Legal lacunas stalling foreign investments

Experts say Pakistan needs judicial reforms, consistent policies

KARACHI:

The government needs to take urgent measures to stem declining foreign investment into the country and a key part of this should be judicial reforms, said experts on Wednesday, during a webinar titled ‘Pakistan’s Legal System and Challenges in Attracting Foreign Investment’.

“There has been a 40% decline, YoY, in foreign investment in the first eight months of the current fiscal year,” said TV journalist Talha Jatoi.

A recent example of a criminal case of defamation filed by former CEO of The Resource Group International Limited (TRG International) Zia Chishti, was cited by Jatoi, who pointed out that in a sexual harassment arbitration case in the US, Chisti was asked to pay over $5 million in damages. On the other hand, however, “in Pakistan he was able to get arrest warrants issued against the directors of a company that brings in millions of dollars in foreign exchange. Such cases send a very wrong signal to foreign investors.”

Karachi based journalist, Naimat Khan was of a view that the “Before looking to attract foreign investors, we need to encourage Pakistanis to invest locally rather than sending their funds overseas,” adding that, “Currently, Pakistan lacks both, security and an enabling environment.”

Lawyer Mirza Moiz Baig also spoke about the lack of arbitration and said much of the law followed in Pakistan dates back to the 1940s. “Consistent business policies are essential for sustained foreign investment,” he said.

According to former intelligence officer and researcher Amir Mughal, “The country is run by a cabal of people and the policies being formulated by them are not very investment-friendly.” There was a general consensus that apart from much-needed judicial reform, it was imperative that there be political stability, and that policies needed to be consistent and long-term.

Published in The Express Tribune, March 30^th, 2023.

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