely to improve further and this is what I believe is necessary for sustainable development in our country. An overall economic slowdown was also observed in the previous year but with the right measures now in place, the situation will definitely improve in the current year.
A number of mega projects are in pipeline with different countries, including Saudi Arabia, Qatar, UAE and others. Some of the Malaysian companies have started their activities in Telecommunications and Automobile sectors. This year, we hope that we will make big progress on many important projects which will be a confidence booster for other investors to bring further investments in Pakistan.
8. How important is it for foreign companies to get a local business partner when they come to Pakistan?
As per our Investment Policy 2013, there is no need to have a local business partner to do business in Pakistan and the companies can repatriate 100% of their profits as well. However, I would recommend it purely because of the reason that a foreign firm will transfer knowledge and expertise to the local firms, which is vital for sustainable development. Also, a local firm can be helpful because of their understanding of local environment and cultural values.
9. After meeting with the Minister of Commerce, Textile, Industries and Production; Hon. Abdul Razak Dawood, he mentioned that the country was boosting its exports of value added goods (mostly in terms of manufacturing), lowering taxes and improving the “Ease of Doing Business”. What is the strategy of the BOI to boost exports and the “Made in Pakistan”?
Asthe Advisor to the Prime Minister on Commerce, Textile, Industries & Production and Investment stated, the EoDB reforms are particularly beneficial for local Small and Medium Enterprises (SMEs), and BoI istaking the lead in implementation of these reforms.
We will continue introducing new reforms and bridging the gaps for the SMEs to thrive in Pakistan. The main objective of development of SEZs is to focus on the industries which improve our exports and reduce our imports. So, this is another way for us to promote ‘Made in Pakistan’. To this end, we also organize business forums with other countries and international business delegations in Pakistan as well as abroad. We facilitate the establishment of B2B contacts so that businessmen from Pakistan can explore the avenues of Joint Ventures with other countries.
The regional offices of BoI established in provincial capitals are a mean to extend the facilitation and support to the business community in resolving their existing issues at the doorsteps. The regional offices of BoI play a crucial role in outreaching the existing as well as new investors to inform them about the business friendly policies of the Government as well as handholding them in their business avenues.
10. With the previous administration (CPEC), Pakistan has been shifting its interest towards China, but there is room for more. Please give us some insight into US investments in Pakistan and the sectors you are looking to bolster with it?
Before the CPEC investments, USA has remained the largest investor in Pakistan with big multi nationals like M&P, P&G, Abbot, IBM, 3M, Pfizer, Coca Cola etc, however the FDI from United States has been declining and stood low at $84 Million in the period July-May 2019. Some of the investments came from the multinational companies but through their regional headquarters. However, the interest shown by Exxon Mobil and Cargill is definitely a positive sign and I hope that it would gauge interest from other investors as well. We are particularly interested in the FDI from United States in Information Technology sector from the world-renowned companies in the Silicon Valley. Some of the companies have shown interest and we hope that these projects would materialize soon. Pakistan produces almost half a million graduates in this sector every year and a number of such companies use services of Pakistan based software houses as well. This is definitely a sector which can produce win-win results for both sides.
11. What is your final message to the readers of USA Today who consider Pakistan as a potential investment destination?
I would reiterate the message given by our Prime Minister to the outside world, Pakistan is open for business and it is the best time to invest in Pakistan. We welcome both the investors and the tourists. Pakistan offers tremendous opportunities for businesses with one of the highest dividends as compared to regional countries. We, at Board of Investment, are here to facilitate the investors in setting up businesses in Pakistan and get the maximum benefits out of the investments in Pakistan.