BoI running without service, investment rules for 16 years

Finance ministry does not agree with benefits proposed for BoI staff

The Board of Investment (BoI) has been working without service rules and investment regulations for the past 16 years due to the Ministry of Finance’s objections to the financial benefits that the BoI has proposed for its employees.

The Auditor General of Pakistan (AGP) has pointed out a serious irregularity while auditing BoI accounts for fiscal year 2015-16. It said BoI had not framed service rules and regulations for investment since its inception in 2001.

BoI employees were drawing allowances and other benefits as admissible to staff of the Prime Minister’s Office.

The BoI 2001 Ordinance says board employees will avail themselves of the financial benefits meant for public servants. But the finance ministry wanted to extend the employees benefits that are available to civil servants.

Public servants often draw higher than normal salaries got by government servants, but they are not entitled to post-retirement benefits. Public servants also have limited housing quotas in government-sponsored housing schemes, unlike civil servants who get a larger share of the pie.

BoI is responsible for making investment policies for the country. It had been established about 16 years ago to promote investment across all sectors of the economy, facilitate domestic and foreign investors and enhance Pakistan’s international competitiveness.

The prime minister is the BoI president. However, the investment board has been working without chairman for the past couple of months after elevation of Miftah Ismail as Special Assistant to the Prime Minister on Economic Affairs.

Tariq Fatemi, former special assistant to the PM on foreign affairs, is being tipped as the next BoI chairman. Fatemi had been removed from office due to his alleged role in Dawn leaks controversy.

“BoI may appoint such officers, advisers, consultants and employees for the efficient performance of its functions on such terms and conditions as may be prescribed under the rules made with prior approval of the federal government,” said the BoI ordinance.

Section 18 of the ordinance states subject to other provisions of this ordinance, every officer and employee of the BoI shall be deemed to be a public servant within the meaning of Section 21 of the Pakistan Penal Code (Act XLV of 1860).

It adds until the rules are made, the officers and employees of the BoI shall continue to be governed, in respect of the matters, terms and conditions of service by rules applicable to them immediately before the commencement of this ordinance.

Service rules for the employees were going through a consultation process at the Establishment Division and Finance Division.

However, the Ministry of Finance did not agree, especially with the proposed pay package, and called for adopting basic pay scales instead of special pay scales, according to a written reply of the BoI management to the AGP. “Rules are at an advanced stage of approval and these will soon be finalised,” commented BoI Secretary Azhar Chaudhry.

The proposed rules give option to the existing staff to serve as public servants, in which case they will not be entitled to pension benefits, or work as civil servants.

The AGP department, however, did not accept the BoI’s reply on delay in framing the rules, saying the board management had given similar assurances a year ago.

The AGP has called for expediting the process, recommending that the pay package should be similar to that of the employees of federal ministries and divisions.

BoI has drafted some amendments to the ordinance in order to resolve the issue. The draft is lying with the PM’s Office.

BoI is also struggling to meet annual foreign direct investment (FDI) targets and ensure competitiveness of Pakistan’s businesses.

Investment in the country stood at 15.8% of gross domestic product (GDP) in the previous fiscal year 2016-17 against the target of 17.7%.

Fixed investment grew slightly to 14.2% of GDP, but it was below the 16.1% target. The FDI target for FY17 was $4.55 billion, but actual investment remained at $2.4 billion.

For the new fiscal year, the FDI target is $4.2 billion and the government is eying to enhance the investment-to-GDP ratio to 17.2%.

Published in The Express Tribune, September 2^nd, 2017.

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