Pay attention to foreign investment... By Fazal
22 October, 2012
Pakistan's problems are innumerable. State institutions are decaying rapidly, businesses are either shrinking or winding up, the economy is declining sharply, foreign investment has taken a nosedive, the energy crisis is deteriorating with every passing day, the law and order situation is worsening, clashes between state organs are acquiring horrific dimensions and terrorism and extremism are taking a heavy toll on innocent souls. It is a doomsday scenario. This scenario has had a serious impact on the inflow of foreign direct investment (FDI) in Pakistan. According to the Asian Development Bank (ADB)-EDRC report, Pakistan needs to significantly increase its mobilisation of foreign resources. However, long-term official assistance will become increasingly scarce. Significant increases in commercial borrowing are also not desirable. It is, therefore, crucial to accord a high priority to FDI as the report emphasises. The ADB-EDRC report maintains that the major impediments to FDI in Pakistan are urban violence, inconsistent economic policies and government bureaucracy. Remedial policy actions are essential. Another major problem is the concentration of FDI on the power sector, a domestic-oriented sector, which results in large foreign exchange costs and remittances. This has serious balance of payments implications. All said and done, what remains to be seen is whether the incumbent government and the government-in-waiting will wake up to the alarming situation in the area of FDI in Pakistan? Will they take serious and tangible measures to improve the political, economic and law and order situations in the country to ensure the creation of an atmosphere that is conducive for attracting foreign investment? M FAZAL ELAHI
Islamabad
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