Amidst the ongoing debate if the country’s economy was really improving, Dr. Abdul Hafeez Shaikh, Adviser to the Prime Minister on Finance & Revenue has said that Foreign Direct Investment has risen 66 percent to 1.56 billion dollars in July-Jan 2020 compared to the same period last year.
In January 2020, he said in a tweet, net FDI was 223 million dollars, 52 percent higher than January 2019.
The Advisor on 13 February 2020 had also said that remittances were on the rise. He judged the increase by 9.36 percent in January 2020 compared to January 2019. According to the State Bank of Pakistan also, the country has made a significant improvement in attracting FDI during the first half of the current fiscal year.
Some believe that the direct investment in shape of currency, dollar, is due to higher interest rates in the country and is not so beneficial for overall economy of the country.
They argue that no Pakistani businessman can run their business on such higher interest rates. Anyhow, the increase in FDI means that the government has succeeded in attracting foreign investment in the country.
If so, Pakistan Tehreek-e-Insaf government rightly deserves appreciation for the same. It can be said that the government’s efforts to bring ease in doing business is bearing fruits in the form of an increase in FDI.
It is essential for the government to make more and more sectors attractive for foreign investments as this year’s investments was limited to two major sectors i.e. telecommunication and power, and electrical machinery.
Many more sectors as chemicals, pharmaceutical and fertilizer, oil and gas and banking and finance can be made attractive for FDI. It’s also important for the government to realize what or who are the stakeholders that make an economy move forward when it comes to formulation of business policies.
It is correct that the government’s policies have helped attract relatively large inflows of FDI in Pakistan in the first half of the current fiscal year. Still, it has to go a long way for ensuring ease of doing business.
Sometime, tight regulations constrain businesses and prevent them from operating to their full capabilities. This, in turn, slows production, which slows down GDP growth. However, deregulation ought not to be touching the level where it is dubbed as lack of government oversight over business.
The government must be aware of the fact that a conducive investment climate is a must for attracting foreign investment. It goes without saying that the increase in FDI will not only boost the country’s economy but also lift government’s morale and encourage it to take more and more steps to attract further foreign capital inflows in the country.
Hopefully, the government’s policies will see further improvements, and, subsequently, more FDI inflows will come to the national exchequer in the future.
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