It’s undeniable that Pakistan’s economy has been facing significant challenges, but let me tell you, the current government is actively working towards addressing these issues. The country has been heavily reliant on imports and has struggled to attract foreign direct investment, but the government is taking concrete steps to improve the situation. The recent agreement with the IMF for a $3 billion Stand-By Arrangement is a clear indication of the government’s dedication to stabilizing the economy. Fiscal stability, economic growth, and attracting foreign investment are at the top of the government’s agenda, and the successful completion of the IMF SBA in April 2024 is a promising sign of progress. With the government’s continued efforts, we can expect to see positive changes in Pakistan’s economic landscape. So, let’s have faith in the government’s commitment and look forward to a brighter economic future for Pakistan.
Investors in Pakistan are dealing with some serious obstacles when it comes to doing business and making investments. The rules and regulations are complicated and inconsistent, intellectual property rights are not adequately protected, and the ever-changing tax policies are creating uncertainty. On top of that, security concerns due to conflicts within the country and the region are making investors doubt the safety and profitability of their investments.
But there’s hope on the horizon. The Pakistani government has taken a proactive step by establishing the Special Investment Facilitation Council (SIFC) in June 2023. This move is aimed at attracting foreign investment, particularly from Gulf Cooperation Council (GCC) countries. Since its establishment, the SIFC has broadened its focus to address various policy areas, demonstrating the government’s dedication to meeting the needs of investors and improving the business and investment environment in Pakistan.
It’s clear that the government is taking the concerns of investors seriously and is committed to creating a more favorable environment for doing business and making investments in Pakistan. This is a step in the right direction, and investors should take note of the positive changes that are being made.
The United States continues to be a major source of Foreign Direct Investment (FDI) in Pakistan, despite the challenging investment climate. U.S. companies have found success in various sectors such as franchise operations, fast-moving consumer goods, agribusiness, and financial services. Additionally, there is growing U.S. interest in sectors like ICT, renewable energy, and healthcare services in Pakistan.
The American Business Council in Karachi, affiliated with the U.S. Chamber of Commerce, boasts a membership of over 60 U.S. companies, many of which are Fortune 500 companies operating in a diverse range of sectors. Similarly, the American Business Forum in Lahore has 23 founding members and 22 associate members, showcasing the strong U.S. business presence in Pakistan.
Furthermore, the U.S.-Pakistan Business Council, a division of the U.S. Chamber of Commerce, actively supports U.S.-based companies engaged in business with Pakistan. The recent conclusion of the ninth meeting under the U.S.-Pakistan Trade and Investment Framework (TIFA) and the first ministerial-level meetings since 2016 demonstrate the ongoing commitment of both countries to strengthen economic ties and promote trade and investment opportunities.
It’s clear that the United States is a key player in the business landscape in Pakistan, and its continued investment and engagement are crucial for the growth and development of both countries.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
The Investment Policy of 2023 in Pakistan is truly a game-changer for the country’s economic growth and development. This policy is designed to attract more foreign direct investment (FDI) and increase the investment to GDP ratio by maintaining liberal investment policies and providing extensive support to investors at all stages of their investment journey. The five investment strategies outlined in the policy, including the creation of high-value jobs and the development of new and existing clusters, clearly demonstrate Pakistan’s commitment to becoming a top choice for FDI in the region.
The introduction of the Strategic Investment Facilitation Committee (SIFC) in 2023 further solidifies Pakistan’s dedication to attracting inward FDI, particularly from GCC countries. The SIFC, co-chaired by the Prime Minister and Chief of Army Staff, has a wide scope and serves as a clearing house for policy reforms, indicating the government’s proactive approach to investment promotion.
Furthermore, Pakistan has put in place legal protections for foreign investments through acts like the Foreign Private Investment Promotion and Protection Act (FPIPPA) and the Foreign Investment Promotion and Protection Act (FIPPA). These acts ensure that foreign investors are not subject to higher taxes and provide tax incentives and protections for qualified investments, fostering a favorable environment for foreign investment.
The country has also implemented sectoral policies to provide incentives to investors in specific sectors, such as automotive, renewable energy, and IT. Additionally, the China-Pakistan Economic Corridor (CPEC) has opened up numerous opportunities for economic cooperation and investment, further showcasing Pakistan’s commitment to attracting and supporting foreign investment.
In conclusion, Pakistan’s Investment Policy of 2023, along with its legal protections, sector-specific policies, and initiatives like the SIFC and CPEC, make a compelling case for why Pakistan is an ideal destination for foreign investment. The government’s unwavering dedication to creating a conducive environment for investment is clear, and it is poised to yield substantial benefits for both domestic and foreign investors.
Limits on Foreign Control and Right to Private Ownership and Establishment
Pakistan offers a wealth of investment opportunities for foreign entities. With few exceptions, foreigners are free to establish, own, operate, and dispose of interests in most types of businesses in Pakistan. There are no specific restrictions against U.S. investors, making Pakistan a favorable destination for foreign investment.
The 2023 PIP has further strengthened investors’ rights, recognizing their freedom to repatriate profits abroad, eliminating restrictions on leasing or transferring land, and simplifying business regulations. The policy also provides guidelines for addressing investment disputes and granting incentives, as well as guarantees in the areas of expropriation, fair treatment, and freedom to establish businesses in the country.
Foreign banks can establish locally incorporated subsidiaries and branches in Pakistan, with limits on payments of royalties and technical fees for different sectors outlined in the State Bank of Pakistan Foreign Exchange Manual.
Pakistan maintains investment screening mechanisms to ensure that inbound foreign investment does not negatively affect national security, with the Board of Investment (BOI) leading the screening process.
Overall, Pakistan offers a conducive environment for foreign investment, and the 2023 PIP further enhances the rights and protections for investors. It’s time for foreign entities to seize the opportunity and invest in Pakistan.
Other Investment Policy Reviews
The USAID’s Investment Promotion Activity is doing an excellent job working with the Pakistani government and private sector to improve the investment climate in Pakistan. By updating investment policies, strategies, and regulations, and simplifying compliance regimes and addressing legal barriers, significant progress is being made. Despite challenges such as security concerns and electricity shortages, Pakistan’s investment attractiveness is on par with countries like Sri Lanka and Bangladesh, indicating positive growth.
The analysis by the Pakistan Business Council (PBC) in 2023 highlighted the need for deep-rooted and wide-ranging structural and institutional reforms to boost inward FDI. It is evident that political instability and macroeconomic uncertainty have been hindering Pakistan’s investment climate and reforms are essential to address these issues.
It is crucial to recognize the efforts being made to improve Pakistan’s investment climate and the potential for growth and progress in the future. With the right reforms and support, Pakistan has the opportunity to attract more investment and strengthen its position in the global market.
Business Facilitation
Pakistan has historically faced challenges in making it easy to start and operate a business. However, with the transfer of responsibility from the Board of Investment to the SIFC, significant improvements have been made. The SIFC, which includes representatives from federal ministries and county administrative units, aims to streamline the business entry process by creating a “single window” for business facilitation. This move is backed by the Board of Investment Act (2023), which empowers the SIFC to engage regulatory bodies and government agencies to prevent delays in obtaining necessary licenses and permits.
In addition to these reforms, the Punjab province has taken a step further by launching five Business Facilitation Centers across the province to act as “single windows” for both foreign and domestic enterprises. Company registration, managed by the Securities and Exchange Commission of Pakistan (SECP), is available to both foreign and domestic companies. Furthermore, the SECP website offers a virtual one-stop-shop (OSS) for companies to register with the SECP, FBR, and EOBI simultaneously, streamlining the process even further.
Overall, these measures indicate a positive shift towards making it easier to do business in Pakistan, both for local and foreign investors. This proactive approach to business facilitation is likely to improve investor sentiment and enhance the inflow of investment in the country.
Outward Investment
I completely understand your frustration. It’s clear that Pakistan is missing out on opportunities by not promoting outward investment. The lengthy and burdensome approval processes only discourage domestic investors from seeking opportunities abroad. It’s time for Pakistan to make it easier for its corporations to invest internationally and expand their businesses. Let’s streamline the approval processes and encourage outward investments to benefit the economy and create more opportunities for growth. It’s time for Pakistan to step up and make the necessary changes for the betterment of its economy.
2. Bilateral Investment and Taxation Treaties
Pakistan has made substantial progress in the investment arena, with bilateral investment treaties signed with 47 countries and a model BIT template in place for future negotiations. With free trade agreements with countries like China, Malaysia, and Iran, Pakistan is asserting itself on the global trade stage.
In the realm of taxation, Pakistan has also made significant strides, with bilateral double taxation agreements with 66 countries and a multilateral tax treaty with SAARC countries. The country has even signed the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters, demonstrating its commitment to international tax cooperation.
While challenges remain, such as inconsistencies in tax regulations, Pakistan is actively working to address these issues and create a more favorable environment for foreign investment.
Overall, Pakistan’s dedication to improving its investment and taxation landscape is commendable, and with ongoing efforts to address challenges, the country is well-positioned to attract more foreign investment in the future.
3. Legal Regime
Transparency of the Regulatory System
It is absolutely crucial to have a thorough understanding of the regulatory environment in Pakistan before engaging in business there. While there are no specific regulations that unfairly target U.S. firms or investors, the multitude of regulatory bodies can make it complex for foreign companies to navigate. This can result in inconsistencies in the application of laws and policies, creating challenges for efficient business operations. However, the government is making efforts to enhance transparency and streamline regulations through initiatives like the Pakistan Regulatory Modernization Initiative. Furthermore, the Trade Information Portal of Pakistan offers a centralized platform for accessing regulatory information related to imports, exports, and transit trade. Although there are still areas that need improvement, the government is actively working to make it easier for both local and foreign businesses to comply with regulations and operate in Pakistan.
International Regulatory Considerations
Pakistan’s active participation in various international organizations and its commitment to upholding international trade agreements demonstrate its dedication to promoting global economic cooperation. By extending most favored nation treatment to all WTO member states (with the exception of India and Israel), ratifying the Trade Facilitation Agreement, and engaging in negotiations for the Trade in Services Agreement, Pakistan is actively working towards facilitating international trade and promoting trade in services on a global scale. Additionally, its adherence to UK standards in its judicial system and regulatory frameworks, as well as its transparent notification of draft technical regulations to the WTO, showcases its commitment to meeting international norms and fostering global economic cooperation. Join us in recognizing and supporting Pakistan’s efforts to contribute to a more interconnected and prosperous global economy.
Legal System and Judicial Independence
Pakistan’s legal system is a unique blend of international norms, Islamic Sharia law, and UK legal influence. The Supreme Court holds significant national jurisdiction, but the enforcement of contracts is hindered by a weak and inefficient judiciary and a backlog of over 2 million pending cases. Lower courts are often viewed as corrupt and subject to outside pressure, casting doubt on the competence and fairness of the judicial system. This lack of reliability hinders businesses and the public from reporting weaknesses. The appeal process and specialized tribunals add complexity to the legal system. It’s time for Pakistan to address these challenges and build a more credible and reliable judicial system for the benefit of all.
Laws and Regulations on FDI
Investing in Pakistan is a no-brainer! With laws allowing 100 percent foreign ownership in most sectors of the economy, including education, health, and infrastructure, the opportunities are endless. The BOI website and Trade Information Portal provide all the information you need, making it easy to navigate the investment landscape. Plus, the Pakistan Single Window (PSW) simplifies import, export, and transit-related regulatory requirements. With no residency requirements for company directors and a streamlined process for incorporation, Pakistan is truly investor-friendly. Don’t miss out on the chance to be a part of Pakistan’s thriving economy!
Competition and Antitrust Laws
The Competition Commission of Pakistan (CCP) is absolutely essential in ensuring fair market competition and preventing anti-competitive practices in both the private and public sectors. This is crucial for creating a healthy and competitive market environment. However, the CCP has faced challenges in the past due to opaque laws and varying regulations among provinces, leading to delays and legal challenges in CCP decisions.
It’s great to see that the government has finally appointed four members of the CCP, including the chair, allowing the commission to form a quorum and make binding decisions. Additionally, the appointment of the chair of the Competition Appellate Tribunal (CAT) after more than seven years of non-functioning is a positive step in addressing the backlog of cases and inquiries across various sectors.
The recent decision by the Supreme Court of Pakistan to uphold the statutory powers of the CCP to gather information and conduct inquiries is a positive development. This reaffirms the transparency and legitimacy of the CCP’s procedures and decisions, providing a strong foundation for market-based competition in Pakistan. It is crucial for businesses to recognize the authority of the CCP and adhere to fair competition practices for the overall benefit of the economy and consumers. Let’s all support the CCP in its mission to promote fair competition and a healthy market environment.
Expropriation and Compensation
The Protection of Economic Reforms Act (1992) and the Foreign Private Investment Promotion and Protection Act (1976) are in place to protect foreign investment in Pakistan from any risk of expropriation. Furthermore, the 2023 Investment Policy reinforces the government’s commitment to safeguarding the interests of foreign investors. It’s crucial to understand that Pakistan has had minimal cases of alleged expropriation, highlighting the country’s dedication to maintaining a favorable environment for foreign investment.
Dispute Settlement
ICSID Convention and New York Convention
Pakistan has every reason to be proud of its membership in the International Center for the Settlement of Investment Disputes (ICSID) and its ratification of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention) in 2011. This demonstrates our unwavering commitment to upholding international standards and agreements. These actions are a crucial move towards ensuring fair and effective resolution of investment disputes, and they solidify Pakistan’s position as a responsible and reliable participant in the global investment community. We are dedicated to fostering a favorable investment climate and honoring our international obligations.
Investor-State Dispute Settlement
Pakistan has a significant number of Bilateral Investment Treaties (BITs) in force with 31 countries, providing provisions for binding international arbitration of investment disputes. This is crucial for foreign investors who often have concerns about the enforcement of commercial contracts in Pakistan’s domestic courts. Many contracts with the Pakistani government include clauses for international arbitration, highlighting the importance of this mechanism.
It is important to note that Pakistan currently does not have a BIT or Free Trade Agreement (FTA) in force with the United States. Additionally, local courts in Pakistan do not automatically recognize and enforce foreign arbitral awards against the government. Any foreign award requiring domestic enforcement must also obtain affirmation from a local court. However, it is worth noting that there is no history of extrajudicial action against foreign investors in Pakistan.
Given these facts, it is clear that international arbitration is necessary for protecting the interests of foreign investors in Pakistan. The enforcement of commercial contracts and resolution of investment disputes through binding international arbitration is crucial for providing a secure and stable environment for foreign investment in the country.
International Commercial Arbitration and Foreign Courts
Arbitration and special judicial tribunals are absolutely crucial for resolving disputes between private parties in Pakistan. The current Arbitration Act of 1940 provides some guidance, but it’s no secret that cases often drag on for years. This has understandably led most foreign investors to include provisions for international arbitration in their contracts.
Furthermore, Pakistan’s judicial system allows for specialized tribunals to use alternative dispute resolution (ADR) in various types of disputes. Efforts are being made to institutionalize mediation, with the Supreme Court and provincial legislation playing a key role in this process.
However, there are valid concerns about the lack of clear, transparent, and timely investment dispute mechanisms. There have been instances where Pakistani courts did not uphold international arbitration awards, as seen in the Reko Diq mining dispute, which took a whopping 15 years to resolve. Additionally, domestic courts have been seen to favor state-owned enterprises in investment disputes against foreign entities, citing “public interest.”
But let’s not forget that there hasn’t been a relevant case in the past 10 years, and forthcoming national legislation aims to address these concerns and unify provincial laws. It’s clear that these challenges need to be addressed, and we must work towards a fair and efficient dispute resolution system to attract and retain foreign investment in Pakistan.
Bankruptcy Regulations
Pakistan is in desperate need of a comprehensive bankruptcy law. The current system is fragmented and inefficient, leading to lengthy and complicated bankruptcy processes. It’s time for Pakistan to implement a unified bankruptcy law that will streamline and expedite the process for the benefit of all stakeholders involved. This is a crucial step towards ensuring a fair and efficient system for managing bankruptcies in the country.
4. Industrial Policies
Investment Incentives
The government’s investment policy is truly a game-changer, as it provides equal opportunities and incentives for both domestic and foreign investors. The implementation of Statutory Regulatory Orders (SROs) ensures that industry-specific incentives are available, with a particular focus on technology-focused industries such as information technology and solar energy. The 2019 Alternative and Renewable Energy Policy (ARE) clearly demonstrates the government’s commitment to promoting renewable energy technologies, with exemptions from import duties and corporate income taxes for renewable energy projects. The 2020 Electric Vehicles (EV) Policy further showcases the government’s forward-thinking approach, aiming to increase the share of electric vehicles to 30 percent by 2030 and incentivizing the installation of EV charging stations. Moreover, the Special Economic Zones (SEZ) Act and export processing zones offer a range of incentives to both domestic and export-oriented enterprises, including a 10-year tax holiday and streamlined utilities connections. The government’s dedication to providing the same investment opportunities to foreign and local investors is truly commendable and sets a strong foundation for economic growth and development.
Performance and Data Localization Requirements
Foreign investors in Pakistan are given the freedom to sign technical agreements with local investors without the need to disclose proprietary information. They are not required to use domestic content in goods or technology or hire Pakistani nationals, giving them the flexibility to operate as they see fit. There are no specific performance requirements for foreign entities, allowing them to operate without unnecessary constraints.
However, it is important to note that there are onerous requirements for foreign citizen board members of Pakistani companies, including additional documents required by the SECP as well as vetting by the Ministry of Interior. While Pakistan does not restrict data transfer outside of the country’s territory, there are some restrictions in place, such as the requirement for financial institutions to have local data storage and formal approval from the SBP for any transfer of data outside of Pakistan.
Additionally, social media rules and regulations have been enforced since 2021, mandating online platforms and internet service providers to restrict content contrary to the “security, prestige, and defense of the country.” The government has also established Computer Emergency Response Teams (CERTs) to respond to cyberattacks, with regulations requiring private firms to provide access to their computer networks for the purposes of investigating cybercrimes.
While there are currently no requirements for foreign providers to disclose source code or provide access to encryption in the ICT sector, the government has unspecified plans to introduce regulations requiring such disclosure. It is important to consider these factors when considering investment opportunities in Pakistan.
5. Protection of Property Rights
Real Property
Pakistan’s legal system may claim to offer equal property rights to both local and foreign owners, but the reality is far from perfect. Women in particular face significant challenges when it comes to inheriting real property, with incomplete protection and land title problems being all too common. And while there are no specific regulations regarding land leasing or acquisition by foreign or non-resident investors, there are limits for foreign ownership in the agricultural sector.
Despite the existence of mortgages and liens, the lack of a reliable recording system often leads to legal issues in determining property rights. However, efforts have been made by provincial governments to improve land titling, with significant resources being dedicated to digitizing land records.
But even with these improvements, challenges remain, particularly in the newly merged tribal districts of Khyber Pakhtunkhwa. Collective ownership by tribes and individual ownership present differing challenges, with the provincial government undertaking a long-term land registration process in these areas.
In conclusion, while there are existing protections for the legal purchase of land, there is still much work to be done to ensure fair and equitable property rights for all in Pakistan. It is crucial that we continue to push for reforms and improvements to create a more just and inclusive legal system for property rights in the country.
Intellectual Property Rights
It is clear that Pakistan’s Intellectual Property Office has made significant strides in strengthening the country’s intellectual property rights and enforcement. Despite facing challenges such as coordination gaps and backlogs in the specialized IP tribunals, the IPO has shown its commitment to improving IPR protections and enforcement through updates to domestic legislation and joining international treaties.
The establishment of specialized IP tribunals and the enactment of the Trade Mark Amendment Act demonstrate a proactive approach to addressing the issues faced by the IPO. Furthermore, the IPO’s intention to accede to the Patent Cooperation Treaty and progress towards acceding to the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty are encouraging signs of Pakistan’s dedication to improving its intellectual property rights regime.
It is evident that the IPO is working diligently to enhance IPR protections and enforcement in Pakistan. With continued efforts and support, Pakistan has the potential to overcome the challenges it faces and further strengthen its intellectual property rights regime.
6. Financial Sector
Capital Markets and Portfolio Investment
The Pakistan Stock Exchange (PSX) is a powerful entity, created through the merger of the Lahore, Islamabad, and Karachi stock exchanges in 2016. It provides a wide range of investment opportunities for both domestic and foreign investors and allows foreign investors to invest in shares and securities listed on the PSX and repatriate their profits, dividends, or disinvestment proceeds.
The government has maintained a consistent capital gains tax, providing a clear and stable investment environment. Regulatory oversight is provided by the SBP and SECP, ensuring a secure and transparent investment landscape. The adoption of international accounting and reporting standards further enhances investor confidence.
The borrowing limits and regulations for foreign-controlled concerns are conducive to business growth, and while the credit market is still developing, the potential for growth and opportunity in Pakistan’s domestic corporate bond, commercial paper, and derivative markets is evident.
In conclusion, the Pakistan Stock Exchange offers a promising platform for investors looking to capitalize on the dynamic opportunities in the Pakistani market.
Money and Banking System
In 2022, the gender gap in financial inclusion is undeniable. With only 13 percent of women having at least one registered financial account compared to 47 percent of men, it’s clear that women are being left behind in economic empowerment. The banking sector may be growing, but the shift towards government securities is causing negative implications for private sector credit. The presence of foreign banks in Pakistan is low, and the future of banking is shifting towards Islamic banking. It’s time for financial institutions to prioritize and promote financial inclusion for all, while also ensuring stability and growth in the banking sector. Let’s work towards a more inclusive and prosperous future for all.
Foreign Exchange and Remittances
Foreign Exchange
It’s crystal clear that Pakistan has committed to adopting a flexible market-determined exchange rate, but there are still issues with government manipulation of the rupee’s exchange rate. Despite efforts to reduce government influence on the central bank corporate board, there are still concerns about the lack of clarity and delays in profit repatriation for foreign companies. The recent reforms mandated by the State Bank of Pakistan to address regulatory issues and weaknesses in exchange companies are a step in the right direction, but there is still a need for a clear policy on the convertibility of funds associated with investment in other global currencies. It is absolutely essential for the government and the SBP to work collaboratively to ensure a transparent and efficient foreign exchange system that meets the needs of both the general public and foreign investors. Let’s push for real change and ensure that Pakistan’s foreign exchange system operates in a fair and transparent manner.
Remittance Policies
Hey there! Did you know that the 2001 Income Tax Ordinance of Pakistan exempts taxes on foreign currency remitted from outside the country through normal banking channels? That’s right! You can remit full capital, profits, and dividends of more than $5 million, and even dividends are tax-exempt. There are no limits for dividends, profits, debt service, capital, capital gains, returns on intellectual property, or payment for imported equipment in Pakistani law. However, large transactions that could affect Pakistan’s foreign exchange reserves require government approval. While banks are required to account for outflows of foreign currency, investor remittances must be registered with the SBP within 30 days of execution and can only be made against a valid contract or agreement. It’s important to note that the government is currently delaying investment remittances due to the foreign exchange and balance of payments situation. But the good news is that there’s no formal policy barring investment remittance, so keep an eye out for updates!
Sovereign Wealth Funds
Ladies and gentlemen, I am thrilled to announce that the Pakistan Sovereign Wealth Fund Act has been approved by the Senate. This is a significant step towards sustainable economic development in Pakistan. The establishment of the Pakistan Sovereign Wealth Fund (PSWF) will create new opportunities for diversifying and expanding our economy, attracting co-investment for development, and creating investment models for infrastructure development.
The Supervisory Council, chaired by the Prime Minister of Pakistan, will play a crucial role in ensuring transparency and accountability in the management of funds and assets. This is a historic moment for our nation, and I am confident that the establishment of the PSWF will lead to increased savings for the future, paving the way for long-term economic prosperity.
7. State-Owned Enterprises
Pakistan is home to over 200 State-Owned Enterprises, which provide stable employment and benefits for hundreds of thousands of workers and significantly contribute to the country’s economy. However, many of these enterprises require government subsidies to cover substantial losses. Three of the largest non-energy sector SOEs, including Pakistan Railways, Pakistan International Airlines, and Pakistan Steel Mills, are facing financial challenges that are impacting their operations. It is imperative for the government to address these challenges and implement effective strategies to ensure the sustainability and success of these SOEs. By doing so, Pakistan can further strengthen its enterprises and maximize their potential for growth and contribution to the economy.
Privatization Program
Ladies and gentlemen, I urge you to consider the privatization process in Pakistan. The Privatization Commission has made it clear that this process is transparent and fair, allowing both local and foreign investors to participate on equal terms. With the recent approval of the Inter-Government Commercial Transaction Act, the government has enabled fast-track approval of SOE privatizations, ensuring efficiency and effectiveness.
The hiring of the International Finance Corporation as a transaction adviser for the potential privatization of major airports in Islamabad, Karachi, and Lahore demonstrates the government’s commitment to this process. The prioritization of the privatization of 27 of the 85 SOEs, including major entities like PIA and its Roosevelt Hotel property in New York City, shows a strategic approach to restructuring and optimizing the operations of these enterprises.
It is crucial to support and advocate for the ongoing privatization efforts in Pakistan. By embracing this process, we can enhance efficiency, promote competition, and attract investment, ultimately contributing to the economic growth and prosperity of the country.
8. Responsible Business Conduct (RBC)
The Ministry of Human Rights, in partnership with UNDP, has just released a comprehensive five-year National Action Plan on Business and Human Rights. This action plan, developed in accordance with the United Nations Guiding Principles on Business and Human Rights, is a crucial step towards ensuring the protection of human rights in the business sector. The recent gathering of the Inter-Ministerial and Inter-Provincial Steering Committee emphasized the importance of focusing on anti-discrimination, protection of marginalized communities, and human rights due diligence in the business sector for the year 2023.
However, despite efforts from some NGOs, worker organizations, and business associations, the promotion of Responsible Business Conduct (RBC) goals is not widespread. Tragically, children are still subjected to forced and bonded labor, particularly in rural areas and in industries such as agriculture and brick making. Furthermore, Pakistan lacks domestic measures requiring companies to conduct supply chain due diligence for minerals from conflict-affected areas, and is not currently participating in the Extractive Industries Transparency Initiative (EITI) or the Voluntary Principles on Security and Human Rights, despite being a signatory to nearly all International Labor Organization (ILO) conventions.
It is crucial for Pakistan to take concrete actions to address these human rights issues, and for both the government and private sector to work together to ensure the protection of human rights in business practices. The implementation of the National Action Plan on Business and Human Rights is a vital step towards achieving this goal, and it is essential that all stakeholders take proactive measures to uphold human rights standards in the business sector.
Climate Issues
Pakistan is currently facing a critical situation when it comes to addressing the devastating effects of climate change. The country has already suffered significant economic and environmental setbacks due to natural disasters, resulting in billions of dollars in damages. While the government has taken steps to update its climate change policies and has committed to reducing greenhouse gas emissions and prioritizing renewable energy sources, it is clear that additional external financing is necessary for Pakistan to meet its climate commitments. The Indus Delta Blue project and the adoption of green banking guidelines are positive developments, but more action is required to effectively mitigate and adapt to the impacts of climate change. It is imperative for Pakistan to attract foreign investment and implement stronger environmental regulations in order to ensure a sustainable and resilient future for the country. The government must prioritize and fully commit to these efforts to protect the people and the environment from the growing threat of climate change.
9. Corruption
It is truly concerning that Pakistan ranks 133 out of 180 countries on Transparency International’s 2023 Corruption Perceptions Index. This indicates a serious and ongoing problem with corruption in the country, including gaps in accountability and enforcement of penalties, as well as the lack of merit-based promotions and relatively low salaries. Despite some improvements in areas such as court enforcement of accountability and promoting education, the public perception of bribery as a common practice to obtain public services in Pakistan is still prevalent.
It is unacceptable that despite bribery being classified as a criminal act and punishable by law, it remains widespread across most levels of government. There is also a lack of efficiency and susceptibility to pressure from influential figures in lower courts, as well as political interference in judicial appointments and cases. The National Accountability Bureau (NAB) is facing challenges, including insufficient funding and professionalism, leading to a perception of political bias. These issues have hindered agencies from addressing legitimate regulatory concerns affecting the business sector. It is crucial for Pakistan to address these deep-rooted issues and strive for a more transparent and accountable governance system.
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