Govt to probe termination of BIT with Sweden

Constitutes committee to ascertain reasons, fears halt to foreign investment

ISLAMABAD:

The government has formed a committee to probe the issuance of a notice of termination of the Bilateral Investment Treaty (BIT) between Pakistan and Sweden, which may deal a big blow to foreign investment.

Sources in the Ministry of Commerce told The Express Tribune that the Board of Investment (BOI) took up the matter in a recent meeting of the federal cabinet. Members of the forum raised serious concern and demanded that the termination notice sent to Sweden should be revoked before it could come into effect.

The cabinet constituted a committee, headed by Commerce Minister Jam Kamal Khan, which would ascertain the reasons and approval process for releasing the notice of termination of BIT signed between Pakistan and Sweden in 1981.

During discussions, the cabinet members observed that given the longstanding diplomatic and economic ties with Sweden and keeping in view the potential adverse effects of the termination of BIT on the flow of foreign direct investment into Pakistan from Sweden and other countries, the notice should be revoked before it could take effect on September 29, 2026.

The cabinet unanimously endorsed the cancellation of the notice of termination of the agreement between the governments of Pakistan and Sweden on the Promotion and Reciprocal Protection of Investments, signed in 1981, and initiation of negotiations with a view to modernising provisions of the agreement and bringing them into conformity with Pakistan's current investment protection framework and policy objectives.

Meeting participants emphasised that it needed to be ascertained on what facts and grounds, and with whose approval, the decision was taken. It was noted that the issuance of such notices, without proper appraisal and thorough understanding of the possible detrimental effects of the proposed termination of the investment treaty, could jeopardise Pakistan's economic relations with other countries.

The prime minister, while agreeing with the views of the cabinet members, directed the constitution of a committee to examine the reasons for the issuance of the termination notice and to establish detailed guidelines, which would be followed before releasing such notices in the future.

In that regard, the PM pointed out that he had already directed the Special Investment Facilitation Council (SIFC) and the Board of Investment to draw up a comprehensive plan for revamping the BOI, which would include recruiting experts and subject specialists with expertise in various dimensions relating to investment agreements and treaties.

He said that the plan, to be presented to him for approval after two weeks, would help in attracting greater investment flows into the country.

While considering a summary submitted by the Board of Investment, the cabinet directed the formation of a committee, called the "Committee on Bilateral Investment Treaties", in terms of Rule 17(3) of the Rules of Business, 1973.

The committee will also examine the outcome of the termination of Bilateral Investment Treaties with 25 countries under the Bilateral Investment Treaty (BIT) Strategy of Pakistan 2021. It will determine the relevance of the strategy and the "Pakistan Model Bilateral Investment Treaty Template 2021" under the contemporary international economic context.

The committee will prepare a draft of the BIT policy in relation to the evolving global economic dynamics, enveloping investment protection provisions, Most Favoured Nation criteria, fair and equitable treatment standards, and dispute resolution mechanisms.