Ray of hope
While the government claims that it has pulled the economy back from the edge the FDI has surprisingly fallen in negative territory. This notwithstanding the fact that almost all regional countries are getting billions of dollars in foreign direct investment. During July-May 2014-15 the FDI fell to $803 million, almost half of $1,509 million in the same period last year, indicating that few countries were willing to put their money in Pakistan. The reasons are well-known but there is no focus on dealing with them The government’s penchant for high visibility projects that can be completed within its tenure so that they can be used to win votes has stopped it from focusing on what constitute the foreign investors’ most basic needs like skilled manpower, end of red tape and corruption and a hassle free infrastructure.
One reason why Pakistan fails to attract foreign investors is the drastic reduction on expenditures under the Public Sector Development Program (PSDP). According to a study conducted by the World Bank last year, Pakistan is in dire need of building infrastructure and is required to invest at least 6.6 percent of national output in meeting deficiencies in critical areas like insufficient investment in transport, electricity, water supply and telecom. Instead of more investment in infrastructure, the axe invariably falls on the PSDP whenever extra funds are needed to fulfil the requirements of some ‘sensitive’ department.
The agreement with Russia to build Karachi-Lahore 1,100 kilometre gas pipeline comes as a ray of hope. Moscow will lend Islamabad $2 billion to lay a pipeline that will transport liquefied natural gas (LNG) from Karachi to Lahore. There is a need to expand bilateral relations with Russia, which is a major regional and world power. Besides the right to exercise the veto power at the UNSC, Moscow has great economic potential. The interests of Pakistan and Russia converge in Afghanistan also where both are keen to put an end to terrorism and promote regional peace.
