KARACHI: As Pakistan endeavors to attract investment, particularly foreign direct investment (FDI), the Pakistan Business Council (PBC) has urged the Special Investment Facilitation Council (SIFC) to prioritize the transformation of the investment climate.
In a recent letter, Ehsan Malik, CEO of PBC, emphasized the importance of addressing fragmentation and siloed operations within key ministries to ensure the long-term predictability of policies, which is crucial for investor confidence.
Malik highlighted the detrimental impact of short-term policy changes that render previous investments unfeasible, stressing the importance of restoring the sanctity of longer-term plans, for which Pakistan was once admired.
Furthermore, he advised the SIFC to focus on attracting FDI in export-oriented sectors and industries that reduce reliance on imports, particularly of essential commodities like food items. While capital from Middle-Eastern investors could support investments in imported plants, technology would still need to be sourced from elsewhere.
Malik cautioned against the current high-risk perception among foreign investors, which could lead to rapid capital outflow if the investment climate does not improve. He urged caution in pursuing headlines on FDI, emphasizing the need for substantial improvements in the regulatory environment.
The CEO of PBC highlighted various challenges plaguing Pakistan’s industrial landscape, including regulatory complexities dating back to colonial times, slow decision-making processes, and the absence of a clear industrial policy with defined priority areas.
Moreover, he drew attention to issues such as under-invoicing, smuggling, and misdeclaration of imports, which collectively undermine the industry’s competitiveness. Additionally, factors such as high energy tariffs, underdeveloped Special Economic Zones, and exorbitant borrowing costs require urgent attention.
Malik also underscored the adverse effects of heavy taxation on salaried employees, resulting in a loss of talent and tax evasion. He criticized the predatory tax regime, which disproportionately burdens industries, and highlighted the need for the government to address capacity constraints within the Federal Board of Revenue (FBR) to broaden the tax base effectively.
Malik emphasized the critical need for a conducive investment climate, characterized by stable and predictable policies, streamlined regulations, and a fair tax regime. Only through comprehensive reforms can Pakistan attract sustainable investments and foster economic growth in the long run.