- Great expectations
PM Abbasi’s forthcoming ‘pitch’ at the World Economic Forum to ‘invest in Pakistan’ has made good headlines but whether or not it survives the ‘test of the pudding’, of course, remains to be seen. The prime minister did not study finance but his years in the West Coast and later experience as a successful businessman must have familiarised him with how FDI works. If any among the international financial elite that will grace Davos finds Abbasi’s words enticing, they will immediately look into the country’s foreign investment trends and its capital market. And even if the PM has yet to read the state bank’s recent report on foreign investment, any would be investors would note that FDI evaporated nearly three percent year-on-year because of the country’s many political, financial and security irritants.
Also, since Davos features question and answer sessions, he might struggle handling questions about continued terrorism, stock market collapse, FDI flight, unstable rupee, high cost of doing business, political instability and still ask everybody to invest in Pakistan. Unfortunately, the ruling party never turned its attention to matters that really mattered for the economy, even after Abbasi’s rise to the PM position. There are still no initiatives to breathe life into exports, or expand the tax net.
And now that foreign aid is also shrinking, and the deficit is the highest in history, Pakistan should prepare itself for a financial squeeze instead of indulging in unrealistic expectations. For others to invest in Pakistan, we must undertake urgent reforms – political as well as financial. Firstly, no country with turbulent politics ever attracts hot money. Sadly our political elite is dirtying democratic politics by forcing an ugly clash of institutions. Unless they get their act together, there will be no respite for the economy. And secondly, we have to kick start the real economy. From revenue to business environment to red tape, the system is not conducive to FDI. The sooner reforms are carried out the better for our investment pitches.