A distinguishing feature of the era of globalization is cross-border flows of foreign direct investment (FDI) and the creation of production networks by multinational companies. During the last decades, investment liberalization has been the strongest driver of growth, giving a significant boost to economies in developed and developing countries. The global integration of economies and related gains is compelling. Around the world, countries are adopting liberalized policies to attract FDI.
The revision of the Investment Policy has been done keeping in view the global investment trends, regional trends and experiences, Pakistan investment data/ flows over time, and present-day economic challenges.
Goal Of Investment Policy 2013-17
The goal of Investment Policy 2013 is to address and adjust economic priorities in the face of the changing global scenario of economic slowdown coupled with domestic difficulties of power outages and continued pressure on the economy due to the war on terror. It is an endeavor to address the changed economic realities and to achieve the targets given in the National Policy Document, Vision 2030. The Policy will be instrumental in achieving a progressive increase in net FDI inflows of US $ 2 billion in the first year then growing by about 25% in subsequent years taking it to US $ 2.5 billion in 2014, $ 2.75 in 2015, $ 3.25 in 2016 and $ 4 billion in 2017 and thereafter at least $5.5 billion per year.
Assuming an average annual GDP growth of 5%, the FDI stock would account for 20% of GDP, which is close to the current global average.
The Policy has been designed to provide a comprehensive framework for creating a conducive business environment for the attraction of FDI. For the implementation of the policy, FDI Strategy for Pakistan, 2013-2017, outlining a detailed plan for structuring the platforms has been dovetailed with it. The Policy 2013 is supported by the FDI Strategy for 5 years (2013- 2017), outlining enhanced facilitation procedures and the role of BOI as a one-window-operation.
Guiding The Following basic principles provide the theme of the Policy a) Reducing the cost of doing business in Pakistan, b) Reducing the processes of doing business, c) Ease of doing business with the creation of industrial clusters and Special Economic Zones, d) Linkages of trade, industrial and monetary policies for greater convergence.
(a) Reducing the cost of doing business in Pakistan
To facilitate market entry of Small and Medium Sized Enterprises (SMEs) steps have been taken to reduce the cost of doing business (money and time) SBP and SECP have removed equity caps on Banking and non-banking financial services. BOI has undertaken an incremental process aiming at reducing the cost of doing business. Investment opportunities and information vital to starting a business in Pakistan and online visa registration have been introduced.
(b) Reducing the processes of doing business (one-window-operations)
BOI is moving towards one-window operations. The aim is to offer constructive policy parameters for removing unnecessary regulations (deregulation) and minimizing the cost to business by necessary regulations (streamlining). The creation of Special Economic Zones (SEZs) is a step towards this direction
(c) Ease of doing business with the creation of industrial clusters and Special Economic Zones (SEZs)
World over, SEZ has contributed to national economies. The phenomenal economic development in the neighboring countries is motivating. Introduction of industrial clusterization with the promulgation of SEZ Act 2012, BOI has endeavored to establish forward and backward linkages in the market with supply chain availability. Adequate business infrastructure coupled with BOI’s one-window facilitation services will make doing business easy and more profitable.
(d) Linkages of trade, industrial, and monetary policies greater convergence
Linkages of macro and micro economic policies will bring all stakeholders: Line Ministries, Provincial Governments, Regulators, and other relevant Departments in unison for greater convergence on important national public policy agenda. This will enhance transparency, predictability, and consistency in the system.