Fall in FDI

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AS the Government is making tall claims about economy being on the right track, the foreign direct investment (FDI) went down drastically to $113 million in the first two months (Jul-Aug) of fiscal year 2016-17 as against $241 million received during the same period of the preceding fiscal year, thus showing a decline of 53%, according to data released by the State Bank of Pakistan on Tuesday.
This should be a source of concern for economic managers of the Government as well as the full-fledged investment board, which is in place for decades but has turned somewhat dormant. The situation becomes all the more worrying if seen in the backdrop of reports that private sector credit off-take was also negative during the first two months of the new fiscal year. Instead, there are still reports of local investors fleeing abroad due to security environment, political instability, energy crisis, unreasonably high taxes especially on IT and telecom sector that attracted huge investments in the past, red-tape, harassment of investors and corruption. No doubt, the Government itself is making huge investments in different sectors of the economy and its impact is also becoming visible but concrete steps are needed to attract the private sector, being engine of growth, to play its due role in national development. Pakistan’s IT sector is still in formative stage as compared to India and there was no justification to burden it with undue taxes. Instead, the Government should offer liberal incentives and its phenomenal growth potential has the prospects of taking care of revenue side besides provision of much-needed job opportunities to qualified youth. Similarly, attractive packages should also be given for telecom, oil and gas exploration, and food and vegetable sector besides simplifying rules and procedures.