Attracting Foreign Direct Investment (FDI) to Pakistan

Foreign Direct Investment (FDI) refers to the participation of one country in another
country for the sake of technology transfer, management, joint ventures and expertise.
High foreign direct investment shows the direct interest of the investing country based on
the facilities offered by the host country and ends up in mutual beneficial relationship.

It is a known fact that the FDI of Pakistan has drastically reduced by more than 55% in
last one year because of the obvious reasons including unstable political scenario, energy
crisis, inflation etc. To overcome these problems and to attract foreign direct investment
into Pakistan, some necessary proactive measures has to be taken as described below.

Investment Promotion

Along with the creation of a business-friendly environment in Pakistan, it may be

important for a potential host country: Pakistan in this case, to actively undertake
investment-promotion policies to fill in information gaps or correct perception gaps that
may hinder FDI inflows. A commonly used definition of investment promotion is “activities
that disseminate information about, or attempt to create an image of the investment site
and provide investment services for the prospective investors.”

Fiscal and Financial Incentives

Countries have to compete with one another to attract FDI by offering a number of
incentives and benefits. Along with fiscal and tax incentives to reduce the burden of tax on
investing country, the host country has to provide them with suitable financial incentives
that may include direct contribution to the firm by the government or relevant body to
support the initiative. Similarly if Pakistan has to attract FDI, the fiscal and financial
incentive has to be offered to the interested country that is interested to invest in
Pakistan.

Sound and Supportive Investment Opportunities

Investing country has to be offered with sound investment opportunities and supportive
environment in Pakistan, where the host country or their company may feel comfortable
in handling their operations and day to day business activities. They must be provided
with all the guarantees that the government will safeguard their interest in every way
possible so that they could extend their projects without any problem.

Resources:

 http://www.economywatch.com/foreign-direct-investment/attract-more-fdi.html
 http://www.spp.nus.edu.sg/ips/docs/pub/pa_kishen_Measures20to20Attract20FDI.pdf
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