Pakistan fighting world’s

war, needs financial help: BoI chief

Saturday, November 21, 2009
By Saad Hasan

KARACHI: The international community must come forward with economic assistance to help Pakistan which is fighting a war against militants not only for its internal security but also for ensuring prosperity in the region and the world, a top government official said on Friday.

“I have said it on different forums and I will repeat it again; this war is not just our war; we are fighting the whole world’s war,” said Saleem Mandviwalla, Chairman Board of Investment, at a press conference held here.

The ongoing conflict in FATA has sparked a deadly wave of suicide bombings which have tainted an already depressed investment environment in the country. “They (other governments) must assist us financially.” His comments come at a time when authorities have to negotiate additional funding from the International Monetary Fund under tough conditions and commitments of grants from some friendly countries are not forthcoming.

Year-on-year foreign direct investment plunged 53 per cent in the first four months (July-October) of fiscal year 2009-10, highlighting the repercussions of the poor security situation here and global financial crisis.

Mandviwalla was at pains to say that the country had no FDI target for this year. “It is very difficult to foresee how much investment will come into the country. There can not be any fixed target.” In spite of the usual rhetoric of possible investment coming into the country, he did not name any company or sector which was expected to catch eye of risk-takers.

In fiscal 2008-09 which ended in June, investment to GDP ratio declined for the second consecutive year to 19.7 per cent due to heightened security risk and power crisis, the State Bank said in its annual report.

Budgetary constraints of the government, which had to raise taxes on telecommunication services, also negatively impacted the overall investment climate. Negative business sentiment in the private sector would delay economic recovery, especially when it was hard for the government to push any incentive package for industrial revival, it said.

The telecommunications industry, which on average had a 35 per cent share in FDI numbers during the past five years, is saturated. According to Pakistan Telecommunication Authority (PTA), most of the cellular operators dependent on foreign loans are in loss due to rupee depreciation. The FDI in this sector must not be expected.

Contradicting reports that Pakistan had allocated its land for corporate farming to Middle Eastern countries, Mandviwalla said no such deal had been made. To his knowledge, the government had not earmarked irrigated or arid land for foreign investors. “There is no such thing in my knowledge.”

He said the government was pushing the US and EU to bring down tariffs on Pakistani textile goods in a bid to boost the industry here. Exporters say cheaper products from Vietnam and Bangladesh sideline Pakistani goods on the back of preferential market access.

A delegation of government officials and businessmen would head to the US in December for inviting potential investors in renewable sources of energy, he said, ridiculing concerns that the fate of existing foreign enterprises hanged in the balance.

“We are also enhancing the bilateral trade agreement inked with Germany 60 years ago that also happens to be the first such treaty signed by any two states.” It remains unclear how the enhancement will boost the economic prospects for Pakistan.Pakistan fighting world’s