Local investors prime area of focus: Chairman BOI

By: 24 News
Published: 09:50 PM, 20 Dec, 2021
Local investors prime area of focus: Chairman BOI
Caption: Local investors prime area of focus: Chairman BOI
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Chairman Board of Investment & Minister of State Muhammad Azfar Ahsan has said that the local investors are the prime area of focus who have already invested in the country. Foreign investment cannot be attracted until local investors are not happy.

He was speaking at a meeting at the Lahore Chamber of Commerce & Industry. LCCI President Mian Nauman Kabir, Senior Vice President Mian Rehman Aziz Chan, and Vice President Haris Ateeq also spoke on the occasion while former Presidents Farooq Iftikhar, Sohail Lashari, Executive Committee Members Mardan Ali Zaidi, Ahmad Elahi, and Shamim Akhtar were also present.

He said that local investors are assets of Pakistan. He agreed that problems in starting or registration of a new business should be tackled. He said that major infrastructural changes in BOI are well on the way in order to provide high-quality services to the investors.

He said that the Board of Investment is short of human resources. Therefore, the capacity of BOI is being increased. He said that BOI is working on automation and one-window operation. In this regard, a desk of LCCI will be set up at the BOI office so that the problems of LCCI members can be resolved immediately.

The BOI Chairman said that only a businessman can provide accurate information about the business so the feedback of the business community will be given priority in all matters.

LCCI President Mian Nauman Kabir said that the business community is concerned over the constant dip in foreign direct investment in the country. According to the State Bank Statistics, the net foreign direct investment in the financial year 2019-20 stood at around 2.60 billion dollars which came down to 1.86 billion dollars in 2020-21.

He said that during the first five months of the ongoing financial year (Jul to Nov 2021), the net FDI has just been 710 million dollars. Going at this rate, it would be even difficult to maintain the level of FDI achieved during the previous year.

The LCCI President said that according to the data, our recent FDI inflows are concentrated in the sectors like Power, Communication, Oil & Gas, and Financial Services. There is a great potential to attract FDI inflows in the sectors like construction, housing, tourism, food processing, logistics, value-added textiles, automobiles and renewable energy etc.

He said that in the first five months of the ongoing financial year, only three countries - China, Netherlands and USA - contributed more than 60% to the FDI inflows. It reflects a lack of diversification in the sources of investment in terms of markets.

Mian Nauman Kabir said that in addition to the FDI inflows, we also need to talk about local investment. The Total Investment as a percentage of GDP has been stagnant at around 15% for the last three years which indicates the lack of trust of our local investors in the economic system.

“One can lay the blame on issues like law and order, macro-economic instability (due to rupee devaluation, inflation and policy rate hike), political volatility and energy shortages for declining trend in the FDI inflows. We all know that these reasons will not be addressed or rooted out overnight. We have to find way out despite all these odds”, he added.  

The LCCI President also emphasized the need to manage the issues like inconsistency in our economic policies, particularly related to taxation and the lack of effective integration with the regional and global economy. As a result, FDI inflows to Pakistan decrease over the past two decades against the global trend of investors focusing and rushing to developing countries like Bangladesh and Vietnam, etc.

He said that this scenario requires a complete review of our current investment policy regime. There is a need of a pragmatic and multi-dimensional investment strategy that should not only incentivize the local as well as foreign investors but also attract new investments across the diverse sectors of the economy. By focusing on Ease of Doing Business, there is a need to review old regulations with a Regulatory Guillotine and replace them with Smart/Prudent Regulations for facilitating Investors.

Mian Nauman Kabir said that although Pakistan has improved its Ease of Doing Business Ranking to 108th position, a lot needs to be done to deal with the persistent business climate challenges to investors in various factors of Ease of Doing Business e.g. registering a company, paying taxes, getting electricity connections, getting construction permits, resolving insolvency, enforcement of contracts, registering property, trading across borders and getting credit etc.

He further stated that there is need for harmonization of Taxes at the Federal and Provincial level (particularly in Sales Taxes and Labour Taxes) through better digitization and furthermore, we need to drastically reduce the number of taxes and the frequency of tax payments.

He said that there should be an integrated Online Portal for getting all the Federal and Provincial tax registrations e.g. Sales Tax, Customs (WeBOC), Income Tax, EOBI, Social Security, and other taxes. Rather than registering for each of these Taxes separately, the businesses should enter one-time information and get these registrations simultaneously as required.

The LCCI President said that for facilitating trade, there is a need for a reduction in cost and time taken for documentary/border compliance through combining documents. According to the World Bank Doing Business Report, only 5 documents are required in Singapore for import/export as compared to Pakistan where 13 documents are required for exports & 11 documents are required for imports.

LCCI Senior Vice President Mian Rehman Aziz Chan said that there is also a need to give an adequate focus on the Cost of Doing Business and make sure we remain competitive with other economies in the region in terms of electricity tariff, gas tariff, land cost, fuel rates and transportation cost.

While highlighting one very important issue, LCCI Vice President Haris Ateeq said that there is lack of investment in Special Economic Zones. There is a need to evaluate the performance of SEZs Act 2012. The SEZ Act looks at only the design and allotment aspects and ignores the financial and management side. In China, the Special Economic Zones have ensured the viability of human resource through the provision of facilities like education, health and vocational training. These gaps in the SEZ Act need to be addressed.

LCCI office-bearers said that the Board of Investment should lead the effort of creating more and more feel-good factors to foster a conducive environment for investments.