The All Pakistan Business Forum has raised its serious concern over the falling trend of foreign direct investment into the country, which has plunged by over 33 percent during the first 10 months of the current fiscal year despite some positive developments on the economic front, placing a big question mark over the investment climate in the country.
APBF President Syed Maaz Mahmood, in a statement issued here on Sunday, said that despite significant improvements in the energy infrastructure and security condition, the government has failed to attract investment in the country. He said the drastic steps and political will can speed up the economic growth, which should be grown significantly and constantly for visible impact.
APBF Chairman Ibrahim Qureshi expressed the hope that FDI would grow over the next one year in the wake of stability in the rupee-dollar parity and improvement in balance of payments position in this fiscal year, as Special Economic Zones, which were under the development phase, would also attract investment among export sectors in the country.
During 2014-2018, foreign investors mostly poured money into the sectors which did not pose a risk to their profit margins due to rupee depreciation such as the power sector. It is appreciable that Pakistan’s economy is now gradually gaining growth momentum, which should encourage foreign investors to invest in new projects, he added.
Syed Maaz Mahmood observed that it is good that the government is anticipating the GDP growth of 4% for the current fiscal year compared to projection of 3%, which is also possible, considering the low base effect of last year, achievement of comparatively higher growth in manufacturing and export sectors, bumper wheat crop in agriculture sector and current account balance in surplus, he said.
He urged the government to take practical and concrete steps for the implementation of business-friendly policies, saying the rising prices of electricity, gas and petroleum products were halting the wheel of economy. APBF President added there was a need to freeze the prices of all inputs for at least two years so that the economy could get required start. He also suggested that the sales tax slab should be curtailed in order to cut cost of production.
Quoting the latest data released by the State Bank, he said that FDI has declined by $748 million to stand at $1.55 billion during July-April FY21 compared to the corresponding period of the last fiscal year. During the period under review, FDI inflows were amounted to $2.505 billion as against $952 million outflow.
Although, net Chinese’ foreign direct investment in Pakistan is on decline, however, still China ranked one in the list of investing countries. The country-wise details showed that net inflow of FDI from China was $708 million during the first ten months of this fiscal year as against $865 million in the same period of last fiscal year. He advocated the need for raising the country’s tax base so that tax-to-GDP ratio improves from current poor level. He urged the trade officers to explore opportunities to diversify exports of goods and services in their respective areas, asking them to meet the challenges faced by Pakistan in European markets. He also suggested the ministry to devise strategies for promotion of Pakistani products, calling upon trade officers to take advantage of opportunities offered by China-Pakistan Economic Corridor (CPEC).