• Fresh strategy eliminates minimum equity requirement
• Restrictions on foreign real estate developers lifted
• Plan aims to attract $20-25bn over next few years
ISLAMABAD: In a move to boost foreign and domestic investments, the government has approved a new investment policy for 2023 to attract investors by adopting best practices and providing an optimal investment climate.
The policy was created in accordance with Prime Minister Shehbaz Sharif’s formation of the Special Investment Facilitation Council, an apex body that includes the army chief and provincial chief ministers. The council’s goal is to facilitate foreign investment and remove obstacles that hinder investment inflows.
The Pakistan Investment Policy (PIP) 2023 has been given the go-ahead by the federal cabinet through the circulation of a summary. It is anticipated that the new policy will attract $20-25 billion in investment over the next few years. The policy is developed in consultation with the World Bank, International Finance Corporation, and provincial and federal institutions.
According to a copy of the policy seen by Dawn, it is based on four main pillars: reducing the cost of doing business, streamlining business processes, facilitating ease of doing business through the creation of industrial clusters and special economic zones, and promoting greater convergence between trade, industrial, and monetary policies.
The new policy eliminates the minimum equity requirement for foreign investment and permits foreign investors to invest in all sectors except for casinos, consumable alcohol manufacturing, arms and ammunition, atomic energy, high explosives, currency, and mining. Additionally, foreign investors will be able to remit their entire profit abroad in their own currency and will receive special protection.
Under the new policy, foreign investors will be able to lease land without restriction and transfer any land they hold without limitation. Restrictions on foreign real estate developers have been lifted, and there will be no distinction between foreign and domestic developers. Foreign investors will also be permitted to hold a 60pc stake in agricultural projects and 100pc equity in corporate agriculture farming.
The policy revolves around simplification of regulations, guidelines for setting up investment grievances mechanism for redressal of investment disputes, mechanism for awarding of incentives on the basis of performance and location, investors protection for the transfer of funds, expropriation, fair and equitable treatment and freedom for establishing a business in the country.
This development follows recent statements by Minister of State for Petroleum Musadik Malik, who said that Saudi Arabia and the UAE expressed strong interest in Pakistan’s information technology and agriculture.
According to the state minister, in an interview with a private television channel, Saudi has earmarked $24bn for investment purposes, while the UAE has allocated $22bn to explore opportunities in these sectors.
According to the World Bank, Pakistan’s GDP-to-investment ratio is projected to decrease from 15pc in 2020 to 13.3pc in 2024. The PIP 2023 aims to reverse this trend by progressively increasing the net foreign direct investment (FDI) ratio from an average of 15pc to 20pc.
According to the economic complexity index, Pakistan’s economy is becoming less complex. In 2020, Pakistan ranked 93rd out of 146 economies, an improvement from its 100th-place ranking in 2019 but a decline from its 89th-place ranking 20 years earlier. Increased FDI is expected to improve Pakistan’s economic complexity by diversifying its products and services for export and helping the country earn higher export revenues through value-added activities.
Pakistan’s economy has been hit hard by the coronavirus pandemic, floods, high inflation, and political unrest. Its foreign exchange reserves currently stand at $4.46 billion, while its external debt repayments will remain high over the next few years, with approximately $25 billion due in FY 2024.
It recently signed a staff-level agreement with the IMF for a $3 billion standby arrangement (SBA). The IMF’s executive board is set to review the arrangement on July 12, which could open up opportunities for Pakistan to bolster its reserves.
Published in Dawn, July 9th, 2023
Tense diplomatic relations may not impact trade, investment ties between India, Canada: Experts
NEW DELHI: The tense diplomatic relations between India and Canada are unlikely to impact trade and investments between the two countries as economic ties are driven by commercial considerations, according to experts. Both India and Canada trade in complementary products and do not compete on similar products.
“Hence, the trade relationship will continue to grow and not be affected by day-to-day events,” Global Trade Research Initiative (GTRI) Co-Founder Ajay Srivastava said.
Certain political developments have led to a pause in negotiations for a free trade agreement between the two countries.
On September 10, Prime Minister Narendra Modi conveyed to his Canadian counterpart Justin Trudeau India’s strong concerns about the continuing anti-India activities of extremist elements in Canada that were promoting secessionism, inciting violence against its diplomats and threatening the Indian community there.
India on Tuesday announced the expulsion of a Canadian diplomat hours after Canada asked an Indian official to leave that country, citing a “potential” Indian link to the killing of a Khalistani separatist leader in June.
Srivastava said these recent events are unlikely to affect the deep-rooted people-to-people connections, trade, and economic ties between the two nations.
Bilateral trade between India and Canada has grown significantly in recent years, reaching USD 8.16 billion in 2022-23.
India’s exports (USD 4.1 billion) to Canada include pharmaceuticals, gems and jewellery, textiles, and machinery, while Canada’s exports to India (USD 4.06 billion) include pulses, timber, pulp and paper, and mining products.
On investments, he said that Canadian pension funds will continue investing in India on grounds of India’s large market and good return on money invested.
Canadian pension funds, by the end of 2022, had invested over USD 45 billion in India, making it the fourth-largest recipient of Canadian FDI in the world.
The top sectors for Canadian pension fund investment in India include infrastructure, renewable energy, technology, and financial services.
Mumbai-based exporter and Chairman of Technocraft Industries Sharad Kumar Saraf said the present frosty relations between India and Canada are certainly a cause for concern.
“However, the bilateral trade is entirely driven by commercial considerations. Political turmoil is of a temporary nature and should not be a reason to affect trade relations,” Saraf said.
He added that even with China, India has acrimonious relations but bilateral trade continues to remain healthy.
“In fact, bilateral trade is an effective tool to improve political relations. India must make special efforts to increase our bilateral trade with Canada,” Saraf said.
India and Canada have a strong education partnership. There are over 200 educational partnerships between Indian and Canadian institutions.
In addition, over 3,19,000 Indian students are enrolled in Canadian institutions, making them the largest international student cohort in Canada, according to GTRI.
According to the Canadian Bureau for International Education (CBIE), Indian students contributed USD 4.9 billion to the Canadian economy in 2021.
Indian students are the largest international student group in Canada, accounting for 20 per cent of all international students in 2021.
Benefits of educational partnerships are mutual and hence the current situation may have no impact on the relationship, Srivastava said.
Apple supplier Foxconn aims to double India jobs and investment
Apple supplier Foxconn aims to double its workforce and investment in India by next year, a company executive said on Sunday.
Taiwan-based Foxconn, the world’s largest contract manufacturer of electronics, has rapidly expanded its presence in India by investing in manufacturing facilities in the south of the country as the company seeks to move away from China.
V Lee, Foxconn’s representative in India, in a LinkedIn post to mark Indian Prime Minister Narendra Modi’s 73rd birthday, said the company was “aiming for another doubling of employment, FDI (foreign direct investment), and business size in India” by this time next year.
He did not give more details.
Foxconn already has an iPhone factory employing 40,000 people in the state of Tamil Nadu.
In August, the state of Karnataka said the firm will invest US$600 million for two projects to make casing components for iPhones and chip-making equipment.
The company’s Chairman Liu Young-way said in an earnings briefing last month that he sees a lot of potential in India, adding: “several billion dollars in investment is only a beginning”.
Taiwan election: Foxconn’s Terry Gou taps star-powered running mate
Last month, Foxconn’s billionaire founder Terry Gou said he would run for the Taiwanese presidency in next year’s election, as an independent candidate.
He said the ruling and independence-leaning Democratic Progressive Party (DPP) was unable to offer a bright future for the island and left Foxconn’s board following his decision to run.
The firm operates the world’s largest iPhone plant, in the city of Zhengzhou in Henan province.
Foxconn to double workforce, investment in India by ‘this time next year’
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