A New Approach to Revive Economy of Pakistan through Foreign Investments
SIFC – Special Investment Facilitation Council under the leadership of Pakistan Former Prime Minister Shehbaz Sharif on June 17, 2023 with the objective to revive the economy of Pakistan through Foreign Direct Investment.
SIFC is a three-tier structure similar to those implemented by China and Indonesia concerning the utilization of its armed forces in specific sectors. The three tier structure of SIFC includes the Apex Committee consist of Premier of Pakistan, Federal Ministers and The Chief of Army Staff along with special assistants and coordinators. The second tier is the Executive Committee and third tier is the Implementation Committee or SIFC Secretariat.
Pakistan is facing a problem of political uncertainty and changing regional dynamics having a direct impact on economy. The Government of Pakistan decided to revive its economy through Foreign Direct Investment.
1960’s era was remarkable for Pakistan as 21% of Pakistan GDP based on foreign investments. Afterwards, it plunged with time. The inflow of FDI reduces with time to 17% as compared to 1960’s era. Pakistan recorded FDI inflows in 2022 to 2023 of just US$1.3 billion. It shows FDI shrinks 21 percent from the previous year after a decline in both: remittances and exports. For this purpose, the government of Pakistan established a Special Investment Facilitation Council (SIFC) combine the expertise and resources of both civilian and military establishments to act as a ‘single window’ for multi-domain cooperation in related sectors with GCC countries in particular and other friendly countries in general. SIFC has initiated several projects in different sectors that includes Agriculture, Energy, Information Technology, and many other Greenfield and Brownfield projects.
Different MOUs have already been signed with China, UAE, and Kingdom of Saudia. SIFC has envisaged the potential of $60 billion on average annual investment flows of $12bn as per the statement of Pakistan Caretaker Premier. MoU worth $1.5 billion signed with a Chinese company, for the up-gradation of Pakistan Refinery Limited. Pakistan and the UAE have inked several agreements under which the Gulf nation is likely to invest between USD 20-25 billion. It covers the investment cooperation across various sectors, including energy, port operations, wastewater treatment, food security, logistics, mining, aviation, and banking and financial services. Similarly, Pakistani companies will work in the Kingdom of Saudi Arabia (KSA), provide trained IT manpower to Saudi companies, promote joint ventures with Saudi firms, and establish a startup exchange programme with top Saudi tech incubators. They jointly work to set up chip manufacturing industry in Pakistan and work on electric vehicles, lithium-ion batteries, agriculture technology, and mining technologies.
Further, many other agreements and MOUs have signed that includes the projects of Agriculture and Livestock. The council is focusing on agriculture and livestock corporate farming, particularly in Cholistan, where 60,000 acres of land has been prepared for this purpose. Additionally, it is working on strengthening the seed development framework that is essential for ensuring increased productivity and growth in the agricultural sector.
Special Investment Facilitation Council is very optimistic and this kind of support and facilitation can go a long way in encouraging domestic businesses to expand and invest further, ultimately contributing to economic growth and job creation within the country.
However, there is another opinion that cannot be neglected. When CPEC started, it also considered as a Game-Changer for the state of Pakistan. Unfortunately, CPEC project is not as productive as envisaged until now. Only 03 out of 09 Special Economic zones are operational. ML1- Railway track upgradation from Karachi to Peshawar is still a dream. Therefore, the performance of CPEC is still a question.
SIFC seems effective, but without acknowledging the regulatory issues, structural reforms at micro and macro level,
