The government has decided to give the Board of Investment the lead role in fetching foreign investment – which has been on a downswing for the past five consecutive years - after dilly dallying by key economic ministries has resulted into blockage of $1.8 billion potential investment.
The amount of foreign investment either blocked or being affected due to hurdles created by ministries of Finance, Commerce, Petroleum, Industries and also the Planning Commission and the Federal Board of Revenue is 152% more than the total foreign investment that came in the country in the outgoing fiscal year.
The decision to change rules of the business of the government was taken by Prime Minister Raja Pervez Ashraf while chairing a meeting of the Board of Investment (BOI), the second such meeting in less than a month to address the decline in investment.
The premier has directed aligning the rules to fast track the process of fetching much-needed foreign investment, according to a statement issued by Prime Minister’s House.
The premier asked the secretaries of the cabinet and BOI to frame the new rules and get them approved from the Cabinet at the earliest, said an official of the BOI. The decline in foreign investment for the consecutive fifth year is one of the main reasons behind sluggish economic growth and increase in unemployment, he added.
While highlighting the urgency to change the rules, Chairman BOI Saleem Mandviwalla suggested the premier to ask the economic ministries to take decisions on investment proposal at the earliest. “Either the government should accept the proposal of an investor or reject it but the investor should not be left hanging for months to know about the outcomes,” said Mandviwalla in the meeting.
Mandviwalla has assured the premier that after amendments in the rules, BOI will streamline $1.8 billion investment within four months.
The BOI raised serious concerns in the meeting regarding delay in taking a decision on South Korean companies’ proposal to set Liquefied Natural Gas Terminal worth $800 million, said the official. The BOI urged the premier to inform investors about the outcome of their proposal who have been waiting for more than six months. The joint proposal by Samsung C&T Corporation and POSCO Korean is shuttling between the Ministry of Petroleum and the Oil and Gas Regulatory Authority for the last six months without any outcome.
Similarly, Lotte Korea’s proposal to expand existing Purified Terephthalic Acid (PTA) plant with an investment of $400 million was also pending for over six month, Mandviwalla told the premier. Lotte was seeking protection from Chinese and Indian competitors through increase in import tariffs, he added. The Economic Coordination Committee of the Cabinet constituted a panel to take a decision but after a lapse of six months no decision has be taken yet.
In yet another case, involving $150 million foreign investment, Yamaha Motors Japan proposal to establish motorcycle manufacturing plant in Pakistan has been pending for more than past six months, the BOI told the PM. Yamaha is seeking 10% reduction in duties on completely knocked down units. Interestingly, the ECC has assigned Minister for Information to give a report on a pure business matter.
The Centaurus mega project costing $450 million is also facing problems due to Capital Development Authority’s reluctance to ensure gas and electricity connection to the mega project in the heart of Islamabad. Designed by British architects WS Atkins, it will comprise three skyscrapers, containing corporate offices, residential apartments and a five-star hotel. The tallest skyscraper will have 41 stories and all three will be linked by a shopping mall.
The Prime Minister directed CDA to resolves all issues till Monday and also directed the BOI and the Ministry of Finance to resolve issues causing delay in implementation of Yamaha project, according to the statement.
Published in The Express Tribune, July 21st, 2012.