The All Pakistan Business Forum has called for consistency and transparency in government policies for attracting foreign investment and improving Global Competitiveness Index (GCI), as the World Economic Forum has ranked Pakistan at 115th position, the lowest in the region.
APBF president Ibrahim Qureshi stressed the need for improving perception and adopting long-term policies, identifying corruption as the most problematic factor for doing business in the country.
Though Pakistan’s ranking in terms of Global Competitiveness Index has improved in 2017-18, yet it is the last amongst its South Asian neighbours where India leads at 40th position followed by Bhutan at 82nd, Sri Lanka at 85th, Nepal at 88th and Bangladesh at 99th position at the Global Competitiveness Index 2017-18.
On FDI trend in the country, he said that though the inflow of Foreign Direct Investment to Pakistan during 2016-17 has increased by 4 percent to $2.5 billion but it remains very low and not even one percent of the GDP of the country. This level of FDI is below Pakistan’s potential and capacity, as well as FDI inflows recorded in the past.
Ibrahim Qureshi said suggested the government to devise strategies to promote Pakistani products. He called upon the trade officers to take advantage of opportunities offered by the China Pakistan Economic Corridor (CPEC).
Ibrahim Qureshi said that despite some increase in foreign investment, the FDI inflows were not sufficient to fully offset the widening in the current account gap. As a result, the country’s liquid foreign exchange reserves declined over $1.7 billion during FY17. According to SBP, portfolio investment witnessed downward trend and declined by 66 percent.
The APBF president said that drastic steps can revive the economy, which should have grown significantly and constantly for visible impact. He advocated the need for raising the country’s tax base so that tax-to-GDP ratio improves from current 9 percent. Besides governance challenges, adverse security perception, political instability and the foreign trade offices role is also vital for the continuity of enhancement in foreign investment.
He said that the rising trade deficit poses one of the most serious economic challenges for the government in its current term. When the present government came to power in 2013, the country’s annual trade deficit was $20.44 billion. It has been continuously on the rise since then while overall import bill rose 18.7% to $53 billion for 2016-17.
Moreover, exports are declining despite the government claiming to provide export-oriented industries with round-the-clock power supply and a concession of Rs. 3 per unit in the electricity tariff. But the fact is that electricity is available at Rs.10.5/kwh for the industry in Pakistan as compared to Rs 7/kwh in other regional countries including Bangladesh. Further, gas is available at Rs 1,000 /MMBTU in Pakistan against Rs 400 in Bangladesh.