Task force suggests boost in levels of investment to 20 percent of GDP

ISLAMABAD (March 22 2003) : Task force to accelerate investment has recommended to boost investment levels to 20 percent of the GDP by 2006 (current levels of 14-15 percent), annual FDI of over 4 billion by 2006, attract value-added investment, emphasis on technology transfer, attracting export-oriented investment improvements in productivity and competitiveness, accelerate job creation by the economy.

It also suggested to increase per capital income from the current level $ 470 to $ 1,000 by December 2012 and annual per capital GDP growth rate of 7 percent. It would need higher investment and higher productivity.

Prime Minister's Adviser on Investment and Privatisation Dr Abdul Hafeez Shaikh chaired a meeting of the combined task force to review draft recommendations and implementation strategy to accelerate investment in Pakistan for submission to the prime minister for approval.

The adviser emphasised that in line with the policy of the newly-elected democratic government, promotion of investment and removal of irritants impeding the growth of investment were on the priority agenda of the government.

The meeting was attended by a number of leading businessmen of the private sector, intellectuals and academicians, including John Speakman of World Bank, Dr Salman Shah of LUMS, Major General Anis Bajwa, managing director, PTDC, Saqib Sherani of ABN Amro, Miss Huma Beg of Serendip Productions, Fareed Rehman, former finance minister of NWFP, Javed Saif Ullah Khan of Mobilink, Suhail W.H. Siddiqui of Siemens, Aftab Akhtar of Islamabad Chamber and Saeed A. Qureshi, former federal finance secretary.

Board of Investment (BoI) Chairman Waseem Haqqie, Secretary Shuja Shah and other senior officials of the BOI also attended the meeting.

The co-ordinator of the task force for Lahore and Islamabad, Dr Salman Shah, gave a detailed presentation on the strategy to accelerate investment in Pakistan.

Highlighting the importance of implementation he said, “Implementation is the name of the game.”

Referring to the Irish story of economic development as a total turnaround which has a GDP growth of 11 percent as compared to debt rate of economy in 1987, he listed various initiatives of the Irish government to turnaround its economy reaching the GDP growth of 11 percent in 2000, achieved full employment increased per capita above Europe average and reduced debt to less than 37 percent of the GDP.

This kind of a turnaround is possible for Pakistan.

He stressed the need that the government's investment strategy should concentrate on continuing commitment to sound economic policy, follow the Irish recipe to lower cost of business, exploit sectoral opportunities and promote and upgrade institutional capability.

A number of policy and procedural irritants were also discussed and debated.

The proposal to develop enclaves, EPZs, SEZs, and industrial estates with public and private partnership was also discussed.

It was suggested to create dedicated teams for each category of sector comprising stack holders, representatives of provinces and private sector.

Suhail Wajahat of Siemens, co-ordinator, Karachi Task Force, presented various recommendations to reduce the cost of doing business by identifying the components of cost in detail.

He made reference of a World Bank report of March 2003, in which the cost of doing business in Pakistan was shown as higher than the neighbouring countries.

Referring to the huge potentials of Pakistan, he said, domestic success business stories would provide an impetus to the foreign investors to come and invest in Pakistan.

For the strengthening of BoI, he suggested induction of young professionals and one-window facility.

He also stressed the need for preparation by the BoI of sector specific feasibility in which Pakistan has competitive advantages and resource base.

He submitted concrete recommendation for changes in policies and procedures to remove irritants pertaining to various departments, including the Central Board of Revenue (CBR), State Bank Engineering Development Board and labour laws of speedy business dispute resolutions mechanism.

Saqib Sherani of ABN Amro said, “While considering lowering of corporate tax and other changes in the fiscal policy we should also keep in view the WTO recommendation.”

Miss Huma Beg gave various suggestions to create mechanism and identify and the communication tools for the image building of the country.

Javed Saifullah of Mobilink stressed the need to speed up the process of privatisation and deregulation. Fareed Rehman spoke about the strong provincial participation to boost investment and facilitation.

Aftab Akhtar of Islamabad Chamber of Commerce and Industry focussed on the technical education commensurate to the growth demand of the business and business community.

PTDC Chief Major General Anis Bajwa highlighted the tourism potential of Pakistan and pointed out that with less investment in the sector more jobs could be created.

Saeed Qureshi, former finance secretary, mentioned that business climate was quite conducive as the bank have access liquidity and the rate of interest have declined to single digit.

The BoI chairman suggested that before submission of all the recommendations for policy changes it would be more appropriate if the viewpoint of the relevant departments were also obtained.

The viewpoint might be different but it would be helpful in reaching a correct decision.

The adviser thanked the participants for their deliberations to formulate final recommendations and assured that the BoI would be reconstituted and strengthened.

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