Staff Reporter Islamabad
The Friends of Economic and Business Reforms (FEBR) has shown its serious concern over the falling trend of foreign direct investment into the country, putting a big question mark over the investment situation in Pakistan.
FEBR President Kashif Anwar, in a statement issued here on Sunday, 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.
He added there was a need to freeze the prices of all inputs for at least three 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.
He 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 can speed up the economic growth, which should be grown significantly and constantly for visible impact.
He expressed the hope that FDI would grow over the next one year in the wake of some 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.
Kashif Anwar 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.
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.
It is fact that the entire world has been witnessing falling inflows of FDI due to the Covid-19 pandemic.
The pandemic has eroded the trust of investors in investment, which has an adverse impact on every step of FDI, including input supplies, increasing uncertainties and liquidity constraints for the multinational firms, he said and added there are also other external factors out of the government’s control.
He advocated the need for raising the country’s tax base so that tax-to-GDP ratio could improve 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.