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Foreign investors may have 100 percent equity in services sector

ISLAMABAD (August 05 2004): Further liberalising the investment policy, the government has decided to allow 100 percent equity for foreign investors in services sector.

Talking to Business Recorder here, the Board of Investment (BoI) Chairman Waseem Haqqie said that 100 percent equity in services sector with the condition of its dilution to 60:40 within five years had been done away with in order to facilitate the investors.

Earlier, it was mandatory for an investor to repatriate 60 percent equity and involve a local investor within five years on 60:40 basis.

Explaining the new policy parameters, he said that repatriation of ceiling of profits had also been enhanced from 60 percent to 100 percent for the investors.

The measure, he said, would further encourage foreign investors to invest more in non-manufacturing sectors such as infrastructure and social and services sector.

The BoI chairman said that among other policy decisions, the government has lowered the minimum limit of foreign investment from $300,000 to $150,000.

He said that in the manufacturing sector, no government permission is required, except for arms and ammunitions, high explosives, radioactive substances, security printing, currency and mint.

Likewise, he added, no new unit for the manufacturing of alcohol, except from industrial alcohol, would be allowed.

Haqqie claimed that Pakistan's investment package offered by the Musharraf government was arguably one of the most liberal in the region, which was being liberalised further.

He, however, pointed out that the government's prime objective is to improve the industrial infrastructure, like provision of gas, electricity, roads and water availability. In this connection, he said, adequate funds had been earmarked in the current Public Sector Development Programme.

The BoI chairman said that the thrust of the current budget was primarily to accelerate the economic growth, mainly in the manufacturing, agriculture sectors, housing and construction and development of small and medium enterprises.

He said that the government was setting up textile cities and a communication centre.

The government, Haqqie said, was all but supporting the private sector to come out and play its role in boosting the national economy.

He said that with gradual improvement in Pakistan-India relations and better environment in Afghanistan, foreign investment would increase significantly in the coming years. “The regional situation will greatly contribute to flow of investment,” he expressed the hope.

Another factor directly linked to the flow of investment, he said, was the law and order on which the government was primarily focussing and was successfully handling the situation.

He said that the improved regional scenario was key to investment and during the last 18 months or so as many as 100 investor delegations from 20 countries had visited Pakistan to explore investment opportunities.

Referring to economic indicators, the BoI chairman said that the national economy was showing improvement in the economic sectors.

He said foreign direct investment (FDI) had registered 195 percent increase from 2000-01 to 2003-04. The FDI enhanced from $322.40 million in 2000-01 to $484.70 million in 2001-02, $789.00 million in 2002-03 to $949.40 million in 2003-04. The FDI, he noted, showed 18.9 percent increase during 2003-04.

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