ISLAMABAD: In a bid to address the pressing need for financial support, the Pakistan Democratic Movement (PDM)-led government has given the green light to a comprehensive economic policy aimed at attracting substantial foreign investments, according to sources familiar with the matter. The federal cabinet recently approved the Pakistan Investment Policy 2023 through a summary circulation, with the goal of securing $20-25 billion in foreign inflows.
Sources revealed that the policy was formulated following consultations with prominent institutions such as the World Bank, International Finance Corporation, and various provincial and federal entities. Notable provisions within the policy include the elimination of the minimum equity rate for foreign investment. Furthermore, foreign investors will now be permitted to invest in all sectors, except for six that were not specifically disclosed.
As per the new policy, foreign investors will have the freedom to repatriate their entire profits back to their home countries in their respective currencies. “Foreign investors will receive special protection,” added the sources, emphasizing the government’s commitment to fostering a favourable investment climate.
This significant development comes in the wake of recent remarks made by Minister of State for Petroleum, Dr. Musadik Malik, highlighting the keen interest shown by Saudi Arabia and the United Arab Emirates (UAE) in Pakistan’s information technology, agriculture, and mining sectors. Dr. Malik revealed that Saudi Arabia has earmarked $24 billion for investment purposes, while the UAE has allocated $22 billion to explore opportunities in three key sectors of Pakistan, as confirmed in an interview with a private television channel.
Pakistan, grappling with a severe economic crisis, has been actively seeking measures to bolster its reserves. Although the government recently reached an agreement with the International Monetary Fund (IMF), global rating agencies caution that the IMF’s $3 billion stand-by arrangement (SBA) will only provide temporary relief for Pakistan’s strained public finances. The nation still faces significant hurdles in achieving sustainable economic stability and growth.
The Pakistani economy has been adversely impacted by the COVID-19 pandemic, widespread floods, soaring inflation, and social unrest. With foreign exchange reserves dwindling at $4.46 billion, the country faces substantial external debt repayments in the coming years, with approximately $25 billion due in fiscal year 2024.
The approval of the Pakistan Investment Policy 2023 underscores the government’s commitment to revitalizing the economy by attracting substantial foreign investment. The policy’s provisions, such as the removal of minimum equity requirements and enhanced repatriation privileges, are aimed at creating a more conducive environment for foreign investors. The government’s engagement with international financial institutions and the growing interest from Saudi Arabia and the UAE are positive signs that can potentially inject much-needed capital into various sectors of the economy.
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While the approved policy is a step in the right direction, sustained efforts and effective implementation will be crucial in realizing the desired inflow of foreign investments. It is imperative for the government to address any remaining hurdles and create an ecosystem that encourages long-term investments while safeguarding the interests of foreign investors. The successful implementation of the investment policy can pave the way for economic stability, growth, and a brighter future for Pakistan.
As the country proceeds on its path to economic recovery, it is hoped that these measures will alleviate financial strain and set the stage for sustainable development, job creation, and improved living standards for the people of Pakistan.
