Thursday, August 15, 2013
LAHORE: With a growth rate of less than four percent of GDP, the unemployment rate crossing 6.6 percent, the current account deficit above seven percent of GDP, inflation ranging close to 10 percent and the rupee rapidly losing its value, Pakistan has lost attraction for foreign investors.
“Private sector companies operate on firm faith of robust growth and success because of the strategies they develop and adjust according to changing circumstances,” said market analyst Dr Shahid Zia. He wondered if our governments did the same. He said maintaining low growth, or no growth, needs no efforts, but to maintain high growth rates the economic managers have to be on the toes all the time.
He said we have exhausted the option to attract foreign direct investment through tax incentives as our planners over did by offering protection to the products made by foreign investors from imports without binding them to export some of their production. Moreover, he added, guaranteed profits were offered to power producers for setting up power plants. He said car manufacturers and polyester yarn producers are enjoying protection for over three decades. He said the icing on the cake was the sovereign default that was slapped on many investors in recent years.
Economist Asif Ali Shahid said the government alone cannot be blamed for the absence of foreign investment in the country. He said the textile sector in Pakistan is also averse to sharing the booty with foreign investors. He said India, Bangladesh, Vietnam and even Cambodia have attracted lot of investment in textiles that resulted in their outpacing Pakistan in textile exports. He said a few joint ventures in textiles that some big textile houses entered into have gone sour.
He said Pakistan is the most suitable place for investment in basic textiles. He said the Chinese in the past tried to enter into joint ventures with some Pakistani players. Its failure led them to divert their investment to Bangladesh and Vietnam. However, he added, they still yearn to have a footing in Pakistan.
He said now the Chinese have approached the new government to establish mega textile estates in special export zones. This time around they have not sought joint ventures with Pakistanis, he added.
Economist Faisal Qamar said that Pakistan needs about two million jobs a year to absorb new job-seekers that are joining labour force annually. He said jobs are the need of the hour, particularly for the youth. He warned that our demographic dividend touted by the government planners will turn into a nightmare if we don’t create meaningful jobs. This, he added, is more critical for rural youths who are moving away from agriculture. He said Pakistan needs FDI to finance its infrastructure, heath care and consumer goods. “Our investment policy, however good it may be on paper, has failed to attract meaningful investment in job creating industries, he said advising the planners to revisit the policy and remove snags.
He said Pakistan needs unrestrictive reforms. He said only restriction in this regard should be that the government would provide level playing field and no guaranteed profits. He said Pakistan has to step up regional cooperation for more bilateral pacts.
He said instead of wasting our energies on unresponsive India we should look at other regional countries like Bangladesh, Sri Lanka, Afghanistan and China.
He said besides governance at state level we should improve corporate governance in the private sector. He said concentration of ownership in corporate sector in a single family remain mired in high debt, poor ethics and governance, and low market capitalisation. He said Pakistan needs to improve its ranking in ease of doing business.
Qamar said FDI must work for both the investor and the country. We should restore the confidence of the investors and build back the trust by opening fresh dialogues with investors to arrive at a win-win situation, he concluded. Courtesy The NEWS
Published in ZaraiMedia.com