The Institute for Policy Studies (IPS) hosted a round table titled, “Pakistan’s Investment Climate: The Way Forward”.
Muhammad Azfar Ahsan, Founder and CEO of Nutshell Group and former Minister of State and Chairman of the Board of Investment (BoI) was the keynote speaker. The Roundtable was a hybrid session, chaired by Khalid Rahman, President of IPS. Ambassador (R) Syed Abrar Hussain, IPS Vice President, welcomed the guests.
The objective of the session was to explore the current challenges faced by local and foreign investors and the desired economic strategies to overcome the prevailing crises.
Azfar Ahsan began his speech with three main issues: lack of vision, lack of political will and the need for cooperation. “While I have zero tolerance for corruption, I believe a major reason for the economic crises we face is incompetence.” He also added that under the current circumstances, doing business in Pakistan is nothing less than jihad.
Referring to investment issues, Azfar Ahsan said that investors need management and assurances as their profits go back to infrastructure development in Pakistan. and a success story creates opportunities for others to follow. Likewise, Public Sector Enterprises (PSEs) must be privatized. PSEs have become a major drain on national resources and the performance of the Privatization Commission is dismal due to lack of purposefulness and identification of issues.
Expanding on Foreign Direct Investment (FDI), Azfar Ahsan said the FDI portfolio is less than US$3 billion, which is not sustainable for a country of over 230 million people. “Our investment climate is challenging due to the lack of consistency and facilitation,” he stressed. Commenting on the turnover and lack of continuity, he said he was the fourth Chairman of the BoI and saw the appointment of the sixth Chairman of the FBR and the fifth Finance Secretary during his tenure.
Speaking about FDI, Azfar Ahsan said,
Investors need management and reassurances as their profits go back into infrastructure development in Pakistan and a success story creates opportunities for others to follow.
He insisted that Pakistan should focus on six to eight countries as best case studies, to attract investment. He also pointed out that the investment strategies of Uzbekistan and Kazakhstan are an excellent model for Pakistan to follow. These economies have shown remarkable growth in a short period of time.
We need to create a similar ecosystem in Pakistan with a simultaneous focus on G2G, G2B and B2B.
While reflecting on the China Pakistan Economic Corridor (CPEC) project, Azfar Ahsan highlighted CPEC as an excellent example of FDI and formally noted that not much is being done to make productive use of the opportunity. He said the Chinese government has already established Special Economic Zones (SEZs) in 22 countries. The BoI had recommended that this should be high on the agenda in our meeting with China’s President Xi.
The government of Saudi Arabia has funding available for eight priority sectors. Their greatest desire is to engage Pakistan as a food security partner. they want to establish an Agricultural Zone in Pakistan, apart from an oil refinery in Balochistan. Unfortunately, the delay was on our end as we were unable to deliver finished projects. Meanwhile, KSA is aggressively investing in other countries. Azfar Ahsan added that during his meeting with the Minister of Investment of KSA, they planned an investment strategy for both countries, based on an opportunity of several billion dollars per year. Since then there has been no progress and the state is only focusing on receiving bailouts.
Azfar Ahsan believes that it is wrong to blame any civilian government, bureaucracy or military for reasons of lack of investment. This is shared responsibility and shared failure. “At the moment, there is a compulsion to sign an agreement with the IMF, but $1.1 billion is insignificant if we compare it to the investment possibilities that we have to create ourselves. We can bring in $6 billion to $8 billion in FDI in three to five years and about $15 billion in eight to ten years, given a stable policy framework that transcends any policy change.”
Another major concern for investors is the functioning and policies of the FBR, he said. They feel burdened beyond their means. It has reached the level of exploitation and needs immediate solutions. However, to deal with issues of this complexity, at the national level with an international context we need strong leadership and that is only the office of the Prime Minister. The prime minister of the state is responsible for resolving bureaucratic obstacles. in the past, none of the premieres could do that.
Attendees praised the roundtable format for allowing them to have an equal voice in the discussion. They contributed through insightful questions and statements and shared an appreciation for an honest approach to understanding obstacles and finding solutions, which of course starts with a clear vision and meritocracy above all else.
Syed Tahir Hijazi, Ex-Member (Governance), Planning Commission; Safdar Sohail, Dean, National Institute of Public Policy. Zafar-ul-Hasan Almas, Joint Chief Economist, Planning Commission; and Dr. Shahzad Iqbal Sham, IPS Senior Research Fellow. Economists, government officials, analysts, researchers and media attended.