Attracting FDI

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Pakistan’s Foreign Direct Investment (FDI) increased by $73.4million in Jul 2019, compared with an increase of $130.4 million in the previous month. The data reached an all-time high of $1.3billion in Jun 2008 and a record low of $-367.5 million  in Oct 2018. The difference between the Total and the summation of data per country is due to the zero value of some countries. Zero refers to the amount of less than $50,000.

Now the government has made a right move towards accurate direction to attract foreign companies for investment in Pakistan’s debt market. The move will help reduce Rs 3.4 trillion budget deficit and stabilize foreign exchange reserves which are at $8.27 billion.

The IMF has barred the Government from seeking loans from the central bank, therefore, the government has decided to lure foreign investment in government securities etc. The decision will require amendment in the Income Tax Ordinance 2001 after which such companies would be given 20 percent relaxation in withholding tax, they would be immune from banking transaction tax, advance income tax and filing tax returns.

The interest rates are jacked up to 13.25 percent to boost reserves which has damaged economic activity but results were not very encouraging therefore the decision has been taken to invite foreign companies and banks for investment.

The government’s move to reverse GIDC Ordinance is laudable and the government should stop paying dues to companies that are holding back billions on account of GIDC. Rather, the government must adjust dues against GIDC and try to get the issue of Rs1.3 trillion stuck in litigation between taxpayers and FBR through a full bench of the Supreme Court.

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