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Pakistan govt sets up plan to woo rich Pakistanis abroad
Publication Date : 05-09-2013
The Pakistan government is working on a plan to attract foreign direct investment (FDI) from wealthy Pakistanis living abroad, by facilitating creation of diaspora-focused venture capital and private equity funds in areas like information technology, automobile vending industry, medical equipment and services and hospitality sectors.
A senior government official said the work on an incentive package to attract overseas Pakistanis was triggered following advice from the World Bank economists Dan Biller and Ernesto Sanchez-Triana who viewed Pakistan’s economic growth being highly dependent on financial inflows of aid and workers’ remittances.
The country has seen declining foreign direct investment from international firms and investors because of security problems, adverse travel advisories and poor energy and macroeconomic conditions.
The resources with influential and enterprising Pakistani’s abroad would facilitate flow in and become a tool to revitalise manufacturing sector for increased jobs, urbanisation and connectivity, the official said, adding it would be one of the elements of industrialisation effort.
The World Bank economists viewed that bulk of the country’s total tax revenue was collected from manufacturing sector in the form of corporate income tax, and sales and other taxes while agriculture and most services were out of the tax net, and hence the government should better balance its tax system and focus on "taxing bads".
The government has been advised that cities and industrial clusters be better inter-connected by upgrading, extending and rehabilitating infrastructure.
This would help achieve interregional transport, information and communications technology services in Khyber Pakhtunkhwa, Sindh and Punjab to facilitate links between cities and along trade corridors like in the case of Gwadar port with northern Sindh.
“Investment in freight transport should be developed, coordinated with efforts to establish or strengthen industrial clusters. Synergies between freight transport and cluster development would boost structural and spatial transformations that Pakistan is undergoing,” the World Bank said.
It said the potential of freight transport needed to be unleashed through reforms that prioritise integrating different modes of transportation while focusing rail for long distances where it was more efficient than road transport and modernising the trucking fleet to reduce environmental and social externalities.
But this should be done by redefining the role of the government on regulating and attracting private investment and fostering new technologies and procedures from bulk cargo to containerised cargo.
The bank also advised the government to exploit to the full strategic location of Gwadar port so that it served as an important mode for Iran-Pakistan-India gas pipeline.
Importing natural gas would partly address the energy concern, given that natural gas demand in Pakistan far exceeded supply, there would still be a supply gap after 2015 even if indigenous gas reserves and planned projects in pipelines in the country materialise.
Improving skills training and education to workers to better match employment needs and supply in industry was also important.