ISLAMABAD:
Pakistan’s security agencies are not giving clearance to 184 foreign business executives, forcing the investors to look elsewhere at a time when investment has already plunged to the lowest level in the country’s history.
In an interview with The Express Tribune, Board of Investment Chairman Saleem Mandviwalla revealed that despite repeated reminders to the intelligence agencies, currently about 184 applications were awaiting clearance. The applicants were mainly from the United States, Europe, China and South Korea.
“We are in constant communication with security agencies, insisting that this is a matter of grave concern as investors are shying away,” said Mandviwalla, who also enjoys the status of minister of state.
He argued that these were not critical issues for the agencies, so they feel this was not something important. “People don’t seem to understand this subject. They have other more serious issues to deal with.”
After getting clearance from the security agencies, the BOI registers foreign executives and gives them green signal to come to Pakistan. The investment board has also raised the issue with Prime Minister Raja Pervez Ashraf, seeking his intervention.
Foreign direct investment (FDI) in Pakistan has been constantly on the decline, dipping to a mere $756 million from July to May of previous fiscal year 2011-12.
Overall investment has plunged to 12.5% of gross domestic product (GDP) during the year, the lowest ever in the country’s history. When the PPP government came to power, total investment was 22.1% of GDP, the second highest.
On the one hand, the investors have to wait for security clearance for months while on the other a handicapped BOI has little or virtually no autonomy to attract fresh investment due to strong influence of lobbies in the Ministries of Finance, Commerce and Industries as well as the Federal Board of Revenue, said Mandviwalla.
He said the BOI was not fully empowered to fetch investment. “We have to be empowered to give investors whatever they need and this requires change in rules of business.”
He said the BOI must have powers to send summaries directly to the Economic Coordination Committee (ECC) of the cabinet instead of going through economic ministries.
“I have requested the PM that if you don’t want to empower the BOI, please close it,” said Mandviwalla.
For the last two years, he was trying to bring Japan’s motorcycle manufacturer Yamaha to Pakistan. However, he said, the strong lobby of the automobile industry has used its influence over the secretaries of finance, commerce and industries, who have in return paralysed the BOI.
He pointed out that for the last 20 years there was not a single new investment in the automobile industry and even BOI officials were part of this mafia.
Highlighting another important issue that is blocking investment, Mandviwalla said investment companies that come under administrative control of the finance ministry were unlawfully investing in stock markets and providing short-term finances. These companies were created to invest in projects. “BOI wants to stop this illegal practice and I have written to the finance ministry,” he said.
He dispelled the impression that majority of overseas investors in Pakistan have repatriated their profits. Instead, he said, majority of them have reinvested in Pakistan. Last year, more than $1 billion was reinvested.
They not only reinvested the profits but also brought new investment. But this amount is in rupees and does not come through the banking channel, thus, not counted in the FDI, he pointed out.
In the telecom sector, he said, full repatriation was going on. Pakistan, for a foreign investor, is not a repatriating country. It is a strategic location and majority of foreign investors are expanding their businesses.
Published in The Express Tribune, July 7th, 2012.
COMMENTS (12)
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@Pakistan is for Pakistanis: u r talking about pre-historic model of operations. over protecting local industry and having same mehran for 22 yrs, highly substandard cars, low quality products in pakistan forever. pakistan needs to change its corporate structure and get out of over protective regime where industry is occupied by few families.
Bring Imran khan i bet not only foreigners but your own people who invest in uk,malaysia dubai etc will bring money here. its about trust only imran cam make us a great magnet for investment and then we will rock the whole world in IT,Telecom,Media,industry and Medical etc.
@Pakistan is for Pakistanis
Sounds grand but the last time I looked Pakistan didn't have enough money to purchase fuel to keep it's people supplied with electricity. The key to financial success for any country is the free movement of capital and that means foreign investment -- ask the Chinese or Russian's how they have made their economic turnarounds.
@Javed: @Pakistan is for Pakistanis: So would you agree that all foreign put a ban on Pakistan's exports.
the very simple technique of making pakistan stand again is acceptance of american slavery. during military rule pakistan enjoys favor of america and thus it not remains stable but gets enough money to raise pakistan to the stature of well established nation though the fact is that it still remains agrarian country during this time. after mush the civilian govt wasnt like military govt so america went away violence rose and investment dropped criplling the whole nation
What BS!
Everyone knows CIA uses the cover of "businessmen" to conduct covert-ops. I guess they are itching to get into Baluchistan. Don't give them access.
Good. Keep them out. Pakistan should be owned by local Pakistanis and not to be sold off to foreignors like PTCL to Etisalat Bank Al Falah to Abu Dhabi Group KESC to Abraaj Capital
and so many licenses for everything from Television, Telecom to Banking given to foreignors. Did it help Pakistan when things went bad for our country??
Foreignors are the first to leave. Pakistanis are here to stay. Pakistani businessman and Pakistan's economic warriors. Support them like you support Pakistan military...
Nobody would given preference to foreign soldiers to protect Pakistans security interests, so why are we trusting our economy to foreign companies
@Ch Allah Daad. The ISI is the bottleneck and the chances of the PLM(N) putting that organization in it's place is nil. This unfortunate reality is that there is no political party that has the will or power to take on the ISI.
Let those businessmen cross over the border from Afghanistan. Our security agencies don't bother to check illegal aliens at the borders.
PPP government has shown indifference to foreign investment and that too not to appease local investor. It believes in distributing jobs among its jialayas at the government owned institutions which are already heavily bleeding due to corruption and incompentency. It fact, the first PPP government of 70's destroyed the industrial-business environment through their policies of nationalization. Large scale business were taken over by the government to provide employment to its cronies, a trend which has continued for last 40 years as successive governments saw potential of corruption in such government owned enterprises.
There is a very simple solution to all these problems. Elect PML(N) with clear majority. Its leaders know how to clear hurdles and create opportunities for foreign investment. Pakistan's economy is in dire state and we need experienced economic managers at all levels not donor recipients who have absolutely no experience how to reform economy. Pakistan's problmes are far more than mere corruption.