Invit­ing FDI through green card scheme

Enterprise - - Contents -

Dis­cus­sions on trade and econ­omy al­ways cul­mi­nate on is­sues such as se­vere en­ergy cri­sis, poor law and or­der and ram­pant cor­rup­tion, but there are sev­eral other fac­tors which are the stum­bling blocks in the way of eco­nomic and in­dus­trial de­vel­op­ment in the coun­try. Gov­ern­ments af­ter gov­ern­ments in Pak­istan find refuge in meth­ods of gover­nance which fre­quently failed in the past. The world is run­ning at a fast speed and us­ing a don­key cart in a car race will bring noth­ing, but only shame and fail­ure. A coun­try with a pop­u­la­tion of 190 mil­lion can be turned into an at­trac­tive des­ti­na­tion for in­ter­na­tional in­vestors if pru­dent poli­cies are en­forced.

The gov­ern­ment is claim­ing that the coun­try’s econ­omy is fast ap­proach­ing a take­off po­si­tion. Since it came to power in 2012, the gov­ern­ment has been ap­par­ently fol­low­ing an ‘open arms’ pol­icy to at­tract di­rect for­eign in­vest­ment (FDI). Fi­nance Min­is­ter Ishaq Dar seems to be proac­tive and is on the fore­front to in­vite for­eign busi­ness­men to ex­ploit huge in­vest­ment op­por­tu­ni­ties in Pak­istan. How­ever, ev­ery coun­try wel­comes for­eign in­vest­ment but the in­vestors want se­cu­rity of life and safety of their cap­i­tal be­fore tak­ing any de­ci­sion. Pak­istan is at 103rd in the list of coun­tries which are ranked best in do­ing busi­ness. In this sit­u­a­tion, no one will take risk to in­vest money in this coun­try with­out guar­an­tees and le­gal as­sur­ances that the money is safe and the in­vest­ment will gen­er­ate profit.

The econ­omy of Pak­istani mostly re­lies on loans it re­ceives from donor agen­cies such as the World Bank, the In­ter­na­tional Mone­tary Fund, the Asian De­vel­op­ment Bank and sev­eral oth­ers. The coun­try has re­cently re­ceived 10th tranche of $550 mil­lion from the IMF un­der a three-year Ex­tended Fund Fa­cil­ity ar­range­ment. The loan has been ap­proved af­ter as­sur­ances from the

gov­ern­ment that it will achieve all the eco­nomic tar­gets and will be able to re­duce bud­get deficit within lim­its be­sides im­prov­ing the tax col­lec­tions. How­ever, it be­comes nui­sance for the gov­ern­ment to meet the con­di­tions at­tached with the ap­proval of loan and it has to seek waivers which are again al­lowed with con­di­tions.

Un­real rev­enue col­lec­tion tar­gets and over tax­a­tion of­ten prove to be dis­as­trous for the over­all eco­nomic en­vi­ron­ment in the coun­try. The gov­ern­ment man­agers must know that bur­den­ing the busi­ness classes with a host of taxes will have neg­a­tive im­pact on lo­cal and for­eign in­vest­ment in the coun­try. The am­bigu­ous laws cou­pled with un­bri­dled author­ity at the of­fi­cial level paves the way for co­er­cive mea­sures against the busi­ness com­mu­nity and it leads to cap­i­tal flight from the coun­try.

As a mat­ter of fact, money laun­der­ing has be­come a flour­ish­ing trade in Pak­istan and Dubai, Sri Lanka and Ghana have be­come at­trac­tive des­ti­na­tion of the coun­try’s black money. Ev­ery­thing is go­ing on un­der the nose of the cor­rupt gov­ern­ment ma­chin­ery and no one is there to stop it. In­stead of tak­ing co­er­cive mea­sures, the gov­ern­ment should im­prove its po­si­tion on ‘ease of do­ing busi­ness in­dex’ as Pak­istan is a worse coun­try to launch a busi­ness ven­ture. If the gov­ern­ment is se­ri­ous in turn­ing the coun­try into an eco­nomic fig­ure, it will have to re­vise out­dated eco­nomic and fi­nan­cial poli­cies.

The coun­try has a vi­brant mid­dle class which can work as an en­gine of growth for con­sumer goods in­dus­try and it is the best time to pro­mote cor­po­rate sec­tor by invit­ing for­eign in­vestors. The China Pak­istan Eco­nomic Cor­ri­dor is set bring over $45 bil­lion in­vest­ment in the coun­try and mega in­dus­trial projects along the cor­ri­dor route.

It is time the gov­ern­ment should ini­ti­ate its own green card scheme for for­eign in­vestors. High-tech in­dus­trial cities and es­pe­cially ex­port pro­cess­ing zones should be es­tab­lished in ev­ery province of the coun­try for the green card hold­ers and they should be treated as guests of hon­ours with guar­an­tees of their se­cu­rity and sureties of their in­vest­ments. The for­eign in­vestors must be given tax free regime and con­ces­sions in im­port and ex­port. We, as a na­tion, will have to leave legacy of colo­nial past and will have to copy an eco­nomic model whether it is Ja­pan, China, Korea or Malaysia. The first thing which the gov­ern­ment has to do is leg­is­la­tion and sec­ond, it has to in­tro­duce struc­tural re­forms in tax col­lec­tion set-up. Once rules and reg­u­la­tions are adopted, there should be no go­ing back. The prac­tice of putting busi­ness­men to a daily test should be ended once for all.

Var­i­ous gov­ern­ment agen­cies are act­ing as a stum­bling block in the way of eco­nomic de­vel­op­ment — one of which is the cus­toms de­part­ment. It is one of the big­gest dens of cor­rup­tion in this coun­try due to the fact that more tough laws will give more pow­ers to of­fi­cials to ex­ploit the law in their favour. There is a need to in­tro­duce struc­tural re­forms not only in the Fed­eral Board of Rev­enue, but also in sev­eral other de­part­ments to clip the pow­ers of black sheep in the of­fi­cial cadre. In this era of in­for­ma­tion and de­vel­op­ment, the gov­ern­ment has sev­eral eco­nomic mod­els be­fore it to em­u­late.

The am­bigu­ous laws cou­pled with un­bri­dled author­ity at the of­fi­cial level paves the way for co­er­cive mea­sures against the busi­ness com­mu­nity and it leads to cap­i­tal flight from the coun­try.

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