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SAZH-TAF Report on FDI

Political - Devolution of Power

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The 18th Amendment to the Constitution devolved several crucial functions to Provincial Governments by abolishing the Concurrent Legislative List in the Constitution and amending the Federal Legislative List. This decentralization of responsibility and authority provided the context in which various institutional actors renegotiated their roles in a contested space, and the Provincial Governments’ amended laws, established new institutional frameworks, developed policies and strategies, and built capacity to effectively discharge their newly acquired responsibilities[1].

 

Our experts asserted that the devolution as a result of the 18th Amendment has had major repercussions for investors looking to invest in Pakistan. In the absence of one window operations and policy consistency, investors have to also grapple with dealing with different jurisdictions that have their own set of policies that are often not in harmony with each other. The 18th Amendment devolution empowered provinces, with certain subjects vesting with the Federal Government and others with Provincial Governments leading to investors running all over to resolve issues. A leading expert on China gave an example to propound this phenomenon; if an investor wants to setup a power project, they would be running through a lot of hoops; while power generation is a federal subject, on the other hand the land where the power project is setup is a provincial subject, this in effect would lead to more processes to go through and interference from different departments in both the Federal and Provincial Governments. With different governments in the province and center, there would be no consistent policy resulting in further hindrances to potential investors

[1] (https://na.gov.pk/uploads/documents/1302138356_934.pdf

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