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National Management College Senior Management Wing, Lahore

National Management College Senior Management Wing, Lahore. Event: 7th Senior Management Course Target Audience: Senior Officers within the promotion zone of BPS-20 Topic: Foreign Direct Investment in Pakistan: Policy, Its Impact and Challenges Speaker:

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National Management College Senior Management Wing, Lahore

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  1. National Management CollegeSenior Management Wing, Lahore Event: 7th Senior Management Course Target Audience: Senior Officers within the promotion zone of BPS-20 Topic: Foreign Direct Investment in Pakistan: Policy, Its Impact and Challenges Speaker: Prof. Dr. Khawaja Amjad Saeed, Professor Emeritus & Principal, Hailey College of Banking & Finance, University of the Punjab, LAHORE. Email: kamjadsaeed@yahoo.com Web: www.kamjadsaeed.edu.pk Venue: Executive Development Institute Hall, (DMG) Campus, Lahore

  2. Presentation Framework A. FDI: Global AspectsB. FDI: PakistanC. FDI: Way Forward for Pakistan

  3. Rationale FDI: Inretrospect FDI: Host Country’s Determinants FDI: Types FDI: Methods FDI: Incentives FDI: Rating Dimensions

  4. A:Global Drivers - Globalization - Regional Setting - WTO RiseB:Economic Drivers 1) Poverty 2) Employment 3) Technology 4) Good Governance 5) Self – Reliance 6) Main Stream 7) Exports 8) Image

  5. DecadeYearly Average-------------- ---------------------( $ b)1970s < 101980s < 201990s 179Drivers1) Mergers and acquisitions.2) Internationalization of production in a range of industries.3) 1998 - $ 636 b4) Source: UNCTAD

  6. 1) Potential Stability2) Law and Order3) Economic Strength4) Government Economic Policies5) Government Bureaucracy6) Local Business Environment7) Infrastructure8) Labour Force9) Quality of Life10) Welcoming attitude.

  7. 1) An individual.2) A group of related individuals.3) An incorporated / unincorporated entity.4) A public or private Company.5) A group of related enterprises.6) A Government body.7) An estate (law), trust or other social organizations.8) Any combination of the above.

  8. 1) Incorporating a wholly owned subsidiary or Company.2) Acquiring shares in an associated enterprise.3) Through a merger or an acquisition of an unrelated enterprise.4) Participating in an equity joint venture with another investor or Enterprise.

  9. 1) Low Corporate Tax and Income Tax Rates2) Tax Holidays.3) Tax Concessions – others4) Preferential Tariffs.5) Special Economic Zones.6) Investment Financial Subsidies.7) Soft Loan or Loan Subsidies.8) Free Land or Land Subsidies.9) Relocation and Expatriation Subsidies.10) Infrastructure Subsidies.11) R & D Support.12) De-regulation.

  10. A:International Rating Agencies - Around: 80 - Famous: 1) Standards & Poors 2) Moodys 3) Fitch - Pakistan: 1) PACRI 2) Private – one - Ratings: - A + ----------------(Mathematical Notations) - Trends: - Upgrade - Maintain - Downgrade - Factors for consideration: - Current Account - Fiscal Policies - Inflationary Pressures

  11. B:Economic Freedom Index: - Pakistan : 110 - India : 121 - Pakistan rated betterC:Opacity Index- Developed by Price Waterhousecooper in UK on requirement of 35 stakeholders.D:World Bank - Rich in human capital - Infrastructure - Corridor - Gwadar - Growth - Government Plans needed - Water - Energy - Food Security - HRD - Infrastructure

  12. 1. PEST Formula2. FDI Pakistan-Foreign Investment3. FDI: Pakistan – Countrywise Inflows 4. FDI: Avenues 5. Infrastructure: Physical 6. Power Sector7. Board of Investment (BOI)8. China Factor9. Korean Factor

  13. B.1: PEST FORMULA

  14. B.2: FDI Pakistan – Foreign Investment# Million______________________________________________________________ Year FDI ---------------------------------------------------------------- Greenfield Privatization Total__________ ___________________________________________ 1990’s 486(A) (Annual Average) 2,000(T)_______________________________________________________________2001 - 02 357 128 4852002 - 03 622 176 7982003 - 04 750 199 9492004 – 05 1,161 363 1,5242005 – 06 1,981 1,540 3,5212006 – 07 4,873 .266 5,1392007 – 08 5,020 1.33 5,1532008 – 09 3,720 - 3,720July – Jan: 2010 1,176 - 1,176_____________ _______ _______ ________19,660 2,805 22,465Percentage 88% 12% 100_____________________________________________________________Source: Expcerted from BOL website on March 11, 2010.www.pakboi.gov.pk/foreign-invest.htm

  15. B.3: FDI : Pakistan1) Country – Wise FDI Inflows1) USA2) UK3) UAE4) Japan5) Hong Kong6) Switzerland7) Saudi Arabia8) Germany9) Korea, Republic10) Norway11) China ( 2006 – 07 high, Now negative ) ___________________________________________________________Source:BOI, Pakistan EconomyForeign Investment, P.2, downloaded on March 03, 2010

  16. B.4: FDI: Avenues1) Power2) Trade Policy3) Oil and Gas4) Construction5) Services6) Infrastructure

  17. B.5: Infrastructure - Physical1) Aviation2) Ports3) Highways4) Roads5) Bridges6) Urban Mass Transfer7) Water Supply & Sanitation8) Departmental Stores9) Housing10) Desalination

  18. B.6: Power SectorA: Needed- Cheap - Abundant - Environmental FriendlyB: Electricity Use % 1) Households 43 2) Industry 28 3) Agriculture 1283 4) Commerce 07 5) Others 10100

  19. C:Installed Generation of Electricity Capacity 1) WAPDA 58 ( Hydel 58%, Thermal 42% ) 2) IPPs 30 3) KESC 09 4) Nuclear 03 -----100 Issues1) Untapped Hydel Potential 58,000 MW2) Line Losses3) Solar 4) Wind5) Austerity

  20. B.7: Board of Investment (BOI)A: International Experiences:- Singapore- KoreaB: Supportive Logistics - Investor Friendly- Liberal Policy- Good Governance- Investor Facilitation- Confidence of Investors- Institutional Arrangements- Other aspects

  21. B.8: China Factor ( March 2006 )- $ 12 b- Composition: 1) Islamabad International Airport 2) Oil Refinery - Gwader : 60,000 barrels of oil per day 3) Bunji Hydro Power Project 4) Neelum Jhelum Hydro Power Project- FTA- Special Economic Zone in Punjab – 5 Years Trade = $ 20 b

  22. B.9: Korean Factor- Industrial Estate for high Technology Management in Lahore.- 60 Korean Firms.- Value addition.- Latest Technology

  23. 1) Investor Confidence - Address2) Asian Investors - Target3) Existing Investors - Expand4) Public Investment - Sustain5) Environment - Friendly6) Infrastructure - Support & Supply

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