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Investment Promotion Conference

With support from an affiliate of the World Bank, Multi-lateral Investment Guarantee Agency (MIGA), the Federal Government organised a well-attended Investment Promotion Conference in Islamabad during the past week. It was incumbent upon the present regime to have an “open house” to display the willingness (and the readiness) of the present political government to change the lip-service of “encouraging” investment of yesteryears into reality. Before attempting to induce inviting foreign entrepreneurs to invest their money and time in Pakistan, the present Government had very correctly loosened the stranglehold that bureaucracy has over the body economic in Pakistan. During the past year far-reaching structural changes have been put into place and to that end a conducive economic environment is gradually taking shape. One must commend MIGA for investing time and effort in helping the Ministerial agencies concerned with making the Conference a relative success.

A figure of US $ 1 billion in investment has been quoted as the result of the Conference, while this may be misleading on many counts, any investment gained is worth the effort. The changes that have been made in the economy will take some time before taking effect, yet the psychological evaluation by private entrepreneurs of a free economy is extremely necessary to encouraging investment and to that end the perception has been created that the Pakistan Government is serious in its efforts to give the intending entrepreneurs every advantage that they need as incentive. Instead of trying to reach some target plucked out of thin air, it was more necessary for the Sponsors of the Conference to instill confidence among the intending entrepreneurs to put their money where their mouth is. Whether we managed only US $ 1 million in outside investment or US $ 1 billion, it is not of the same significance as that of creating a climate of “open doors” in Third World Countries. A strong, all-pervasive feeling must be induced in the economic climate that investment would be secure under international guarantees and that there would be free repatriation of capital and profits as in other areas which are competing with us in attracting foreign investment. In any case, most of the investment in Pakistan will be made by expatriate Pakistanis who would be more than willing to invest in the home country if the necessary security for their investment is assured and guarantees given that their efforts would not be frustrated at the altars of bureaucracy.

The first conference should be studied as a model of how to better organise such meetings more meaningfully in the future. While the logistical arrangements were more than satisfactory in the limited availability of time and space, those services by themselves can become a focus of private foreign investment. One of the first items to be noted on the agenda of an intending entrepreneur would be the availability of boarding, lodging, transportation and communications. Once these basic ingredients for a sound economic base are found satisfactory, the intending investors will look at the security environment, availability of skilled and semi-skilled labour as well as adequate management staff, medical, educational and recreational facilities. But before they ever reach this stage, the potential investor will look at the enthusiasm of the Government at all levels to welcome them with open arms and the willingness to remove those obstacles that frustrate businessmen when dealing with intransigence in the bureaucracy.

Some of these restrictions imposed by bureaucracy are of Catch-22 nature that were meant to be eradicated by the one-window operation of Ms Benazir’s Board of Investment (BoI). The BoI was an excellent concept but was only moderately successful because it was run by bureaucrats instead of businessmen contracted from the private sector for management slots. The BoI may have been misused somewhat in encouraging investment portfolios for favourites, better managed it could have considerably paid fair dividends. The BoI was meant to be a mechanism that could by-pass the Investment Promotion Bureau (IPB) and encourage more confidence in the potential entrepreneurs. While the BoI did not survive Ms Benazir by much, the IPB continues to be the greatest stumbling block in the way of foreign investment. It is indeed a shame that the Nawaz Sharif Government did not put the BoI to better use. Properly shaped and structured, the BoI could have become a permanent “Investment Promotion Conference” that entrepreneurs could visit 24 hours 365 days of the year. The IPB is a lasting disgrace to this country and the Federal Government must dissolve this counter-productive establishment.

Since the Federal Government is constantly harping on the need to privatise, it must begin with taking away the powers of sanctioning in any facet of industry or services sector from the Ministry of Industries and/or the IPB and giving the authority to the respective Chambers of Commerce to coordinate incoming investment objectively. Each Chamber of Commerce and Industry (CCI) must prepare comprehensive lists of investment possibilities in the area of its responsibility. These lists may contain the names of those who want to act as the local partners in any venture. CCIs are well-managed by experienced businessmen who have no time for restrictions that are imposed by bureaucracy. These CCIs should be encouraged to contact their counterparts in affluent countries directly and thus have an exchange of information flow at the grassroots level, reaching across for a cross-section of entrepreneurs who would be willing to invest and be made aware of the opportunities present in Pakistan so that they could contact each other directly. Each CCI would be required to maintain a permanent secretariat on the pattern of BoI that could act as a liaison and facilitation, a sort of “clearing house” where the entrepreneurs could focus on for information and overcoming local problems. The Provincial Governments which should be most concerned with creating more job opportunities in their Provinces, could help the CCIs by attaching bureaucrats to them on a permanent basis that could inter-act as and when necessary to overcome local government problems. The object of the whole exercise should be not only to hand over the concept of inviting investment to the private sector but also to decentralise as far down as possible so that government functionaries, whose natural predilection is against giving away any kind of permission without some consideration, are bodily removed from the path of progress.

Any effort that attracts investment into the country must be encouraged, the volume of investment does not matter. The slogan should be that “one is more than zero, two is even more, and so on.” So it does not matter whether we got a US $ 100 million or the US $ one billion claimed by our cigar-smoking Minister for Industries as long as some jobs are created as a result! We must shun making tall claims which can be seen through, the Government tends to lose its credibility. This Conference was the first of what one hopes are many more such events planned at Federal and Provincial levels in the next year. Given conducive economic environment investment will come but self-glorification exercises are bound to be counter-productive. Some officials did go overboard and thereby invited scorn in the discerning media. The tragedy is that such media cynosure, though well-directed and well-deserved, may not be conducive for improving the investment climate. Without outside participation, job creation to match the population explosion will remain a pipe dream. To that end, the organisation of the Conference by the public sector should have been played down rather than publicized and in turn the private sector, which was only evident in parts, must be encouraged to play their rightful role in promoting private foreign investment into the country.

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