Islamabad, October 18, 2022 (PPI-OT):Former Vice President of FPCCI Atif Ikram Sheikh on Tuesday said the environment for investment in Pakistan is unfavourable which is keeping us from development. The reasons behind the lack of investment on the part of local and foreign investors include the law and order situation, political instability, weak dispute resolution system, tax administration, energy crisis and inconsistency in policies, he said.

Atif Ikram Sheikh said that the concerns of local and foreign investors should be allayed and the situation should be controlled before any major investor leave country which sends the wrong signal. Talking to the business community, he said that there is certain advantage linked to FDI which include economic growth and the creation of jobs. FDI boosts the manufacturing and services sector which results in the creation of jobs and helps to reduce unemployment rates in the country.

Increased employment translates to higher incomes and equips the population with more buying power, boosting the overall economy of a country, he added. It also develops human capital. Skills that employees gain through training and experience can boost education and human capital. Through a ripple effect, it can train human resources in other sectors and companies.

Through FDI businesses receive access to the latest financing tools, technologies, and operational practices from all across the world. The introduction of newer and enhanced technologies results in the company’s distribution into the local economy, resulting in enhanced efficiency and effectiveness of the industry.

FDI also boost exports. Many goods produced by FDI have global markets, not solely domestic consumption. The creation of 100% export-oriented units helps to assist FDI investors in boosting exports from other countries. The flow of FDI into a country translates into a continuous flow of foreign exchange, helping Central Bank maintain a prosperous reserve of foreign exchange which results in stable exchange rates.

The inflow of capital is particularly beneficial for countries with limited domestic resources, as well as for nations with restricted opportunities to raise funds in global capital markets. By facilitating the entry of foreign organizations into the domestic marketplace, FDI helps create a competitive environment, as well as break domestic monopolies. A healthy competitive environment pushes firms to continuously enhance their processes and product offerings, thereby fostering innovation. Consumers also gain access to a wider range of competitively priced products.

Atif Ikram said that during 2020 South Asia attracted FDI worth 71 billion dollars in which the share of India was 64 billion dollars while Pakistan’s share was only 2.1 billion dollars. FDI in India rose to 27 percent, while it fell by six percent in Pakistan, he said, adding that from 2016 to 2020 FDI in India jumped from 44.5 billion dollars to 64 billion dollars while it was down from 2.5 billion dollars to 2.1 billion dollars in Pakistan.

Developing nations attracted $662.6 billion of investments, Vietnam got $15.8, Indonesia got 18.6, Bangladesh bagged $2.6 billion and China attracted $149.3 billion. Atif Ikram noted that from 2015 to 2020 the FDI stock in India swelled from $318 billion to $480.3 billion while it shrank from $41.9 billion to $35.6 billion at home. The government should boost the investment climate otherwise it will have to depend on IMF loans, he warned.

For more information, contact:
Atif Ikram Sheikh
Ex. Chairman PVMA, Former VP, FPCCI,
Former President ICCI, Former President HCCI,
Tel: +92-51-4437597, 4440772
Fax: +92-51-4440773