ISLAMABAD – The government plans to draw investment of up to $500 million from overseas Pakistanis through different national saving schemes (NSS) offered by the Central Directorate of National Savings (CDNS), an official source has revealed.
The proposal under consideration, would allow the Pakistani Diaspora to conduct direct investment online in any of the national saving schemes. The investment could be made in any currency but the principal amount and profit is to be maintained in the Pakistani rupee, he said, adding that the investment during the first year is estimated to be over $500 million.
With over six million investors, CDNS has a portfolio of over Rs 1.0 trillion. The state owned entity is a key player in the domestic debt management as it has 40 percent share of the government’s domestic borrowing. Due to the higher rate of return than the domestic banks, CDNS attracted a record sum of Rs 800 billion during the last three years.
Some of the local banks, the source indicated, were bitterly opposing the move, as permission to CDNS to directly access investment from overseas Pakistanis would lead to a decline in overseas investment portfolio. “The online system is ready, only government’s nod is required to launch the scheme.”
The interest of Pakistanis abroad for investment in NSS is being whetted by the fact that domestic banks are offering low profit rates of five percent as compared to the interest rate of 18 to 22 percent on loans, while investment made in NSS gives profit of up to 15 percent.
At present, non resident Pakistanis can nominate an agent, based in Pakistan, for investment and collection of profit of the principal at personal risk, after issuing a power of attorney. This system has remained a hurdle in attracting investment from overseas Pakistanis.
CDNS, the source said, had given a proposal to the government that it could easily provide financing for the mega development projects like $13 billion Bhasa Diamer Dam provided the entity’s role is redefined. The matter of granting autonomy to CDNS has been on the hold since 2007. The International Monetary Fund, State Bank of Pakistan and local banks have all opposed the move.
If the government grants autonomy to CDNS, it could arrange financing for development projects on a model similar to Turkey which helped revive Turkish economy from near collapse in late 1990s, the source pointed out.
