Pakistan needs to broaden the scope of foreign direct investment (FDI) sources by attracting investments from a diverse array of countries across various sectors, Muhammad Azfar Ahsan, former chairman Board of Investment (BOI), told WealthPK. Azfar said foreign direct investment plays a crucial role in generating jobs, transferring technology, and fulfilling debt obligations. When examining the FDI landscape in Pakistan, it becomes evident that the country heavily depends on a limited number of nations; therefore, it is essential to broaden the scope of FDI sources by attracting investments from a diverse array of countries across various sectors, he said.

Azfar said a broader FDI base facilitates the transfer of a wide range of technologies and expertise, as different countries often specialize in distinct industries and sectors. Pakistan should also diversify its FDI base, as diversity will lead to more comprehensive knowledge spillover, benefiting various segments of the country’s economy. He added that China and the United States of America lead other countries in extending investment to Pakistan. Although both countries are big players in the global economy, diversifying the FDI base by incorporating other regional countries will be more beneficial for Pakistan.

One of the benefits, he said, of diversifying foreign direct investment (FDI) sources across numerous countries is that it offers several advantages over relying on just a few nations. First, it will enhance the economic stability of Pakistan by reducing dependence on a handful of countries, making the economy less vulnerable to geopolitical or economic fluctuations in those nations. Additionally, attracting FDI from numerous nations can reduce the risk associated with debt repayment obligations of the country. A variety of investors mitigates the likelihood of being overly indebted to a single source, thereby enhancing financial resilience.

Apart from that, Azfar highlighted the pivotal role of diplomatic doors and regulatory frameworks. “Pakistan must engage with other regional countries through comprehensive business plans and ensure that the regulatory framework at home meets the expectations of foreign investors,” he said.

Credit: Independent News Pakistan (INP)