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SAZH-TAF Report on FDI

Political - Bureaucratic Quagmire

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According to the experts in the largest law firms, there are frequent examples of investors having been communicated a policy by one department, only to have that contradicted by another department. Following this, when the investor may approach the firm for advice, they would share a third opinion, that a judgment of the Superior Courts has rendered both policies invalid. They disturbingly shared, that almost no one in Pakistan can give a definite opinion on a matter, without provisos or disclaimers since the government itself constantly contradicts and disputes amongst themselves as to the policy or law in vogue at the moment. It is not until a case and ratio are decided by the Supreme Court of Pakistan, that one may consider a matter sorted and settled, yet the problem will not end, since the bureaucracy may not be aware of it. Hence the inconclusive advice and erroneous course of action may continue to be an impediment. They shared that an investor may come into Pakistan on the guarantee of a statutory authority, set up a project, put in the money, however, when the momentum builds, and they may engage a more experienced law firm or consultants, they are informed that a certain policy has been scrapped and therefore the investment would not be possible. They are left with no remedy, except relying on dispute resolution clauses or mechanisms, which as shared above, have their own issues.

 

Within the governance structure of Pakistan, there are so many facets that adversely impact FDI and lead to investors losing trust in the State; inconsistent policies and lack of coordination between various departments within the government, issuing policies without any kind of due diligence, careless representation, lack of effective legal remedies in case of breach of contracts with a statutory authority. Furthermore, things are further convoluted as polices are often interpreted and implemented differently on three levels: federal, provincial, and local, miring the process of investment in confusion with endless and contradictory red-tapeism.

 

Thereby, it was often repeated by our experts that there needs to be a sole source of information for international investors, and during the Round Table, our expert from the Board of Investment, along with our experts from the private sector suggested that BOI should be the nexus and coordination point for information on government policy and updated laws. The latter of which, the expert from the Ministry of Law suggested could be achieved by establishing a coordination cell with his Ministry. It became clear thereby that a deep problem lay in the lack of coordination between the government bodies themselves, the cure of which could solve the root cause of many pain points highlighted by our experts.

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