Investment opportunities galore

FOREIGN direct investment (FDI) is generally seen as bringing growth, jobs, technology, skills, market access and development.
Currently more than 90 percent of the government policies in the third world are FDI-driven; as they view it as the engine of development, and that without FDI there will be no growth.
It is widely believed that FDI brings inter alia efficient management of resources, technology, a culture of competition, and access to global markets. FDI is the best source of development finance, on the grounds, among others, that it is self-liquidating since foreign investors have to show profits for the host country as well as for themselves.
Pakistan is amongst the important emerging economies of the South Asian region, with a population of 180 million plus, presenting the ideal location for access to all the growing markets of the world, with liberal and investor friendly policies. In Pakistan, foreign and domestic investors can directly invest in every sector. There are no limitations on even bringing in or taking out capital.
The government of Pakistan desires to encourage investors in order to support investment activities in Pakistan, which is a gateway of foreign investors into Central Asia through which the volume of external trade can be expanded.
Almost 70 percent of FDIs has come into power sector, telecommunications, chemicals, pharmaceutical and fertilizer, oil and gas and banking and finance. Large size of market, more domestic investment, trade liberalization, little indirect taxes, low inflation, and low external debt are encouraging FDI inflows into Pakistan.
Significant improvements in the country’s overall macroeconomic environment backed by sound policies have helped attract relatively large inflows of FDI in Pakistan. The investment policy of Pakistan offers proactive facilitation, guarantees of equal treatment to both local and foreign investors, easy tariff structures and a liberal regime on repatriation of profits. These strategies have borne results with a record inflow of foreign investment of US $ 23 billion during the last 10 years. Pakistan in the recent past was no exception to global financial crisis coupled with domestic difficulties but the economy has shown resilience to the shocks and has maintained global and regional patterns and has performed better than some of the neighboring countries. The World Bank Report of 2013 confirms that Pakistan ranks ahead of Russia, Indonesia, Brazil, India and Philippines.
Recently, Pakistan showed an increase in the FDI by 6 percent in the first six months of the current fiscal year. Pakistan attracted a total of $ 562.8 million FDI during July-December, 2012, as against $ 531.1 million received during the corresponding period last year. An improvement in the foreign direct inflows is mainly driven by the investment in the oil and gas exploration and financial sectors by the global companies in the country.
Foreign investment in Pakistan is fully protected through Foreign Private Investment (Promotion & Protection) Act, 1976, and Protection of Economic Reforms Act, 1992. Pakistan has a very liberal policy on repatriation for foreign direct investors. Therefore, investing in Pakistan may give foreign direct investors the following added advantages:
• Remittance of royalty, technology and franchise fee is allowed in projects in social service, infrastructure, agriculture and international chains food franchise.
• Minimum share of the local (Pakistani) partner in a joint venture will be 60:40 for the service sector. However, 100 percent foreign equity can be owned for the first 5 years.
• The FBR (Federal Board of Revenue) will not question as to the source of investment. However, the FBR will only like to know whether the investor has paid requisite income tax on that specific investment. The FBR will not inquire into the source of the funds.
• Foreign investors are allowed to invest in industrial project on 100 percent equity basis without any permission from the government.
• There is no requirement for a no-objection certificate (NOC) from the provincial government.
• In addition to manufacturing sector, foreign investment on a repatriate-able basis is allowed in services, infrastructure and social sectors.
• Full repatriation of capital gains, dividends and profits
• The facility for contracting foreign private loans is available to all those foreign investors who make investment in the approved sectors.
• Foreign controlled manufacturing concerns are allowed to borrow on the domestic market according to their requirements.
• Foreign controlled semi-manufacturing and non-manufacturing concerns can access loans equal to @ 75 percent and 50 percent, respectively, of their paid up capital including reserves.
The Board of Investment being fully conscious of global economic competitiveness has introduced the Special Economic Zones Act 2012 (SEZ), which will allow to create industrial cluster with liberal incentives, infrastructure, investor facilitation services to enhance productivity and reduce cost of doing business for economic development and poverty reduction. The law further envisages reducing processes through SEZ in Pakistan.
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