Pakistan lagging behind in foreign investment compared to other countries in the region

September 12, 2018

Photo: Reuters

The number foreign businesses investing in Pakistan is less than a third of what other countries in the region attract, according to a report by the Overseas Investors Chamber of Commerce and Industry (OICCI).

The present foreign direct investment in Pakistan is less than 1% of the country’s gross domestic product, a key measure of the size of an economy. This is much lower than the regional average as foreign investment in other countries of the region is 3% of their respective GDPs. The OICCI revealed these details to the media on September 11 in Islamabad.

The 190-member association said foreign companies invested $2.7 billion in Pakistan in the 2017-18 financial year, which was 20% higher than the previous year.

But the country still lags behind its regional peers in terms of attracting a high level of foreign investment.

The OICCI says there is a significant improvement in the security environment in Pakistan. The number of visits by foreign staff of multinational companies operating in Pakistan has gone up since 2014.

It also said they are optimistic about investment opportunities in the country and expect the new government to take some bold measures to put the economy on a solid growth trajectory.

Pakistan is facing a shortage of dollars to keep its foreign exchange reserves at a sustainable level so that it can repay its foreign loans and continue to buy oil and other commodities necessary to keep the economy running. Foreign investment is an important way to boost dollar reserves.

Therefore, the government has to announce its policies on taxation, debt management, reforms in the Federal Board of Revenue and the tax regime. The clearer the government is about its economic policy, the more confidence investors will have and, eventually, the more dollars Pakistan has.