Fluctuating trends in foreign direct investment (FDI) — experiencing brief peaks followed by prolonged declines — have raised many an eyebrow at the effectiveness of the existing policies, reports WealthPK. Despite the Special Investment Facilitation Council's (SIFC) dedicated efforts to foster a favourable business atmosphere, Pakistan is confronting stagnant FDI numbers, recording a modest investment of USD1.77 billion in 2023. The departure of multinational companies (MNCs) is attributed to the lack of policy consistency, thus further hindering the desired boost in FDI. In a brief chat with WealthPK, Dr Javed Iqbal, an economic researcher at the Quaid-i-Azam University, talked about the importance of domestic policies in attracting and optimizing FDI and emphasized the urgent need for creating an enabling environment for businesses. He further said the declining FDI figures, accounting for approximately 0.59% of the GDP, highlight the failure of the current policies. The gap between promises and actual results prompts a closer examination of structural issues hindering Pakistan's economic growth.

Comparatively, Bangladesh's quarterly FDI updates present a stark contrast, showcasing a significant increase in inflows. "Fundamental factors, such as trade liberalization, current account convertibility, and focus on private sector-led development, have contributed to Bangladesh's success," Javed Iqbal pointed out. He stressed that there was a strong correlation among the FDI, international trade, and their impact on structural factors. While progress has been made in the privatization of government-owned entities, a locked plan with zero tolerance for interference is deemed essential for meeting economic goals. Talking to WealthPK, Dr Faiz-ur-Rehman, an economic researcher at the Institute of Business Administration, identified institutional resistance to reforms, especially the Federal Board of Revenue (FBR), as a roadblock and emphasized restructuring and competent leadership in the Board of Investment (BoI) and Privatization Commission to avoid a further decline in FDI.

"Owing to uncertainty caused by the recent elections, it is crucial to adopt a collaborative strategy that incorporates technocrats, political leaders, and military assistance to attain stability," he pointed out. He further suggested a three-pronged approach, where the private sector expertise complemented political direction and military support. Concluding, Dr Faiz highlighted the need for all agents of change to unite in addressing the fundamental issues of economy, education, and environment (3Es) and called for a collaborative effort to move beyond rhetoric and make tangible strides toward the country's economic and investment goals.

Credit: Independent News Pakistan (INP)