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| Tuesday, 23 March 2004 |
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Pakistan seeks increased investments in its development strategy By Alauddin Masood Investment is a critical element in the socio-economic development of a country. Every government seeks an increased inflow of investments as a main plank of its development strategy. Pakistan is no exception. Normally, national savings are the main source of investment in a country. However, at 15 per cent Gross Domestic Product (GDP), national savings remain at a low level in Pakistan. The other source of investment is the flow of foreign resources in aid, loans and direct investment. At a time when foreign assistance is dwindling and private commercial borrowings are becoming costly and uneconomical, foreign direct investment (FDI) turns out to be a preferred alternative choice for investment, especially when also including multiple benefits of technology transfer, skills development, and aggressive marketing techniques. Pakistan has been trying to woo foreign investments offering various incentives. In the 1990s, the government further liberalised policy and opened the sectors of telecommunications, energy and insurance to FDI. But, due to rapid political changes and inconsistency in policies the level of FDI remained low. Credit should be given to the present government for taking steps which resulted in increasing the inflow of FDI in Pakistan by 71 per cent in 2003 than the preceding year. In 2002, the total stock of FDI, in Pakistan, was $ 6.4 billion, which exceeded by $ 820 million during 2003. Of late, the prospects for FDI in Pakistan have further strengthened. The indicators are: * Improvement in economic growth to 5.3 %, which is expected to rise to 6 % this year against a level of 5.1 % in 2002, * Macro-economic stability, as reflected in low level of budget deficit, decrease in external debts from some $ 38.5 billion to $ 32.5 billion, increase in remittances by the expatriate Pakistanis as well as foreign exchange reserves from a negligible figure of a few hundred million dollar in 1999 to over 12 billion dollars, and a stable currency, * Continuation of economic reforms, reduction in the cost of doing business in the country and upgradation of Pakistan's credit rating. * Political stability, restoration of democracy and relatively a better law and order situation, * A market of over 145 million people and also a fast emerging hub for regional economic activity, in particular for export of manufactures to the Middle East, Central Asia and South Asia. * Expected rebound in the global economy this year after a sharp decline in the beginning of the century. Encouraged with the success of their economic reforms, Pakistani leaders are now focusing on attracting new foreign investments to the country. President Pervez Musharraf's address, on January 22, asked participants of the Economic Forum, to benefit from Pakistan's investment-friendly climate, robust economic growth, aggressive privatisation policy, improved governance and strong commitment to stamp out extremism from the society. Recently, the Commonwealth Development Corporation expressed its interest in the exploration of investment opportunities in power, oil, gas, telecommunications and privatisation. In a meeting, last December, with Finance Minister Shaukat Aziz, the Corporation's Chairman Earl Cairns said that they would also explore investment. |
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