FITCH Ratings, one of the top three credit rating agencies, has hailed steps taken by Pakistan in improving environment for business. In its latest report, the US rating agency stated that Pakistan is one of the ten economies where business climate has improved most over past year.
Fitch report comes after Pakistan jumped 28 places on the World Bank’s Ease of Doing Business 2020 securing a place in the list of top 10 countries with most improvements in area of doing business. These back to back encouraging reports of international institutions speak volumes of government’s right direction, which must be appreciated yet at the same time it is to be seen as how government moves forward and projects Pakistan as a lucrative market in outside world to genuinely bolster Foreign Direct Investment (FDI). The country for long has struggled to achieve higher volumes of foreign investment to expand and modernise its stagnant economic base. Pakistan’s investment level is almost half the volume of investment attracted by growing economies like Vietnam, India, Bangladesh and Sri-Lanka and according to economic experts the country needs to double its investment to GDP ratio to accommodate two million young Pakistanis entering the labour market every year.
Indeed it goes to the credit of present government of doing away with many cumbersome and unnecessary procedures that were hitherto keeping investors away from Pakistan as well as introducing online portals to facilitate businesses. Nonetheless, all this is not sufficient and there is need to take more structural steps including supporting regulatory and physical infrastructure, lowering cost of doing business, fast tracking of business transactions and formulation of an industrial policy & incentives in order to achieve desired investment flows on the back of improved ranking. Fitch in its report has also pointed out that some of the government’s reforms including the push towards documentation of economy, raising tax revenue targets have been unpopular and faced resistance from local sectors. In this context, it is advisable for the government to move towards addressing genuine concerns of private sector and give confidence to domestic businesses to enter into new ventures. Domestic investment will also help bolster the confidence of foreign investors to come to Pakistan and explore different lucrative sectors for investments.
The first year in government has undoubtedly remained difficult for PTI but it can now really turn the tide on economic front and put the country on positive growth trajectory if it manages to bring good volumes of FDI. This will also help government fulfil promises made with the masses during electioneering.
